Thursday, March 19, 2015

2015 Goal #5 - Financial

I am blogging my 2015 goals! I wrote about my goal making process.
So far, we've covered spiritual, physical, intellectual, and social.

Up today: Financial

My financial goal is a combined one with Ben. (We treat all the money as one. More on this another time.) Our goal is to pay down 1/3 of our student loan debt.

It's a big number for us relative to our income. It's a stretch & it's higher than we are projected to have "leftover" even after tightening the budget. We've decided to have me be a full-time-stay-at-home-mom anyway, but that means the budget is strict, the spending is minimal, and the amount of extra stuff we both do to bring in side income is as much as possible.

Here are 3 specific things we're doing to this end.

1. We have a budget and stick to it. 
Behind the crafty, semi blogger, music-teacher, go-with-the-flow front I put up, I have a secret love for systems, organization, basic math, and spreadsheets.

I can't deny my love for a good excel spreadsheet. Although my super nerd husband recently informed me google sheets is the new excel.

So, it may or may not surprise you that I love budgeting. I could look at budgets for hours. Fake budgets, real budgets. I've tried a few budgeting softwares and all the built-in budgets with the 3 banks we've used. I like tweaking budgets to see savings. I like plugging all the money saved into various interest rate calculators to see what the investment would look like in 5 years, 10 years, 20 years. It's nerdy.

And also, I like spending money. I'm not a saver by nature, though I'm becoming one.
This is why we have a budget.

You can kinda see it here - I plugged in some fake numbers. I will detail our budgeting system more another time with explanations about what works and hasn't worked for us. But here's a sneak peek:

2. Money "dates" every day twice a week... usually 
For a while now, we've discussed our budget weekly or bi-weekly. But, I was doing the bulk of the work of tracking expenses, paying bills, etc... and then we'd "meet" once a week or so to check over everything. For whatever reason, this process wasn't working. We sometimes used credit card (that we always paid off and racked up points on), and sometimes debit. For a year we lived on loans which came in as one big payment, so it was hard to know how to stretch that out over the course of a year. Some bills were on auto-pay, others weren't. It just felt complicated.
So, we simplified it.
We use a debit card and cash only.  (We have a credit card for ben's travel only which gets reimbursed from work.)
When we kicked off the new year with our new astronomical (to us) debt-paydown goal, we decided we had to be a bit more intense.
So, for the month of January, we sat down every day together for a budget meeting. (Yep, every day. Are you looking at me like we're nuts?)We like to call them 'money dates.' It usually took 5 minutes, and involved cookies, ice cream, and/ or really cheap wine. #livinglarge
We opened our online bank account to see if any transactions had cleared and we categorized them in our budget sheet. (More on this later.) Then I pulled out the receipts from my envelope of cash if we had spent any money that day and we entered that too. Then we'd see how much was left in each category to spend still.
We knew every day where our budget stood and how much money we'd have left at the end of the month to pay off our debt.
By February, we relaxed this a little. We probably do it 2 or 3 times a week still, and it still takes 5-10 minutes. Honestly, we probably won't do it this way forever, and I know there are other systems that work, but it's saved us a lot of budgeting headaches, and we have an intense goal. When your goals are intense, you have to be intense to get there. 

Ben was pretty glad I took this picture...
3. We have money we're "allowed" to spend on whatever we want, no questions asked.
It may sound crazy to have an amount of money you're allowed to blow every month while you're getting out of debt, but we have this. We each get a small amount of money we're allowed to spend on whatever we want or save for whatever we want. Most everything extra falls under this category - craft stuff & fabric (me), clothes (either of us), extra toys or fun stuff for kids, lunches or coffees out with friends, home decor, books, music, running shoes, whatever! Having this category eliminates the "why did you buy that?" or "i think what YOU want to spend money on is dumb" conversations.
Can I be honest? We NEVER have that conversation.
Granted, we have other spending and saving decisions to work through, and it's not all rainbows and sunshine, but this simple spending money category has saved us a lot of hassle. No guilt, no pressure. This is the amount of money we agree on that we are each 'allowed' to spend freely on whatever each of us wants. :)

I've been working on a budgeting/ practical finance series of posts... mostly things we've learned the hard way (Aka: trial and error) or from people smarter than us. So if you're curious about other aspects of budgeting (which I'm sure you are), look for that to come soon. It'll be thrilling. ;)
In the mean time, if you have any questions, I am certainly not qualified to answer them but I would be happy to give it a go or google the answer for you :)

Frugally yours,