Who Stole All of Our Money?! (Hint: It Was Us)

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My husband and I have been “saving for a house.”  I put this in quotes because while that was our biggest post-wedding goal, we’ve noticed that our savings really hasn’t gone up in the past couple of months.  I’ll admit that as the one who is normally the budgeting nerd, I have done a pretty poor job of tracking our expenses lately.  I’ll go ahead and blame it on job stress (more about that at a later date), which is partially true.  I found that most days, I was so wiped out by the time I got home from work that I didn’t want to look at anything.  I wanted to buy clothes, or pretty things for our house, or go out to eat.

Then I looked at our savings account.

While we had been doing a great job of saving up, that progress had more or less come to a standstill, which was very confusing to us.  “But we don’t spend that much”, we said to ourselves, “so who has stolen all of our money?!”

Then I took a look at our joint account and my credit card account, just for the past month (6/14/14-7/14/14).  I started writing down all of the non-bill, non-grocery expenditures…and I. Was.  Floored.

No one stole our money (shocker).  WE SPENT ALL OF IT.  I am absolutely kicking myself, because I just think about how much closer we would be to our goal if we would have just stuck to our budget.  Here’s a breakdown of what we did (note: this does not include anything that my husband put on his credit card.  That’s where his “spending money” goes each month, with a portion of our income going towards paying it off.)

Alcohol

total alcohol

I would like to point out that my husband is a fantastic home brewer, and we always have 2 beers on tap at home.  The alcohol expenditures above were wine and rum–not really necessary for those trying to save for a home.  That could have easily been cut in half, if not more.

Dining Out

total dining out

Ahem.  I think we found our problem.  This doesn’t even count dining out expenses that were put on my husband’s credit card.  What’s sad is that this is much more than our grocery budget for the entire month.  Do you know how much awesome food we could cook for $417.23?  We’d eat like royalty, I tell you.

I don’t think that there’s anything wrong with dining out, but within reason.  A lot of these were going out with friends or co-workers, and a few were some very necessary trips to get frozen yogurt (IT WAS SO HOT HERE.  Really, it gets hot in Buffalo for at least a week each year).  There are definitely a few things that we could have done to cut this expense down drastically:

  1. Buy ice cream or frozen yogurt at the grocery store ($11 for one trip to the frozen yogurt place?  Really??)
  2. Stick w/ one drink per meal, or don’t order alcohol at all (it has the highest markup of any item at a restaurant!)
  3. Do a better job of planning meals ahead of time and having some meals already made and frozen for the nights when we’re too tired to cook
  4. Invite friends over for dinner, brunch, etc.–or just say ‘no’ to going out if it’ll put us over budget (which is really hard to do, I know)

Home Improvement

total home improvement

Because we rent, this isn’t an area that we normally spend a lot of money on.  We both just started working from home, though, and most of the home improvement expenses for the past month went towards setting up an office for my husband.  Ideally what we should have done is to have taken a chunk out of his normal spending money for the month to put towards at least some of this, rather than using money that we could have put into our savings.

Miscellaneous

total misc

Right away, four big expenses stand out: Brewers Festival tickets, haircut, massage, and Emeals annual subscription.  There are still a handful of other expenses, though, that helped to push this category up to almost $400.  What could we have done differently?

  1. The Brewers Festival includes a concert, and it’s something that we’re going to with my husband’s parents, so we probably would have gone to that regardless.  However, we could have saved some of each of our spending money over 2-3 months to cover the cost, instead of having it all come out of one month.
  2. Emeals is actually worth the cost IF WE USE IT.  Cooking at home = worth it (you receive a week’s worth of recipes ahead of time, and a lot of those meals share ingredients, so it saves money on groceries).
  3. I’m in between with the haircut–the $52 included the tip and I love the salon I go to (also, I am terrible about going regularly and usually only get my hair cut 2-3 times a year).  I could have waited to get a massage, though, until it fit within my spending money budget.
  4. I don’t even remember what half of the other expenses (Target, Marshalls) were.  Some of them were gifts, which, with better planning, is a more controllable cost.

