My husband has been on surgery disability for several weeks now and we’ve learned a few surprising things about the process, the first of which is that it’s really not that much of a financial strain. Of course, we earn more than we spend, so it might be more difficult for families that are on the edge.

Total Reduction in Income
My husband’s income, after taxes, is reduced by about 25%. State disability income isn’t taxable, but the 5% bonus we’re receiving through his employer’s private disability plan is. If you’re planning a disability, find out if your benefits are taxable and budget accordingly.

I’m still working, so the total reduction in monthly income is closer to 15%. It’s something, but not so much that we really feel a pinch. I will also be interested to see how this affects our Federal taxes. We planned our withholding around our full incomes. If my husband is out for three months rather than the initial six weeks we estimated, that’s a full quarter of his annual salary, which may bring us into a lower tax bracket. If that’s the case, our total reduced income will be closer to 12%.

Total Reduction in Spending
We figured we’d see some reductions in spending, but we were stunned by the size of the reduction. We’re spending anywhere from 33%-50% less on our credit cards each month. Not only is my husband not eating out at all, or driving, or getting dry-cleaning, but I’ve also been seen some of my expenses go down. I expected our grocery bill to go up a lot, but it’s only gone up $15 a week or so. In addition, we have an FSA this year, so we’re no longer paying for prescriptions or co-pays.

The weather has been relatively mild, which has helped from an energy perspective. We had to use the heat during the day for about a month, but it was only heating the house an additional 3-5 degrees, so it wasn’t a big jump.

Planning for the Reductions by Stockpiling Cash
Once we knew the surgery was coming, we immediately put all major purchases on hold. We had planned to buy furniture, have some work done on the house, and buy me a car. None of that happened. Instead we funneled all our excess income into savings. Combined with our emergency fund, we had more than enough to cover the lost income and the gap between applying for benefits and receiving them. We’d expected that to be four weeks, but it was only three.

Pre-Pay Bills Whenever Possible
Before my husband’s surgery, he scheduled most of our bills for payment through our online banking. That way I didn’t have to worry whether a bill was due while sitting in the hospital. We were very glad he did that when his computer died the day before he went into surgery. Yes, I could access online banking from other computers, but I couldn’t use Quicken or access our budget. Let me tell you, not having access to Quicken or our budget for three weeks was very upsetting for me.

Between the FSA, reduced spending, and reduced income, we’re only falling about $600 a month short of our usual budget. That means we’re saving a little less, but far more than we were expecting. Recovering from surgery is tough, but the financial aspect doesn’t have to be if you plan carefully.

I’ve tried and tried and tried to quell my stabbiness, but I was driven over the edge today by three different things. So, today, it’s a That Makes Me Stabby free for all! First I’ll post mine, then you can share the things that make you reach for the kitchen knife in the comments.

Proposed Salt Ban
How do these idiots get into our legislative bodies? First, there’s the growing movement to tax soda, because apparently soda is the sole cause of obesity in this country. It couldn’t possibly be the corn subsidies that have resulted in high-fructose corn syrup being placed into nearly every food on the planet. It couldn’t possibly be decades of poor health policy and an increasing reliance on fast foods and convenience foods. Nope, it’s the soda.

Now, a legislator in New York wants to ban salt from food preparation in New York restaurants. Salt. As anyone who cooks knows, salt is a pretty vital ingredient for cooking if you want your food to have, um, taste. But no, let’s ban it and ruin the restaurant trade, because salt is bad for you. And it’s true, high sodium levels can be very bad for you, but prohibiting restaurants from using a vital cooking ingredient is not the best way to combat that. Unless, of course, you like flat bread and flavorless food.

Medical Bills
As I’ve mentioned a few times before, my husband recently underwent surgery. Today we received a bill summary from the hospital. Total cost for two hospitalizations: $295,000. That eye-popping number doesn’t include the surgeon, anesthesiologist, or a couple of tests he received while in the hospital. After insurance reductions, the total came to a mere $106,000, most of which is covered by insurance. So far we haven’t had to pay much at all. Due to my husband’s dual coverage, we may not have to pay more than prescription and doctor co-pays.

