Budget Archives - The Happy Homeowner

10 Steps Towards Financial Security

Posted on November 24, 2013 by Jen

Given our current economic climate that’s riddled with uncertainty and anxiety, it’s necessary to take stock of where you lie on the financial security spectrum.Whether you have debt or not, you should have an awareness of what constitutes financial security, and you should know how your specific situation impacts your ability to attain this type of freedom.

By following the 10 steps towards financial security below, you’ll have a great shot at getting ahead in the financial game as well as making sure you’re setting yourself (and your family) up for future financial success.

Here’s a brief overview of what I consider a great start for covering your financial bases:

Track your spending!

Do you know how much of your money comes in and where/how it goes out? If not, develop a tracking system right. this. very. minute. It can be detailed like an Excel spreadsheet broken down by category, automatic like a Mint.com account, or elementary like a crayon on a napkin. Basically, it doesn’t matter how you track as long as you’re doing it!

Create a budget

Ahh yes, the dreaded budget. All joking aside, this is one handy little nugget in anyone’s quest for financial security. Keeping a budget helps you make plans and goals and stick to those plans/goals. A budget puts you in control of your money and, really, who doesn’t like the idea of that?

For a quick reminder of the power of a good budget, check out the video below:

Build an Emergency Fund

And keep it funded! 3-6 months of living expenses should be your bare minimum goal. Once you meet that, continue funding for at least 12 months of living expenses.

Pay off ALL consumer debt

Credit card balances, HELOCs, and personal loans are not for the financially secure, no matter how you slice it. If you want something, save for it. If you fell on hard times or have previously made poor spending decisions (as I once did), NOW is the time to remedy the situation.

Max out your 401K

Or at least contribute! She/he who pays herself/himself first now is the one who enjoys a financially stress-free retirement.

Open a Roth IRA

If you can take advantage of this type of retirement account, please do so. As in, please do so yesterday. Hopefully that statement helps to highlight the importance of having a Roth IRA.

Build in some “fun” money

Budgeting isn’t all about savings, debt payoff, and retirement–it’s also about having fun! Build in a small reserve to treat yourself–whether for vacations, shopping, dining, whatever is most important to you. Building in this cushion will help you stave off burnout and feel more satisfied with your progress.

Set goals

As the saying goes, if you fail to plan, you plan to fail. Set goals that work for you. They can be annual, monthly, hell, even daily! Set them and remind yourself of what they are.

Work your tail off to meet set goals

So you’ve set your goals, now what? Reach them; blow them out of the water! The satisfaction and motivation yielded from meeting your goals is a catalyst for future success–ride that wave!

Consider other steps

Obviously this list is not inclusive and will not fit everyone’s situations. Perhaps you want to open a 529, invest more, quit your job, pick up another job, or purchase investment properties. Perhaps you need to dial down your lifestyle. Or perhaps you need to fix some emotional wounds prior to being on-board with your finances. Whatever your own personal steps happen to be, define them and get to work. If you need a bit of help, there are plenty of financial resources you can seek out to help you gain momentum with your efforts.

Even if you can’t do all of this now, do what you can. You’ll be amazed at what immense progress you can make with just a little bit of effort!

What kinds of steps are you currently taking to ensure your own financial security?

Why I Told My Budget to Shove It

Posted on November 6, 2013 by Jen

For the past 8 years, I’ve taken immense pride in my weekly “appointments” with my Excel workbook. Ever the budgeting nerd, I’ve spent countless hours crunching numbers, creating graphs and pie charts, and running various macros and formulas.

I’ve created hundreds of tabs, run countless what-if scenarios, and have tracked everything from my debt totals and retirement account balances to my net worth and mortgage payoff efforts.

My prize for all of that hard work?

A pretty well-balanced budget that has allowed me to pay off my credit card debt in less than a year, understand my spending habits, and manage my money as a freelancer. More than a means to track what’s coming in and going out, my budget has been a rock-solid tool that had aided my quest for financial freedom.

A Budget Turning Point

Yesterday, I told my beloved budget to shove it.

That’s right, the very budget that I’ve spent the past 8+ years perfecting has officially been thrown out the window. And for good reason…

As I was working through the various numbers and tallying my various expenditures, I realized that I’m not using my budget as I once did. Whereas before I was constantly aware of each line item’s specifics, I now find myself using a more generalized approach to budgeting and meeting my financial goals.