So there you have it, friends.  This is why we haven’t bought a house yet.  We’ve stolen money from ourselves to do things that make us happy in the short-term, rather than focusing on the long-term goal of buying a house.  WE WILL NOT BE DEFEATED (by ourselves), though. Back to the budget we go (and that credit card is coming out of my wallet)!

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Judge Not, O Indebted One

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I have a confession: I judge other people’s financial behavior like nobody’s business.  If I know that money is tight, but I see you in a new dress…BAM.  Consider yourself judged.  Spent money on a vacation? I can only assume that you spent the entirety of that vacation foolishly disregarding your student loan debt. Oh, did you buy a brand new car?  I hope you enjoy living in it, because you probably just spent your mortgage payments. (How do I have any friends?)

Like the quote above says, we judge others by their behavior, and ourselves by our intentions.  The way I see it, both are pretty dangerous habits.

Judging Others by Their Behavior 

Maybe money is tight, but you found a cute dress on clearance that brightened your day.  Maybe you do have a lot of student loan payments, but you saved up for a vacation–and found some great deals while you were planning it. Maybe you researched new cars, saved up a good down payment, and had a decent trade-in for that new car.  Even those closest to me don’t know the intricacies of my finances, and likewise, I don’t know all the details of theirs.  And yet, I still find myself judging them, often very harshly, on the small pieces that I do know.

This mindset–that the behavior of those around me reflects poor intentions, or selfishness, or an inability to face reality–can only hurt my relationships.  It puts me in the unearned position of feeling superior to friends and family, when I should be approaching them from a position of love and support.

Judging Ourselves by Our Intentions

Do I always make the best financial decisions?  Absolutely not.  Do I make excuses for myself? Sure do.  Case and point:

We’ve spent almost two hundred dollars on takeout over the past couple of months. 

But we’ve been busy and too exhausted to plan meals and cook.

I went to New Orleans for work and exceeded my monthly “fun money” budget.

But the colors in the Pearl Jam print are beautiful…and it’s something that we’ll display in our home…and when am I going to go to New Orleans again?

 I purchased (yet another) black dress for the trip. 

But what would people think if I wore the same dresses I’ve already worn to other events?

Why do I feel that it is okay to hold others to different, much higher standards than those to which I hold myself?

Because I remember my intentions, and excuse my behavior. 

What should I do when I see someone making financial decisions that I don’t feel are appropriate?

  1. Be slow to judge–unless it has been explicitly explained to me (i.e. “Katie, I have $5 in my bank account, but I felt like making a foolish financial decision, so I went out and bought these shoes”), I need to remember that I don’t know why the decision was made.  Even if it was explicitly explained to me, back off! I don’t need to agree, but I need to respect that it wasn’t my decision to make.
  2. Ask myself–and honestly answer–what would I do in their position?  Or rather, what have I already done in their position?  I have certainly bought something small to brighten my day, even when it didn’t fit in my budget, and I distinctly remember purchasing a plane ticket to London when my credit card was nearly maxed out.  It happens.
  3. Offer support and guidance, if it will be welcomed. Nobody likes a know-it-all, but as someone who has worked to get out of debt, I do have something to bring to the table.  If nothing else, sometimes it just helps to have someone to talk to when you’re in a financial pickle.
  4. Redirect that energy towards my own debt.  There’s enough there to keep me busy for a few more years, eh?

What about you?  How do you interact with friends and family who make financial decisions that you don’t agree with?

Photo Credit

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Related Post:

Spending Excuses: My Big 3

2013: A {Monetary} Year in Review

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2013 was a big year for us.  We started the year off by creating our budget and setting some financial goals.  Our #1 goal was to pay for our wedding in cash, with no assistance.  And guess what?

We did it!

