Tag Archives: finance

Joint Book Review: Your Money or Your Life by Vicki Robin

ymoylThe latest version of Your Money or Your Life has been updated from the book that Vicki Robin and Joe Dominguez had written in the early 1990s. It details the 9 steps of the “financial independence” (FI) system.

Amanda’s Take

This was another worthwhile read for me, and should be on your “must read” list if you are looking to improve your relationship with money.

One of the key takeaways for me was something I already felt strongly about:  there are many non-monetary costs to working; they include less time for your family, working endless hours, and stress.  This certainly does not mean one should not work; rather it means one should be wiser about their expenditures and priorities.  The discussion on your real hourly wage is one everyone should stop and consider.

If you are looking for a book on money management that is a bit more in-depth and involved, Your Money or Your Life is worth a peek!

Ronnica’s Take

Reading Your Money or Your Life was inspiring. I like the idea of measuring money in the hours of “life energy” that you gave for that money. It was very eye-opening to realize that I work 62 hours a month for my rent.

The chapter that was most surprising to me was the chapter about finding a high-paying job. In contrast to most advice to find something that you find fulfilling, Robin encourages her readers to pursue paid employment that yields the highest pay while still “consistent with your health and integrity” (p. 233). By doing so, it allows you to focus the bulk of your time on activities that you most want to pursue.

I did step through the steps outlined in the book, but I couldn’t help but compare these steps to Dave Ramsey’s system, which I am more familiar with. Quite simply, I find Ramsey’s plan much simpler to work through.

However, what I think the FI system does better is frame financial principles in terms of life value. After all, money has no inherent value: its value is in its representation of the things that you can do with it for yourself and others.

Money in the Bank

Last week I had a conversation with a coworker about how many of my other coworkers eat out every lunch. He said that it was something that he, as a husband and a father, just couldn’t afford to do. I replied that I didn’t feel I could afford it either, even with only having myself to support.

His response, “So you have money in the bank.”

I’ve never thought about it in those terms, but that’s exactly what not eating out meals has afforded me. When I was younger, I used to be just like my coworkers, eating out most meals. Sure, they weren’t anything fancy, but $5-15 each meal adds up very fast. Not to mention the types of food I was eating added to the 112 pounds that I’ve been diligently working to get back off me these last few months.

So instead of all those delicious, convenient meals, I have “money in the bank”. I am still eating pretty tasty fare that is as convenient as sticking today’s previously-homemade meal in the microwave for two minutes.

This conversation made me realize I needed to re-calculate my net worth. Sure enough, for the first time in my adult life, my net worth is larger than my annual income:

Ronnica's Net Worth

It’s excited to see that number grow as I continue to squirrel away money towards a future home purchase and even more long-term, for retirement. I still feel like I’m playing catch-up a bit from the time I spent in my 20s spending every dollar I made, but slowly the numbers are starting to work in my favor. That’s only going to continue to be the case as my money starts working for me, too. As Chris Hogan says, “Interest paid is a penalty; interest earned is a reward.”

Ronnica’s 2016 Goal Updates

Now that we’re half way through 2016 (!), it’s time to look back on the goals I set for myself at the beginning of the year. To be honest, I haven’t really thought about them too often, as my life plan has taken over my focus, so I was a little worried.

In January, I set 2 goals as well as spending goals. My first goal was to spend 30 minutes each day to cleaning/straightening my apartment. I’ve been pretty successful with this goal, and my apartment shows it. Accompanied by getting rid of things and organizing, my apartment looks better than it ever has. I still have work that I want to do, but I feel much more comfortable at home.

My second goal was to do my Bible reading first thing in the morning. I still spend too much time on my phone (usually 15 minutes) before I get to it, but I am regularly getting to it. I would like to keep working on keeping the phone down first thing in the morning.

As for my spending goals, here’s how I’ve done through May (haven’t calculated for June yet):

Groceries
2016 goal: $1,820, 2015 actual: $2,026.04
2016 YTD: $888.75

I’m currently on track to be a bit higher than last year, but as I’ve radically changed what I’m eating, that makes sense. I think this will balance out a little lower, probably on track to be the same as last year’s spending.