However, if we didn’t have insurance, my husband simply wouldn’t have been able to have surgery. There is no way a family that wasn’t wealthy could afford something like this. I’m sure by the time all the doctors and physical therapy are factored in, we’re looking at $350,000. At that point, it becomes a choice between surgery and a home or retirement.

Clearly, something has to be done about the cost of healthcare and the insurance system in this country. This was major surgery, but it wasn’t life-saving surgery. I can only imagine what something like heart surgery or a transplant would cost without insurance.

For those who say, “Consumers need to be able to shop around for medical care and negotiate for the best price,” sometimes shopping around isn’t an option. You can’t shop around for a doctor in the middle of a heart attack or after a car accident. You can’t negotiate the cost of your Medivac helicopter as you’re being airlifted to a life-saving procedure.

Unemployment Insurance Encouraging Unemployment
This has long been the reason why unemployment benefits are lower than disability benefits: they don’t want you to sit at home doing nothing while collecting unemployment. You’re supposed to get off your lazy, unemployed bum and look for work.

Of course, this doesn’t always work because sometimes it’s hard to find work. Like now, for instance. Unemployment insurance has already been extended to a record 99 weeks. That’s nearly two years of benefits. However, last week one of our political parties trotted out two arguments against extending benefit eligibility (not adding to the number of weeks available): 1. We can’t afford it. (Actually, the money was already in the stimulus bill, this just gives people more time to collect it) And 2. Extending unemployment people will encourage people to remain unemployed.

Yes, because my unemployed friends just sit at home eating bon-bons purchased with the grocery store gift cards they received in lieu of other gifts at Christmas. Perhaps Congresspeople haven’t noticed, but people who are on unemployment can’t just go get a job. If they could, 99.99999% of them would. But they can’t, because there aren’t jobs to go get. Maybe Congresspeople, with their guaranteed lifetime pensions, should think about the actual state of our economy before pronouncing that extending unemployment makes people lazy.

Okay, so that’s three things that make me stabby. What makes you stabby right now?

So, we’re seven months into homeownership and still enjoying it. We’ve learned quite a few more lessons about owning and maintaining a home. And, of course, we learned them the hard way.

Always Double-Check the Paint Before Starting
On President’s Day weekend, I decided to paint the hallways between two of the bedrooms. It’s a fairly small hallway, and between all the doors and closets, I figured I had just enough paint left from the family room gallon and sample pint. Unfortunately, I ran out the main paint with 30 square feet left to go, and the pint turned out to be a different finish. It wasn’t supposed to be a different finish, but I didn’t realize at the time of the purchase that they’d given me semi-gloss rather than eggshell finish. So, I had to stop and wait until the morning when I could get to the paint store. Once I got a quart of paint, it took me all of 30 minutes to finish up. From now on, I will check the quantity of paint in the can BEFORE I start a project!

Gardeners Are Worth It
When we bought our house, the backyard was dead. We cleaned up the front yard ourselves and figured we’d get to the backyard eventually. Then came heavy winter rains. Suddenly weeds sprang up in the back. And not just any weeds. Fast-growing stalks with large leaves on top. We tried to cut them, but that only resulted in ugly sticks that still grew fast. Then, with my husband heading into surgery, we gave up. Fortunately, my neighbor sent his gardener over to see if we wanted to hire him. We did – at only $60 a month, it’s totally worth it to have someone else go into the back and pull up all those stalks. It’s the only way to get rid of them. It also saves us the trouble of buying a lawnmower and raking up leaves all fall. Yes, we could take care of it, but we’d rather put our energy into the parts of yard maintenance we like.

Power Tools Are Fun
I already had a drill and some tools, but I didn’t have everything I needed. After borrowing a circular saw from a co-worker for my window treatment projects,  I’ve decided that’s my next purchase. I have shelves and garden boxes to build. If anyone has an affordable circular saw recommendation, let me know. My co-worker has a Ryobi, which I was pretty pleased with, so I might get that.

