Budget Date

Two newlyweds navigating personal finance.

[budgetdate-blog]

Personal Budget Date

On a night when my sweet sweet husband is away with friends, I find the desire to have a budget date. Solo. Yes. Candles, Christmas trees, music and beers are involved. As they should be with any good date night. I am married. So happily. (Still exciting to say!! Love you - S!!). We keep some things separated. Such as our paychecks. His salary goes to his account and mine goes to my account. Yes, everyone handles this differently. We have it set up so S pays certain expenses (mortgage, car insurance, home insurance, etc) and I pay for other expenses (such as groceries, gas, lunches at work and my $@/!: debt!) (oh and ps, we each have the "individual" health insurance plan at work because it was cheaper than being married - definitely something to look into!). Anyways - we have "together goals" and "individual goals". I am becoming closer and closer to reaching my personal goal of paying off that student loan. As of today I have paid 3 down and have 3 to go. Totaling about $17,800. (When I graduated from school it was approximately $35,000). So thrilled about that!!!! But now we are in crunch time and lets get this thing OUT OF MY WAY. So I'm game planning. Let's look at # of paychecks left this year, how many ill get next year, raises? Bonuses? And supplemental income. Let's sort this out. Make a plan. And be done with it. Goals for post student loan debt? Well, when my SL is gone, I'm proud to say I'll be debt free - so my plans are to max out 401k, HSA (which I already am doing), Roth IRA, and save to buy my next car in cash (3-4 years down the road. I have a 2010 Jetta in great condition. Thinking to rebuy when the Jetta is 9 or 10 depending on repair expenses, etc). That's all for now. Off to my solo budget date. The only thing to make this better would be a bubble bath and if S were here. Xxoo- K

[budgetdate-blog]

Budget Refresh

Well, we missed they first of the month! But! I hope you all reset your budgets!! Best day of the month!!! Wait, you don't have one? Oh. Well you should. So here are the basics: you have income. And you spend money. But so many people are spending beyond their means, and that's something that causes concern. So plan for your monthly income in advance. If you earn more than that? Bonus! Extra money in savings. Also: categories. Categories, categories, categories. Make categories within a budget. Look at it like this, if you make say $2500/month but then your budget is just a vat of $2500, you'll for sure blow it. Insert categories. You get to spend $400 on groceries, $100 on gas, $200 to shop, you get the point. When you're out of money in a budget, you're done. Or, if you feel like you're in your budget groove, perhaps you take from another budget. But NO MATTER WHAT, you don't spend more than your budget. And that's why when you make more than what you plan for (the $2500), that's why it just stays in the account; we could all use a little money to the side for an emergency (typically 3-6 months is encouraged, S and I are trying for 12 months). And guess what?! If you don't spend everything you budgeted, that's more money you get to keep! Make it a game. You budget for $1100 (see below) but if you only spend $1000 that month, look! You just found yourself $100!? It's like the modern day lottery. Also as a side note: build in savings to your budget. So your income is $2500, in our example, that doesn't mean spend $2500. I build in about $1400 a month in savings and spend $1100 on the essentials - gas, groceries, what have you. That's money I plan for to pay off the (dreaded) student loan, vacations, emergency savings, etc. It's really not that hard. Look at income, plan for it, and create your budget. Categories. And savings. Win and win. Hope this helps and happy budgeting! Xoxo K

[budgetdate-blog]

What is a budget date?

Seeing as its the name of our blog, it should probably be explained.

Talking about money and budgets is icky, lets be honest. It is! 

Very early in our relationship, we knew communication was key. Everyone says that 'ya, we will always tell each other everything always and forever and ever'.... until it gets hard. 

As previously mentioned, my parents had a not so fun ending that ended in large part due to lack of communication about finances, and lack of communication in general. So this is certainly an important part of the relationship not just to me, but to both of us.

So if we have to talk about the icky ugly topic of debt and money and finances and such, we should at least make it fun.

Insert -- BUDGET DATES! We decided to make it as open and fun and be something we actually look forward to. Think wine, prizes, and fun treats when its over!

How does it work? We sit down, put pen to paper, drink (duh), and when its done we either make dinner, watch a movie, eat Justin's (organic peanut butter cups, check them out....), or what have you.

