The B Word

You probably know by now I'm not a very good budgeter. Yesterday, I had $23 to my name. Thank goodness today was payday. I have a lot to do with not a whole lot of money, so it's time to buckle down and analyze my spending habits.

Some financial experts (I use that term loosely) recommend carrying around a small notebook and jotting down everything you spend money on for the month, but I'm not disciplined enough to do that for more than two weeks or so. The good thing is having a PNC Virtual Wallet account almost elimimates that need by offering a "Spending Zone" tracker where I can catagorize my purchases.

First, let's look at where my money should be going. I used a budget calculator which figured out the max I should be spending in each catagory:


(click to make it bigger)

The only catagories I'm "under" the limit are Housing and Transportation - sometimes Food. Yikes!

Now let's look at what I'm actually spending money on. I'm primarily basing this off February's spending because March was really a fluke with the whole bats in the attic mess, but I'm also taking into consideration the fact that our electric bill isn't $300 every month and I'm also contributing more money towards credit cards.

Here's the corresponding number breakdown:
   House: $640 ($600 for the mortgage, $40 water/sewer)
   Auto: $85 ish for gas & EZPass - I probably should raise this number to about $100 per month to factor in oil changes. Hubs pays the insurance so it's not included
   Debts: $470 for credit cards & student loans
   Utilities: $200 for phone & electric ($90 cell phones, probably an average of $100 for electric, although in the winter this number can climb a lot higher) I did not include cable b/c the hubs pays for that on his own
   Food: $500... MUCH higher than I expected
   Everything Else: $345 (mostly stuff for Molly, ATM withdrawals, & Wawa coffees)

For a total of about $2,285 or $185 over budget every month. And Savings didn't even make it onto the pie chart (good thing I opened that credit union account to have some automatically put away!) Obviously something's got to give and it's clearly food. I really need to get serious about coupons and shopping the sales.

It's kind of depressing to see yourself in the red after trying so hard to stay in the black. Hopefully I'll hit the Mega Millions tonight ($546 million dollars!) and I won't have to worry about it. But in the mean time, I'll keep working for a fatter wallet.

Day Thirty Two Spent:
$20 ATM withdrawal (work raffle, lottery tickets, coffee)
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Day Thirty Two Saved: $50.00

Treat Yo'self

The above captioned phrase has become quite verbatim in our house. We use it seriously, as a joke, when we're mad, sad, ecstatic, the whole nine yards. We like it so much that we wrote it on a dollar and hung it on the ceiling at a restaurant on Cabbage Key island this past December.

if you already know our last names, great! if not, the mystery continues...

But in order to better understand the science behind "Treat Yo'self/Yourself", we need to watch a little clip, courtesy of Parks & Recreation (seriously, if you're not watching this show, you need to stop reading this blog until you're caught up -- the references aren't going to stop here):

How about one more for good measure? I want to make sure you're fully immersed in the concept:

Ever since this episode came out, I feel like every advertiser is using this phrase in some form. I would be foolish to think the "go on, you deserve it" campaign is a new strategy, when in fact, it's probably one of the oldest tricks in the advertising book. What I didn't realize was how much of a hold it had on me until this past weekend when I was out at the shops (read more about that here).

I started to think to myself: "Self...you've been really good lately. You haven't used your credit card in one month! What's the harm in buying one dinner/shirt/drink/hair product/etc?" Let me tell you, it is a slippery slope back into debt when you start thinking that way.

Even though Lent is almost over, I know my financial journey is still just beginning, especially with this epiphany of sorts. I still have to overcome this almost primal desire to buy and consume. I have to make myself take a step back when there's an item in my hand and ask "Self... why are you buying this drink/shirt/hair product/snack? Are you really thirsty/naked/hungry or do you just want this item for the sake of having it?" Although identifying wants versus needs was an integral component in my rules, I have a bad habit of justifying my purchases instead of admitting I made a mistake by buying it.

I think it's a step in the right direction to be able to identify when I'm using the "treat yo'self" mentality. Hopefully, this will help curb future spending!

