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Goals for 2011

I’m surrounded by boxes once again, and in two days, we’ll move for the third time in eight months. It’s a stressful way to start the new year, but it’s really a great thing for our family. After eight months of frugal survival mode, we’ll finally be making enough to start building our savings instead of depleting it.

In addition to paid time off and a decent salary, we finally have employer-provided health insurance again after 8 months of COBRA and private insurance (Hallelujah!).

As I’ve written before, though, I actually find it harder to reach my goals when we’re living comfortably. A tight budget keeps me accountable and forces me to live frugally. More money means more temptation to spend frivolously. While this is more money than we’ve ever made, it’s still a very modest salary by today’s standards, and we’re going to have to stay focused if we want to stretch it to reach all of our goals.

To keep ourselves on track, I’m taking a break from packing to list our goals for this year and beyond.

1. Continue to live frugally.

Over the past eight months, we’ve had no choice but to live frugally. There wasn’t enough money available to go out to eat or buy things we didn’t need. Now that we’re earning more money, the temptation to spend will be greater, and we’ll have to stay committed to our frugal lifestyle.

2. Save at least 25% of our income.

The last year that we lived in North Carolina, we were saving about 30% of our total income. We’ll actually be earning more now than we did then, but we have loftier goals so saving will be a little more challenging.

3. Rebuild our emergency fund.

This is savings priority #1. Three moves, four months with no income at all, and four months earning less than we needed to pay our meager expenses have depleted our emergency fund to practically nothing.

4. Buy a second car.

We currently share a tiny economy car. It has served us well for the past four years, but now that we have a child, it’s a little cramped. In North Carolina, I drove the car to work and Tony was able to take public transportation to work and class. Now that we’re living in a city without reliable public transportation (and we’re living about 15 minutes from Tony’s job), sharing a car will be a little more difficult. So we’d like to invest in a second car so Judah and I aren’t stuck at home all day.

5. Buy a home.

We’re definitely renting for the first year in our new city — and likely the second year as well. But now that it looks like we’ll be settling down for a few years, I want to start making plans to become homeowners. That means meeting with a mortgage broker to find out what we need to do to get our credit in order and ramping up our savings for a down payment.

6. Pay off our student loans.

Becoming debt free is still pretty low on my list of priorities. I do plan to increase our monthly payments on these debts, but I’d like to wait until we’re homeowners to really buckle down and pay them off.

7. Increase retirement savings.

As part of his benefits package, Tony’s employer will be matching his retirement savings up to a percentage. We both have Roth IRA savings accounts as well. I will continue to put money earned through freelancing and other money-making projects into my account. We’ll also decide how much of Tony’s salary to contribute to his employer-provided account tax free.

8. Open a college savings account for Judah.

We likely won’t be too aggressive about saving for Judah’s college fund at this point, but I’d like to get the account in place so his grandparents can contribute if they’d like and we can put some money away when it’s available.

I’m so excited to finally have a bit of money to work with, but it’s not going to go far considering all of our goals. We’re going to have to be extremely focused. Stay tuned to see how we do!

Photo by dmachiavello

Adjusting to our new lifestyle

This summer has been terrible for our finances. We haven’t had any income since May. Thankfully, our bills were drastically reduced for the first, oh, 6 weeks of summer while we stayed with Tony’s family. But we still had car insurance, health insurance, student loan payments, my health insurance deductible, and other expenses.

We moved into our own place in the middle of July, and ever since then we’ve been hemorrhaging money from our savings account. I try to remind myself that this is why we saved. We knew moving was going to be hard, and that Tony wouldn’t start work until August. And of course, when you start a new job, it’s always a few weeks before you receive your first paycheck.

Tony is scheduled to be paid for the first time today, and this month marks the first when we’ll be utilizing our new budget. Up until now, the name of the game has been Spend as Little as Humanly Possible, but I didn’t create a zero-based budget because we didn’t have a monthly income.

When Tony was first offered his adjunct teaching position, his salary wasn’t going to be enough to cover even our bare bones expenses. But they offered him additional classes (he’s now teaching 6), and the extra income took us barely over the edge. Thankfully, they’ve already offered him 6 classes for the spring semester, too, so we know we’ll be set until May. I’ve spent a lot of time crunching numbers, and it looks like we should be able to hang on to our savings if we can keep our budget very tight.

