money

Financial Goals for 2017

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Like any game plan, financial goals will have to adjusted in response to bumps along the way. It is better to start with a plan that just needs changes, than to be struck with a crisis and have no clue at all where to start!

With 2017 just days away, how are you getting yourself or your family off with the right financial game plan? These are a few of our financial goals for the next year. I hope they help inspire you to make small changes with big impact!

1. Update our budget.

I am a zero-based budget girl, which means that when incomes change and expenses change, so does our budget. A couple of years ago I updated our budget every month – but it became impossible to keep up with! Now, I’m making a general plan for the year, and I can update it when significant things happen. If we make a little extra or lose income, we adjust our expenses to get back to zero! (Okay, in our case I think we have ten dollars at the end, but that’s “wiggle room.”)

Bonus! You can look at my own zero-based budget template by following this link: https://docs.google.com/spreadsheets/d/1E4MWBflO6FqEigl6c0QbH7i7VNEJA8ejtZLWELlj0XA/edit?usp=sharing

Once you view the budget, copy and paste it to edit and make it your own!

2. Save at least $15,000.00 for a down payment on a house.

We really, really, really want a house. We like to set ambitious goals, so we have to work at them, you know? But first, we had to build up our emergency savings.  This year, we established our emergency savings, and are on our way – thanks to an automatic savings plan and our increased budget – to making this home-ownership goal a reality. It will be a sacrifice, but we can do it!

If a house seems like a far-off dream to you, start with the basics from my post “3 Steps to Being Good With Money.”

3. Make regular contributions to our HSA.

We have had an HSA for the past couple of years, and I basically use it as a tax-deduction “funnel” for health care expenses. We don’t go to the doctor regularly enough to keep money sitting in there. I would rather keep our savings in a place I can use for any needs that arise – health care, fixing our existing cars, new car, etc. What I do is when I have a health care expense, I deposit enough money in the HSA to cover that expense, use it to pay the bill or reimburse myself for paying the bill, and voila it is paid and I get the tax deduction. This year, I carved out the tiniest piece I could in our budget and will make twenty-five dollar monthly deposits into our HSA. I know it’s comically small, but I figured that over time, we will eventually have an emergency health care expense, and I will feel really good knowing he have at least a couple of hundred dollars stashed away to help pay the bill. Also, I learned that money in an HSA doesn’t go away – even if you change health insurance plans! You can still use it, you just can’t make additional deposits to the HSA.

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I married younger, but look at how cute he is? Age is just a number, after all….

4. Establish an IRA for my husband, and make regular contributions.

I began my IRA through my employer when I started my job last year. I was, coincidentally, twenty-five years old. Since then, I have made regular contributions, and my employer has matched them. My balance is only a couple of thousand dollars at the moment, but it will make a big difference down the road. My husband turned twenty-five this year, and has no such plan through his job. He also anticipates being self-employed some day, so retirement is his responsibility alone. Accordingly, in January of 2017, we will establish his IRA and make regular contributions – roughly what I am contributing. To start us off on a positive foot, we will cash in a small federal savings bond I happen to have and use the proceeds as a foundation. By the end of his first year, he and I will be on roughly the same track and on our way to a financially stable future.

5. Stick to our budget.

What good is a budget if you don’t stick to it? After some tough conversations, we believe we have pin-pointed our problem with sticking strictly with the budget: extras! Extra needs or extra incomes don’t fit in the budget and we never know what to do with them. For example, what if we have used up our eating out budget for the month, and a friend we really want to spend time with asks to go out to eat? Or what if one of us gets a bonus, and one of us wants to use it to catch up on the budget we’re breaking, while the other one wants to use it to buy things which are really needed? See what I mean? Extras. To solve – at least hopefully – this issue, we have included a “slush fund” in our budget. This small, cash-only cushion will be used for the extras that inevitably arise. We have also agreed to treat bonuses like bonuses, which will happen when we truly stick to our budget. *fingers crossed*

6. Pay off two more student loans.

This year, I paid off one student loan and I’m half-way through another! I’ve thrown bonuses, tax refunds, and cash found on the street at these loans and can’t wait to slaughter them. I anticipate that our tax refund will pay off the one I am attacking now, so that leaves eight months to hit another one. By the end of the year, if we accomplish this goal, we will reduce our monthly payments by almost fifty dollars and save hundreds in interest! Motivation!!

