So we spent a riviting night on Friday having a serious talk about our finances, about selling our house, about what we can realistically afford, and our hopes and dreams for the future. I had recorded Suzy Orman's "The Money Class" that aired on PBS last week. This opened up a lot of discussion about what we have, what we owe, and what we want to do with our money. I'm so glad that we watched this together. We were able to pause it and discuss what she was talking about and for once it was both of us learning together. In the past it went: I read, I try to explain, I don't get the point across, and Hubs doesn't want to get on board.
We decided that since we couldn't sell or rent our place out right now, moving in the next year or so just seemed unrealistic. We wanted to be able to put down more than a minimum down payment and wanted to not have to pay cash to get out of our current house. We've made enough updates in the past year that living there for the next couple years no longer seems like a prison sentence. With a Metro station within walking distance to our condo expected to begin operation in 2016, we have toyed with the idea of sticking around to be able to sell for a profit at that time. It is just 5 short years away and will open up so many more options if we don't have to lose money when we sell.
Dave Ramsey would be proud of this next part. Since we don't need a down payment fund right away, I took money from there and paid off our credit cards. Boom. Done. So now our plan is to spend with no credit cards and put all the money we monthly would have put towards those payments back into out down payment fund. We'll build that up and once we get to a more significant amount, we'll be able to start looking for a house again.
Now Dave would tell us to pay off our car next, but I just can't bring myself to pull another chunk of change out of our down payment/emergency fund. I like having a cushion to fall back on in case anything happened. We'll work to pay the car off early, but don't feel like I need to pay it off immediately.
So credit cards have been removed from wallets, budgets have been outlined, Husband is on board, and we are ready to start saving some cash! Another positive is no credit card debt means another item crossed of the 101 in 1001 list!!!
Have you had to sacrifice any dreams to make the more responsible financial decision?
Showing posts with label money. Show all posts
Showing posts with label money. Show all posts
Wednesday, March 16, 2011
Wednesday, October 27, 2010
the awful B word
Gosh, I was on such a roll posting and then all of a sudden life got in the way. Since my last post we've spent our weekends on two separate wine tours. Virginia has an amazing wine country and I intend to check out each and every vineyard. Out of the six vineyards we visited in the past two weekends, five of them were new to me. We've had an the normal warm October, it's been in the 60's and 70's everyday so far, it might have even hit 80 today.
Since September I've been so excited thinking about a blog post about the amazing budget I created and how we were going to stick to it and beat not only our credit card debt, but also pay down our condo enough to sell it and save enough to put a downpayment on a house. As all budgets go, we had some emergencies come up, but I felt better prepared this time.
In the past my mindset was always "Pay bills first and then put every single extra dollar toward paying off debt." While this is a very sound way to tackle finances, it didn't work for us. Something would always come up or I would forget about a major expense for the month. My new mindset in creating this last budget was more along the lines of slow and steady wins the race. I tried to think of everything that throws us off course. It was usually car repairs, vet or our own health bills, or impulse purchases. These unexpected expenses would end up on a credit card since all of our extra cash had already been spent, towards paying credit cards off. The cycle was never ending and VERY frustrating. When I built this budget I put a percentage towards car repairs, medical, and clothes. I put a more modest amount towards credit cards and even upped our monthly savings.
I chose October to start our budgeting because Hubs got three paychecks this month. While I get paid bi monthly, he gets paid every other week, so about twice a year, three paychecks in one month. We had a couple planned expenses that we knew were coming that we would put that extra paycheck towards: car taxes and a couple various expenses we had put on the credit cards in September that we wanted to pay off.
So I put together a spreadsheet of expenses and percentages of our total budget. I did this in early September and would check it out and tweak it almost daily. I was honestly giddy on October 1st, ready to track every penny and see how much we would end up saving!!!!