We created a separate wedding budget, accounted for EVERYTHING we could possibly think of, and paid for our wedding completely out of pocket (about $13,000 when all was said and done. Whoever said a wedding had to cost $30,000 is a goober.  Check out this post to see how we did it!  I’ll write an update about how it turned out in a future post, but suffice it to say–best. night. ever.)

Meanwhile, back at the ranch…

While creating our goals and budget for the 2013, we knew that we didn’t want to throw everything we had at the wedding.  That’s where the budget comes in handy–by identifying our monthly income vs. expenses, we were able to reasonably identify how much was left over for debt reduction.  When all was said and done, we reduced our debt by about 23%.  We still have a lot left to pay off, but WOW…is this a great feeling.  We also have our $1,000 emergency fund and thanks to our wonderfully generous friends and family, we were able to recoup what we spent on the wedding and then some, which went right into the bank.

In review, here’s where we ended for 2013:

Paid $13,000 in cash for our wedding

Maintained our $1,000 emergency fund

Paid off 23% of our debt

Saved a large chunk of money to put towards our 2014 goals (and beyond!)

Exciting stuff, right?  You’d think we would get after it for 2014, right?  

Full disclosure: It is January 11th and we still have not revised our budget for this year.  Oops. (See, even the budget nerds trip up!)  That being said, we’re going to make it a priority ASAP, because we have some HUGE goals coming up, including:

  • Going on our honeymoon- and paying for it in cash
  • Buying our first home
  • Making some mini-budget nerds

…so let’s get budgeting!  Ready?  Break!

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Need help creating your budget?  Here are some great resources:

Dave Ramsey’s Budgeting Forms

Be Organized- Our New Budget Sheet (through trial-and-error, this is the method that has worked best for me.  What can I say? I’m a pen-to-paper type of gal).

Kiplinger’s Household Budget Worksheet

 

 

 

Should You Lie to Your Kids About Money?

A recent blog post on Christian Science Monitor.com took a look at a 2012 Time Business article that claimed 77% of parents say that they are not always honest with their kids about money.  The two statistics that stuck out the most for me were:

  • Only half of all parents surveyed are willing to discuss saving and spending with their kids
  • A third avoid talking about the family’s finances at all

I’m only the mom of a dog, not mini-humans, so I can’t claim to have ever had to struggle with deciding what to tell my children and what to keep from them.  That being said, I grew up in a home with a lot of money tension.  It seemed as if we were “over budget” every month, and there was a cycle of spending and saving that was irregular at best.  We were told to “save our money” but never taught to save our money.

Guess what: your children will model what they see, not what you tell them.

I did the exact same thing that my parents did—I see my siblings doing it too.  We get it in our heads that we need to cut back on spending, but then we see a new dress.  Or a book we really want to read.  Or a movie we want to go see.  We start to lie to ourselves about how much we’re really spending.  We lie to ourselves about the vast difference between what we say our priorities are and what they actually are, based on the behaviors that we demonstrate.

I don’t believe that you need to tell your children everything.  It can cause unnecessary worry and if your family is in dire financial straits, it can be a huge burden for a child to shoulder.  Isn’t it important, though, to show your children how to handle that?  Maybe they don’t need to know the exact numbers, but what if you included them in family discussions about budgeting?  You’ll screw up—we all do.  You’ll make a stupid purchase or bounce a check.  So what?  Show your children how you live with the consequences of those mistakes and then show them how to make better choices in the future.

When they are adults, I guarantee your children will carry your lessons about budgeting and prioritizing with them as they face the realities of an uncertain job market and increased cost of living.  What a great gift to give your children.

Wedding Planning on a Budget

Weddings are expensive.  I have been to some really elaborate ones that were beautiful and entertaining…but very expensive.  I have friends who have taken out loans large enough to purchase a luxury car just to make sure their day was perfect, only to regret that decision during the subsequent 5-10 years of payoff.

When the Mister and I got engaged last year, we made three decisions: 1) we didn’t want a cookie-cutter wedding, 2) we didn’t want to go into any more debt, and 3) we wanted to pay for the entire thing ourselves.