Angie’s List Rocks
I was hesitant to join Angie’s List because it costs $35 a year. I figured I could find what I needed on Yelp. Except then I needed to hire a bee removal service, and I needed them fast. I couldn’t find anyone on Yelp, so I joined Angie’s List, and I’m so glad I did. They listed several local services complete with reviews that included prices. I called one company and they came to my house within an hour. It cost me $55 to have two abandoned wasp’s nests removed and the property sprayed. I already plan to use Angie’s List to find a carpenter for another project.

When Replacing Weather Stripping, Take a Sample to the Store
One of my projects was to replace the weather stripping in our French doors. I meant to bring a sample, but I forgot. The first problem was the underside of the doors, which have been shaved down. That meant that the rubber gutters couldn’t be attached. I explained the problem and the salesperson helped me figure out a solution that would keep out air gusts and worms that crawl inside when it’s too wet outside.

Then I had to figure out which kind I needed to go inside the doors. He showed me a few options, and I found a kerfed style that looked similar to what we had. I didn’t have a sample and didn’t want to come back, so I called my husband to describe it over the phone. I guessed right.

The next problem was cutting the weather stripping. The kerf is made out of hard plastic, which couldn’t be sawed through with a box cutter. I finally used a pair of pruners to cut through it, but I expect that wire cutters would have worked, too.

So far, we’re doing well. I’d still like to buy that new fridge and the rest of our furniture. But first I need to hire a carpenter and my husband needs to return to work. Then we’ll feel comfortable spending again.

TurboTax asked me to review their software and gave me a free Federal and State return filing to give away. This is a copy of the online version. To enter, simply comment at the bottom of this post by 6PM PST March 17, 2010. Leave a valid email address where I can reach you. And now on to the review. This was my third time doing my taxes, because apparently I’m a masochist. That’s a nice thing to learn about yourself!

Anyway, I used WebTurboTax about ten years ago when it was available free through Vanguard, but I haven’t used it since that became a paid service. Back then, I quite enjoyed TurboTax, and the ability to import some data from Quicken. That’s still an option in the new version, as well as a few other features I liked.

TurboTax Interface
Like the other programs, the TurboTax navigation and status bar are prominent and easy to use. I can quickly and easily skip between elements of the program or see how my return is progressing.

TurboTax navigation bar

Turbotax status barTurboTax Flags

I particularly liked the Flags feature, which lets you create a flag to go directly back to a portion of the return if you need to get some information and complete it later. Then you can continue with the information you do have. For example, if I needed to double-check some mortgage interest information after a refinance, but didn’t want to go dig out the papers at that moment, I could flag it to return later with the information. The same if I donated to a charity online and didn’t know what state they were located in (which was true of several of my charitable donations this year), or needed to find a few more medical bills.

Importing Data
Since TurboTax is a Quicken product, you can opt to import some data from that program. I didn’t choose this option. It also gives you the option to import your W-2. TurboTax didn’t require a passcode, but it wasn’t able to import my data because it wanted text in box 12, but my employer entered numbers. I had to enter the data manually, instead.

Import W-2

New Homebuyer Credit and Mortgage Deductions
The homebuyer and mortgage section started with questions about interest and points, then simply asked me if I bought a new home and wanted to apply for the credit. It asked me the necessary questions and then told me which documents I needed to send to the IRS to back up my claim.

Homebuyer Credit

Missed Deductions
Rather than wait until the end to check my inputs for errors or missing items, TurboTax runs an deduction check at the end of the section to see if there are any areas you missed that you shouldn’t have.

Charitable Donations
The charitable donations section was pretty easy. I simply had to enter the name and city where the charity was located, then select the type of donation I made. The screens were very easy to use and provided detailed information about determining a value.

Correcting Errors
Rather than continue straight through without telling me how many sections I had left, TurboTax takes you to a summary after each section. I could also easily go back to a section and re-answer the questions by selection the subcategory (deductions, for example), then selecting Explore On My Own. Then it showed me the summaries with the option to go back and update any item.

