Finances

I am happy to say unemployment has finally kicked in. We waited almost 3 months and finally got a retro check. The extra income from unemployment is certainly not paying the bills but we hope to put it all in the bank until I can go back to work.

So this month we have added back the extras we removed from the budget while we were waiting for unemployment- including $55/month for my daughters gymnastics lessons. We reduced the grocery budget in March to $30/week and it wasn’t as painful as I thought. I did have a hard time fitting in as much produce as I’d like so for April we are going to see how $35 works. I also want to stockpile a bit more in preparation for the baby and in preparation for all the house guests we will have.

So here is how we are progressing-

1. Save 6 months of expenses in Emergency Fund- 56% there!
Once that is complete we will attack the remaining balance of my grad school loans and then we will be debt free except the house.

2. Enroll in life insurance for me (my husband already has coverage)
We met with an agent and got a quote- we are going to get one other quote and will likely sign up soon.

3. Start cash only spending plan. We have tightened the budget so much this is really only needed for groceries. I went over my grocery budget by $7 in March due to having extra debits that hadn’t cleared the account. Hopefully cash will simplify things.

4. Pay cash for baby in May. My husband’s company just switched insurance carriers and we found out the max out of pocket for labor and delivery is $200. We had planned to pay $1500 so this is great news! We will be adding the extra money into our savings.

5. Pay cash for home renovation. We are planning to convert the loft/playroom into a 4th bedroom for our baby. We are estimating a few hundred dollars for materials and labor will be done by my husband and father. We are so focused on trying to fully fund our emergency account we don’t want to detract from that goal. I have decided April will be the month of Craiglist and I am hoping to sell several items we no longer need. This will be put into a separate account to fund this project and a few others we have planned.

6. Learn to CVS! I am thrilled that we will have CVS opening in late May. Finally! I am hoping we can go back down to $30/week once CVS is here.

7. Accumulate gift cards. I have started using Swagbucks and I am surprised at how quickly it is adding up! I hope to use these gift cards to do the majority of our holiday shopping this year. If you aren’t familiar with Swagbucks see my post here….

So that is about it. I am very pleased at the progress we are making on the Emergency Fund. We live in a very high cost of living so 6 months of expenses is quite a challenge.

How are you doing with your financial goals? I’d love to hear about your successes and setbacks!

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April is here already and it seems like time is flying by!

In February my employer closed down and we waited 10 weeks to find out if I would get unemployment. Right when I was laid off I slashed our budget down to bare bones- including our grocery budget from $50/wk to $30/wk. I thought it would be extremely painful but I am proud to say we did very well on $30. Thanks are mostly due to Safeway’s need to give me free groceries. I did go over by $7 for the month which I blame on Walgreen’s tempting Huggies deal.

For April my unemployment is rolling in and we are a little more comfortable now. I decided to increase the budget to $35/week as we are having lots of house guests this month and as I want to take advantage of the gorgeous farmer’s markets.

I had to cram extra trips in at Safeway to take advantage of the $10/50 coupons I was lucky enough to get before they expired (thank heavens as this week is another stinker for deals) so I planned to spend the bulk of my budget early in the month. I have also been stockpiling like crazy in prepartion for baby #2 due in early May.

I currently have $92 left in this month’s budget (out of $140) and we are stuffed to the brim! My freezer and I are going to have a serious conversation as I have a great Kashi waffle deal that I will be taking advantage of this week. Otherwise I am pretty sure I can virtually skip next week – except a small trip to the Farmer’s Market for produce.

I have my weekend Target, Wags and Walmart shopping breakdown coming soon and neglected to mention a quick Costco run for cheddar cheese, mozzarella, 40ct tortillas, hamburger buns and hot dog buns that totaled $16.45 and a Target run for dish soap and kitchen sponges for $3.05.

So I spent just under $50 already, which was my weekly budget just a few weeks ago and feel like I have enough food to last for months. I would encourage you guys to challenge yourselves too- you might be surprised!

Stay tuned this month as I will be posting our financial update as well as an article on Farmer’s Markets vs Grocery Store pricing.

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If you haven’t heard of Dave Ramsey, he is a financial advisor that offers down-home, simple advice to take control of your finances. You can learn more about his philosophy by catching his television call-in show on the Fox Business Channel, his radio call in show or by reading his books. I listened to his book, Total Money Makeover, 4 years ago during my commute to and from work. My husband and I quickly became hooked and we decided to drag ourselves out of debt following Dave’s plan. At the time, I had read the books of a number of financial advisers and Dave’s program seemed to make the most sense for us.

His mantra is to pay cash for what you have, live within your means and stay debt free. Sounds easy, right?

The very simplified version of Dave’s plan includes 7 “baby steps:”

Save $1000 as a beginners emergency fund
Pay off debt using Debt Snowball
Build Emergency Fund up to 3-6 months expenses
Invest 15% in retirement accounts
College fund for children
Pay off Mortgage
Build wealth and give to charities

At the time we started, we were engaged with no children and had a good income. We had also just purchased a $280k home with nothing down, nothing in savings and had gotten accustomed to spending whatever we earned. When we started the snowball, we owed about $12,000 on 2 cars, about $10,000 in credit cards and about $17,000 in student loans. Ouch.

In about 18 months we paid off almost all the debt. Here’s how:

1. We started living on a budget. Looking back we could have saved so much more! We weren’t ready to give up shopping, vacations, eating out etc… This was way before I learned to coupon and not only did I pay for shampoo but it was $20 salon brand to go with my $150 highlights.

2. We got serious about the snowball and decided to face our debt. We taped a plain sheet of paper to the refrigerator with a running total of all the debts. Every time we made a payment I would update the total. It was so satisfying to see the balance get lower and lower- I became pretty addicted. If we got a $100 incentive check or $50 from an aunt for a birthday I would immediately pay the credit card. I paid our cards so often that the credit card company actually limited me to how many payments I could make in one month! The sheet confronted us every day and served to really keep debt reduction front of mind. We kept it up even when friends were over because we made the decision to stop pretending and to be honest about our challenge. Most people made fun of us or worse- called me tacky, money obsessed, cheap etc… but I believe that being honest about money is the only way to gain control.

3. We paid off the cars, paid off the credit cards and started working on the student loans. I used to have a stack of preaddressed envelopes with notes inside that said “Please credit the enclosed check for $x.xx to account #…” I put those right by my keyboard in my office and every single payday I would send as much as I could to my loans. Some months it was $20 and some months it was $500. Every penny counts when working toward a goal!

During that time, we also got married and had a wonderful honeymoon, furnished a 2000 sq foot home, I got my MBA and we started planning for a baby. We stayed out of debt during that entire process which was another major accomplishment. I am proud to say four years later we own our cars outright and haven’t touched a credit card.

But then we slipped.

I highly recommend getting on board with Dave’s program and have two of his books on my Amazon sidebar. I recommend starting with Total Money Makeover. You can read the book or listen to the audio version and it breaks everything down in very clear terms.

(Stay tuned for part 2 with how we thought we were smarter than Dave and fell off the wagon and part 3 where we are today.)

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