Getting Financially Fit

A couple weeks ago, I talked about how shocked I was about my restaurant spending.  The grand total for the month of April ended up being $239.22.  Still ridiculously high but a $46.61 improvement from March.

I spent the remaining week of April trying to automate my finances as much as possible.  I switched my mortgage payments from a monthly payment to a weekly payment.  I've also increased the amount of principle I pay, so at the end of the year  it's like having three extra payments but going directly to principle (so the value is actually greater than three months of principle, since at the beginning of the loan term a larger percentage is applied to interest).  I have to pay the bank $2 per processing transaction, but I learned last year I can't do it on my own because their lockbox system doesn't recognize the non-standard payment amount.  However, having it set up outside my control gives me less incentive to go through Bank of America's annoying phone system to get to a representative to change it every week to suit me.  The object here is to be accountable.

I also set up my student loans to be withdrawn automatically every month.  I'm on an extended graduated payment plan so I can have smaller payments now, but end up paying nearly as much in interest as the original value of my loans.  I did this so I can still set aside some savings every month, which will hopefully enable me to pay off large chunks of my student loans every year.  If I'm good, I can have my student loans paid off in five years and end up paying only half of the interest as I would have on the standard payment plan.

Once my student loans are paid off, I can transfer that money to my mortgage payments.  My mortgage, again if I'm good and diligent, can be paid off in 10 years.

That's right.  I can be debt free in 10 years.  On just my modest salary.  In a three person household.  I think that's kind of badass.

I took a page from Dave Ramsey and instead of depositing the rent money I received, I broke it up into two groups:

Piles of money! My monthly allowance for food and gas.

I paperclipped the food cash ($120) and the gas cash ($160) together a put a post-it note on top so I could document where the money goes.  The food pile can go towards groceries or eating out, but once it's gone, that's it.  Same thing with the gas money.  If I have no gas and not enough money to fill my tank, I have to take the bus (which at most would be $40 to commute every day to and from work for the month).  However, anything left over is for me to spend on whatever I want (for now that will be saving up to take a 6 week yoga class when my bellydancing class ends).

There's just one little problem:  Jeff's temp gig that he's been working for nearly six months is just about over.  We're both confident they'll find a permanent position for him there, but we don't know for sure yet.  If the worst happens, I'll have to take on more expenses (like Dan's preschool and daycare) until the issue is resolved.  I'm not worried though.  Reducing my inflated mortgage payment will more than pay for the extras and I can pick it up again at a later time with very little upset to the overall plan.

It's not without sacrifice though.  I can't buy things for the house when I need them (or more precisely, WANT them), I can't contribute as much to potlucks as I would probably like, and I can't fit in as many social activities as I might be inclined to do otherwise (although I can certainly invite friends and family over instead of dinners or coffees out).  Actually, I kind of anticipate this journey being relatively peaceful once I'm fully acclimated to it.

How's your financial health?

A New Challenge

A few weeks ago, I was broke.  Again.  For like the umpteenth time.  I've been fortunate in that I always have enough to pay all my bills, but future projections always looked grim.  So I took a closer look at my spending habits.

What I found, shocked me, although it really should not have.

Suffice it to say, I've been enjoying my income the last few months or so.  It has never really been mine to enjoy, through previous arrangements I've always had to share it with someone else.  I love that I was able to save up and pick out and purchase a new couch (my first piece of furniture that I've ever owned that wasn't second hand or purchased by someone else) and I was frugal and got a fantastic deal on it (I even got a free display case thrown in that now beautifully contains all of our digital media, including gaming systems).  But with the newfound freedom comes the need to be more responsible.  I don't have anyone else to be accountable to.  And I've definitely taken advantage of that.  

I don't have expensive tastes, but I do like to go out to eat (A LOT!) and I love to spoil my friends when I can.  I love to pick up little somethings, or treat friends to dinner, or help them out financially when I have the means to (sometimes when I don't).  That's not to say I'm Miss Moneybags now, but when I was struggling I had a lot of friends who weren't "made" but more comfortable than I was treat me to dinners, help me with projects, and lent me a $5 here or a $20 if I needed help with gas just because they loved me and wanted to spend time with me.

So back to how I'm broke.  I looked at my budget, and by far the biggest offender in dollars spent was eating out.  So I looked through and totaled up just how much I was spending on restaurants (this doesn't include groceries!).  I'm usually super-secretive about my money, but I think I need some more transparency, so here it goes:

It's condensed so you can see the bill for each month on the far-right of the image.  Here's the text breakdown:

• January: $386.15
• February: $341.20
• March: $285.83
• April: $210.87

Note that this doesn't include cash purchases.  Other than the withdrawal, I don't track where my cash goes exactly.  I actually was doing REALLY WELL this month.  Before this past weekend I had only spent about $85 for the month on the 15th.  I completely BINGED financially over the weekend.  I went out for sushi Friday night, Table Moutain buffet Saturday night, and rounded out the weekend with dinner before we saw Wicked.  That's over $100 I spent in just ONE WEEKEND eating at restaurants!  How freaking insane is that?

In two weeks, Jeff might be out of a job again (his temp assignment is ending, but we're still keeping our fingers crossed that they find more work for him at his current assignment).  Which means I'll need to carry the household alone for a little while.  I am EXTREMELY fortunate that I have the capacity to do that and still put a little bit of money in savings, including retirement.  But things are still going to be tight, and eating at restaurants has to go.  Frivolous spending will need to go.  Projects will no longer have the luxury of being completely spontaneous.  I might even revisit taking the bus through the summer and cutting back on social plans and visits during the week to save gas during peak consumption season so we can still afford gas to go on hiking trips at least once per month. (Yes, I know there are plenty of places to go closer to home, and trust me, they will be explored!)

So what's my challenge?  

• To be more honest with myself about my money and introduce a little transparency. Detail every financial transaction and keep every receipt for a month, every month.

Being accountable for years did me a lot of good.  It got me out of debt in record time and allowed me to save for a house and major appliances for said house.  And if I did it before on less, I can definitely do it now.

• Limit eating out to two or three times per month.

I prefer eating at home anyway.  I have better control over what is put in my food.  I don't have to wait as long to arrive at my kitchen table, the whole family can participate in meal preparation rather than being bored at the table, I don't have to wait every 20 minutes for my drink to be refilled, and the couch is just a few feet away after the meal saving me lots of dollars on unnecessary gas consumption. I just don't like the cleanup (I seriously feel like a slave to my kitchen!), and I bet if I asked the household (and even guests, because my friends are the most super duper awesome people!) to help me clean up after a meal I get:

1. The best company the world has to offer;
2. The job goes by at least half as fast!

So no more excuses!  And because I've been trying to incorporate a modest "minimalist" and clutter-free lifestyle (still a work in progress), my purchases for things I don't use is pretty much non-existent or at least has been diverted to going out to eat.  

You know, wait.  I'm going to stop and have a moment of pride over the fact that in the last 8 months I made a dramatic change to my spending habits.  Okay, sure it's really just a shift, but for someone who loves to acquire stuff, I still think the moment is worth celebrating.  This path is certainly NOT easy.

I'm really lucky that I really only need to make a couple minor lifestyle changes in order to maintain a level of comfortability that I still find enjoyable and fulfilling.  I know a lot of people aren't as blessed and there may be a time when I need help again.  Life's a cycle.  I just hope that I continue to make the best decisions possible for myself and the life I *want* to have.