Overall Opinion
TurboTax is another good program for people with more complicated returns or those who are itemizing for the first time. If you use Quicken already, the ability to import data could be a huge time-saver, assuming you’ve accurately tracked all your information throughout the year.

I wasn’t asked to calculate things myself, although I could if I wanted to. I also didn’t have to enter a great deal of information that doesn’t appear on the actual tax forms.

I found that this was a nice balance between the streamlined TaxAct and the heavy guidance of H&R Block At Home.

The online prices are:

Free for Federal e-File only (State $27.95)

$29.95 for Deluxe (Federal only, State $36.95)

$49.95 for Premiere (Federal only, State $36.95)

Remember, enter my giveaway by March 17, 2010 at 6 PM EST to win!

Recently someone told me about his budgeting method: he finds out that latest he can pay a bill without incurring a late fee and then mails the payment just in time. For some bills, this is normal because you incur a late fee the day after it’s due. (Hi, credit cards.) With other bills, you might not get a late fee until 15 days after the due date, but that doesn’t mean you should get in the habit of “budgeting” for late payments.

Budgeting to Pay the Mortgage Late
Mortgages are a prime example of this, and the example my friend used. He discovered that although the mortgage is due on the 1st, he doesn’t get charged a late fee until the 15th. So he pays it around the 14th. This is ridiculous. I expect that this pad was created to allow for three things: 1. Holidays and weekends that occur on the 1st, 2. slow or lost mail delivery, 3. Payment foul-ups like mistaken processing. It’s not an invitation to pay super-late every month.

In fact, it’s not a good habit go get into. What happens if there’s a foul-up with the payment you mailed on the 12th? What if the computers have an error in automatic billing? Now you have only yourself to blame for the late payment.

Budgeting for Late Utility Bills
Utility bills also frequently have long grace periods after the payment is due, but this is a dangerous game to play. If you mess up and mail your payment too late to miss the late payment cut-off, not only will you get slapped with a fee, but they could shut off your power, gas, water, or phone. Is that a risk worth taking?

If you can budget to make the payments late, then you can budget to pay them on time. Yes, you’ll have to spend less for one month, but then you can get on track to pay your bills when you’re actually due. Gaming the system by paying after the bill is due but before you incur a late fee is a slippery slope that could quickly lead to multiple late fees.

So why does he due date chase? So he can spend whatever he wants in the meantime. He doesn’t want to budget his money or spend carefully. He’d rather live on a whim and scrape together the cash at the last second.

If you’re really strapped, then these extended grace periods are a boon, but you shouldn’t plan for them so you can spend whatever you want in the meantime. Instead, sit down and make a real budget. If you can’t do that, then you need to cut your spending so you can pay the bills when they’re actually due.

It’s been a rough couple years for employees. Many lost their jobs, and those who kept their jobs were unlikely to receive raises and bonuses. However, the economy is on the mend and many employers are finally able to offer raises. If you’re among the lucky recipients, you might be tempted to resume your prior spending levels, but I’m about to argue that you shouldn’t do that. Instead, use this as an opportunity to do one of the following. After all, you’ve survived this long without the extra money, you can keep doing it.

Pay Down Debt
If you received a pay cut, or couldn’t cut spending enough to avoid debt without a raise, then use the new money to pay down any credit card or other debt you’ve built up in the last two years. Since you weren’t used to having the money, you won’t miss it. If you use it to pay down debt, you’ll even wind up ahead of where you started because you’ll pay less interest and move through your debt faster.

Rebuild Your Emergency Fund
If you had an emergency fund, it may be depleted at this point, especially if you received a pay cut. If you’ve gotten used to spending less and aren’t creating new debt, then use the raise to rebuild the emergency fund. Another emergency could happen at any time, so it’s important to restore it as much as possible.

