You know how it seems that as soon as you get close to accomplishing a goal something always comes along to set you back? That happens often in my life, especially with my financial goals.
It seems like every time I free up money - by paying off a debt, getting a raise, or a money gift - something comes along to eat up that money. And, that "something" always shows up AFTER I've made plans to spend the extra money or have actually already spent it.
So, I've paid off my credit card debt and freed up $185 a month. I planned to put that money toward paying down the mortgage, saving to buy a house in the country, and adding a little extra to my food budget.
And that "something" showed up. That "something" is Major car repair. OK, it wasn't really unexpected. I knew it was coming, eventually. Both of our cars are OLD, and my car has been sitting in the driveway - not working - for several months now.
I've had my car in the shop 3 times in the last year to fix the same problem. It seems there is not one mechanic in this town that can figure out what is wrong with it, so I just keep paying to fix something else "that might be the problem," but isn't.
So, we just parked the car and decided we could get by with just one car. We've been told that the transmission in this car is on it's way out. The "brilliant" mechanics in our area told us that the transmission could last another 6 months or another 6 years. That was 3 years ago. So, I guess it's close now.
The car still works, but it's something that we just can't keep ignoring. There are little sounds and symptoms that warn us of imminent doom. So, why haven't we been saving and preparing for this major expense?
When you've lived poor as long as I have you learn to just push the specter of major expenses out of your mind, because you know you don't have the means to really prepare for them.
But, that has to change now. I have money freed up that can be saved for this expense.
So, I've re-written my goals again, including the car repair.
New Goal #1: Pay Off Credit Card Debt
SHORT-TERM GOAL: 3 more months till all credit card debt is paid.ACCOMPLISHED
LONG-TERM GOAL: Stop using credit cards unless total can be paid each month ACCOMPLISHED
New Goal #2: Save for Transmission Repair/rebuild
New Goal #3: Save just for Home Improvements needed to Sell the House
New Goal #4: Save for Down Payment and Closing Costs on a Home in the Country.
They say that Life is what Happens When You've Made Other Plans. I guess they were right.
Showing posts with label Goals. Show all posts
Showing posts with label Goals. Show all posts
Thursday, December 28, 2006
Saturday, December 09, 2006
Keep Saving after Credit Card Debt is paid
I've paid off all of our Credit Card debt. So now, what do I do with that extra $185 (plus the $200+ from Kim's part-time job) that I was sending the credit card companies every month?
Yep, you guessed it, I'm going to save it. Or, most of it anyway.
The money from Kim's part-time job is nice hunk of change, but it's not something I am counting on. Part of the agreement Kim and I made about her getting another job was that it was temporary and she would quit at the first sign of feeling over-worked. (While the job lasts, it will all be saved in the New House fund.)
But, the extra $185 a month that went to pay off our credit card debt gets to be redistributed in the budget. And, that's going to be fun!
A small portion will go back into our food budget to add a little variety, and provide us with occasional treats.
Things like herbal tea, Ruffles potato chips (a rare treat, but the best brand of chips out there), roasts, lasagna (high cost for the cheese and sausage), and steak were cut from our food budget. They can come back in now - on an occasional basis.
Another small portion of money will go back toward paying down our mortgage. Paying just a small additional principal payment can shave years off your mortgage, and save you money in interest payments.
By paying an extra $30 a month for 2 years, I've cut the mortgage back 3 years and 1 month. That saved me $3720 in interest payments.
The biggest chunk will go into our New House fund and be saved for a down payment and closing costs on a new home in the sticks. (I enjoy other people, their guests, friends, music, and pets the most when it's from a distance :-).
So, most of the money I freed up by not having debt gets saved.
Saving money is a permanent goal for me, and will always be a part of my budget. It's a truly satisfying feeling knowing I will have that money tucked away - ready for what we decided is most important to us.
Yep, you guessed it, I'm going to save it. Or, most of it anyway.
The money from Kim's part-time job is nice hunk of change, but it's not something I am counting on. Part of the agreement Kim and I made about her getting another job was that it was temporary and she would quit at the first sign of feeling over-worked. (While the job lasts, it will all be saved in the New House fund.)