Unfortunately I didn't plan for one of the dogs to get a strange bump on her stomach that would require a biopsy and rack up over $300 in vet bills. (She's ok, it was just an infection that ended disappearing in about two weeks, I was fine just letting it run it's course until it started bleeding, then I broke down and got it checked out). I also didn't plan for my car to start sounding like we were newlywed's again and dragging tin cans behind it. I checked for diet coke cans to be stuck under it before I took it in. $1,100 I finally got that 90k mile tune up as parts of that were the culprit of the noises.
BUT guess what? Neither of these went on the credit cards. Somehow we had enough cash to cover these unexpected expenses. I had budgeted 2% to go toward medical, so that helped us start the dent on the vet bill. The amount for car maintenance I budgeted fell FAR short of the car repairs, but it helped and that extra check covered the rest.
So here is what I started with:
Housing would be 30% - This included our mortgage, storage unit, home insurance, and a small sum for home decor items.
Food is the next 20% - This is divided by groceries, dinners out, and happy hours
Transportation came in at 15% - We fit in gas, a car payment, car insurance, our parking costs, tolls, and maintenance.
Utilities are 10% of the budget - Cell phones, electricity, cable, gas, and water. I also included our condo fees in this category.
Medical came in at 2%
Clothing is 3%
Debt - 10% - Includes credit cards and putting a little extra towards the mortgage to get the condo selling price down
Entertainment - 5%
Savings - 5%
I figured we may not need the 2% in medical or the specified car maintenance every month. The alloted money would be put in an ingDirect sub account specified for it's own purpose. That way when a larger bill showed up, we would have the cash to cover it. I guess that will start next month since we were wiped clean in October.
Going into November we'll start fresh. We have one birthday to shop for and we'll have to start thinking about Christmas gifts for our families. We'll have one quick weekend trip, but we can drive and will keep costs down. I'm looking forward to reporting how well we did in November. I do feel so much more at ease knowing that the unexpected doesn't need to set us back on our debt goals and that we can take care of that without dipping into downpayment money or credit cards.
Have you had any success with budgeting?
Since September I've been so excited thinking about a blog post about the amazing budget I created and how we were going to stick to it and beat not only our credit card debt, but also pay down our condo enough to sell it and save enough to put a downpayment on a house. As all budgets go, we had some emergencies come up, but I felt better prepared this time.
In the past my mindset was always "Pay bills first and then put every single extra dollar toward paying off debt." While this is a very sound way to tackle finances, it didn't work for us. Something would always come up or I would forget about a major expense for the month. My new mindset in creating this last budget was more along the lines of slow and steady wins the race. I tried to think of everything that throws us off course. It was usually car repairs, vet or our own health bills, or impulse purchases. These unexpected expenses would end up on a credit card since all of our extra cash had already been spent, towards paying credit cards off. The cycle was never ending and VERY frustrating. When I built this budget I put a percentage towards car repairs, medical, and clothes. I put a more modest amount towards credit cards and even upped our monthly savings.
I chose October to start our budgeting because Hubs got three paychecks this month. While I get paid bi monthly, he gets paid every other week, so about twice a year, three paychecks in one month. We had a couple planned expenses that we knew were coming that we would put that extra paycheck towards: car taxes and a couple various expenses we had put on the credit cards in September that we wanted to pay off.
So I put together a spreadsheet of expenses and percentages of our total budget. I did this in early September and would check it out and tweak it almost daily. I was honestly giddy on October 1st, ready to track every penny and see how much we would end up saving!!!!
Unfortunately I didn't plan for one of the dogs to get a strange bump on her stomach that would require a biopsy and rack up over $300 in vet bills. (She's ok, it was just an infection that ended disappearing in about two weeks, I was fine just letting it run it's course until it started bleeding, then I broke down and got it checked out). I also didn't plan for my car to start sounding like we were newlywed's again and dragging tin cans behind it. I checked for diet coke cans to be stuck under it before I took it in. $1,100 I finally got that 90k mile tune up as parts of that were the culprit of the noises.