We’re getting married at the end of November, and I’m happy to report that we will achieve all three goals!  How did we do it?

 

WE MADE A PLAN:

We had about a year between the engagement and the wedding.  We sat down and estimated all of the expenses (over-estimating for the expenses we were unsure about), and figured out the total amount we would need to pay for the wedding in cash.  We then divided the total by the number of months we had to save, and figured out how much we would have to throw in savings each month.  That number was added into our monthly budget.  Since I’m the budget nerd, I made sure I was sharing the number as it crept towards our goal—we were so excited when we realized we’d actually hit it!

 

WE WERE CREATIVE:

While our combined income is decent, it’s by no means amazing.  We are also still chipping away at our debt, and didn’t want to give up on that goal while saving for the wedding.  That meant that we had to get creative with the wedding—there’s no way we could afford all of the typical expenses.  Here are some of the biggest areas in which we were able to save:

Wedding dress: My mom is making it!  She’s a great seamstress and it’s going to be beautiful.  That being said, I understand not everyone is lucky enough to have a mama who is talented with a needle and thread!  There are so many other options though—find a friend who sews, or a local designer—or go secondhand!  There are a ton of places online to find dresses in perfect shape for a big discount.

Bridesmaid dresses: This isn’t actually something we would have paid for anyways, but I found a local designer who could custom-make dresses for each of the girls (based on a picture that I found) for less than the cost of a David’s Bridal dress.  The dresses look great!

Suits instead of tuxes: Rather than having the guys rent tuxes they’ll never wear again, we just told them to wear charcoal grey suits.  Most of the guys already own them, and those who don’t will be able to use them again in the future.  We didn’t give them a specific suit they needed to buy—as long as it’s dark grey, they can purchase whatever fits within their own budget.

Photographer: I asked around and found a friend of a friend who does amazing wedding photography.  Because I had been referred, she offered us the friends and family discount, which almost cut the cost in half.  We double lucked-out on this one, because the photographer has a friend who is a…

Deejay: Nicest guy ever, deejays weddings as a side gig.  He has all of the equipment and is charging us a fraction of the cost of other wedding deejays.

Location: We found a place where we know the food and drinks are great, and there is no site rental fee.  We also chose not to go the typical beef/chicken/fish route for food—instead we selected a buffet option with food that people actually want to eat (chicken wings, anyone?  We do live in Buffalo, so that was a must).

Save-the-Dates/Invitations: There are some really awesome websites for these.  I used WeddingPaperDivas.com for the Save-the-Dates and Minted.com for the invitations.  Both turned out perfectly and I was able to find coupon codes that knocked a big chunk of the cost off each.

Cake: Instead of a big, dry wedding cake (or a crazy expensive delicious one), we’re doing a small cake just for us, and tiered display of donuts for the guests.  Jackpot.

Florist: I asked around about this too, and was directed to a local guy who doesn’t even have a storefront.  Apparently he does floral arrangements for some of the local elite and gets all of his business from referrals.  His work is gorgeous and very reasonably priced—I never would have found him without asking.

There are a number of other small ways in which we’ve saved money—coupons and sales for centerpiece stuff, creating the programs ourselves, foregoing favors and instead giving a donation to a local charity (with a small note to each guest).

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I am SO glad we figured out the costs ahead of time—having a concrete goal in place made it easy for us to stay within the budget.  We knew exactly how much we could spend, so that forced us to be creative where we could.  The best part?  Our wedding will be very “us” and we can enjoy it, knowing that when we wake up on our first morning as husband and wife, we won’t have another $30,000 in debt staring us in the face!

Spending Excuses: My Big 3

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Photo Credit

I started off 2013 with financial gusto–a good plan and a solid commitment to sticking to the plan.

Then it started…

  • The dog needed surgery ($$$).
  • I read a book about eating healthy and decided to start loading up on fresh fruits and veggies ($).
  • I had a very busy few weeks and didn’t feel like cooking when I got home from work ($).
  • I went on a work trip to Miami and bought a great pair of heels ($$).