Boost Retirement Savings
Many employers cut their 401K matches last year, but are now restoring them. If you reduced or stopped contributing to your retirement, use your raise to start contributing again. Especially if your employer is resuming matching funds. If you don’t get matching funds, consider using the raise to open a Roth IRA or traditional IRA.

Replace Worn Out Appliances
Okay, this is a spending one, but if you have an appliance that is due for replacement, now is the time to do it. Some states have already run their Cash for Appliances programs, but other states are just ramping up. If your state is in the latter group, wait until it starts and then use your raise to replace your appliance and claim your rebate. While you’re at it, check for other rebates from your local utility. You could cover a significant portion of the cost by combining rebates.

Make Delayed Home Repairs
If you delayed any home maintenance because money was tight, now is the time to do it. Continuing to delay maintenance could lead to higher replacement costs later when it’s an emergency. Spring and summer are on the way, which is the perfect time for home maintenance.

Set New Savings and Investing Goals
You’ve already missed part of the new bull market, but there’s still quite a way to go. If you’ve already funded your retirement and rebuilt your emergency fund, consider investing in a regular brokerage account, starting a CD ladder, or increasing your general savings. If you really need a vacation, then you can set a savings goal for that and set aside your extra pay for that.

Of course, you can also go out to a nice dinner with your new raise, but don’t let it become a habit again. There’s no reason to give up your newfound frugal ways because you have more income. Have a little treat every now and then, but otherwise stick to your goals. You learned to live without the money once. You can continue to do so.

Are you getting a raise? If so, what do you plan to do with it?

A couple months ago I showed you how to make a no-sew window swag.  If you want a more architectural window treatment, and still don’t want to sew, it’s time to consider the window cornice. Once again, you’ll need power tools and lumber, but you won’t have to sew. I used instructions I found at Lowe’s, but I discovered along the way that some modifications were necessary, so here’s my version of the instructions for making a window cornice.

completed window cornice

Window Cornice Materials
1/4-inch Lauan plywood
1×2 mounting board
Staple gun and staples
¾” Wood screws
1 or 2-inch L brackets
Wood glue
Circular saw
Measuring tape
L or T square
Marking pen or pencil
Drywall screws
Electric screwdriver

Steps to Build a Window Cornice
1. Measure the window. Take the following measurements: width including frames or window treatments that extend beyond the edge of the frame, depth including window treatments that extend beyond the edge of the frame, height of window treatments you want to cover or window frame.

Now add to each of those measurements. Example: I added 4 inches to the window width to allow room for mounting. We don’t have window frames, so I measured the height of the blind cornice and added 4-6 inches to give it some drama. My cornice sticks out half an inch, then I added 2 inches to the depth.

Write down your measurements. Determine the number of cornices you’ll be making and figure out how many pieces of 4×8 foot Lauan you’ll need. You’ll be cutting a cornice front that is the width of the cornice by the height of the cornice and two cornice sides that are the depth of the cornice by the height of the cornice. For example, one 60×8 piece and two 3×8 pieces.

2. Measure out the cleats. If you use Luan, you’ll need to make mounting cleats out of 1×2 pine. If your cornice is less than 3 inches deep, make 1 inch wide by 2 inch tall cleats. If your cornice is more than 3 inches deep, make 2×2 cleats. Each cornice will require four cleats. Buy enough wood to have some overage for mistakes. If you make 2×2 cleats, you can use 2-inch mounting brackets rather than 1-inch.

3. Measure and cut the wood. Sand all the edges smooth.

window cornice materials

4. Lay the cornice front flat. Measure half an inch in from the left and right edges and make a line. Measure half an inch down from each of the edges and make a line. Glue one cleat in each corner. If you’re using 1×2 cleats, the long side of the cleat is parallel to the short edge of the cornice front.

mark corners where cleats should go

cleats5. Lay the cornice sides flat. Measure half an inch from the left edge of the left cornice side and half an inch from the top. Mark these lines. Repeat half an inch from the right edge of the right cornice side and half an inch from the top. Glue one cleat to each cornice side. Let dry.