What are your financial goals for 2017? What is in your family playbook for the next six months or year?

-D. E. Barbi Bee

3 Steps to Being Good With Money

My husband and I have a saying we use when deciding whether to buy the cheap version of something (that will probably be less functional, soon break, and have to be replaced) or buy the more expensive, higher-quality version. We say that we’re too poor to not have the best – meaning we can’t be wasting our time and money on ultimately worthless goods. And the same applies to your finances: we’re too poor to not be good with money.

I used to get so frustrated with “money saving tips,” thinking, “How can I get on a budget when I don’t even have enough to pay my bills?” Guess what: you don’t need a lot of money to sharpen your smart money skills. And if you can be smart when you are making minimum wage, think about how much more your dollars will go when you land that big career! So let’s get going!

Step 1: Open a Money Market Account

You want to save, but you’re paying bills out of the same account where you keep you “someday I’ll get to do ______” money. Two problems: you can never really tell which is which, and have a habit of dipping into your “savings” to pay everyday expenses.

Here’s what you do: open a money market account (I have and love the simple, no-fee, no-minimum money markets with Sallie Mae bank*). Put some money in there – anything. Now, you have a dedicated account for saving up for the emergencies or the somedays (ours is for emergency savings and a down payment on a house).

Bonus: establish an automatic savings plan: every month (or week, or whatever), automatically transfer funds to your money market account. You will watch that money GROW! Plus, you’ll earn a competitive interest rate (that Sallie Mae account is a cool 1.05%, which is shocking for money market accounts these days).

 

2. Make a budget and use an awesome budget app.

Mint and Goodbudget are two great free apps (I use both: Goodbudget to track our spending in different categories (groceries, eating out, etc.) to make sure we are staying on track with our budget; Mint to get the big picture of all my accounts, debts, and assets).

A simple spreadsheet is all you need to make a budget. Start with how much money you expect to take in each month, then take out your expenses: tithe, rent, food, insurance, savings, etc. At then bottom of the spreadsheet, you should have nothing left! Adjust the budget every couple of months as you get the hang of it, and make adjustments for seasonal changes and extra expenses.

3. Pay down your cussing debt.

I currently am on the cusp of breaking down below $60,000.00 in debt – that’s right, I am this just a few thousand dollars close to getting into the $50,000.00’s! I’m so excited for many reasons, but mostly because the sooner we pay off these student loans, the sooner we can move on with our lives. Our monthly student loan payments are almost exactly the same as our rent – which means we’re basically paying two rents every month! This just won’t do…

What’s my strategy? First, I took the fastest plan to paying off my loans. I realize this is not an option for everyone, but for us, it was a worthy sacrifice. I signed up to pay off my loans in 10 years – which gave us huge, steady payments that are a struggle to pay now, but over the years we will save tons on interest and will eventually be able to make those payments (and maybe even extra) more easily as our income gradually increases.

Next, I’m paying down extra to reduce my monthly payments. I found my smallest loan, which also happened to have the highest interest rate, and one of the higher monthly payments ($50.00/month). When we get extra money – tax refund, bonus at work, refund from my Bar review course – it goes towards that loan. We are tackling that loan head-on, and we’ve paid it off in just a couple months!

Now that this loan is out of the way, we’ve reduced our loan payments by $50.00 per month, and we’ve saved hundreds in interest! What will we do with our new-found $50.00 per month? One idea is to put it towards our next-smallest loan, to pay that off faster. The other idea is to start an IRA and put that money in the IRA every month. Another idea is to just save it, and get into a house even sooner! The point is, paying off debts means money in your pocket – scraping and fighting in the short-term to get to freedom later! It’s 150% worth-it. I promise.

Go forth and be smart with your money now! You’re too poor to put it off.

*Not a paid endorser, just a huge fan of this account!

How Much Money Do You Need?