What do we talk about? Debts we are working on, goals, timelines, current balances in our accounts (savings, 401k, roth IRAs, checking, joint account, 529s, hsa's ...ya we have a lot of accounts, more to come later), and action steps that we are taking to achieve those goals. 

We both like to set long term and short term goals. If you set a goal that says, for example, 'I want to pay off my $25,000 student loan", thats great! But probably not going to happen very quickly. SO I do both. Set that goal, and give it a deadline. But also set a short term goal too, like 'I want to pay off the smallest of the loans ($2,500, or so)' and get that done in 3 months. Thats do-able! And you really feel like you're making progress.

All of this is part of the fun fun fun that are our budget dates. 

Every date we learn more -- things that work, things that don't, more about each other; whats important to us as a couple and each of us individually. 

We are biased, but we entirely recommend that you start a budget date, or solo budget date or group of friends budget date -- whatever. Do it! 

xo,

K

[budgetdate-blog]

Paycheck

When I first sat down and really looked at my paycheck it gave my an instant headache.  What does all of this mean? Why does this look so complicated?  You have exemptions, after tax deduction, pretax deductions, medicare, social security, federal, state, city, local taxes.  I feel like you need to be a CPA to understand it all.  Well here are some little insights that have helped me.

FICA taxes:  currently 7.65% (6.2% social security, 1.45% Medicare)

This tax is pretty much unavoidable on your wages.  401k/403b contributions do not lower it.  The only thing that I found that helps reduce it are health insurance premiums and HSA contributions. (Health Savings Account, which deserves its own post on how great it is). 

So if you have a high deductible health plan and have the HSA make sure you make your contributions through payroll deductions to help save on the FICA tax. 

Federal Income Tax Liability:  I have realized that this not that scary or complicated to figure out your federal tax liability (unless you situation is compicated and you have a lot of itemized deductions).

Gross income - Above the Line Deductions = Adjusted Gross Income

AGI - Standard Deduction or Itemized - Personal exemption = Taxable Income

Gross Income: "All income" your pretax deductions on your paycheck will reduce this (HSA, 401k, health insurance premiums)

Above the Line Deductions: further reducing your Gross income (e.g. Traditional IRA(depending on income), SEP IRA, deductible employer share of self employment tax(ill have K share on this), interest on Student Loans (also K's department).

Standard or Itemized: (below the line deductions) Im just going to talk about the standard deduction because thats what applies to me. (and lets be honest that what I care about).  2014: married filiing jointly $12,400  and then you also have personal exemptions 2014: $3,950 per person.

So you can effectively make $20,300 being married filing jointly without paying any taxes. (There is no way in Hell we could live off that). 

Then there are tax credits that don't apply to us. But after that you can figure what your Marginal tax bracket is (Tax Bracket that your highest dollar earned falls into).  You will also have an effective tax rate because not all of you dollars are taxed at the same rate. Married Filing jointly rates: 

$0- $18150  10%

$18150 - $73800  15%

$73,800 - $148850 25%

Anything above that I don't care, I'm sure they have fancy CPAs that make their effective bracket less than mine.

Once you get an idea of what sort of bracket most of your money will fall in that should help give an idea on what your exemption # should be on your paycheck so that you are not giving too much.  I hate to get back a big return at tax time. 

Of course they are already getting that 6.2% to social security that I will probably never see.  Wouldn't it be nice to have the option to put that into my own retirement account and invest it over the next 30 years.  Thats just wishful thinking.

[budgetdate-blog]

Little Changes (lead to big results)

This post is coming from S.  Notice I am not as much of a talker, I am more of the numbers guy.  I am going to lay out some simple changes that we made in our budget that will hopefully have a very nice long term effect.

1.) Cable/Internet:  We cut cable and lowered the internet speed. We have an Apple TV and bought an HD antenna to get the major channels.

Savings: $80 per month

2.) Cell Phone bill:  K simply called Verizon and said, "I am not going to pay this much."  They gave her the 'Loyalty plan.'  (She tends to get what she wants).

Savings: $50 per month

3.) Haircut:  S started cutting his own hair. (lets be honest, great clips wasn't doing that great of a job anyway)

Savings: $20 per month

4.) Salon services: K getting nails and hair did.  (she still looks good)

Savings: avg ~$50 per month

Total Savings:  ~$200 per month

Compounded over 30 years @ 8% growth ~ $298,000.