Travel
2016 goal: $1,400, 2015 actual: $743.35
2016 YTD: $847.35

I’m currently above my goal, but as my two plane trips were in the first half of the year, I’m really on try.

Hobby
2016 goal: $260, 2015 actual: $625.93
2016 YTD: $24.99

Well below goal, yay! I am saving up right now for a backpacking pack, but will probably wait until next year to get it as I’d like to fit it to my new body, not my in-between one.

2016 gardenGarden
2016 goal: $75, 2015 actual: $319.60
2016 YTD: $68.18

This has taken a lot of self-control, but I did it! My gardening expenses are probably done for the year.

Eating Out
2016 goal: $200, 2015 actual: $281.98
2016 YTD: $37.09

I’ve eaten out twice this year (while not traveling). I was already not eating out a lot before, but making my own food from scratch goes a long way to not wanting to eat out.

Gifts
2016 goal: $120, 2015 actual $179.61
2016 YTD: $62.94

I’m over my goal, and will probably end over my goal by the end of the year, but we’ll see.

Clothes
2016 goal: $20, 2015 actual: $60.86
2016 YTD $4.30

Doing great so far, but I have a feeling I’m going to need to spend more than $20 this year. I do plan on buying my newer wardrobe as cheaply as possible, getting by with as little as possible and buying most of it at thrift stores.

Everydollar.com Review

everydollar appIn the last month, I’ve gotten hooked on listening to Dave Ramsey again (this time in podcast form). I’ve  found his Total Money Makeover to be instrumental in my early forays into saving.

One thing that Ramsey’s team has done is create a free website and iPhone app to help people budget. His budgeting philosophy which I’ve followed for years is to give every dollar a name: you decide where each dollar will be used before you receive it. This website is aptly named EveryDollar.com.

I have been able to successfully create these “every dollar” budgets in Google Sheets. Still, I thought it would be interesting to check out the Every Dollar app to see if it would be more useful.

The first thing that struck me when I logged in to the site for the first time was how pretty it was. I can create graphs in Google Sheets (and sometimes do), but they would never be as pretty, easy or interactive as what you can see on everydollar.com. I just wish that you had graphs to compare month to month (though to be fair, this is my first month using it, so there may be some features that have not yet been unlocked for meeverydollar).

Another helpful feature is that you can create “funds.” I use these for my Freedom categories (like saving for my bi-annual insurance bill) and my various saving accounts. It did confuse me at first, but I quickly realized that I did not need to record actually putting money into these funds, just the expenses out of them. This can be a bit confusing if you’re like me, and fund them throughout the month as the money comes in, not at one time.

In addition to the budgeting features, the website tracks your progress through the baby steps. I’m on baby step 3b, which isn’t on there, but it would be really exciting to see progress through baby steps 1-3.

The biggest down-side is that because of the link to the baby steps, you can’t remove “debt” as a category. I worked hard to remove debt from my life…I don’t want it in my budget.

Still, that’s a minor impediment to a very slick and useful site. If you’re new to budgeting or just want to try something new, I’d definitely recommend checking it out. The beginning of a new month is the perfect time to do so.

I probably will continue to use my Google Sheets, if only to keep track where each paycheck is going, and not just where my money is going for the month as a whole.

Joint Book Review: The One-Page Financial Plan by Carl Richards

one-page financial planCarl Richards’ The One-Page Financial Plan is about what it sounds like: simplifying personal financial planning. Richards walks his readers through creating this very simple guide for their personal financial decisions.

Amanda’s Take

This was not my first experience with Carl Richards’ work; I am also familiar with his previous work, The Behavior Gap, and enjoyed it.  As such, I was eager to read what he had to say in Financial Plan.

I was not disappointed.  What I appreciated most was the over-arching theme of prioritization–a topic near and dear to my heart.  It is difficult to make a plan of any kind–financial or otherwise–without taking note of one’s goals and priorities (be it on one page of paper or ten).