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We live in a very materialistic world. As I’ve been watching House Hunters and similar shows, I find myself amazed at what kind of money people spend on their homes, and what qualities in a home are absolutely ESSENTIAL!! They just can’t live with carpet, and can you even cook on counter tops that are not granite? Every child needs their own bedroom, plus a guestroom. And if there is only one sink in the master bath, their marriage is doomed.

These may seem like perfectly reasonable requests, and are very nice things to have. But take it from someone who grew up with carpet in the living room, vinyl counter tops, and five bedrooms for ten people: they are not essential to survive, or even have an amazing, abundant life. My parents, too, have somehow made it through 30 years of marriage with one little sink. It’s a miracle, I tell ya!

But home-buying and sorting children into bedrooms seems like a distant folktale to my husband and I. We have our little apartment, not too big, and just small enough to make us excited to have more space. When we think about what we look forward to, it’s things like a washer and dryer, a full-sized couch, and a dish washer. These are the things we know we don’t need, but really look forward to having one day, to save time (something you can’t buy), and make ourselves a little more comfortable.

It’s all a matter of perspective, they say. And I say “they” are right. For example, we often get into a discussion of money in my classes, and there is a clear disconnect between the financial world of our professors and that of the debt-laden law students. In Family Law, for example, my professor will told an anecdote about a client who made “basically nothing, you know, like $50,000.” Everyone in the class looked confused, all thinking simultaneously, “Wait, is that nothing? That is a lot more than I have. That’s a lot more than I’ve ever had. That seems like a lot. But she said it wasn’t. Should I nod in agreement?”

When you live on loans, and might make minimum wage for the 15 or 20 hours a week you work, $50,000 sounds like it could go really, really far. But from my professor’s view, you might as well have nothing. And I understand that $50,000 doesn’t go as far as it used to, but it would buy the nice groceries, an occasional outfit, and maybe even a full-sized couch.

So how much money do you really need? In this world, and in this country, there are a lot of versions of “need.” You “need” a roof over your head and food in your stomach, but you also “need” the latest fall shoes and coats. Are these both really needs? When you have very little, you think about needs a lot. You think about whether you need another vegetable in your cart, or if you need yogurt instead. You think about whether you can get those shoes through another winter, and whether you need to replace the jeans you just ripped. You also think about the things money can’t buy, but that you also need: love, fellowship, truth, and safety. In many ways, you value these things even more than the things you bought, because you can’t buy more of them if you get a raise or a new job.

I read this list recently reciting the things you should be able to buy with what you make in your 20s. Among the list are some things I certainly can’t buy, like travelling the world, and some things I wouldn’t buy, like $12 wine. But this inspired me to make my own list. This list is for myself, to always keep “needs” in persective, even if I do have money someday. And it’s also for my readers, perhaps those that have money: consider it a challenge, especially with the gimme gimme gluttony of the holidays fast-approaching, to consider what you need, what you can give, and to appreciate what you have in the first place. There are so many people in this world just making it, just squeezing by and not even sure how they did it. And there are people who make $50,000 a year, and think that is “barely anything,” perfectly justified from their perspective. They both have their challenges, their stresses: just take a moment and remember that more isn’t always better, and consider that needs aren’t always what they seem.

What do you really need?

Enough for food?

Enough for organic food?

Enough for organic, paleo-friendly, local food?

Enough to feed the neighbor downstairs?

Enough for clothes?

Enough for work-appropriate clothes?

Enough for fashionable clothes?

Enough to buy clothes for your friend?

Enough so that one spouse can stay home?

Enough so that the kids can all go to college?

Enough so that all the kids can go to private school?

Enough to homeschool?

Enough for toothpaste?

Enough for their children’s regular dentist visits?

Enough for their doctor’s fee?

Enough for their insurance payment?

Enough for their prescription copays?

Enough for a home?

Enough for separate beds for all the children?

Enough for hard-wood floors?

Enough for a formal dining room?

Enough for a backpack?

Enough for cupcakes on their child’s birthday?

Enough for an apple laptop?

Enough for a private tutor?

Enough for a game board?

Enough for a trip to the movies?

Enough for a trip to Disney world?