But, the extra $185 a month that went to pay off our credit card debt gets to be redistributed in the budget. And, that's going to be fun!
A small portion will go back into our food budget to add a little variety, and provide us with occasional treats.
Things like herbal tea, Ruffles potato chips (a rare treat, but the best brand of chips out there), roasts, lasagna (high cost for the cheese and sausage), and steak were cut from our food budget. They can come back in now - on an occasional basis.
Another small portion of money will go back toward paying down our mortgage. Paying just a small additional principal payment can shave years off your mortgage, and save you money in interest payments.
By paying an extra $30 a month for 2 years, I've cut the mortgage back 3 years and 1 month. That saved me $3720 in interest payments.
The biggest chunk will go into our New House fund and be saved for a down payment and closing costs on a new home in the sticks. (I enjoy other people, their guests, friends, music, and pets the most when it's from a distance :-).
So, most of the money I freed up by not having debt gets saved.
Saving money is a permanent goal for me, and will always be a part of my budget. It's a truly satisfying feeling knowing I will have that money tucked away - ready for what we decided is most important to us.
Tuesday, November 14, 2006
Frugal Extremes - What are Your Priorities?
I have Goals. Because I have goals, I have priorities. Some things are more important to me than others. For example, I'd rather save money for a down payment on a house in the country than be warm in my current house.
Now, that might seem extreme to some of you, but to me it's a simple choice. There are only a few categories in the budget that I have any real control over, and propane is one of mine.
I allot a certain amount of money in the budget for propane each year and that's all I buy. And, I still challenge myself not to use it all. The fact that my fingers are cold as I write this doesn't matter to me. I have my Goal in mind.
Personal Expenses is another category that I have some control over. I can't decide not to buy soap and shampoo, but I can decide how much to spend on these necessities. So, instead of buying cheap, watery shampoo I buy Tresemme or Pantene.
That last sentence may have surprised you. It would have surprised me had I read it on another site last year. Back then all I bought was store brands of shampoo. But, I've since learned that we use much more cheap shampoo than we do Tresemme or Pantene and it doesn't work nearly as well.
With shampoo it isn't the cleansing aspect that is different, they all clean your hair just as well. It's the conditioning and body aspects that make a difference. For example, I have fine, thin hair. When I use a store brand shampoo my hair flies all over the place like it's been attacked with a blown-up balloon. But, when I use Tresemme my hair has body without static.
Would I spend more just to have more body or an absence of static in my hair? No, like I said, I have plans for my money. But, when the cost-analysis showed me that it comes out just as cheap (or close to it) as the store brand shampoo, I changed brands. And shampoo is on the shopping list much less frequently.
For bath soap, I use Caress. I've found that I spend more money on cheap soap plus body lotion (trying to put some moisture back into my dry, itchy 40+ year old skin) than I do when I buy Caress. So, I save time, money, and my itchy skin when I buy a better bath soap.
Hair cutting is another item in the Personal Expense category that I have control over. I haven't paid to have my hair cut in over 2 years. I cut my own hair. It's not that hard to learn, especially if you have long hair and just really need your hair trimmed every few months.
I cut my daughter's hair too. She wasn't happy about it, at first. She wanted to go to a "Hair Salon" and watch in a big mirror as some person gossiped with their work-mates while snipping away at her hair (and charged us to wash her already clean hair just to add to the bill). They usually cut it too short, too.
But she has long hair and just needs a trim. Once she understood that I wasn't going to pay $15 - $20 every 8 weeks just to have her hair trimmed, she got used to the idea. Now, she asks me to cut it, and I cut it a little at a time to make sure it isn't too short.
Other ways I save money that might seem extreme are:
Some of these methods of saving money may seem extreme to you, but to me, they are simple choices. When you have Goals, you set Priorities, and that just means you make choices based on what is most important to you.
I'd much rather be extremely frugal in the small details of my life than do without the things that are most important to me.
What are Your Priorities? Do you use Frugal Extremes to reach your Goals?
Now, that might seem extreme to some of you, but to me it's a simple choice. There are only a few categories in the budget that I have any real control over, and propane is one of mine.