40 Ounces to Savings

Confession: I was a bit spend happy this weekend. I broke down and shopped needlessly.
On Saturday, we went out for a friend's birthday in Atlantic City; First, we went to Tony's Baltimore Grill, which was budget friendly at $9 for a cheese pizza and $2.50 for a beer. Then we headed over to A Dam Good Sports Bar in the Tropicana. ADGSB is famous for its $5 40 ounce beers; However, on Saturdays the price goes up to $9.00. Still a pretty good deal, when you compare it with other casino bars where it's $4 or $5 for a 12 ounce bottle. The spending kicked in when I bought four shots for the birthday girl. When we got our tab, I was shocked to see it was $8 per shot! I was ready for $5 each, definitely not $8. Overall, I spent $60 for the evening, without any gambling. We did save $10 in parking, though, thanks to one friend who snagged us parking passes.

Earlier in the day, I dropped Molly off at day care and stopped off at Target. I didn't buy anything (I saved that for Sunday) so I tempted fate by going to our local TJ Maxx/Homegoods store. I managed to not buy a million things for the house, but I did buy a $15 shirt to wear out to the bar. Now, if this was five years ago, I would have spent about $30 on a dress like this:



I had a photo of an actual girl at the bar, but it won't load. damn you, blogger!

But since I'm married now and don't need to impress anyone, I opted to buy a simple striped shirt which I can wear again. At least I'm learning something.
On Sunday, the hubs and I went back out and ogled at new grills and tried to price out how much it would cost for us to build a new fence ourselves rather than having it installed. We also stopped by Target (again) and I bought goodies to fill the hubs' nephews Easter baskets. I spent about $15 on each and filled it with mostly non-candy goodies, like mini games, stickers, etc. We were in a pizza mood still so I stocked up on frozen Digiorno's for $9 with a coupon.

Oh! And we received our tax return on Saturday, but that went right into the savings account to pay for the removal of the zoo in our attic. No fun to be had there.

Did anyone do better than me at saving money this weekend? Now I have no choice but to be super frugal until payday this Friday.

Saturday Spent:                                                                           Sunday Spent:
$60.00 dinner + drinks                                                           $28.00 gas ($3.63 p/gal. yuck!)
$15.00 TJ Maxx                                                                         $32.10 Camp Bow Wow
$3.20 Wawa (5 hour energy)                                                 $77.05 Target
-------------------------                                                                  $18.00 Walgreens (allergy meds)
Saturday Saved:  $10.00                                                          -------------------------------
                                                                                                               Sunday Saved: $0.00

Monday Spent:
$5.00 Mega Millions tickets
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Monday Saved: $0.00

Fantasy Fun

Lets take a break from our serious money talk for a minute, okay?

The Mega Millions in NJ has rolled over for the second time and the jackpot is now a cool $356 million and growing.

Which means, if you won Tuesday night and took the lump sum pay out option. NJ is going to take about 11% of that in taxes, leaving you with about $317 million. Uncle Sam is going to take a hefty 25% which means you're bring home about $238,750,000. What do you do first?

Here's what I would do (in no particular order):

• Immediately put in my two weeks at work
• Put out house on the market. I wouldn't even pay it off first. 
• Pay off our other debts
• Buy a big house a few blocks from the beach in Brigantine so my mom could sell her house and live there with us
• Travel
• Open my own bar/restaurant or at least go back to bartending (a job I actually really loved)
• Become a dog trainer
• Adopt more dogs
• Get Brian a membership at Galloway National Golf Club
• Buy a hybrid car
• Invest at least 100 million of it
• Get crazy awesome seats at MetLife stadium for all the Jets home games for all my in-laws

If I've learned anything from this savings experience, it's definitely to put as much of the money away before I start spending it!

What would you do if you woke up a mega millionaire?

omg! pyf. wth?

Yesterday, I was chatting up a co-worker for details to add to Thursday's post and she mentioned a concept I hadn't thought of since my personal finance course at Simmons College - Pay Yourself First (or as I like to say, PYF).

