Tag Archives: savings

Celebrating One Year Debt-Free

A year ago this month, I paid off the last of my student loan.

Since then, my net worth has more than doubled, now at 85% of my income. More than the positive influence on my net worth, being debt free has provided a degree of flexibility and freedom that I didn’t have before.

For example, I flew back to North Carolina earlier this month. This is a trip that I’ve wanted to do for over a year, but I couldn’t justify slowing down my debt payoff to save for it. Now debt free, I can enjoy such trips without guilt.

Another benefit I see to being debt free is that interest is now my friend. As I was filing my taxes for 2015, I realized that this was the last year I plan on reporting paying more interest than I have received. (Well, at least until I get a mortgage. But I revel in being fully debt free for now.)

While I still practice a tight budget, I much prefer to see the balance of my saving accounts going up to the balance on my student loans going down. I can easily imagine each of those dollars playing their part in buying my dream urban homestead.

I’m anxious to take the next step in my financial plan: buying my house, but I know that I will best be served by preparing first. If I do, I should be able to be permanently debt free in less than a decade after I make that large purchase.

Visiting the beach debt-free doesn't keep it from being a rainy day.
Visiting the beach debt-free doesn’t keep it from being a rainy day.

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

coinsJanuary has gone quickly for me, even though it was my “Buy Little” month. Typically these months where I am focusing on not spending are slow, as I’m hyper-aware of each day’s decisions. I think that’s one of the beauties of doing something like this: it forces me to pay attention to something I might have otherwise done mindlessly.

While this was my 3rd go around at a “Buy Little” month, I was surprised that I had different lessons to learn this go around than previously. The biggest take away I had this month was that I really did not have a lot of excess food, and quickly had to start buying almost everything again.

I think the last 2 cycles of “Buy Little” months has trained me to buy less groceries throughout normal months. I still have room to grow, as always, but I’m encouraged to see the progress that I have made.

So how much of my regular budget was I able to save this month?

$119.27 from my grocery budget
$47.77 from my gas budget
$19.92 from my utilities budget
$187.16 total saved

This is not an insignificant amount, as January I wasn’t otherwise able to save as much I would like as I was not yet working overtime in my new position.

I also spent $13.22 mailing Bibles to a charity who takes used Bibles. I find this worthwhile money as I wasn’t going to donate the Bibles to Goodwill or throw them out, and they were just taking room up on my shelf.

I want to keep up this month’s conscientiousness in a new way next month by keeping track of every item that comes in and out of my apartment. I look forward to what I will learn from that experiment as well!

Photo by John Liu

Before I Buy a House

house on a hillLast year I made a big deal of getting debt free. Paying off my student loans was one of the biggest financial achievements of my life.

My next financial goal is to save up 6 months of expenses as emergency savings. I only have 4 months currently, but it won’t take me much longer to save up the last 2 months of expenses. Once I have my emergency savings where I want it, I will be formally working towards homeownership, something I wish to obtain by the time I’m 40 (within the next 7 years).

A couple of jobs ago I did some housing counseling. This was during the housing market crash and was eye-opening. I couldn’t tell you how many people I met with that were entirely upside down in their house. On top of that, most of them also had thousands of dollars of credit card and other debts and were often unemployed or underemployed.

That experience makes me very cautious about buying a house. It doesn’t scare me off entirely, but I am aiming to have a 20% downpayment. I can’t protect myself from all financial uncertainty, but I can wisely choose to make preparations now that will put me in the best possible place when adversity happens.

In addtion to a sizable downpayment, I want to have two other funds in place before buying a home. The first is I am calling my “Big Bad Wolf” fund.

My “Big Bad Wolf” fund will be a separate emergency savings account (my bank allows me to create up to 25 different savings accounts, and name them)  with the intent to cover expenses like a new hot water heater or roof. These types of expenses will come, but it’s just a matter of when. (This is essentially an extension of my freedom fund.) I’ve set a seed amount for this fund to be $5,000, with the intent of continually paying into it monthly so it stays funded at this level.

Finally, (and this is the fun one!) I want to have a house upgrade fund. This will be the money that I can use for planned upgrades. Because I know that whatever house I will get will not fully meet my wishes, I want to start out with $1,000 in this fund. I imagine most of that will be going into the garden and some new furnishings. This fund can be depleted, but I’ll allow myself to put money in it each money to continue to make the improvements that I would like. Once I have my place, I’ll estimate the types of upgrades that I would like to do and on what time schedule and balance that against my desire to have my mortgage paid off in 15 years or less.

Will I have all this money in hand when I make my house purchase? Probably not. These are personal goals, not requirements. When I have some of it in hand, I will start to look for mortgage assistance programs that I may qualify for. The market itself will also dictate when I may buy, as right now I’m paying in rent about the same amount as I would pay for a mortgage for a house twice the size of my apartment.

How are you working towards your long-term goals?

Photo by Kevin Saff

Birthday Thoughts

33Today is my 33rd birthday. I hope never to be embarrassed to tell others how old I am…why should I be?

Officially being a year older makes me consider how I’ve grown in the last year…and where I still have work to do.