6. Turn over the cornice front and sides. Screw through the Luan into the cleats to secure in place.

7. Turn over again. Run a line of glue along the left edge of the cornice front. Attach the cornice side to this line of glue, perpendicular to the front, and flush with the mounting cleat. The mounting cleats should also be perpendicular. Hold until dry. Repeat on right side.

(See photo in step 11 for example. There are cleats at each end in the photo, but this was because of a mistake.)

8. Screw from the outside of the cornice side into the mounting cleat attached to the cornice front.

screw in the cleat

9. Measure the length of the cornice from side to side, allowing wrap-around. For a 60-inch wide cornice with 3-inch sides, this is 66 inches. Add 6 inches for batting and wrapping. Add 6 inches to the height for batting and wrapping. My total fabric size was 72 inches by 12 inches.

measure and cut the fabric

10. Iron the fabric.

11. Cut the fabric and the batting to the appropriate size. Turn the fabric wrong side up. Lay the batting on top of the fabric. Center the cornice on top of that. Pull the fabric taut against the bottom edge. Staple in the center. Repeat at the top. Move to one side. Pull the fabric over the side and pull taut. Staple in the center. Repeat on the other side. Now staple every few inches along each side. Pull taut before each staple. Trim overage. You may need to stitch or hot glue the outer corners so the fabric doesn’t bunch where it presses against the wall.

staple the fabric tight to the plywood

staple fabric to the sides

If the back of the cornice will be visible from outside the window, hot blue glue an unpadded piece of the fabric to the inside of the cornice.

fabric on back of cornice

12. Measure from the middle of each mounting cleat. Mark this width on the wall. Hold up the cornice to make sure it’s centered and level. Mark the edges to confirm. Drill starter holes in the wall and each cleat. Mount one L-bracket to the wall with a drywall screw. Align the cornice cleat with the L-bracket, and screw the bracket to the cleat with a wood screw. Check leveling and centering again and repeat on the other side.

cornice mounted to wall

cornice mounted to the wall

You’re done. The total cost was about $60. My fabric was $10 a yard and the batting was $1 a yard, but I have access to cheap fabric. Without the fabric, the materials were around $30, not counting the tools I had to buy that I didn’t already have.

My dad proposed a couple of alternatives to this. When they made their cornices, they used 1×10 mounting board rather than Lauan and held them together with L-brackets rather than cleats. Although this is easier, it will be heavier, so you make sure you can mount the cornices to studs.

If you use Lauan and cleats, he suggested that we could have hung mounting hooks on the wall, attached hooks to the cleats, and simply hung the cornices on them instead of screwing them to the wall. Visit the hardware store and see what looks useful to you.

This is the last day to enter my H&R Block tax software giveaway. All entries must be received by today at 6PM PST. Simply comment on my H&R Block review post to enter. Make sure to leave a valid email address.

Making extra mortgage payments in order to cut the amount of interest paid is quite popular these days. The theory is that you’ll save interest and then be able to save money for other things later. But, I’m not sure this is the right approach if you’re not fully saving for retirement, because you’ll miss out on years of compound interest.

Retirement Maximums
This year, the maximum 401K contribution is $16,500. The maximum Roth IRA contribution is $5000. That means a couple (assuming you both have 401K options at work), could contribute $43,000 a year to retirement. Obviously, most people can’t afford to contribute that much, but you should be contributing at least 10% of your income to retirement before you consider paying off a low-interest debt like a mortgage.

The Cost of a Mortgage Over Time
If you have a fixed rate mortgage, the interest portion remains flat for the life of the mortgage. So, in 20 years time, the $1500 costs far less than it does now. Yes, it’s still $1500, but your income will have increased just to keep pace with inflation. The mortgage will become a smaller and smaller portion of your monthly expenses, meanwhile, the money you save for retirement grows and grows and grows.