This book would be especially helpful for those just starting out in life–specifically young adults.  As Ronnica will note in her portion of the review, there are plenty of diagrams to help illustrate the author’s point.  As an added bonus, the book is relatively short, which is something not all financial books can say.

Check out The One-Page Financial Plan for a good introduction (or reminder) on financial well-being.

Ronnica’s Take

I really enjoyed The One-Page Financial Plan. While I’ve had some formal training in budgeting and personal finances, this was the most useful book or training that I have.

Simply, Richards walks you through specifying the one most important reason why you are working on your finances, then takes you from there.

In specifying what financial goals that will help you achieve your bigger “why” I love that he walks you through determining which of those are most important to you. I think it’s rare if anyone has a set of financial goals that can all be accomplished to their fullest desires. We all have to prioritize, and this book provided a good framework to recognize that.

Another thing that stands out to me in this book was the multitude of simple diagrams. In this age of apps, memes and infographics, I think that this helps the book and it’s teachings “stick.”

If your finances need a tune up or an overhaul, I recommend checking out The One-Page Financial Plan.

Amanda’s Buy Little Month Wrap-Up, January 2016

unnamed (13)January was “Buy Little Month” in our house.  Ronnica sang the praises of intentionally minimizing purchases, so I figured…why not try it?

We did not keep records as meticulously as she did, instead opting to track expenses as we would ordinarily.  Rather, our thought processes were what we took note of more than anything.  “Is this a need or a want?” is something that crossed my mind whenever potential purchases came up.  (I think this is how Riley thinks on a regular basis, Buy Little Month or not, so this month really benefited me more than anyone in that regard!)

That said, I wasn’t terribly surprised to find that not much changed in how things went–we didn’t save a great deal of money (although if one considers what has been saved via the new grocery shopping method alone, we did pocket an extra couple hundred dollars).  It turns out, one of our financial strengths is that we tend to be pretty intentional and thoughtful when it comes to purchases.

What I did appreciate about our Buy Little Month exercise was the fact that it was good to refocus on our financial goals at the beginning of the new year.  I don’t know that this is something we will actually sign on to do again, but making sure we continue to stay on the same page as a couple is always a good practice.

Be sure to come back on Thursday to read about Ronnica’s Buy Little Month experience!

Amanda’s Christmas Secret

69681668-3243-45d2-8de0-15cd197bc0dfI have a secret to share with you.

I went into this holiday season without a set budget for Christmas gifts.

So now that the big secret is out, let me explain.

I’m not proud of this tidbit.  Initially, I had a budget lined up (if little else), but that was before the recipient list widened considerably.

Due to many factors, there wound up being seventeen people on our Christmas list this year, and three December birthdays to plan for.  That is a whole lot of dough to spend, particularly if one is an “average” American.  Let’s just say we didn’t have several hundred dollars at our disposal.  (In that respect, I suppose our budget was, “As cheap as possible.”)

I briefly considered going the craft/homemade gift route, but realized I did not have the time necessary to create a thoughtful and creative gift.  Instead I opted to do one of four things for each recipient on our list.

We had family pictures taken and ordered prints. With a coupon coupled with an amazing online sale, this turned out to be a really great idea.  The recipients of this gift (grandparents, etc.) are always appreciative of a personal gift…especially where our kiddos are involved. Bonus:  we got family pictures for ourselves as well, which were long overdue.

We gave a donation.  Using points sites, we were able to give charitable donations in the gift recipient’s honor.  Bonus:  it made us feel like we were contributing to something greater than ourselves.

We gave an experience.  Nothing says “Happy Birthday” like taking someone out to eat at a favorite restaurant.  Bonus:  the restaurant is a favorite of all in attendance!

We gave gift cards and cookies, or traditional gifts.  Although these were among the more expensive gifts on our list, for these recipients, gift cards were preferred gifts, and the cookies added a personal touch, as well as something to “unwrap.” We were able to choose our denomination for the gift cards, which helped keep costs down.

