Friday, May 13, 2011

Rare Personal Finance Post

Now that I'm solidly a grown-up - this having a kid of my own thing sort of leaves little choice - it seemed like it was time to start concerning myself with more grown-uppy things. Like finances. How fun are those! TONS as it turns out.

Historically, I haven't been, how shall we say it, real good with money.  Well, I've been great at spending it. Terrible at saving it. And pretty much an absentee landlord when it comes to managing it. (Because there wasn't much to manage - see previous point about being spendy.)  A few years ago, Rob and I retained a financial planner. She was really nice.  She cost $800/year.  And we completely did not gain anything from the experience. (Not because of the planner - she was great.)  I look at money management like I look at weight-loss - either you're ready to change or you're not ready to change. Hiring a professional planner or a personal trainer isn't going to do any good unless you're ready to change.

Well, on the money front, I'm ready to change. And it all started with the great pantry cleanse of 2011.
Seriously. I cleaned out our huge walk-in pantry ('Burbs livin' bonus, y'all!) and it seriously cleaned out my head, too. Tossing some crazy old canned goods, lining up the good ones, seeing what ingredients we have on hand - it all made me want to cook more at home. And that saves money. And then I wanted to organize everything. And then I wanted a new car. I don't know either, but we got from pantry to car.  And I thought, I wonder if I could afford a car payment. So I actually sat down and no-joke figured out what the hell we spend our money on each month.  I could totally afford a car payment! And yet, more importantly, I am totally not going to add a car payment because there's other stuff that's more important. I'm going to become a saver. I'm going to become an intentional spender.  And I'm going to do it now.

Actually, I did it two pay periods ago and it's going okay so far! No great, but okay.

To keep myself honest, I thought I'd share our initial goals and strategies with  you, my faithful 4 readers:

  1. Review insurance rates and coverage and adjust as necessary.
  2. Purchase life insurance
  3. Purchase disability insurance
  4. Create living trust, scary legal what-if stuff.
  5. Pay down credit card debt
  6. Build 6-month emergency fund
  7. Max out annual contribution amounts to a Roth IRA
  8. Start college fund for baby girl
  9. Start "tithing" charitable fund
  10. Pay down law school debt faster
You may note that most of that list involves SPENDING money.  So from where will that money come?

  • I consolidated my existing credit card debt onto one credit card. After I started a account (jury still out on how useful that site is for me), I checked out their offers page and found a Discover card offer for 0% APR for 24 months balance transfers.  Score!  My credit score is great and could afford the minor ding of opening a new account. All that debt will now be paid off in smaller amounts without any interest payments at all. That frees up money for building the 6-month emergency fund first and foremost.  I've read advice on line to build anywhere from a 3 to 12 month cushion. So I'm going with 6 to start and we'll move on from there.
  • Controlling discretionary spending is, of course, the biggest challenge we face because of the spendy folks we are.  For years, literally, we've discussed moving to cash-based living to limit ourselves but haven't done it. Now we are.  We've budgeted $200400/month for groceries and $200400/month for "free" spending (lunches out, toys, clothes, whatever).  And we've pretty much stuck to that for a month now. Good for us.  Setting those limits/goals has also helped encourage a certain competitiveness I had hoped might happen: can we not bust that ceiling? How much can we save? [Ed's note: my parents questioned that $200 figure and it turns out I typoed and then didn't realize it speaking to them. $200/pay period is what's budgeted, or $400/month.  Except maybe it was a freudian typo as when I write "$400" it seems like we could do better. We'll see.]
  • Trimming the bills: They are about down to what they can be down to at this point but will be better once the credit card payments are done, etc.  I routinely work deals with the cable company, etc, to lower our rates.  My next target is Rob's cell phone bill which is a whopping $1200/year (and for that we get no actually phone service at our house. I hate AT&T).
  • Insurance shopping and updating: I just finished this project. While, in a strictly technical sense, we now spend slightly more per month on our home and auto coverage, we're finally insured at much more appropriate amounts and have added an umbrella policy for extra protection.  I shopped around and fortunately have access to USAA via my dad. They were by far the best when it came to auto insurance and the difference made their on-par home insurance worthwhile too since bundling created some extra discounts and gave us access to the umbrella coverage. I also finally (I know, I know) bothered to budget for insurance which previously was just a regular, nasty half-yearly, non-surprise when those semi-annual car premium bills would arrive.
That list up there is roughly prioritized and making it gives me a bit of an "I can't do this" pause.  Because I'm impatient.  And I want a new car. But clearly, that won't happen until at least the emergency fund is fully built.  And after I save up most of the cash needed because I don't want a car payment.

I've spent much too much time in the evenings while nursing T to sleep reading various personal finance websites. They get pretty samey after a while, too.  Frugal is the watchword, kids. Frugal.

See what pantry cleaning does?


  1. Good for you!!! Taking charge of any part of my life is always such a high (and a usually a sign of good things to come because I'm less stressed and more wide to receive). Now you've got me thinking about what I need to do. Thanks.

  2. And BTW, I have been hamstrung by the challenge of saving that six-month cushion without a spendy reward at the end of the savings period. I always end up blowing it (ex: my backyard remodel) and having to start again at like the two-month mark. Good for you for setting an example.