Enough for a trip to Europe?

Enough for gas to drive to the library?

Enough for a book?

Enough for an ipad?

Enough for an XBOX?

Enough for a bus ticket?

Enough for a used car?

Enough to lease a car?

Enough to buy a new car?

Enough to buy two new cars?

How much money do you really, really need?

-debarbibee

Thoughts I Always Have In The Grocery Store

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Okay, I’ve got my list, I’ve got my reusable bags, and my husband. Let’s do this.

First up: produce. Wow, why does every dish I want to make involve tomatoes? Can you overdose on tomatoes? I don’t know. “Seven of these.”

Which is the cheapest potato? I know there is an actual difference between the types of potatoes, but aren’t yellow and gold really the same thing? Just get the cheapest.

Oh my goodness why are the plastic bag thingys never close to the food I get?! Oh there’s one! It’s empty, of course.

I look like I’m possessed right now, just wandering around looking through people trying to find the green peppers. Oh! There they are. No, you take your time with your little hand-held space-age check-out gun thing. It’s cool. I didn’t just start.

These were $1.49 each last week, and this week they are 3/5. Is that better? Can I eat three avocados before they spoil? I don’t know. Let’s move on.

Okay, meat. Let’s see… holy not okay! Why does this chicken cost so much? Where are these chickens living, Beverly Hills? What is happening?! Whatever; girl gotta eat.

Just pick a cereal from the wall of cereal choices. Why on earth do we need a whole wall of cereal? Also, I thought cereal was, like, the cheap college kid staple? In don’t care. Fact: Honey Nut Cheerios are totally worth $5 a box.

Aaaaaannnd, canned goods. Garbanzo beans vs. chickpeas. They look exactly the same in the picture, and cost the same. So why do they have different names? Which one do I get? Ahh! I can’t choose! What if I’m wrong?! Okay, one of each.

Oh, old people having a nice chat in the middle of the aisle. How sweet. How about moving it along. Make a date, gentlemen. They only make these two-carts wide. That’s it: read my panicking facial expression. I only need two things in the Asian Foods section, so let’s boogy.

Why aren’t the Ramen Noodles in the Asian Food section? They are the most Asian thing we eat! What on earth is galangal? I need to get out of here.

Tuna: 10 of $10. That looks good. What a second, this not-as-colorful, smaller sign on the “Valu Foods” brand tuna is 80 cents each. Haha, you thought you would get me. I saw through your trickery. I saw…

Getting there, just a few more things. Ma’am: that child of your’s throwing a tantrum is in my way, and he’s going to get run over. Smile at her so she doesn’t know you think her child is a waste of space. That’s it. Yell at him for being in my way. Nice.

And we’re off! Wow, this country is way too into frozen foods. We have a problem. But these aisles are sooo much wider, so maybe I should buy more frozen foods. Look at all this space! I could dance in here!

Should I get frozen pizza? That would make things easier. You know what, no. It never looks as good in real life as on the box.

What time is it? What the cuss?! Stop & Shop? More like “Stop & get all your time sucked up while you shop.”

Cheese. My best friend. Get the largest block of the sharpest cheddar you see. Who even cares how much it costs: it’s heaven!!

Checkin’ things of my list, gettin’ closer to the end. Nah nah nah nah

Now, what are these random things left? Of course! The last two things on my list are waaaay over on the other side of the store. Perfect. This store should be arranged in the order of my list. That would be super helpful. Thanks.

Man, I’m hungry. Maybe I should get a snack for the way home. Oh! These ice cream bars look good. 3 bars in a pack!? What the what? Massimo is going to be super bummed when he only gets one.

Now, to search for the shortest check-out line. Scanning, scanning. This looks good. I’ll start putting my food down just in time to notice a much shorter lane to my left. *Puts the oranges on the belt* There it is! Whatever. I’m committed.

Yes, I have a card. Why on earth would I shop here if I didn’t? Git me them points!

$173!!! Is that really necessary?! I mean, look at us. We don’t have that.

Okay, whatever. It’s mine now. Done. I did it! I’m a survivor! Let’s never do that again.

-debarbibee