The Dawn of a New Era

My wife and I had our financial summitt this weekend. It went well. We think we have worked the numbers to fit the new budget. Sacrifice is tough. We will be starting on August 1st. We decided to use the calender month as our fiscal month. We will meet again at the end of the month to see how it went and what changes need to be made. Important notes:

* All surplus will be rolled into DP fund.
* All deficits will be deducted from next month's allotment.
* Allowed 1 Mulligan PP for the first 2 months.
- A Mulligan is defined as a momentary lapse of budget conscienceness. The funds will be supplemented from emergency cash. After two months, will be treated as a deficit.

Some of the most intense conversation came from the biggest change in this budget. We are converting from a 3 account system to a singular account. Previously, we both deposited a set amount into a joint account that was used to pay for bills and the remainder went into individual accounts to be used as we wanted. It worked perfectly as we first merged our finances. The big problem now is - its not working for our common goals. No savings. Now we are accountable for what we spend for individual pleasure. The funny part is neither of us really cares what the other spends, but we don't want to be seen as the majority money spender. Those greens fees cost what?!? This aspect will take the most patience and discipline. We have always been great communicators and we have agreed to talk about any ill feelings about individual expenses. One potential fix is dividing the Fun Money into 1/3s. That way we can spend our part of the fun money without feeling like we are taking away from the other. I don't really want to do it this way because I want us to be accountable for our spending and get into the mentality of OUR money.

This weekend we gave it a test run.

Friday - greens fee and 19th hole dinner and beverages. Maybe walk in the future instead of taking a cart.
Saturday - Did not eat out for lunch or dinner. We ate at one of CC's restaurants and cooked dinner at home. Brought beer and a flask for street festival. We did splurge on a intoxicated pizza at 1 am.
Sunday - Did not go out for lunch. Did not buy margaritas for poolside treat. Tap water is not as enjoyable as a lovely glass of margarita, but it was cheaper.

** Weight loss note - I began playing Sunday morning basketball with the boys. I cancelled my gym membership in a money savings attempt and I am looking for free exercise indoors during the oppressing heat. It also achieved detoxing from previous night.

All in all, I am actually excited. It is going to be a challenge to get to our goals. We are notorious big spenders especially during the upcoming holidays. So the most difficult is about to come.

Notes for the upcoming week. Look into ING account for DP savings and mail out the wedding thank you cards.

Oh, that's how much I spend?

This weekend my wife and I are going to have a serious meeting of the minds and implement a new budget in our househould. After reading on a few sites I ran into the article about the 60% Solution. I believe it originated on MSN Money. If I new how to do cool links I would add it HERE. In simple terms it's making sure that 60% of your gross income goes to your "Committed Expenses". This is Rent, bills, insurance, grocery - the necessities to not have collectors calling you. The other 40% is divided into 4 - 10% catagories. Short term savings, long term savings, retirement savings and fun money. It seems to be the most functional and, honestly, the easiest to follow budget plans. So we are going to give it a shot for the rest of the year. Our meeting will be to modify it to our needs.

First, I am not a big fan of financial plans that use your gross income. I don't have my gross amount to spend. So, I am going to adjust the numbers to work off of my net income. I will guarantee the 60% will not work. Also, I am in sales so I don't have a consistent monthly income. Some months are better than others, so that is another matter to contend with. We typically try to live off our salaries and my commission check is cream. Or "shoes", as my wife puts it.

I have 3 six-month goals. I will be adding them onto NCN Network as soon as I figure that out. First goal - down payment. I am looking at 5% for a down payment. We are shooting for additional 5% gift from our parents. More on that later. Second - $1000 emergency fund. We are almost there. Third - eliminate all credit card debt. We are currently riding around $5,000. Most of this is from our wedding. Hey, it was a nice wedding and these are the consequences.

