Budgeting · Finance · Money · Personal Finance · Saving

A Lot Can Change in a Year

It has been a ridiculous amount of time since our last post on this blog. Going on a year and a half. This amount of time has shown me how extremely fast time can fly by, and it has made me realize more than ever how important it is to begin living a life of intention immediately and stop letting time pass me by. That’s not to say though that we haven’t accomplished a lot during this time. We have paid off all of our debt and saved enough for a down payment on a duplex. We are going the duplex route so that we can rent out half of our home, and hopefully make enough from the rental income to cover our PITI (principle, interest, taxes, and insurance). Being able to do this has required us to cut back, but the changes haven’t been nearly as limiting as I had once thought they would be. Some of the key changes we made that have helped us in our journey are:

  • Subletting our apartment and moving in with family
  • Reducing our monthly “allowances”
  • Going through our finances with a fine tooth comb and reducing costs
  • Reducing our food allowance, and separating this from our main checking account
  • Searching for lower cost activities

I will get into each of these more deeply in my next post, but for now I just want to chronicle what I believe to be the key changes that we have made that have helped us. And we are constantly trying to come up with new ways to decrease our joyless spending. Notice how decreasing our spending in all areas is not necessarily a goal of ours, but rather more specifically in areas that don’t make us happy. Having our own apartment was great, but living with family has been fun and beneficial for not only us, but our family as well. Having less money to spend has made me more intentional with the money I do have and made me realize how much I buy that I don’t use, wear or particularly want. And the list goes on, which I will certainly share more in future posts.

Is anyone else on a journey right now to try to live more intentionally, or to save more money? What are some things that are working for you?

Budgeting · Debt · Finance · Money · Uncategorized

The Evolution of Our Budget

Stage 1 – Writing in a Notebook

This was the “pullout” method of budgeting. Better than nothing, but only slightly. This was a list of expenses and paydays I would write out, in a notebook, by date. We both get paid on the 3rd of the month, then rent is due on the 5th, we buy groceries on the 7th, then we get paid again on the 17th, etc. It was just an on-going “here’s the money we have in our account now, and the bills we have coming up”. Literally this “budget” spanned page after page of notebook paper. As if that wasn’t disorganized enough, I was very selective about what I put on the budget. It was strictly bills I knew were coming up, and estimates of most recurring expenses. I budgeted $50 every week for food. Do you want to take a guess, percentage-wise, how often we stuck to that $50 a week? I would venture a guess in the low teens. But did I ever edit the amount to accurately reflect how much we actually spent per week? Never. Gasoline wasn’t included in the budget at all, nor was any type of entertainment. Because I wanted to think we didn’t spend any money on stuff like Starbucks, date night, and clothing, and when we did, it wouldn’t adversely affect our budget. I know, wtf, right? Credit card payments were not included in the budget. I just made payments when I felt we had enough money in our bank account, which usually resulted in an overdraft because I had not properly budgeted for something else that week. We were a couple of hot messes.

Stage 2 – Screw This, No Budget

I am sure you are shocked to read that this was our next stage. After creating the above absolutely brilliant budgeting plan and realizing it was failing us, how could we not lose faith in all types of budgets?? I hope my sarcasm isn’t blinding you. This was a phase we went through after deciding that, despite budgeting being one of the top financial recommendations for everyone, budgeting was not going to help us achieve our financial goals. We thought we were better than the budget. The one described above didn’t help us at all, so why were we wasting our time? I just checked our accounts on a daily basis and made sure we had money in them. Did we always have money in them? Nope. This was right about the time that our slow progression of credit card debt hit its peak of 10k for the second time.

Stage 3 – The Calendar

After a few months of no budget, my husband came up with an idea that I can now only describe as ingenius. But don’t ever tell him I said that. He suggested we put all of our monthly expenses on a physical monthly calendar. I was against the idea at first. I had all the excuses in the world for why it wouldn’t work. My stubbornness that we didn’t need a budget and blind dislike for trying an idea that I myself did not come up with being the main ones.  But one month I tried it. I used Mint (which I will sing praises of later) to determine how much we were spending each month on what and when. I printed out a monthly calendar and wrote down each of our bills and the amount due on the day they are usually deducted from our checking account. I also included weekly expenses and the days we usually made them (i.e. grocery shopping on Sunday, getting gasoline on Thursday, etc). I took a hard look at the amount we actually spent on things such as food, entertainment, and miscellaneous expenses, which allowed me to more accurately budget for them. Did it hurt to look at our budget and see $125 a week going to food? Yes. But I had some peace of mind knowing it was budgeted for, and that we could still afford all of our other monthly expenses. It finally felt like we were on the right track, but we still had a ways to go.