BUT guess what? Neither of these went on the credit cards. Somehow we had enough cash to cover these unexpected expenses. I had budgeted 2% to go toward medical, so that helped us start the dent on the vet bill. The amount for car maintenance I budgeted fell FAR short of the car repairs, but it helped and that extra check covered the rest.
So here is what I started with:
Housing would be 30% - This included our mortgage, storage unit, home insurance, and a small sum for home decor items.
Food is the next 20% - This is divided by groceries, dinners out, and happy hours
Transportation came in at 15% - We fit in gas, a car payment, car insurance, our parking costs, tolls, and maintenance.
Utilities are 10% of the budget - Cell phones, electricity, cable, gas, and water. I also included our condo fees in this category.
Medical came in at 2%
Clothing is 3%
Debt - 10% - Includes credit cards and putting a little extra towards the mortgage to get the condo selling price down
Entertainment - 5%
Savings - 5%
I figured we may not need the 2% in medical or the specified car maintenance every month. The alloted money would be put in an ingDirect sub account specified for it's own purpose. That way when a larger bill showed up, we would have the cash to cover it. I guess that will start next month since we were wiped clean in October.
Going into November we'll start fresh. We have one birthday to shop for and we'll have to start thinking about Christmas gifts for our families. We'll have one quick weekend trip, but we can drive and will keep costs down. I'm looking forward to reporting how well we did in November. I do feel so much more at ease knowing that the unexpected doesn't need to set us back on our debt goals and that we can take care of that without dipping into downpayment money or credit cards.
Have you had any success with budgeting?
Friday, December 4, 2009
Total Money Makeover
I heard about Total Money Makeover by Dave Ramsey from Not Quite Betty Crocker. She mentioned reading it and then paid off all of her debt in 12 weeks. Alright, that got my attention.
So I checked the book out from the library (bonus points for not increasing debt by paying for the book, right?) and sat down to read a few chapters last night. I ended up reading almost the entire thing, I stopped when I got to the part about being so wealthy you don't have to worry anymore, lets tackle that topic when we get there.
So Dave breaks down his plan into baby steps to conquer your debt and to become entirely debt free. He has a lot of comparisons in his book to dieting and losing weight. All the weight won't come off right away, you won't be able to run a marathon without training, you have to start somewhere. I did some mental math as I was trying to fall asleep and figured it would be about 6 years and our condo would be paid off. That would be a huge accomplishment. No mortgage, no car or credit card payments, just wealth accumulation. The only caveat would be that we are still in a one bedroom condo. I can't be there in 6 years, I just can't.
Dave's first baby step is to immediately get a $1,000 emergency fund. The next step is to start your Debt Snowball, which tackles ALL of your debt but your house. He calls for you to empty your bank account if you already have more than $1,000 to but anything above and beyond towards starting the snowball. This would mean that our Downpayment fund would be gone. GONE. We would have a great start on the debt, (over a third there!) but would set us back from moving.
I love his approach and think it makes a logistical argument on how to get started, but maybe not for us right now. If getting out of debt is like starting a diet, starting this right now would be like starting a crash diet the night before Thanksgiving. I think Dave would say "Stick it out in the condo to become debt free before upgrading the house", he advocates suffering now to live it up later. I can't Dave, I just can't. So I think we're going to go all out to save for this house, while not accruing any MORE debt, and start this whole deal once we have some room to breathe. In the process we'll have a couple loans that will expire and will free up money anyways!
Are we just setting ourselves up for disaster?
So I checked the book out from the library (bonus points for not increasing debt by paying for the book, right?) and sat down to read a few chapters last night. I ended up reading almost the entire thing, I stopped when I got to the part about being so wealthy you don't have to worry anymore, lets tackle that topic when we get there.
