My 2016 So Far – Budgeting

Alright, so next up on my 2016 update is our financial changes! We’ve had quite a few changes in the last couple months of 2015, and in to 2016. Some have been decisions we’ve made, and other things have just kind of happened. While most of our financial goals are more long term, our changes now are really going to help out.

 

Financial Goals

Our goals, as one might expect, are pretty simple: pay down our debts and save money, without stretching ourselves so thin that we can’t have fun. While money doesn’t buy happiness, the feeling of having no money to have fun or buy random “toys” is also not good.

We are in a decent amount of debt, as many people our age are. Between student loans, and buying our Chevy Volt last year, we have about $60,000 left to pay off. Getting rid of the student loans are especially high priority for us. We’ve felt very held down by these, and it’s a constant reminder that college just wasn’t all that great of an experience for the cost paid. While having these loans, things like getting a house or building a family are pretty much out of the question.

Unfortunately, due to the debt, saving hasn’t been as easy. This is especially true when it comes to retirement savings. So we hope to get to a point where we can contribute to our 401ks again. I wish companies gave you a choice to have them match a certain amount toward student loan payments, rather than a 401k (and then, switch to a 401k once you’re done).

 

The “Strategy” Thus Far

Spreadsheets: I’ve gotten a lot better overall at tracking our money. Last year I made spreadsheets to help better understand our income, family expenses, and budgets. This year, I took it a step further and created one for personal expenses. We’ve always each had a monthly allowance, but sometimes things would get out of hand due to forgetting about pre-orders, impulse spending, etc. With this new sheet, it causes us to better plan out our purchases, and helps us remember when there’s a large pre-order coming up. We will now always know how much money we have left from our allowance for the month.

Banking: While Chase has not treated us poorly as customers, there’s still the fact that there’s a measly 0.01% APY on savings, as well as various fees on the accounts if you don’t meet specific requirements. After a bunch of juggling to make sure we didn’t screw up any bills, we’re now happy customers of Capital One 360. No fees, 0.75% APY on savings, AND 0.20% APY on checking. We’ve been to a bank branch maybe once in the past couple years, and once to an ATM (though, there’s still tons of ATMs we can use anyway if necessary). Online banking doesn’t scare me!

Credit Cards: Along similar lines to banking, we decided to switch to using our (already existing) Capital One credit card for family expenses. It’s got 1.5% cash back, compared to the 1% on our Chase Freedom card. It also has no foreign transaction fees, which is great for any travel or importing. Even though the Freedom card has 5% cash back on certain categories every quarter, I realized the categories aren’t generally helpful for us. For example this quarter is gas stations. With our Volt, we fill gas about once per month. Next quarter is grocery stores, but we do all our grocery shopping at Target (which is not included). We’ll get much more use out of the general 1.5% cash back.

Additionally, since we do almost all of our grocery and necessities shopping at Target, we decided it was time to open a REDcard to save 5% on everything (along with already saving through the awesome Cartwheel app). So far, from REDcard alone, we’ve saved over $60 this year. Every little bit helps!

Taxes: We’ve loved getting our pretty hefty tax returns. Last year was enough for a down payment on our Volt, and this year paid off all credit card debt after a rough holiday/Blizzcon season. However, due to our $100+ rent increase last November, we decided it was time to figure out how to get more of our paychecks. It’s been done, allowing us to not have to sacrifice our fun money each month.

Paid Off some Debt: This past month we finally paid off our Sleep Number bed. That’s $175 per month we can allocate elsewhere! Woohoo!

 

Where We Are Now + The Future

Recent unexpected events have put us in a much more positive financial position. I’ve updated my spreadsheet and calculations, and can see things are going to become a lot easier for us, and will accelerate our goals by a decent amount.

We are increasing our student loan payments by 20%. Previously, at the rate we were paying, it was going to take me 36 more months to pay mine off, and 48 months for Mike. At the new rate, mine are cut down to 30 months. Once mine are paid off, we decided to put that money toward Mike’s and accelerate it, putting it at 35 months. I’m not sure why this never occurred to me before! Once those are paid off, we could put the money toward our car payment for 6 months to finish it off, though we’re not as concerned with that one. In any case that’s still about 3 years from now, so many things are likely to change anyway!

On the side of KEEPING money, we are increasing our monthly savings by a generous 60%, which will build our safety net much faster. We also increased our personal allowances by 20%, with an additional plan that any extra money we haven’t spent by the end of the year will be put toward our student loans. We also finally get to contribute to our 401ks again, though we are keeping it moderate for now in favor of building our immediate savings and paying down the loans.

We are planning to move this September, as last year’s $100+ rent increase was a pretty big hit, and we don’t expect this year to be any different. We love our place, and the area around it, so no matter what there will be sacrifices. We’re hoping to find a nice place with lower rent, and closer to work (which could also save us extra on gas each month, and possibly even eliminate general daily gas usage). The issue is, there’s a lot of requirements our new place must fit (e.g. it MUST have an attached garage with a power outlet). The good news is, if we don’t find a place, it won’t be the end of the world, but saving money monthly, as well as cutting our commute down, sounds real nice.

I hope to get better at using Mint.com, which is a pretty neat financial tool for setting budgets and goals, and seeing your money, credit cards, loans, etc. all in one place. I’ve mainly used it for tracking how much money we spend on food, since that’s probably the most difficult thing to track. The issue is, it doesn’t currently support the place our car loan is through, and Target REDcard has not been working properly on there for the past few months (this is a huge problem considering the amount of shopping we do at Target). I’m trying to keep up with it regardless, and will update categorization on Target purchases as soon as it’s possible.

 

So, that’s about it for financial updates! The next post (not 100% sure when) will be about getting back in to creative work. Then I might make a post about a 4th goal I forgot to mention: organization.