Stage 4 – The Well-Oiled Machine

Our monthly budget now is one of my proudest accomplishments. Every time I look at our budget, I feel a sense of calm. My husband will tell you, probably a little exasperatedly, that I look over our budget and our accounts Every. Single. Day. Most everything is accounted for. No longer do I shy away from putting things on my budget that I don’t feel will affect our finances. Every expenditure affects our finances. Acknowledging that has changed the way I look at budgeting. It’s not meant to limit us. It’s meant to help us. It made it possible for us to go from about 30k in debt at the beginning of 2017 to 4k at the end. It has also helped us identify weak areas. Monthly bills that we could potentially be paying less for. We are now utilizing other accounts for variable expenses such as food and entertainment, and we have an account for bills only. It is (mostly) an organized and reliable system. Is it a perfect system? No. But with every passing month I am more and more confident that we are finally hitting our stride. And that there is hope that our ugly budget will lead to a beautiful life.

My next post will show our current budget and its breakdown.  In the meantime, I would love to hear about your budgets! What has worked for you and what hasn’t?

Budgeting · Debt · Finance · Money

Getting (Almost) Out of Debt in a Year

At the beginning of 2017, my goal was to get both my husband and I completely out of debt by the end of the year. We started the year with approximately 27,500 in student loan debt, and approximately 2,000 in credit card debt, for a daunting grand total of $29,500 of debt. We have both been out of college for close to 6 years now, and have slowly whittled away at our student loan debt over the years. We’ve paid the minimum payments monthly for the most part, with the occasional larger lump sum payment we were able to sock away from bonuses, wedding/holiday gifts, etc.

I have said year after year, this is going to be the year we do it. The year we finally crack down and wipe out most of our debt. And year after year life has gotten in the way: vacations, moving, losing jobs, making large, not-well-thought-out purchases, etc. The list goes on and on. The excuses go on and on. I had an a-ha moment though at the beginning of this year. We are very close to our 30th birthdays. And what do we have to show for our 20s financially?

We both have bachelor degrees from an excellent school, and, while very costly, I wouldn’t trade them for the world. We both have jobs we enjoy. And we have some nice photos from the wonderful vacations we have taken. Also, we got married. But that’s pretty much where the positive list ends. We have been renting apartments now for close to 11 years each, with the idea of buying a home barely on our radar at the beginning of this year. We had very little retirement money saved up. We had an emergency fund of exactly $503. Which would not have gotten us very far in the case of an actual emergency. And we had $29,500 in debt. Most importantly, we were unhappy with our financial state. We felt like we were pinching every penny, and still had not come very far on the road to financial freedom. We could just barely see the beginning of the road through a telescope.

Over the past 5 years of trying to adult, I can honestly say that we had more failures than successes. We repeatedly overdrew our checking account. We relied on credit cards without a second thought for everything from paying for vacations to splurging on that $400 jacket that is still hanging in my closet with the tag on. We got ourselves into and out of $10,000 of credit card debt. TWICE. I try to live with no regrets but knowing that 20k could have helped us pay off our student loan debt years earlier ties my stomach in knots.

But throughout the years, despite all of our failures (and probably mostly because of them), we learned. Boy did we learn. We learned we need to make a budget. Even more importantly we learned we need to stick to said budget. We learned that we have a need to spend money on ourselves every now and again. And we learned to put that in the budget. We learned that waiting to buy something until we actually had the money was way more gratifying than putting it on a credit card. Well, we’re still perfecting this one. We learned the importance of automating our savings and investing. We learned how to treat each other as teammates rather than adversaries, and how to talk to each other about money in a way that is non-confrontational (although my husband can attest that I am still known to overreact to that unexpected $0.99 iTunes charge). Put it on the budget if you want me to remain calm!

We didn’t get 100% of the way to achieving the goal I had set out at the beginning of the year. But we came pretty damn close. Our student loan debt has gone from 27,500 to 3,000. And our credit card debt is down to 1,000. I anticipate being able to pay this off by early February of 2018. Our net worth increased by $50k this year. Suddenly buying a home in the next few years seems feasible. Was it a challenging year? Yes. Did we do everything in our power to achieve our goal? Probably not. Was this year still life-changing for our financial future? Absolutely.

In my next post, I will begin to delve into our successes and failures with budgeting. I hope that our failures can help you from making the same mistakes. And most importantly I want to open the conversation about money. It’s such a taboo topic, to the point that I do not tell my own family about raises or debt, and I have never shared with them my income. The more we talk about it, the more we can learn from each other. I hope you enjoyed reading, and I would love to hear your stories!