I no longer find myself in the depths of the dark side of budgeting, but I’m also not completely abandoning all of the things I’ve learned as I’ve cleaned up my financial life over the years. As I once did before, I’ve decided that a break from budgeting is in the cards and this time, it’s permanent.

The Birth of a Spending Plan

Before anyone thinks I’ve flown the coop and will soon be drowning in debt after I fritter away the $100K profit I made from selling my condo, there is a personal finance-friendly alternative in the works.

From now on, the worksheets I produce in my Excel books will be geared more towards creating a fluid, sustainable spending plan for each month. After all, my fixed expenses such as rent, car insurance, and utilities don’t change from month to month (we’re on a fixed payment plan for our heating bills and the electric fluctuates only a few dollars at most). My retirement and long-term savings contributions are auto-debited each month so those don’t change either.

The only piece of the puzzle that’s left after all of this is my discretionary spending. At this point in my life, these are the only line items that change from month to month which is why utilizing a spending plan makes much more sense than balancing a budget does.

Make a Spending Plan Work for You

A spending plan isn’t simply a fancier way to refer to your budget. It’s the idea that if you concentrate your efforts on managing your discretionary spending well, you can fit a lot more into your monthly spending without going overboard.

When used correctly, a spending plan helps you make good decisions about where your money is going so that you’re able to more freely purchase the things, vacations, and experiences you covet most. It’s an ever-changing entity that affords you the freedom of choice in any given month.

A World of Possibilities

If you’re interested in creating your own spending plan, it’s quite simple: Focus your attention on what you’re spending as well as what you’re saving. Obviously these totals should never be in excess of what you earn, but if you’re focused less on balancing line items and more on creatively managing your spending, you’ll find that a world of possibilities opens up.

With a spending plan, it’s far easier to readjust one category to account for a greater amount being spent in a different area. It’s also easier to see where you need to cut back on frivolous purchases and how you can fit in other things you’d rather have more. You can literally plan as you go instead of feeling locked into a budget that was created weeks or months prior.

In essence, it’s a win-win in terms of getting a handle on your money and making it work better for you. In my book, this is always a winning equation for how to manage your money well.

Would you tell your budget to shove it?

Shameful Things I’ve Done to Save Money

Posted on May 8, 2013 by Jen

The other day, I was ~~trolling~~ reading through the FinCon13 Facebook page, and I saw a post from Stephanie at The Empowered Dollar where she was asking people to share the most embarrassing things they’ve done to save money for her upcoming Confessions of a PF Blogger post.

This first made me think of my own Confessions of a PF Blogger series I started over two years ago to chronicle my financial past. Then I began to think of all of the wonky things I’ve done over the years to save a few bucks. From the cringe-worthy to the surprisingly common, here’s where my bad behaviors fall on the shame scale when it comes to saving money/pinching my pennies:

Loading up on Freebies

A lot of people responding to the FinCon FB thread mentioned loading up on free food samples while grocery shopping in lieu of paying for a meal (so have been there, done that). Some also mentioned swiping extra condiments and disposable silverware/napkins from fast-food places (yep, totally have done that before!), while others mentioned taking full advantage of buffets to line their purses or backpacks with snacks for later (what, I can’t take 5 bananas with me?!).

While I’ve done most of these, I think my mecca of free comes in part from the various sporting events I participate in. Race expos can be a gold mine of great stuff for free if you’re savvy and not shy. I’ve flat out asked for free, full-sized samples and products–and I’ve usually been rewarded for my boldness! The most shameful haul I ever pulled in? 5 pairs of brand-new Asics athletic socks that retailed for $13/each.

I was at a race and afterwards a woman put out a few cases of merchandise for the runners who were left to take home with them. I politely took my one pair but as I was turning to walk away, she grabbed my bag and stuffed in a few more pairs, saying, “Go ahead honey, take more!” I sheepishly accepted (feeling a bit odd yet elated because I really needed new socks), and I scurried my way back to the parking lot.

Estimated savings on socks, goo, drink mixes, energy bars, and even apparel: $1,000 and counting.

Milk the Student Discount

It’s no secret that I love to learn and that I’ve been pretty savvy with finding creative ways to finance my education. What’s been a bit of a secret is that I was flashing my student ID card for discounts years after graduating. I’ll admit that it’s still quite tempting to do even today, but I resist that urge because I don’t want to abuse the very programs that allowed me to have a social life when I had no money. That being said, I did get into some museums in Europe for free within the past 3 years thanks to my grad school ID. Oops!

