Monday, January 10, 2011

Time to Buckle Down

(photo from anne taintor dot com)

As many of you wonderful, faithful reader-friends already know, our household is under some new budget constraints since I recently quit my day job and am slowly building up my own private voice studio.

The hubs and I have always lived pretty frugally, especially when compared to the American "Standard of Living." But I thought it would be fun to share some of our trials and triumphs when it comes to budgeting. Our new budget perfectly coincided with the New Year, so this January is the first month we are really getting down to business.

Most of the things we are doing are pretty much no-brainers, but I've noticed that even though some things seem to be common sense, people tend to do the opposite and get themselves in a lot of financial trouble (Hello, College-Age Version of Myself).

1. Pay down debt. Josh and I finally paid off my car loan this past Summer (after 1 year of making $1,000 car payments every month. I know. Insanity). And let me tell you, it's the best feeling ever to get out of debt. Now, the only debt we have is student loan debt and our mortgage. I wish we could annihilate the loans just like we did with the car, but right now it feels more like we're hacking at an iceberg with a butter knife.

2. Stay away from MORE debt. We do use a credit card to keep track of purchases, but we pay it off every month. In college, I learned the hard way that when you buy something on credit because you lack the funds to pay for it out-of-pocket, you end up paying way more. I bought a coat on credit for $120, and took about 6 months to pay it off. Since I didn't have a great credit score (it was my first card), my interest rate was somewhere around 17 %. Let's just say, I could have bought a Versace for that price. Or maybe 1/4 of one.

3. Keep housing/mortgage expenses within our budget. When we were deciding what we wanted to spend on housing, we most definitely did not go by the bank's standard. The bank would have easily approved us for a mortgage that was actually way out of our price range. Our town-home is pretty outdated (oh, how I often bemoan the 80's era builder grade houses. ugh.), but our mortgage + association fees are actually less than what a 1-bedroom apartment would cost in this area. I know it sounds crazy, but it's true! And we don't live in a "bad" area, we actually live in one of the nicer suburbs of the Twin Cities.

4. Save. Save. Save. Before I met Josh, I had no clue what it was like to not live from paycheck to paycheck. Part of this was due to a painful experience with my old car (all I will say is, don't make the mistake of replacing your transmission without checking to make sure your engine is in working order. Ouch). When you're living from paycheck to measly paycheck, what happens when a financial emergency hits and you don't have cash saved up? You "borrow" from your credit card, and you also end up paying more than you bargained for. Thanks to my Hubby's awesome savings skills, we were able to pay for our wedding out of pocket, and now we have a nice savings account should anything go awry.

When it comes to finances, I am NOT perfect. I'm more like that chick in the top picture who thinks "Frugal is such an UGLY word." Josh tends to be overly frugal, whereas I tend to enjoy spending money (Let's go buy some shoes!!! Props to whoever know where that came from!).

It's hard for me to resist buying things, but I'm learning how much more important it is to save and pay down debt primarily. Not only does it give you security financially, but it definitely adds to your sense of peace and security in life in general.

How about you? Are you a newbie to being financially responsible like me, or do you have some financial tips to share? I would love to hear all about it!


  1. Ahh, money. I think that you and I have a lot in common in that area. :)
    Ryan's been a big help, but I also swear by the book and blog I Will Teach You To Be Rich. Really reasonable and applicable advice. All about using money AND credit cards to your advantage. (But paying off in full each month, of course).
    My big issue nowadays is that I want to spend, but I also want to save an escape fund, as you know. :)

  2. I paid for my own wedding too! It was so thrilling to pay off that credit card... um yeah - I put the ENTIRE wedding on my credit card! We got some great citi thankyou rewards out of it =)

    I'm such a spender. I need to be more careful!

  3. Lucky your hubs is a saver. That is a small point of contention between me and my guy. It's so nice to know you have a big cushion for emergencies...or an amazing vacation (kidding, sorta).

  4. "but right now it feels more like we're hacking at an iceberg with a butter knife" Amen! I feel like we're in the same boat!

    We also use our credit card like a debit card. We use it to make normal, everyday purchases and pay it off in full each month. That way we're able to earn some rewards for spending money that would would normally spend anyway.

    I hope your new quest in frugality goes well!! It sounds like you're on the right track.

  5. Jane- sounds like a really good resource! I have that same issue too- torn between wanting to save and wanting to enjoy myself now too! For me it's about balance- definitely saving more than I spend (hopefully) but still allowing myself to buy little things here and there. Makes it a bit less painful!

    Jenn- That's awesome that it's all paid off!
    YAY for you! =)

    Hannah- Yes, it's true, I'm super lucky to have a spouse who saves instead of spending. I think I'm the one that he gets annoyed with, but I'm definitely trying! Yes, the savings/vacation fund continues to grow...

    Ashley- Thats really smart! We have talked about switching to a credit card where we can actually get some rewards too, I really need to look into that more!

  6. You go girl! And congrats on paying off the car. That's huge. And someday that iceberg will disappear.

  7. so responsible and wise of you, my financial advisor husband would be so proud!!! no debt, pay credit cards off each month, and only have one or two credit cards, and buy less!!! Keep up the good work, God will continue to bless you! Good luck on your voice studio business, that sounds interesting!!!



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