I allot a certain amount of money in the budget for propane each year and that's all I buy. And, I still challenge myself not to use it all. The fact that my fingers are cold as I write this doesn't matter to me. I have my Goal in mind.
Personal Expenses is another category that I have some control over. I can't decide not to buy soap and shampoo, but I can decide how much to spend on these necessities. So, instead of buying cheap, watery shampoo I buy Tresemme or Pantene.
That last sentence may have surprised you. It would have surprised me had I read it on another site last year. Back then all I bought was store brands of shampoo. But, I've since learned that we use much more cheap shampoo than we do Tresemme or Pantene and it doesn't work nearly as well.
With shampoo it isn't the cleansing aspect that is different, they all clean your hair just as well. It's the conditioning and body aspects that make a difference. For example, I have fine, thin hair. When I use a store brand shampoo my hair flies all over the place like it's been attacked with a blown-up balloon. But, when I use Tresemme my hair has body without static.
Would I spend more just to have more body or an absence of static in my hair? No, like I said, I have plans for my money. But, when the cost-analysis showed me that it comes out just as cheap (or close to it) as the store brand shampoo, I changed brands. And shampoo is on the shopping list much less frequently.
For bath soap, I use Caress. I've found that I spend more money on cheap soap plus body lotion (trying to put some moisture back into my dry, itchy 40+ year old skin) than I do when I buy Caress. So, I save time, money, and my itchy skin when I buy a better bath soap.
Hair cutting is another item in the Personal Expense category that I have control over. I haven't paid to have my hair cut in over 2 years. I cut my own hair. It's not that hard to learn, especially if you have long hair and just really need your hair trimmed every few months.
I cut my daughter's hair too. She wasn't happy about it, at first. She wanted to go to a "Hair Salon" and watch in a big mirror as some person gossiped with their work-mates while snipping away at her hair (and charged us to wash her already clean hair just to add to the bill). They usually cut it too short, too.
But she has long hair and just needs a trim. Once she understood that I wasn't going to pay $15 - $20 every 8 weeks just to have her hair trimmed, she got used to the idea. Now, she asks me to cut it, and I cut it a little at a time to make sure it isn't too short.
Other ways I save money that might seem extreme are:
- I wash snap bags and re-use them
- I save aluminum foil if it hasn't actually touched food, just the bowl
- I wash our cars at home - with a bucket - I don't use the hose except to wet and rinse
- I use bath water to wash the dogs or water my plants and garden
- I use less detergent per load of clothes than is recommended - washes just as well
- I add one capful of fabric softener to a 32 oz spray bottle, add (boiled, then cooled) water, and spray just the wrinkle-prone clothes - works great
- I make my own hot chocolate mix and use less than is recommeded per serving
- I don't buy paper napkins or paper towels, I make them from old flannel shirts (just cut into rectangles or squares and hem)
Some of these methods of saving money may seem extreme to you, but to me, they are simple choices. When you have Goals, you set Priorities, and that just means you make choices based on what is most important to you.
I'd much rather be extremely frugal in the small details of my life than do without the things that are most important to me.
What are Your Priorities? Do you use Frugal Extremes to reach your Goals?
Tuesday, November 07, 2006
Tweak Your Financial Goals - 1 Year Mark
After a year of working on my goals, it dawned on me that my goals had changed. Some had been accomplished, others had changed. Let's see how far I've come.
Goal #1: Create Freedom/Smart Accounts ACCOMPLISHED
SHORT-TERM GOAL: Save the minimum amount needed to pay irregular bills ACCOMPLISHED
LONG-TERM GOAL: Increase savings to upgrade coverage and provide a cushion This Goal has been suspended until after I move. At that time I will re-visit it and determine if it still fits my needs.
My Freedom (Smart Money) Accounts are at INGDirect. I keep just one account and divide them into categories in a Spreadsheet. My Categories are:
AUTO - for Auto Insurance and Tags
PROPANE - for heating gas (I have a note on the spreadsheet to remind me to fill the tank in the summer when prices are usually lower, and that tank rent is due in Oct)
SEASONAL - for seasonal clothes and gifts like Christmas
LIFE INSURANCE - obviously for life insurance premiums
I had several more categories in my Freedom Accounts, but found I didn't need them there. These 4 are the basic necessities.