Unfortunately, there’s no room in our regular budget for savings. However, our regular budget is based only on my husband’s income. Any income I make through freelance work or blogging will be reserved for savings. So we’re hoping to replenish the $2,000 we spent from our emergency fund over the summer.

Our new monthly income is about 1/3 lower than our previous combined income. Our monthly savings budget took the biggest hit since we’re no longer including it in our regular budget (for now). But there are other shifting expenses. Our rent is much lower here, but we’re now paying about $500 a month for health insurance (and that will go up when the baby comes. Ugh.) We’re also spending money here and there buying things for the baby (diapers, clothing, etc.)

With new expenses and lower income, we’re trying to make major changes to our spending habits. Here are the biggest changes:

Groceries/Household Goods

I’ve jumped onto the drugstore game, and I’m doing pretty well. Unfortunately, my pregnancy has wreaked havoc on our food bill. When I go to the grocery store, I end up with tons of extra food in the cart. When I send my husband alone, our bill is lower, but I spend the week feeling like I’m starving and there’s not enough food. Sometimes I even send him out to pick things up. Harumph. I’m not sure how to get around it. I was never a big snacker before I got pregnant, but now it seems I need several snacks a day. And snacks are expensive. Hopefully my drugstore deals are offsetting our overspending on groceries. I’ll have to wait until the end of a full budget cycle to know for sure.


We’ve cut cable and most entertainment spending from our bill for now. I haven’t missed going out much since most days I don’t feel well enough to do anything but lay on the couch anyway. Now that we’re living in a smaller town, we’re also not tempted by recreational shopping trips that result in $50 worth of stuff from Target that we don’t need, and that definitely helps.


This apartment is much more energy efficient than our last place. So we’re saving money on our electric bill without even trying. Yay! We tend to keep our place cooler by default, so I’m anticipating lower energy use in the cooler months — at least until December when the baby arrives.

Our goal is to make it through the year with our emergency fund intact. The really ambitious goal is to replenish what we’ve spent and save a little more on top of that. We’re still working on cutting our spending to free up more money for savings. I’ll let you know how it goes!

Photo by purpleslog

Why I’m a money multitasker

Last week’s post about holding off on paying down debt sparked a little controversy in the comments. I wanted to clarify some of my views, because there seems to be some confusion about my financial philosophy.

First of all, I am not debt free. I have never claimed to be. Like most 25-year-olds, my husband and I both carry student loan debt. I’ve written about it before. I don’t regret a day of my education, but I do regret some of my financial choices during that time. But it’s done now.

My husband is a graduate student. I earn an entry level salary. We’ve been blessed with a few pay increases over the past few years, but our income remains pretty low by today’s standards.

When I started this blog, I was depressed about our financial situation. We had credit card debt, student loan debt, no savings, tuition to pay, and we still felt like we didn’t have any money left over for fun. I wanted to learn to save without sacrificing fun.

Since then we’ve adapted to spending very little money in our daily lives. We don’t eat out. We shop the clearance racks (when we do shop). We meal plan. We share a single vehicle. The result is that 30% of our income goes directly into savings. Another 10% of our income goes toward debt repayment.

As my husband prepares to graduate next month, and we prepare to close this chapter in our lives, we have been spending more than usual lately. After three years of frugal living and hard work to pay off credit card debt, build an emergency fund, save for our move, and save for our vacation, we are rewarding ourselves.

I did not ask for permission. I don’t think any of you should ask for permission from anyone when you make decisions about how to manage your money. The point of my blog — from the beginning — was for my husband and I to learn to live on less than our already low income so that we could have enough money to pay debt, save, and enjoy life. Those are my priorities.

I have never subscribed to the Dave Ramsey philosophy. I understand that it’s worked for many people. I admire them, and would never ever judge their choices. I’m happy for them, because they’re happy. But putting every single penny of my extra income toward debt repayment doesn’t make me happy. I don’t want to wait until I’m debt-free to have children, own a home, or see Europe. So I’m using some of my extra income to save for these goals while I pay down our debt.

I admire the commitment to debt-free living, I do, but there is room in my budget for more than that. Dave Ramsey’s baby steps philosophy is focused on one thing at a time — save, then pay debt, then save some more. Only after you’ve saved and paid debt is there room for fun. I just don’t believe that.