Probably my greatest area of growth in the last year was financially. Which makes sense, as it was an area of emphasis. In the past year I’ve doubled my retirement and emergency savings as well as paid off $9,000 in student loan debt. I’ve tried to track what I’ve spent this year so I have a baseline for future years as well (more about that in January). Instituting my first “Buy Little” months this year were helpful to show myself that I can indeed live on less. It’s a habit I will continue.

As far simplifying, I’ve done better than previously, but not as well as I wish. I still have too much clutter in my life, though I’ve taken a lot less in than I ever have. I want to keep working through the Marie Kondo zones to tackle the clutter. I think I need to really work on reestablishing my habit of cleaning for 10-15 minutes every day to get a handle on things better. Inevitably, if I’m able to continue to get rid of things faster than I get new things, I’ll get there.

There are other areas, too, that I’m evaluating my life, but I won’t discuss them here as they are outside the scope of this blog.

What milestones have you accomplished this year? What do you wish to work on in the next year?

Photo by Stephan Mosel

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

Frugal Victories

6988272680_97102f42c6_zI’ve been spending quite a bit of time on here lately commenting on reducing our grocery bill, perhaps at the detriment of discussing financial victories we have experienced.

You know me (and Ronnica too)–improving our stewardship of money is a constant quest! I wanted to take a post and share what I’ve been proud of recently, as far as our finances are concerned.

We have been a one-car family for over three years. Darn right I’m proud of this.  We have been a one-car household (remember:  four people and two big dogs comprise our family) for over half of our marriage now.  People said it couldn’t be done, but thanks to careful planning, priorities aligning, and a walkable neighborhood, this has been a noteworthy accomplishment.

I don’t know how long we will be able to swing this, but we have no plans of adding a car any time soon, so as long as we can make one car work for us, we will.  It’s saved us a large amount of money!

We have been without student loan debt for over two years.  I wish we could say “completely debt-free” but the mortgage alone precludes this.  We’ll get there–in the meantime, let me say that not paying a student loan bill has been pretty awesome (as Ronnica can attest to!).

We continue to be on-track for savings–including retirement and college.  Without delving into specific numbers, I will say that I am pleased with our progress in saving for our emergency fund (we’ve needed it more than once!), retirement, and college for the kiddies.  There are times where I wish we had more funds to play with right now, but knowing we won’t have to worry about the future as much (because, as a worrywart, I worry no matter what) is a relief.

What victories have you celebrated lately?

Photo by Phillip Taylor at ptmoney.com

101 in 1001

Have you heard of the concept of “101 in 1001”? It’s a type of mid-term goal-setting where you set 101 things you wish to accomplish in 1001 days (approximately 2.75 years).

I really like the length of 1001 days for goal setting. You can have some reasonable idea of what the future might look like: for me, 5 years is just too far out. I also think it provides a more reasonable deadline than a bucket list does. And as opposed to New Year’s resolutions, you can challenge yourself further (and have more time to make up in areas that you stumble).

I made my first 101 in 1001 goal list when I turned 30…1003 days ago. I was able to complete 93 of the 101 things. I also really enjoyed it, so it was an easy decision to do a second one, which formally started yesterday.

As this blog covers specific topics, I won’t share my entire list here. But not surprisingly, a number of the items on my list conform to the themes found on these pages (you know, if blogs had pages).

Any list is made better by being made into a pretty spreadsheet.
Any list is made better by being made into a pretty spreadsheet.

So here are a few of the things I want to accomplish before June 9, 2018:

– Do another “Buy Little” month.
– Write a will.
– Redirect $1001 from budgeted items to savings.
– Build up savings to $XX,XXX.
– Save $7,000 for a new car (or devote to savings, if I give up car living).
– Build up retirement savings to over $XX,XXX.
Can something (not freezer canning).
– Go through all 20 identified Marie Kondo zones.
– Purge 100 items.
– Forage for wild edibles.
– Grow 3 garden plants inside over the winter.
– Grow 3 new-to-me plants.
– Make something from repurposed materials.
– Save seeds and grow them.
– Keep track of every item brought into the home for 1 month.
– Keep track of every item disposed of from the home in 1 month.
– Buy a piece of clothing from Goodwill.

If you want to see my entire list, you can do that here. I can’t wait to get started on these things!

Where Does My Paycheck Go?

depositing checkA couple of months ago I read a post of the same title on The Single Dollar. I found it fascinating, so I decided to break my own paycheck down!

I waited until I had 2 months of post-debt-payoff data (yes, I’ve been 2 months debt-free!), as my budget has changed since then. My goals have changed: instead of throwing every spare dollar at my student loans, I’m now throwing every spare dollar at savings: for emergencies, retirement and a new car (though I still hope to go without).

A short note on how I made these calculations: they are an average of 4 bi-weekly paychecks. The amount I earn varies greatly each paycheck, so I thought it would be more useful to use these averages.

So where does my paycheck go?