I am generally very good at budgeting, but a few times a year, I find myself digging into a financial hole. The conservative amount I usually reserve for spending money is tossed by the wayside, and before you know it, I’m spending like one of the Real Housewives (ok, that might be a slight exaggeration).

When I start spending like that, I find that I tell myself any combination of three excuses:

Excuse #1: I deserve this!

Sometimes it’s true–do I deserve to eat well?  Yes.  Do I need to purchase fresh fruits and veggies at the nicest grocery store?  Probably not–Aldi actually has a good produce selection.  There’s a grocery store in town that I grew up with, though, and as stupid as it sounds, there’s a certain comfort level to shopping there, even if it costs more.

The even more unreasonable part of me comes out when I’m out shopping with other people.  I get caught up in the moment and make shopping decisions that I otherwise would never make.  The pair of shoes I purchased in Miami is much nicer than any one I’ve bought before.  Don’t get me wrong–I’m not a total slob.  I generally dress okay, but my clothes and shoes are usually purchased secondhand, or at Target, Marshalls, TJ Maxx, sale racks, or outlet stores.  The shoes might make a little more sense if I could wear them all of the time.  I can’t though, unless the dress code at work starts resembling that of a Miami nightclub (doubtful, in Buffalo).

When I’m shopping with other people, especially those who make more money than I do, I get caught up in the fantasy world where I can purchase whatever I want. It almost feels embarrassing not to purchase something, even if it’s not in my budget.  I try to make myself feel better with the, “But I work hard…I deserve this!” excuse.  I always, always regret the purchase later.

Excuse #2: It’ll only happen this month.

This is another way that I excuse beyond-budget purchases.  I tell myself, “Ok, I had a bad spending month.  Next month will be better.”  This is a very dangerous excuse, because if I want something, I will find a reason why I “need” to have it.  Planning ahead helps with this–for example, I know that I will need to purchase new tires next month, so I’ll have to modify my budget accordingly.

The real trouble (for me, at least) comes once something unexpected happens.  For example, we took our dog to the vet and found out that he needed surgery.  After spending that unexpected money, my brain starts to excuse smaller expenses.  I think, “Well, the budget is already shot for the month.  It doesn’t matter if I spend $10 on a book, or $30 to go out to dinner.”  I’m actually shaking my head as I write this, because it makes so much more sense to tighten the purse strings after paying an unexpected expense.  Oops.

Excuse #3: I was too busy to keep track of my spending.

This one has come up several times within the past month.  Work and life have been crazy, I’ve been out of town quite a bit, and at the end of the day, I’m exhausted.  Making time to track my expenses has been moved to the back burner week after week, so I’m left just trying to be good.

Great plan, you financial goddess.

It’s not as if keeping track of spending takes much time.  Olivia over at Snyders Tell All has a simplified version of the envelope system that is popular with super savers.  If I were to follow her plan, it would literally take 5-10 minutes a week to keep track of my budget.  After working long hours and dealing with all of life’s other little interruptions, that 5-10 minutes can feel overwhelming, even for those of us who typically enjoy budgeting.

There’s still time left in February to revisit my monthly budget, and to figure out how to make the wisest financial decisions I can that will minimize the damage.  March is a new month, and I will re-commit to my budget again.  My reason for sharing these excuses is to show that it is so easy to get off track.  Budgeting and saving for future goals is a marathon, and sometimes we all trip and fall (for some of us, it’s while we’re wearing our very cute new shoes).  Recognizing the ways in which you excuse your spending is important, but you then need to take that information and figure out how to stop yourself the next time you’re tempted to excuse choices that aren’t aligned with your financial goals.

Debt Buster vs. Burned Out: Budgeting as a Couple

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There was a post on Dave Ramsey’s blog the other day about the 3 main money fights couples have and how to prepare for them.  In many partnerships, there is a “Debt Buster,” who is willing to throw every penny at debt and a “Burned Out” mate, who is tired of foregoing the extras for the sake of debt reduction.