The million dollar question - "Is this attainable?" As I mentioned before we had a budget. Its only function was to make sure that our income was more than our "committed expenses". No savings plan, repeat, no savings plan. The honest truth - we have $800 in savings. No retirement plan, no IRA's, no investments. Our motto has been "Living on Love" or "Sweat Equity". That and a nickel will get us, well, nothing these days. Really, I feel like I truly have my life long partner, so everything else is about finding the way to be as happy as possible together. BMWs and beach houses aren't free, are they?

We do a decent job of saving all our receipts. So, last night I entered every receipt for the last two months into a spreadsheet to see what numbers we have to work with. We wrote down what we thought we spent and what we would like to have our new budget look like. You know to see where we would have to make sacrifices. I quickly loss my appetite. Side bar, this could be the new weight loss fad - finances before dinner. In the catagory of Food which holds groceries, fast food and eat in dinners: we were 400% higher than we thought we would budget. Gas and travel expenses (which my wife argued should hold trips to Starbucks) was 125%. Lastly and the hardest to catagorize is Fun Money. It holds everything from vitamins to ridiculous bar tabs, but mostly golf and salons. It was another 300% more than we were going to budget.

Good news - we have something to work with. We both know exactly where to we can cut out the fat. Bad news - what the heck were we thinking. How do two people who feel like they are being frugal flush so much money down the toilet? I don't know but to answer the question, is it attainable? - it is.

This is what I am going to present to my wife. Taking 30% of our net income and throwing that towards the 3 goals. First, fill the emergency fund. Second, determine whether I should pay off the credit card first or save for the down payment first. My initial thought is to do both. I am going to open an ING or HSBC account for our DP savings. There is a lot of conflict info out there that says go both ways. We will have to see what is possible and what is attainable. We have a small time frame for the DP, due to our lease ending. We already pay our CC early and at least 2x the minimum due. The interest rate is not entirely out of hand considering my past credit problems.

One day I will have to rant about the in-laws and the dissappearing wedding gift (cash). Lesson learned - don't adjust your finances for something that hasn't happened yet. Or simplier yet, don't spend money you don't have. I thought I would have learned that by now!!

Wish me luck.

Better late than never ...

That's what I always say, but I think thats what all people that our consistently late say. Well, I have been on blogger a lot lately. I have mostly been reading Personal Finances sites. I have found fantastic one called MapGirl's Fiscal Challenge. She is fantastic to read and offers several links to other sites. Since my last post (last year) I have gotten married and lost several more pounds. Hurrah! Marriage is fantastic and I couldn't be happier. BUT!! Now I am consumed with planning our financial future. We have always talked about money and have been great communicators, but I have taken it to a new and quite disturbing level. My wife nows when I am about to talk about finances and she walks in the other room. My wife and I have not had the best background with finances. I was a spender who found new and exciting ways to spend money and more interestingly enough *find* money (spend next week's check before you get it)that I didn't have. After a rough tenure in Chicago I filed bankruptcy. No good. My wife was different. She was supported by her family while she was in college and worked for fun money. When we first got together she had never paid a bill or balanced a checkbook. Sounds like a disaster in waiting, right? It's amazing what a great love will bring to the balance of your life. We are preservering and slowly, but surely making headway. A lot of the advice that I have been reading from other PF sites have really help me shape where we COULD go.

We face a lot of challenges for our financial future. I am passionately motivated to accomplishing several financial goals. I plan to list them here soon in order to face them often and help to stay on course. First things first. We need to make a budget that makes sense. We currently have a budget, but its not functional. It basically lets us know that we make enough money to cover our fixed expenses. It stops there. Now it has helped. For the last several years I have been saving for a goal. Not being able to acquire things on credits forced a level of frugality that I never knew was in me. My budget was easy - pay for all the expenses and what is left over goes towards buying an engagement ring, then a wedding ring (now suffering, but that doesn't require money) and half of our wedding. The next big thing is a house. I am affixated on creating a smart budget for two graduate students with not a lot of money who want to buy a house.