Goal #2 Create an Emergency Fund
SHORT-TERM GOAL: Save $1000 ACCOMPLISHED
INTERMEDIATE-TERM GOAL: Save 3 months expenses PLUS a typical car repair, a typical home repair, and the medical insurance deductible (I added this one. I find it more reasonable than a 6 month goal when so many things in the house need to be done) ACCOMPLISHED
LONG-TERM GOAL: Save 6 months expenses PLUS enough to cover a typical car repair, a typical home repair, and the medical insurance deductible. This Goal has been suspended until after I move (see above)
I have my Emergency Fund in a Capital One Money Market Account. This account pays a little bit more than INGDirect (Cap One 4.8%, ING 4.4%) but more importantly it has check writing priviledges.
If an emergency occurs (as it did when the washer sprung a leak), I want access to the money immediately. I am more likely to need a checkbook for an emergency or a car repair than need cash, and the checks are free. This is why I chose Capital One for my Emergency Fund.
*The only down side to this account was that it was not EFT enabled (Electronic Funds Transfer). Capital One has now encorporated these accounts into their Direct Banking system, so you can withdraw funds to your checking account online, or write a check.
Goal #3 Pay Off Credit Card Debt
SHORT-TERM GOAL: Pay off smallest credit card bill ACCOMPLISHED
LONG-TERM GOAL: Pay off all credit card debt and stop using credit cards unless total can be paid each month (I have paid all but $560 credit card debt. This will be paid off in 3 months) 83% ACCOMPLISHED
Once the next to last cc debt was paid, I rolled that payment into this one. No backing off was allowed. I didn't even think of having money freed up, I just started sending it all to this last debt. It feels GREAT knowing I will have paid off $3289 in 1 year and 3 months time!
Goal #4 Contribute to Retirement Account
SHORT-TERM GOAL: Contribute at least 1% to retirement.ACCOMPLISHED
INTERMEDIATE-TERM GOAL: Increase contributions to reach employer match ACCOMPLISHED
LONG-TERM GOAL: Increase contributions to 10% - 20% This Goal has been suspended until after I move. Half-Way ACCOMPLISHED
Start with at least 1%, do more if you can and make it a goal to increase your contribution at least once a year. Roll your annual pay increase into your 401k and you won't even notice it. You will be accomplishing this goal without feeling even a pinch.
If your employer offers a match (most employers will match some portion of your 401k contribution) contribute at least enough to get the match. If you don't have a retirement account through your employer, open a Roth IRA account and contribute at least 1% of your take-home pay.
I contribute 5% to the 401k because the match cutoff is 5% (employer matches 50% of contributions, up to 5%).
Goal #5 Save for Home Improvements
SHORT-TERM GOAL: Decide on most pressing area for improvement and begin saving
LONG-TERM GOAL: Create savings sub-accounts for all improvements
If you own a house you're going to have to make improvements and repairs. All houses will need a new roof, new flooring, fresh paint, new appliances, and maintenance at some point. Saving for these things just makes sense.
Now that I've re-visited my Goals and realized they need a tweak, I've rewritten them, as follows:
New Goal #1: Pay Off Credit Card Debt
SHORT-TERM GOAL: 3 more months till all credit card debt is paid.
LONG-TERM GOAL: Stop using credit cards unless total can be paid each month ACCOMPLISHED
New Goal #2: Save just for Home Improvements needed to Sell the House
New Goal #3: Save for Down Payment and Closing Costs on a Home in the Country.
Remember: studies have shown that happiness comes from making progress on a Goal, Not on reaching that goal. So, always re-visit your goals and create new ones when you've accomplished (or suspended) the old ones. Keep a Goal of happiness and contentment a permanent part of your life.
Goal #1: Create Freedom/Smart Accounts ACCOMPLISHED
SHORT-TERM GOAL: Save the minimum amount needed to pay irregular bills ACCOMPLISHED
LONG-TERM GOAL: Increase savings to upgrade coverage and provide a cushion This Goal has been suspended until after I move. At that time I will re-visit it and determine if it still fits my needs.
