DH and I sat down this afternoon and discussed our finances. I feel pretty good about the decisions we made and I am really looking forward to starting on them. Here’s what we came up with:
1. We need to be better about sticking to our budget. We have had a ‘budget’ since we got married 10 months ago, but it never really got past the tracking our expenses mode. Meaning I use Money to see where our money goes and put that in the budget, but we rarely denied ourselves if it meant going over budget in a particular category. Part of that comes from the fact that we put everything on our CC which we pay off each month. So it was spending virtual money. To make up for this we have enacted the white board system from our college days. Basically we have a white board with our most variable expenses (entertainment, groceries, dining out, etc) and the amount budgeted for them. Then after a purchase in one of these categories it is subtracted from the total budgeted. This is along the lines of an envelope system, but it allows us to still use our CC and earn cash back from those purchases.
2. We are going to open Roth IRAs for both of us and max out the contributions for 2007. We are planning on opening a Vanguard Target Retirement account since it automatically becomes more conservative as we get older and we wouldn’t have to think about it.
3. We are going to maintain at least 10,000 in our savings account as an EF. This is the minimum needed to earn the higher rate of interest, and about 3 months expenses. DH is in the military, so he’s got pretty good job security. [Since this earns pretty good interest it is also going to be the holding for our other goal of saving for a down payment, so there will more likely always be more than this available to us if needed…plus our Roth if things got REALLY bad.]
4. Once a month I am going to drain our checking account down to a safe comfort level for us. This is so that we won’t bounce the few checks we write, but also so we can earn higher interest on that money. On odd months we are going to transfer that money to help pay off our cars and on even months it is going to go into our savings/EF/down payment account. If we stick to our budget, this amount could be about 1200 a month.
5. We are using the $10,000 I got from my dad’s life insurance to cover unexpected education and travel expenses. Looking back over the last 5 months expenses, tuition and other associated educational costs were by far the biggest budget busters. We weren’t really able to plan for these expenses and they were quite significant since I was considered an out of state resident. So, having this money to cover these expenses in the future will be budget a life saver.
Results of our money date
May 17th, 2007 at 09:37 pm
May 18th, 2007 at 02:53 am 1179456781
May 18th, 2007 at 02:55 am 1179456913
May 18th, 2007 at 03:38 pm 1179502714
May 18th, 2007 at 04:21 pm 1179505319
May 18th, 2007 at 05:12 pm 1179508343