The concept is simple - set aside money in some type of account before you pay bills, buy groceries, or hit the bar. Like most people, I think about saving only when there's barely any money left in my bank account. In October 2011, Americans were saving about 3.6% of their disposable income which is only 0.5% higher than our pre-recession savings of 3.1% (from here). When I think about how much I take home per year, while it's not much, 3.6% in savings seems downright pitiful. Clearly, paying myself last isn't working out, especially after crunching the numbers yesterday.

What does work (for me) is an automatic payroll deduction. If I can't see it, I can't spend it. A few months ago, I enrolled in a deferred compensation plan and opened an IRA, both offered by my employer, in addition to the money taken out for my pension (I'm of the mindset the pension probably won't be there by the time I retire). Between the two accounts I was contributing 12% of my pre-tax income towards retirement. So I actually was paying myself first for a bit. Once I started this debt payoff challenge, I decreased my contributions to 3% in order to sock the extra $120 or so towards credit cards. Unfortunately, my savings account has grown only infinitesimally in the past two months and I decided it's time for more drastic measures.

Our employer won't automatically deduct money into just any account so today, I signed up with our county's credit union online. All they asked for was $5 to open a basic savings account. On Monday, I'll pop in with my signed form and my driver's license and they'll be able to route $50 from every paycheck into this new account. Once I have $100 in the account, I'll receive compounded interest quarterly. The rate isn't much (0.1%), but at least I'll have money set aside every month before I can figure out a way to spend it.

one day this will be me.
(with money. not with a colored face but a grey neck/hands)

Who else PYF's? Can we get this acroynm happening for real? LoLz.

Day Thirty Two Spent:
$0.85 vending machine Oreo's
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Day Thirty Two Saved:
$5.00 in new credit union account

5gether

Does anyone know where the name of today's post came from? It's from the geniuses that developed this little diddy:

Can you believe it's been twelve years since that series aired? Me either. Anyway, "5gether" was the first song off their sophomore album 2gether: Again. It popped into my head while reading the article "5 Tips to Cut Custs on Your Home" What? You're not reminded of fictional boy bands while reading finance articles? Weirdo.

Absolutely none of the recommendations are helpful to us at the moment. None of the homes in our area are even selling for me to fight a property assessment (though this tip did help my mom last year!), we can't even afford basic remodeling right now because of the costs of removing the zoo from our attic, I'm fairly certain we have the cheapest mortgage we could have scored (and a low interest rate to boot), and we don't have a business that needs a home office, at least not until this blog goes viral.

The only tip that got me thinking was #3 - Know how much mortgage you can afford. I distinctly remember being on the phone with Wells Fargo during the pre-approval interview and almost having a heart attack when we were approved for a $1,600 per-month mortgage. Once I picked my jaw up from the desk, I remembered I was only paying half that amount. $800 per month still seemed like a lot, especially with our wedding right around the corner. I never did a monthly mortage calculator back then, so why not do one now?

Most mortgage calculators tell you to take your gross monthly income and multiply it by 28%. This percentage accounts for monthly payments for principal and interest, mortgage insurance (we have it), property taxes, homeowners insurance, homeowners association fees (don't have it), and payments for a home-equity loan or line of credit (don't have either). I used my take-home pay to do the calculations - I don't see the point in figuring out what I could afford before everything is taken out, since that's not what goes into my bank account every other Friday.

$2,200 x 0.28 = $616.00 per month

I'm just squeeking under the max by $16.00. Phew!

The other calculator the article suggested was a Maximum Monthly Debt Repayment (MMDR) calculation of your gross monthly income multiplied by 36%. The MMDR includes mortgage payments, credit cards, student loans, car loans/leases, ailmony, child support, or other debt with more than ten months of repayment left. It's noteworthy that the ideal percentage is 36%, but in places where the cost of living is higher, like the northern NJ/NYC region, the percentage may go as high as 45% Here's mine:

$2,200 x 0.36 = $792.00 per month

Here is where I blow past the recommended 36% and even topple the cap of 45%. Between the morgage ($600), my student loans ($205), and my credit card payments ($350), I'm closer to using 52% of my monthly take home pay just for debt. Wow! No wonder it's tight during the winter months when the electric bill gets sky high as well.