I can definitely relate.  My fiance and I handle our money differently–I love budgeting and personal finance (doesn’t everyone?), while he tends to spend more freely.  In the past, it didn’t matter how we spent our money individually, because our joint bills were always paid on time and in full.  Once we got engaged, though, I asked him to sit down with me so that we could set up a budget that we both agree on, that would help us achieve our mutual goals.

This seemingly simple request elicited the following response:

<<<Insert wide, fearful eyes and a slight tremble>>>

“…does this mean that I have to start shopping at Goodwill, too?”

Yes, I am very much the Debt Buster in the relationship.  I buy my clothes at Goodwill and groceries at Aldi.  But that doesn’t mean that I require the same of my partner.  What I wanted to do was create a budget that worked for both of us.  Here’s how we did it:

#1: Establish Shared Goals

If you don’t know where you’re going, you’ll never get there, right? We discussed what we want out of the next five years: to pay off our debt, pay cash for our wedding, and save for a house.  By setting these goals, we had a much clearer idea of how much money we needed to allot for each goal.

#2: Make a List of Your Expenses

Figure out how much you each spend on a monthly basis, both on fixed costs and variable costs. Here are the costs that we tallied up:

Fixed Costs

  • Rent
  • Electric
  • Gas
  • Cable
  • Internet
  • Car loans
  • Car insurance
  • Student loans
  • Gym membership

Variable Costs

  • Credit card payments
  • Groceries
  • Shopping/entertainment
  • Misc (e.g. gas for the car, etc.)

(This is not an exhaustive list; add or remove items as needed).

#3: Decide Which Changes to Make

Can you get rid of cable, and use a cheaper service, like Netflix or Hulu?  Can you get a shared phone plan?  Are you using your gym membership, or can you exercise at home?  There is no right answer for anyone–it depends on your lifestyle and your priorities.  Figure out what you can’t (or really don’t want to) change and change the things that don’t matter so much.

#4: Create Your Budget

Tell your money where to go.  Plan for, and account for, every penny.  If you leave too much leeway, I guarantee you the money will disappear.  Even in my role as the Debt Buster, I’ve been in situations where I’ve found myself thinking, “you know, I’ve done so well these past few months–I deserve a break.  I deserve some new clothes/a meal out/a drink with friends/something fun.”  This simple thought might be okay if I stuck to one small treat, but inevitably, that thought snowballs, and before I know it, the money that could have been used to pay off debt has instead been used for mostly meaningless purchases.

For our joint budget, we are using Google Docs (as noted in the picture above–and by the way, Oliver is our dog.  Though not gainfully employed, he’s a valued member of our little family).  That way, we can both access the document at any time to enter updated information or check on our progress.  There are a million different ways to set this up, though, from a spiral notebook,to an Excel spreadsheet, to budgeting software.  It’s all up to personal preference.

We entered our fixed costs and variable costs into the spreadsheet, along with the extra money that we’d throw at debt and savings.  For variable costs, I find it easiest to lump them into three categories: gas, groceries, and miscellaneous.  That makes it very uncomplicated to keep track of my spending.  

We decided that my extra money would go towards debt repayment, and his would go towards wedding and house savings.  I also have an emergency fund of $1000 set aside for us, for the inevitable “Murphy’s Law” incidents that tend to come at the most inconvenient times.

#5: Get Both Partners to Buy-In

This is absolutely, 100%, the most important step.  We identified our goals and created our plan together.  As the Debt Buster, I was much more excited about this process, but I was sure to make it clear that the purpose of the budget wasn’t to keep tabs on his spending.  The purpose of creating a budget was to create a blueprint for how we will achieve these goals together.  This process can’t be one-sided; while that might work for a few months, it probably isn’t realistic long-term.  Budgeting is a team sport, and to be successful, both sides need to have input and agreement at each step in the process.