So Dave breaks down his plan into baby steps to conquer your debt and to become entirely debt free. He has a lot of comparisons in his book to dieting and losing weight. All the weight won't come off right away, you won't be able to run a marathon without training, you have to start somewhere. I did some mental math as I was trying to fall asleep and figured it would be about 6 years and our condo would be paid off. That would be a huge accomplishment. No mortgage, no car or credit card payments, just wealth accumulation. The only caveat would be that we are still in a one bedroom condo. I can't be there in 6 years, I just can't.
Dave's first baby step is to immediately get a $1,000 emergency fund. The next step is to start your Debt Snowball, which tackles ALL of your debt but your house. He calls for you to empty your bank account if you already have more than $1,000 to but anything above and beyond towards starting the snowball. This would mean that our Downpayment fund would be gone. GONE. We would have a great start on the debt, (over a third there!) but would set us back from moving.
I love his approach and think it makes a logistical argument on how to get started, but maybe not for us right now. If getting out of debt is like starting a diet, starting this right now would be like starting a crash diet the night before Thanksgiving. I think Dave would say "Stick it out in the condo to become debt free before upgrading the house", he advocates suffering now to live it up later. I can't Dave, I just can't. So I think we're going to go all out to save for this house, while not accruing any MORE debt, and start this whole deal once we have some room to breathe. In the process we'll have a couple loans that will expire and will free up money anyways!
Are we just setting ourselves up for disaster?
Tuesday, October 27, 2009
a penny saved....
In our quest to save money for a downpayment we have found tons of ways to save money anywhere we can. Saving is especially difficult for us as we already own our condo and are saving to upgrade to a townhouse. If we sold our condo right now, we would take a huge loss. We are basically starting from scratch but don't have the advantage of having a low rent apartment.
So our favorite way to save a few dollars is by couponing. Seriously, it's become addicting. We can't go to the grocery store and buy anything that isn't on sale or that we don't have a coupon for. It's a challenge to see how much we can get for as little money as possible. Tony called me earlier today with the exclamation "I just saved over $20 bucks at the grocery store!!!" He was so proud when the total went from $85 down to $62. We clip coupons from the Sunday paper each week. The best part is, we don't even have a paper subscription. My mom saves the coupon section for us after she takes what she needs each week.
Before we were serious about buying a bigger house, you could find us eating out 3-4 nights a week and for EVERY meal on the weekend. We would hit happy hour a couple times a week and not think twice about it. Now that grocery shopping has become a challenge to get as much for a little as possible, we are eating in 6 nights a week, cut out happy hours, and scrounge for food around the house on the weekends.
I also starting tracking our monthly spending on Mint.com. After seeing where money goes each month, it's become a challenge to shave off a few dollars from each category. I'll think twice about driving through for lunch or buying that shirt just because it's on sale. I think when saving is more of a challenge and less of a chore it's a heck of a lot easier.
How do you trim your spending and save a few dollars here and there?
So our favorite way to save a few dollars is by couponing. Seriously, it's become addicting. We can't go to the grocery store and buy anything that isn't on sale or that we don't have a coupon for. It's a challenge to see how much we can get for as little money as possible. Tony called me earlier today with the exclamation "I just saved over $20 bucks at the grocery store!!!" He was so proud when the total went from $85 down to $62. We clip coupons from the Sunday paper each week. The best part is, we don't even have a paper subscription. My mom saves the coupon section for us after she takes what she needs each week.
Before we were serious about buying a bigger house, you could find us eating out 3-4 nights a week and for EVERY meal on the weekend. We would hit happy hour a couple times a week and not think twice about it. Now that grocery shopping has become a challenge to get as much for a little as possible, we are eating in 6 nights a week, cut out happy hours, and scrounge for food around the house on the weekends.
I also starting tracking our monthly spending on Mint.com. After seeing where money goes each month, it's become a challenge to shave off a few dollars from each category. I'll think twice about driving through for lunch or buying that shirt just because it's on sale. I think when saving is more of a challenge and less of a chore it's a heck of a lot easier.
How do you trim your spending and save a few dollars here and there?
Subscribe to:
Posts (Atom)