What's your percentage look like? Off the chart or small and sweet?

Day Thirty One Spent: $0.00
--------------------------------
Day Thirty One Saved: $0.00

For Richer, For Poorer

Today, I thought it would be interesting to see how my peers handle finances within their relationships. You already know I'm not the best when it comes to communicating with the hubs about money. I was curious to see if anyone else had the same difficulties or if I was the only one with my head in the sand. I gave everyone the same three questions to answer, but all the respondents have been together for varying amounts of time (names have been changed).

1. How did you view money before you were in a committed relationship/engaged/married?

• "I would say my husband and I have always been "loose" with our money" - Gloria, married 1.5 years, together 7 years
• "I was actually a better saver before...but I was also working two jobs" - Julie, married 6 months, together 5 years
• "I didn't think about money that much, I would spend it like hot cakes. I didn't save much, or if I did, it was because I wanted something expensive." - Wes, married to Julie
• "Back in the day I was probably the consumer who bought things without researching and double checking. I just did stuff without thinking about the future." - Sophia, getting married in August, together 1.5 years
• "Prior to being in a committed relationship, I viewed money as something to spend on clothes, gadgets, going out, or vacations." - Dan, in a relationship 2 years

2. How has being in a relationship/engaged/married changed the way you view your money?

• " When we first opened the joint account, it took a little getting used to, because we were both so used to just doing what we wanted all the time, and not having to worry about what anyone else was spending...But with the joint account, you have to know what the other person is doing so you don't overdraft. If we are running low in the checking account, I just give my husband a heads up so he can watch his spending until the next direct deposit is put in.  Neither one of us spends too frivolously... With big purchases, he usually just goes by my opinion since I handle the finances." - Aubrey, married 3.5 years, together 9 years 
• "Before we got married, we settled a lot of debt and refuse to use credit cards except for 1 small one to build our credit- less than $500 limit... We have made a point to try to make all big purchases in cash... Overall, our relationship with money has been the same- what's mine is his and vice versa." - Gloria
• "I think of everything WE need, for example if I want to buy a Coke for work, I think is there anything we need at home...Now-a-days money is the third thing I think about everyday!" - Wes
• "As much as I make fun of him for making pie charts and talking in percentages... I have found myself looking at the charts and making sure that whatever I want is #1: necessary; #2: affordable... I used to spend money on crap that I really did not need- only because I didnt have a goal." - Sophia
• "I've always been a saver, so if anything, I've influence my husband to be better with money." - Bridget, married 28 years

3. Do you find it difficult to talk with your significant other/spouse about money?

• "Some times it's difficult to talk about money with my husband, especially after I splurged on something for the house or myself or even when the grocery bill gets a little higher than usual." - Claire
• "It's very difficult because I never had to explain to anyone how I spent my money... We both have a love/hate relationship with payday because we know we have money but at the same time we know we need to sit down and talk bills..." - Wes
• "No. We often have discussions about money." - Bridget
• "There are no difficulties talking about money with my partner, we talk about it all the time, our goals, and how to spend and save." - Dan

It wouldn't be fair for me to ask others about their personal lives without discussing our own, so I sat down with the hubs tonight and made him talk about these topics (spoiler: he wasn't very interested).

1. Prior to dating, we were both spenders and we didn't think about what we were spending our money on.
2. The hubs said "it's easier to save now, but only because I make more money." He thinks he spends money on the same kinds of things he did before we were dating. Obviously, you all know I am trying not to spend the way I used to and (attempting) to save more money.
3. We both think it's difficult to talk with each other about money. He says it's because I "have my own ideas about a situation." I can admit I have trouble listening and/or seeing a different perspective other than my own. I feel it's difficult to talk to him about money because he can be very dismissive about what I see as a problem (for example, how much money should we have in savings).

Feel free to respond in the comments with your answers to the questions as well! I think it's so interesting to hear about others relationships. Must be the sociologist in me. Or I'm nosy. Probably both.

Day Thirty Spent: $0.00
----------------------------
Day Thirty Saved: $0.00