Our kids (and Riley) are the primary recipients of the traditional gifts.  To keep things simple, I adhered to the, “Something you want, something to read, something to wear, and something you need” gift-giving philosophy, so each kiddo is getting just four small gifts from us.  Bonus:  We get to see their little faces light up when they see their gifts. (Although they are very easy to please.  Peanut, for example, would be thrilled with just the wrapping paper.)

Each recipient has either already received their gift, or knows of it, or (as in the case of our kids) can’t read yet, so this post should not spoil anyone’s surprises. But I do want to share one more thing.

We spent around $250 total.

While certainly far below the national average, that is still a lot of money to spend in the span of just a few weeks, and I blame going into it without a Christmas budget.  Note:  there are a couple of gifts under the tree for me from Riley and the kids, and those are not factored into the total…because I have no idea what was spent (though Riley and I are on the same page as far as family finances are concerned, so I doubt it is a huge sum!).

Bonus:  now we know just how important budgeting is.  And this has also served as a great reminder of the true meaning of the season…and reminded me how important simplifying the holidays is.

Breaking Rules

52501482_fcd5405228_mI think it is a pretty accurate statement to say that I follow the rules.

If a doctor tells me to do something, I will typically do it.  In school, I was the girl who adhered to every single dictate put forth by the teacher.  As an adult, not much has changed.

…except when it comes to a few financial rules.

I realize that rules–especially financial rules–become such because they tend to work well when followed.  For most people.  I also believe (and hope I have effectively conveyed on this blog) that there can be exceptions to many rules.  Each family may have a different way of going about their different priorities.  I know our family does!

What follows is just a sampling of some of the rules we don’t follow.  It should be noted here that 1) this is simply a short list of rules that first came to my mind that we also happen to break, and 2) I am not a financial “expert”–your own situation will vary, so when in doubt, get to a professional!

Rule #1:  We save more.  

Depending on which financial guru you follow, the number in your savings account should range from $1,000, to 3-6 months of salary, to many times that.  Since our family has one breadwinner, we have experienced job loss before, and we have little people looking to us to provide for them, we have always aimed on the higher end of savings.

For example, $1,000 would not provide nearly enough of a safety net in the event of a major life event, so we have made our goal higher than that.  That doesn’t mean that our savings account always reflects where our goal is (we have had to dip into emergency savings some this year), but the peace of mind this affords is priceless.

Rule #2:  We use credit cards.

This one is a tough one, because obviously one wants to avoid debt as much as possible.  One could also argue that the credit card rewards are either rarely (if ever) cashed in on, or that the potential rewards do not outweigh the drawbacks (high interest rates, crushing debt, etc.).  I do believe, however, that credit cards can be a helpful tool…when used correctly.  Obviously paying off your balance in full each month is the ideal.

Rule #3:  We pay our retirement accounts first.

I’ve mentioned here before that we have worked to find a good way to fund our children’s education.  It’s still a work in progress, but here’s the important thing to note:  our kids have many options available to them when it comes to paying for higher education.  Our retirement?  Not so much.  So, as much as we love our littles, we pay our retirement accounts first.

These are just a sampling of some of our rule-breaking ways.  While rules may be in place for a reason, it’s important to remember every rule may not be the best fit for your life situation.  And when in doubt, consult with an expert!

Photo by Jem Stone

What is an Emergency?

If you read a lot of budgeting and personal finance blogs as I do, you have probably read a lot about having emergency savings. On these blogs I’ve seen various recommendations as to the size of an emergency savings account: everywhere from 3 months to 8 months.

Personally, I am almost up to 3 months of emergency savings after getting debt-free 5 months ago. In addition to building my retirement savings, I want to double my emergency savings in the next year.

But what really is an emergency? Under what circumstances is it justified to break into this money?

I’m sure that you could get a lot of different answers to that question, too.

In the past, I’ve used my emergency savings for:

1. Paying down the last of my debt. This was a one-time thing, and a decision I made based on my relative stability at work and other resources at my disposal.

2. Living expenses after I made the move to Denver.

3. Buying a couch and other decorations after moving to my first apartment on my own (4 years ago).

4. Car repair expenses (3 years ago).

Of these reasons, I’m happy with the first two, but not the second two. The difference between them is that the first two were planned and deliberate decisions, the second two were I-don’t-feel-I-have-another-option decisions. But looking back, I should have been better prepared for those situations.