I come from the generation of multitaskers, and I think if you’re smart about your spending, you can do a lot even with a very limited salary — without increasing your debt. You can save money, have fun, and pay down debt at the same time. It will take a little longer, but it’s worth it to me. I will eventually be debt free. That low-interest debt will be there waiting for me when we get back from Europe. And we will pay it off — on our own terms and our own timeline.

What Dave Ramsey takes for granted is that we have all the time in the world. But what happens if you spend your young life doing nothing but saving and paying down debt, and then your life is cut short by tragedy? You’re left with no time to enjoy the riches you’ve accumulated. I’d rather multitask now and know that I won’t run out of time before I can enjoy the fruits of all that saving and hard work.

When we get home, it’s back to counting every penny, just like we have for the past three years. It’s back to saving for our goals through very limited spending. We can’t forget about why we’re doing this, though. We want to build a better life for ourselves, and sometimes that means spending a little money.

The whole point of budgeting is making your money go further. If there’s something you’ve been wanting to save for, don’t wait for permission. Start saving now. I think you’d be surprised at just how far your money goes if you spend carefully.

Photo by amagill

I wasn’t even being chased

This morning I finally ran a 5K after four months of training.

My first accomplishment was actually getting to the race and starting. I was convinced that it was too soon, and that I wasn’t ready. I almost backed out at the last minute.

But I made it there, and I ran the race. I’m not going to lie to you — it was hard. Today wasn’t just my first race — it’s the longest I’ve ever run in my life. I’d never run longer than a mile and a half in one stretch.

When I came to mile 1, it felt like I’d already been running for an hour. I made the mistake of training indoors on a treadmill, and running outside was a whole different experience. My lungs were burning with the chilly morning air. My legs ached as they hit the hard concrete. Several times during the race, I wondered if I could actually finish. I considered stopped, cutting through, and walking back to the car without finishing. But I kept going.

I was hoping I’d get a second wind as I hit mile 3. Instead, I just felt exhausted. I wondered how I’d actually get over the finish line.

At that moment, you’ll never believe what song randomly started playing on my iPod shuffle: “Eye of the Tiger.” I almost couldn’t believe it myself. I was going to finish my first 5K to “Eye of the Tiger”? It was too perfect. So I picked up the pace, pushed myself a little further, and I crossed the finish line.

My goal was to finish the race in under 40 minutes. I came in at 41:35. That’s roughly a 13:45 minute mile. My fastest speed is about 12:30 minutes per mile, but considering the fact that I’ve never run a full three miles, I’m cutting myself some slack for endurance.

I may have been slow by a seasoned runner’s standards, but I still crossed the finish line feeling like Rocky.

Photo by Tony, who was so proud when I crossed the finish line that he actually got misty eyed. :)

Losing the battle, winning the war

I write about this topic a. lot. It’s because after years of working on it, I still spend way too much time beating myself up when I have to let things go.

This week I announced that I’ll be updating this blog a little less frequently for the next few weeks as we head into the final weeks before our move. I put a lot of thought into the decision, and I know it’s the right thing to do if I want to maintain my to-do list and my sanity. But knowing it’s the right decision wasn’t enough to keep me from feeling defeated when Tuesday passed with Monday’s post on the homepage.

I’m running my first 5K this Saturday after months of training. The last week in February, my training was going really well. My times were up, my endurance was strong, and I felt like I would surely be ready by the end of March. Then I came down with a brutal cold in the second week of the month that kept me out of the gym for over a week. The endurance and speed that I worked so hard to build flew right out the window. My lungs are still recovering, and my body is still weak from what was a pretty nasty virus. This week I can barely make it a mile before I have to slow down and walk.

My difficult runs aren’t a product of laziness, and I can’t control it. Still I can’t help but my kick myself as I consider the strong possibility that I won’t reach my goal on Saturday. I may not be able to run all 3 miles without walking, and my time will likely be much slower than I hoped.

I know I’m not alone in this endless struggle to convince myself that obstacles are not necessarily failures. I know that you can lose the battle without losing the war, but I still have trouble getting over even the smallest of defeats.

I think a lot of women (and men for that matter) waste too much energy beating themselves up instead of building themselves up. Unfortunately, I’m proof that recognizing the problem isn’t enough to solve it. I can tell myself over and over that it’s okay to take a step back, the important thing is to keep going. Yet I still end up here — beating myself up for obstacles that I can’t control and feeling defeated prematurely. Of course, that attitude isn’t very motivating, and I end up sabotaging myself with negativity in the end.