Estimated savings on museums, concerts, travel, meals out, and other fab student-only freebies: $600+

Postpone Gift-Giving Plans

Now we’re starting to enter the real realm of shameful. Back when I was in debt up to my eyeballs, I spent two years delaying my Christmas gift giving until after the holiday had passed. Why? Because I couldn’t afford much of anything that I was used to giving people, so I waited for the after-Christmas sales, I combined the sale items with any gift cards I had received, and I bought everyone’s presents on the cheap.

Looking back, I could have just made things or given my time or even cooked/baked/cleaned for my family members. I now realize that it doesn’t matter what you give as long as you’re doing it with good, loving intentions. I no longer tie my own self worth to the extravagant gifts I can shower people with–I’d much rather just have a conversation or spend some much-need Quality Time with them!

Estimated savings after two Christmas seasons of belated gift-giving: At least $500.

Hitting the Gym for Free

In the past, I was a master of utilizing the “try before you buy” incentives at local gyms, yoga studios, and bootcamps. I was a serial gym goer…but only if it was free to me. I’d happily give out my name and spam email address, and I eagerly listened to the salesperson’s script for however long it took me to get that week-long (or even month-long) pass. Granted, this was years ago and today I don’t even go to the gym because I prefer to run/workout outside, but I shudder to think of how many places I’ve skipped out on when it came time to enroll in a paying membership.

Estimated savings through 3 years of gym hopping for free passes: $800+

Returning Clothes After I’ve Worn Them

OK, I did this once. But in my current book of financial security, once is too much. Now we are knee-deep in the arena of shame. Back when I was interviewing for grad schools and new jobs in Boston, I needed a new suit. With a pile of maxed out credit cards and only a few dollars to my name, there was no way I could buy a suit no matter how bad the need was–even if it came from a thrift store.

So what did I do? I marched into the local mall, picked out a gorgeous suit, pinned up all the tags, wore it for my interviews (all in one day thankfully), then returned it the next week. Graceful? Certainly not. Shameful? Absofreakinlutely.

Estimated savings on new suit: $350

Turning a New Page

Thankfully, I’ve come a long way since my days of ridiculous debt and living as a financially clueless wonder. I’m proud to say that I don’t do any of this stuff anymore, but I certainly wouldn’t judge someone who needs to because I understand firsthand how rough it can be to make changes in your financial world.

That being said, it’s a lot easier on your pride if you simply plan for expenses, save up for them in advance, or have an e-fund for those little surprises that can wreak havoc on your budget!

So let’s hear them: Spill the most shameful things you’ve done to save money!

The Inconsistent Side of Freelancing: $3K Less Income in April

Posted on May 2, 2013 by Jen

As some of you might have noticed, I didn’t post my monthly goals at the beginning of April. As it turns out, this was OK because of the crazy twists & turns the month took as it went on. Even if I had set goals, most of them would have been augmented, abandoned or blown out of the water. How’s that for variability??

Speaking of variability, April was the proof I expected to find (at some point) about how insanely variable freelancing can be. Inconsistent is the word that I’ll use to describe my income over the past two months–and I know this is just the beginning of the freelancer roller coaster ride. Luckily, I had anticipated this so when I ended up bringing in over $10K in March, I knew that I shouldn’t rest on those laurels too much before diving right back into my work.

Another blow to the April income statement came in the form of the Boston Marathon bombings. I don’t want to share anymore space here talking about such a negative event, but I’d be lying if I said it didn’t impact me in some way. I spent that week sort of floating around in a haze, glued more to the TV and newspapers than to my laptop. This certainly had an effect on how much I brought in for the month but I’m hopeful that I can pick things up in May.

On the positive side, I had another round of exciting media mentions in April which included my work being quoted on Wise Bread, an article being picked up on Lifehacker and my very first TV appearance on the Dr. Oz Show! The TV stuff was definitely unnerving and I’m not sure I’d ever be cut out for it unless I could spend plenty of time desensitizing myself from the panic of cameras, lights and audiences in my face. That being said, it’s pretty cool to see myself and up on national TV! Sadly, there was no mention of this site due to legal reasons but it was such a fun experience that I’m not really sure I care. Stay tuned for whatever screen shots I can manage to pull from the footage after it airs.

All in all, I ended up being just under $3K short of the total income I made in March. While $7,200+ is nothing to sneeze at, I still see plenty of room for improvement. I have my eyes on the $8K mark for May so hopefully a bit of extra hustle gets me over that threshold (and higher!).

Here’s how I fared overall with the various items I wanted to cross off my financial to-do list:

The Happy Homeowner

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