Since then, I’ve created my freedom account which gives me the ability to cover such expenses. I also have learned better to do without…though I can still grow in this area.

I hope that this is never me, but if it is, I'll be prepared.
I hope that this is never me, but if it is, I’ll be prepared.

Going forward, I will allow myself to use my emergency savings for:

1. Basic living expenses in the event of a job loss or inability to work.

2. An expensive medical emergency that goes beyond what my insurance and FSA can cover.

Honestly, that’s all I can think of. I have money in my freedom account for car repairs. Before I become a homeowner, I will have a separate fund saved up for housing emergencies and will make regular payments into that fund.

I can’t be prepared for everything, nor do I want to place my security in my savings. But I believe that there is wisdom in preparing for a rainy day.

What do you use your emergency savings for?

Photo by Scott Hughes

Updates on the Striving Stewardess

A few months have gone by since our last updates, so here’s updates on things we’ve talked about previously:

Ronnica’s Updates

How I Paid Off $10,678.28 in 8 Months

It’s been over 4 months since I got out of debt. The cool thing about not having a mortgage is that I’m completely debt free.

Since then, I’ve been focusing hard on building emergency savings and adding to my retirement account. To balance my two goals, I’ve decided to put 20% of my savings towards retirement (my 401k contributions are handled separately).

How it Works: Living without Air Conditioning

This is the first summer that I’ve gone completely without air conditioning. I’ve become unapologetic about it: if someone is at my house I’ll give them full control over the fans, but do not turn on the air. While it doesn’t get as hot here in Colorado as in anywhere I have lived, it has regularly gotten into the lower to mid-90s.

Yes, I’ve sweat a lot, but I don’t think that’s a bad thing (regular showers are a must).

Parsley has my best performer this year (good for my ranch dressing!).
Parsley has my best performer this year (good for my ranch dressing!).

Ronnica’s Garden Plan

Sadly, this has been my least productive garden, apart from the year I stopped watering due to anemia-caused exhaustion.

The primary cause was the cold and rainy weather we had for most of May. I also tried a few new-to-me varieties that I’m not sure did as well as I would have liked.

The great thing about gardening, though, is that every year is a learning opportunity. I’m going to take what I’ve learned to make better choices next year.

And there’s always my winter garden (details to come).

Amanda’s Updates

Giving Our Time

Just a couple of months after writing this post, an opportunity to give my time presented itself:  serving on the pastoral call committee of our church.

Although we have only met a few times so far, and there is a good chunk of time I have to commit (a few hours a month for meetings and ultimately interviewing potential candidates to serve as our pastor), it is a volunteer position that is well-aligned to my gifts, one that is fairly flexible with our family schedule, and most importantly, is vital to the future of our congregation.  It’s a great opportunity!

Grocery Shopping

It has been six months since I first posted about my grocery shopping method (one word:  methodical).

Since that time, a lot has changed–for starters, the national egg shortage has resulted in eggs no longer being the least expensive item in my cart.  I have also lightened up quite a bit in my grocery shopping prep, because where I get most of our food now (Aldi) doesn’t accept coupons, so that actually saves me time…but also because I’ve become a bit lazy.

Our grocery bill has also crept upwards, due in part to a sales tax increase and cost of food steadily increasing, but also due to the aforementioned lackadaisical attitude.  Since grocery shopping is one of the easiest ways to help or hinder a family budget, I have been working on reducing our grocery bill.  Stay tuned later this month for how that went.

Fall Purge

A quick look at the calendar tells me that, yes, fall is indeed upon us!  Since Riley has started working from home several days a week, this has forced us to adopt a whole new way of looking at cleaning and organization; with no home office, we have had to turn “the dungeon” into a multipurpose area.

That has meant–you guessed it–a whole lot of purging.

It’s a work in progress.  But it definitely doesn’t look like this anymore…

unnamed (5)

…and for that I am very grateful.