It’s a vicious cycle that I hope to someday overcome. In the meantime, I just have to keep reminding myself that each setback makes me stronger, brings me one step closer to my goals, and teaches me a valuable lesson in how not to get there.

Photo by kaneda99

Slow & steady

Yesterday, I started week 6 of the Couch to 5K running program. I have to be honest: it’s still really hard. I don’t love running. In fact, I hate it more days than not. I’m bored and tired and every second feels like an eternity. But I set a goal, and I’m making progress.

Even though I started off in decent shape (I’d been working out regularly for over a year), running is a whole different ball game. On my first run two months ago, running for two minutes straight almost killed me. Monday night I was supposed to run 20 minutes straight, but I only made it 13 minutes before I had to slow down and catch my breath.

When I left the gym, I was beating myself up a little. I’ve been training for 8 weeks now (two of which I spent out of the gym because I was sick and then recovering from oral surgery). I want to be able to keep up with the program.

Then I reminded myself of how far I’ve come. Though I’m not advancing in the program quite as quickly as I’d like, I’ve increased my running time from 1 and a half minutes to 13 minutes. I’m running faster and longer. I’m finally losing weight again (only five pounds, but at least the scale is moving).

Most importantly, my training has made me more aware of what I’m putting into my body. My diet has been mostly healthy for the past five years, but I have a tendency to eat too much of the healthy foods we cook. Watching the calorie tracker on the treadmill as I push my way through my run has made me aware of how hard it is to burn off that extra serving of pasta.

It’s also a lot easier for me to resist the occasional temptation. When my entire office went out for Mexican food on Tuesday, I stayed at my desk and ate my Lean Cuisine. As much as I love unlimited chips and salsa, it’s not worth derailing my hard work.

I don’t know if it’s the 5K training or the extra push from the knowledge that I have to wear a bathing suit on our cruise in 2 weeks, but running has helped me accomplish my main objective: increasing my motivation.

In about 6 weeks, I’ll be running my first 5K. If I continue to train this hard, I should be able to run the whole race without stopping. Here’s hoping I can reach my goal.

Photo by cdm

Where we’re going & how far we’ve come

Last week after I  mapped out financial goals for the next 3 years, I felt overwhelmed. Whenever I set a new goal, especially one as lofty as saving $20,000 for a house within three years, I go through a period where it feels impossible.

I have to remind myself of how far we’ve come. I remind myself where we were just three years ago — living paycheck-to-paycheck with an empty savings account.

I remember how I felt when I started this blog a year and a half ago. Simple goals like building an emergency fund, starting a retirement account, and saving for our move in three years on our meager income felt so far away. It might as well have been a million dollars.

I think back to last January when Tony and I started talking about our crazy plan to go to Europe. I wanted to make it happen, but I doubted whether we could save that much money in addition to our emergency fund and moving fund.

But step by step, dollar by dollar, we met our goals. We learned to spend less and save more without compromising our comfort. We learned that determination and good planning can make even the most difficult goals a reality.

When we finally completed our emergency fund and saved enough for Europe, I felt like I’d just finished my last final exam. I was relieved and proud. We’d come so far. That’s partly why I waited so long to set new goals. I wanted to revel a little — to feel like we’d finally made it — before starting over again.

It’s time to move on, though. There’s no finish line for frugality. There are always new challenges to overcome and new goals to accomplish. That’s part of the fun of it.

This is only the beginning, and we have a long way to go. With such a long road ahead of us, it helps to look back on how far we’ve come, and remind ourselves that each step is taking us closer to the next goal. Each time we hit a new landmark, we’ll be a little more stable, a little more settled, and a little more confident in our ability to get to the next one.

Photo by cdm

Prioritizing our goals for the months ahead

Now that our emergency fund is complete, and we’re less than $1000 away from our goal to pay for our Europe trip in cash, I’m starting to think about what goals are next for us. Even though we’re unlikely to make much progress in the months ahead, it’s time to set our priorities and figure out where to start funneling our resources.

We have several goals for the next 3 years or so, but we’re still undecided on the order of things. Here’s a rough sketch:

Save $6,000 for moving expenses.

It will cost us under $1,000 to physically move our stuff. Tony’s family has generously offered us a place to stay while we get settled in and look for jobs, but we have several expenses that we’ll have to pay (health insurance, car insurance, cell phones, student loan payments, and groceries). We’ll need about $1,000 a month.