14.2% goes to taxes (10.8 % federal, 3.4% state and local)
7.4% goes to FICA (6% social security, 1.4% Medicare)
4.5% goes to my 401(k)
2.4% goes to my share of health insurance premiums

All the above (28.5%) are taken out of my paycheck before the remainder is direct deposited into my checking account. So that leaves me with 71.5% of my earnings as take-home pay. This is where that goes (as percentages of my gross pay):

26% rent (painful)
13.3% emergency savings
8.2 % giving
5.7% new car savings account
5.4% transportation(gas, car insurance, car repair fund and public transit fares)
4.8% freedom fund (cell phone, discretionary categories)
4% utilities
4% groceries (ridiculous low, primarily due to other factors than my budgeting skills)

All told, I’m saving 23.5% of my gross pay (including 401(k), emergency and new car funds). I want to keep increasing that percentage.

When I take out savings and giving, I’m living on 62% of my take home pay. I think that’s an excellent place to start, as a single-person household earning median income.

I found this a very helpful calculation. I want to do this periodically to encourage myself not only to save and give more, but also to increase the percentage of my income that I’m saving and giving as my income increases.

Photo by David Goehring

How I Paid Off $10,678.28 in 8 Months

My thermometer is full!
My thermometer is full!

I’ve found a lot of inspiration from other’s debt-free journeys, so this is mine.

When I started my job in September 2014, I owed $10,678.28 on my student loan. That was my only debt, but it weighed heavily on me.

I graduated 10 years ago next month with $19,125 in debt (plus interest). Between graduate school and unemployment, I had 5 years of deferment, of which I took complete advantage.  That means it took me 5 years to pay down my debt which is longer than I would have liked, but half of that payoff has been in the last 8 months.

When I accepted my current job last fall, I wasn’t sure that I’d be able to pay more than the minimum payments on my loan. On paper, that was all I could afford. But with single-minded focus, I was able to find the money needed to pay almost $1,000 a month.

I really didn’t expect to have it paid off that quickly. I made my debt thermometer with the stretch goal of having my loan paid off in December. Turns out, that wasn’t much of a stretch.

Including interest, I paid $10,865.27 in 7 1/2 monthsSo how did I do it?

$1092 – Regular monthly payments (if that’s all I had paid, I would still owe almost $10k!)
$3000 – Savings which I emptied out to finish paying off my loan
$1732.38 – Income earned from working overtime
$1350.37 – Extra paychecks. I get paid every 2 weeks, but I budget for 2 paychecks/month. The bulk of those 2 extra paychecks went to my student loans.
$1085 – Tax refund. I don’t recommend saving in the no-interest bank of Uncle Sam, but not working for several months isn’t factored into the tax withholding tables so I had extra withholding coming to me.
$938.16 – Extra income from working a non-standard shift (since I prefer these hours, it’s definitely a win-win)
$465.96 – Work bonus
$391.61 – Cash gifts I received
$353.64 – Redirected money from over-budgeting 
$254.51 – Redirected money from my “Buy Little” month
$136.19 – Money from credit card rewards (don’t worry, I pay off charges as soon as it hit the card)
$58 – Income from odd jobs
$7.45 – Interest on my savings account

When I compiled this list two things stood out to me:

Every little bit counts, and

I could have reasonably been justified to spend any of this on other things. While I haven’t completely deprived myself, I have largely chosen to deny instant gratification in order to accomplish this larger goal.

It was worth it to be free from debt. I can now choose to do other things with my money and let interest work for me, not against me.

So I celebrated by creating a new set of thermometers. Maybe I should aim for completing these 7 months before my stretch goal date as well?

savings thermometers

Cooking in Bulk as a Single

I can recall the very moment that I realized I like to cook. I was in my sophomore year of college and a friend with an apartment had me and a few other friends over who also lived in the dorms to make dinner.

Of course, I didn’t get too many opportunities to cook those 4 years in the dorms at OU.

Though I’ve long since moved up and out of the dorm to a series of apartments, I don’t always cook as much as I might like as I live alone. I love cooking for others (I need to be more bold in inviting people over!), but I also want to make more of my own meals from scratch.

Making a single meal for one person from scratch is incredibly time-intensive.

Thankfully, modern technology makes it easy to make and preserve meals. After all, large corporations make money making meals to freeze, why don’t I do the same? Instead of pulling out an overpriced meal with questionable ingredients, I could pull out a healthier, tastier homemade meal made at less than half the cost.

The current contents of my freezer, including burritos (in foil) and the last of my summer veggies (in jars)
The current contents of my freezer, including burritos (in foil) and the last of my summer veggies (in jars).

What have I found easy to make in bulk and freeze?

Mini-meatloaf (made in muffin tins)
Beef stroganoff
Pesto (frozen in ice cube trays)
Individually wrapped patties or fillets (to cook on my George Forman. Though they can be bought pre-packaged, it’s often cheaper and less package intensive to wrap yourself)
Pizza dough

I only have the freezer compartment of my fridge for freezer storage, but it’s enough for me for now.

I also make some meals to heat up for lunches at work during the week. My favorite has been beans (or chili) with a carb like rice or corn muffins. Beans and rice feeds a large portion of the world, and there is so many options to customize it with different spices. So far I’ve added lentils, kidney beans and black beans to the mix and I hope to try even more.

What do you make in bulk?