My Freedom (Smart Money) Accounts are at INGDirect. I keep just one account and divide them into categories in a Spreadsheet. My Categories are:
AUTO - for Auto Insurance and Tags
PROPANE - for heating gas (I have a note on the spreadsheet to remind me to fill the tank in the summer when prices are usually lower, and that tank rent is due in Oct)
SEASONAL - for seasonal clothes and gifts like Christmas
LIFE INSURANCE - obviously for life insurance premiums
I had several more categories in my Freedom Accounts, but found I didn't need them there. These 4 are the basic necessities.
Goal #2 Create an Emergency Fund
SHORT-TERM GOAL: Save $1000 ACCOMPLISHED
INTERMEDIATE-TERM GOAL: Save 3 months expenses PLUS a typical car repair, a typical home repair, and the medical insurance deductible (I added this one. I find it more reasonable than a 6 month goal when so many things in the house need to be done) ACCOMPLISHED
LONG-TERM GOAL: Save 6 months expenses PLUS enough to cover a typical car repair, a typical home repair, and the medical insurance deductible. This Goal has been suspended until after I move (see above)
I have my Emergency Fund in a Capital One Money Market Account. This account pays a little bit more than INGDirect (Cap One 4.8%, ING 4.4%) but more importantly it has check writing priviledges.
If an emergency occurs (as it did when the washer sprung a leak), I want access to the money immediately. I am more likely to need a checkbook for an emergency or a car repair than need cash, and the checks are free. This is why I chose Capital One for my Emergency Fund.
*The only down side to this account was that it was not EFT enabled (Electronic Funds Transfer). Capital One has now encorporated these accounts into their Direct Banking system, so you can withdraw funds to your checking account online, or write a check.
Goal #3 Pay Off Credit Card Debt
SHORT-TERM GOAL: Pay off smallest credit card bill ACCOMPLISHED
LONG-TERM GOAL: Pay off all credit card debt and stop using credit cards unless total can be paid each month (I have paid all but $560 credit card debt. This will be paid off in 3 months) 83% ACCOMPLISHED
Once the next to last cc debt was paid, I rolled that payment into this one. No backing off was allowed. I didn't even think of having money freed up, I just started sending it all to this last debt. It feels GREAT knowing I will have paid off $3289 in 1 year and 3 months time!
Goal #4 Contribute to Retirement Account
SHORT-TERM GOAL: Contribute at least 1% to retirement.ACCOMPLISHED
INTERMEDIATE-TERM GOAL: Increase contributions to reach employer match ACCOMPLISHED
LONG-TERM GOAL: Increase contributions to 10% - 20% This Goal has been suspended until after I move. Half-Way ACCOMPLISHED
Start with at least 1%, do more if you can and make it a goal to increase your contribution at least once a year. Roll your annual pay increase into your 401k and you won't even notice it. You will be accomplishing this goal without feeling even a pinch.
If your employer offers a match (most employers will match some portion of your 401k contribution) contribute at least enough to get the match. If you don't have a retirement account through your employer, open a Roth IRA account and contribute at least 1% of your take-home pay.
I contribute 5% to the 401k because the match cutoff is 5% (employer matches 50% of contributions, up to 5%).
Goal #5 Save for Home Improvements
SHORT-TERM GOAL: Decide on most pressing area for improvement and begin saving
LONG-TERM GOAL: Create savings sub-accounts for all improvements
If you own a house you're going to have to make improvements and repairs. All houses will need a new roof, new flooring, fresh paint, new appliances, and maintenance at some point. Saving for these things just makes sense.
Now that I've re-visited my Goals and realized they need a tweak, I've rewritten them, as follows:
New Goal #1: Pay Off Credit Card Debt
SHORT-TERM GOAL: 3 more months till all credit card debt is paid.
LONG-TERM GOAL: Stop using credit cards unless total can be paid each month ACCOMPLISHED
New Goal #2: Save just for Home Improvements needed to Sell the House
New Goal #3: Save for Down Payment and Closing Costs on a Home in the Country.
Remember: studies have shown that happiness comes from making progress on a Goal, Not on reaching that goal. So, always re-visit your goals and create new ones when you've accomplished (or suspended) the old ones. Keep a Goal of happiness and contentment a permanent part of your life.
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