We’re hoping to find part-time jobs right away to extend our savings. My hope is that $5,000 plus whatever we make part-time will be enough to cover our expenses until we find jobs. Of course, in this economy, there’s no telling how long it could take. If we run out of “moving money” before we have jobs, that’s what our emergency fund is for. But I’m crossing my fingers that we won’t have to dip into that.

Our tax refund will give us quite a good start, and now that we’re done saving our emergency fund and Europe, we can devote all of our monthly savings to this goal, so saving this by May shouldn’t be a problem.

Buy a second car.

I know we’ll eventually need a second car. I want to wait until our current car is paid off before we begin shopping for a new one, but this will depend largely on our living situation once we move. If we’re both working on separate sides of town, it won’t be as easy as it is now for us to share a vehicle.

For now, we’re playing it by ear. Our car will be paid off in May 2011, and depending on our situation, we may need a second car sooner than that. So we’re starting to save now for a down payment at the very least, but if we have more time we might be able to pay cash.

Buy a house.

This is the big one, and it’s the goal that intimidates me most. I’m not against having a mortgage, especially if it’s a sensible one, but I’d like to save $20,000 in cash before we even consider buying a house. Saving that much money is a really tough commitment to make when I look at the cost of rent in the Indianapolis area, though. Considering our modest price range, it’s likely that a monthly mortgage payment would cost us less than rent.

Our plan is just to start saving, and then wait and see what our situation is. We may start doing some serious looking to figure out exactly what it would cost us, and if it makes sense to do it sooner, we may.

Pay off our student loans.

We still have a significant amount of student loan debt between the two of us. We’re currently paying them down slowly but surely, but eventually we plan to get much more aggressive to pay them off more quickly. At this point in our lives, though, I think security and stability is more important. I want to be debt free, but paying off those loans more quickly would eat up a huge percentage of our financial resources. So this goal remains on hold for now. It will likely wait until we’re settled homeowners.

I know that it’s unlikely that we’ll make much progress in the months ahead. Things are going to be very tight for us right after the move. We’ll be in survivor mode again, spending savings with no income, but we’re reasonably prepared. I can only hope that it will be very short time period before we’re able to start saving again.

I also have to remind myself that three years ago saving an emergency fund, moving halfway across the country, and paying cash for a trip to Europe seemed just as impossible. These are bigger goals, but we can achieve them if we stay focused.

Photo by alancleaver

Learning to jump right back on the wagon

This post originally ran on January 22, 2009. A year later, I’m still struggling to stay motivated, especially after temporary setbacks. Besides, I think we can all use a little encouragement as the novelty of New Year’s resolutions fades.

These days, I’m thinking as much about fitness as I am about finance. I’m still working on losing weight and living healthier, and I’m constantly fighting my vices — with overeating and overspending.

With the novelty and motivation of New Year’s resolutions wearing off, you may find yourself slipping up, too.

One thing I’ve learned is that it doesn’t matter how often you fall off the wagon. Everyone lapses. The real test for success is how quickly you rebound.

It seems that too often one little mistake can snowball into a catastrophe. In a moment of weakness you eat a donut or splurge on an expensive pair of shoes. Suddenly you’re thinking, “Well, my diet/budget is blown for today. I might as well make it count.”

That kind of logic led me to gain more weight and rack up more credit card debt in college than I care to admit.

This time I’m trying something new — forgiving myself and starting over. Not tomorrow or next week or after the weekend, but right now, right after I realize I’ve made a mistake.

After overeating or overspending, I used to bargain with myself. If I ate too many pieces of pizza on Friday night, then the weekend was shot, so I might as well wait until Monday to start over. In college, I used the same bargaining process when it came to my finances. “Starting next month I’m not going to use my credit card anymore,” or “After this weekend, no more eating out.”

The truth is, one mistake never really derails anyone. The real catastrophe comes from the self defeat that follows that one mistake. If you decide to give up for the rest of the day, week, or month, then you only make a bad situation worse. Your one mistake becomes a major derailment.

When you give up, even temporarily, after every little mistake, you find yourself feeling defeated a lot of the time.

Next time you find yourself straying from any goal, don’t put your efforts on hold. Don’t wait to start over. Do it right away.

Once you’ve eaten the donut or spent too much money, there’s nothing you can do to take it back. Don’t dwell on it and let one mistake derail you. Instead, wipe the slate clean, and move on.