You Can’t Make Up for Lost Time
So let’s say you decide that it’s more important to be debt-free than it is to save for retirement. Let’s take an income of $50,000 as an example. You save only 3% for retirement ($1500) and put an extra $5000 a year towards your $150,000 mortgage at 6% interest. Now you have an extra $899 a month you can spend on other things, like retirement. We’ll also assume you don’t earn any raises, just to keep things simple. If you follow this option, you’ll pay $72,697 in interest and pay off your mortgage in 14 years and 2 months. Meanwhile, you’ve saved $31,000 for retirement at a very conservative growth of 4% (plus 3% inflation). Once you add the mortgage funds to your retirement in year 14, you’ll only manage to save $107,780 in 30 years.

Now let’s look at saving 10% for retirement and paying the mortgage over time. You’ll pay $173,000 in interest on the mortgage over 30 years. You’ll also save $104,000 toward retirement in 14 years, and $434,812 over 30 years.

So, yes, you’ll save $101,000 in interest, but you’ll lose $327,000 in retirement savings. That seems like a bad deal to me.

Retirement is Almost Always the Highest Priority
Certainly, you should make sure you have an emergency fund with six months of living expenses before you max out your retirement. Make sure you can pay your mortgage or rent and other vital bills.

Next, find a way to balance your credit card debt and your retirement goals. We kept our retirement savings low while paying off credit card debt, because credit card debt costs far, far more.

However, before you start saving for your dream home, or a boat, or a fancy car, or even deciding to pay off your mortgage early, make sure you max your retirement as much as your budget will allow. Yes, you won’t have to worry about making mortgage payments when you’re retired if you pay off the mortgage early, but you may not have enough money to heat that house if you don’t prioritize your retirement.

So this week we accidentally paid our mortgage twice. Fortunately, we have a large enough cushion in our checking account right now that we could cover both payments without moving money around. Unfortunately, we have only ourselves to blame for this snafu.

How We Came to Pay the Mortgage Twice
It started like this: we refinanced our mortgage. Our first payment was due on February 1. Because our mortgage had to be sold to a servicer, and then the servicer had to send us payment instructions, there was some concern we wouldn’t get the info in time. To be safe, I used the account number to set up our servicer as payee in our online banking. Then I discovered that it would take seven days for the payment to go through. Seven! This is two major banks that can’t communicate electronically!

But I digress. The new bank’s info did indeed arrive in time, so I set up automatic debit at that account. However, they have a fairly unfriendly interface, so you have to click a few things to determine that it’s been setup properly. I cancelled the other payment.

Then I mentioned to my husband in passing that I’d cancelled the online payment and setup automatic debit. The payment went through fine. We both forgot the conversation.

Fast forward to this week. My husband emails me to tell me that he’s paid all the bills and the mortgage. I immediately called him and said, “You paid the mortgage?” Thus began the odyssey of calling the banks. We called our primary bank to cancel the online payment, because it was only submitted the day before. We couldn’t do that – they mailed a physical check. We called the second bank to cancel the automatic debit, but opted not to in case the check gets lost in processing or something. We’ve been assured that the payment that arrives second will be applied to our April payment, not the principal. I will call in March to cancel the March auto debit. Some day we might pay extra toward the principal, but not this month!

What We Learned from This
We learned one simple lesson from this: don’t have financial discussions on the fly! My husband was with me in the room when we set up automatic debits for our first mortgage. We were both fully aware of the process. I should have done that again with the new mortgage. At the very least, I should have told him that I set up the payment during a financial discussion, not during Daily Show commercials. It was too easy for that information to slip through the cracks, especially since I didn’t delete the servicer as a payee in our online banking account. The funny thing is, I was in the online banking interface a few days earlier and thought “I don’t need this anymore. I should delete it.” And then I didn’t delete it. Why don’t I listen to my intuition?

If you and your spouse both handle the finances, then learn this lesson from us. Always have clear conversations about your money, especially when it comes to huge payments! Although we have enough of a cushion to handle the missing money this month, it could have been a problem if we didn’t have it in place and only discovered the error after one of the payments bounced. We’ve started to slip on our daily financial talks. We need to work on that.

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