These easy changes have not hurt our lifestyle one bit and can roughly add $1,000 per month to our retirement income (tax free if put into a Roth IRA).

More to come on different retirement accounts and the beauty of compounding interest. 

[budgetdate-blog]

1.

Where I came from -- K

I think we are all raised differently, when it comes to money. My husband, S, said to me today, something to the effect of wealth and debt look the same. Which is, ultimately, true. Those people have nice cars, bags, and are shopping at and eating at all the same places. But one has money in the bank and the other is up to their eyeballs in debt.

My family of money was all about things. Nice cars, newest clothes, toys, places to be and see and have. All consumption. Long story short, parents had a messy divorce, I did lots of moving, unhappy in jobs, blah blah blah.

I was in debt. Well, consumer debt. When I met S I had probably $9,000 in stupid credit card debt. You have that scary day where you go to the grocery store, and go, shit .... I can't afford to pay for this. 

Then, I met S. (See previous post). But you're all googley eyed and happy, but then you have to have the finance talk. Well, S is a few years older than me and came from a different finance family than I did. So this conversation was less than easy. "Uh, hi, I love you, and I'm $45k in debt! Oh and I have no savings." Not exactly a reason to celebrate. Ya, marry me, and all my debt. 

SO, we made a plan. I paid off the credit card debt in 9 months. (Luckily this was made possible, in large part, by S letting me live with him rent free). And he introduced me to this magical mysterious thing called a BUDGET. A what?? Oh right, that thing I've never done in my entire LIFE, or have ever been taught in any of my years of high school or post secondary education. I GRADUATED FROM COLLEGE with $35k in student loan debt but not one class on how to manage that? Seems like someone dropped the ball there.... 

Anyways, budget. I actually had to stop shopping (for what though? really, i didn't need it..), looked at money in, money out, and 9 long months later, it was gone. 

Its still gone. We are a 'use the credit cards for the rewards, then pay them off in full every month' kind of family. Why would we not take advantage of 2% cash back into our savings account? No benefit like that with checking. So thats what we do. 

But the stupid, miserable, annoying, what seems never ending, debt I have left is my student loan. I know, I know, "everyone has them", but that doesn't mean I want them. And its not like I'm going to win the lottery or someone is going to appear out of thin air, and be all, YA! I'LL PAY THAT FOR YOU, its not gonna happen. So this is where 99.6% of my financial thoughts are directed. I've been out of college for 4 years, and have just recently gotten focused on making this a first priority.

I should also point out, that although credit cards were paid off 18 months ago, since then we've had wedding, honeymoon, and debt to mother (I, know, right?) to pay off... those are finally all behind me, and now hellllo focus on student loan. As I said it was $35k when I graduated and as of today its right at $21k. 

My monthly payment is graduating. So it gets bigger every 2 years. Right now its $241.88/month, and I have them take it out of my account automatically to save a little in interest. Interest, by the way, is 6.5%. I also save $800/month for the SL and when I have enough to pay off one of the loans, I do so. My plan is 12 months. Well, I keep saying 18 months, but I like a good challenge. 12/31/2015, DEBT FREE. 

More to come later on the total budget, income, how we keep track, and why, but that dang student loan had to get the first ounce of attention. And also, by setting a debt free date, that seems like a commitment. 

Ps, S is really proud of me, I think. He married me even with all the debt, and he's made it possible for me to get this all taken care of. 

I guess I'm lucky that the two financial families came together, because without him I'd still be the girl at Kroger, not sure if she can afford her groceries. Lucky, to say the least. 

xo

K 

[budgetdate-blog]

The Backstory

When you meet someone and fall in love, your first thought isn't "how are their finances?".

Then, things get serious. Right? You're supposed to get on the same page and have these 'big kid' conversations. Easier said than done. We were two twenty-somethings who just took the giant leap of love, and were not only combining our lives -- but our finances too.

We do things differently than most. We each had/have different struggles to overcome. Today we are post wedding rings, post honeymoon, post registry, and are trying to figure out finances in the real world.

What are our goals?  How do we get there? And how is it that we are supposed to do all of this with so many places for our money to go and only so many dollars coming in.  In this quest, we know we are not alone. And hence, the blog. Or diary? Or both. But here we go. 

S+K