Short Stacks

Pickin' up the pennies and figuring out where to put them.

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Love Letter to Toyota Yaris

We traded in our old Chevy Impala with the shitty muffler for a 4-door Toyota Yaris hatchback in September. We just finished a 10-hour road trip to Minnesota for less than $50. So good. Toyota Yaris, I wanna be in you.

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A Manifesto.

This is a blog born out of my fairly recent obsession with saving money with my husband…that we don’t make.

I was made in the 80s. I make minor ducats at three thankless part-time jobs (cheers to anyone who gets that subtle reference). I married in June 2012 to a very fine gent who also makes minor ducats as a paralegal at a law firm…a niche profession he fell into as a temp worker. We both have master’s degrees. We both have passions for other pursuits that generally aren’t regarded as valid for gainful employment in our modern American society. We work hard. We both want long-term happiness and a secure financial future without fearing the grim prospect of living in poverty as senior citizens.

If this sounds at all familiar to you, I get you.

Beginning in 2013, we have began budgeting very strictly, mainly in part to a new goal of purchasing real estate in the Windy City. We’ve learned quite a bit since then about spending, saving, debt, and our reality, but I feast on the challenge to become a home finance prodigy. I’m like a ravenous liger in search of dinner when it comes to sucking out any possible way to save a penny here or there. However, as I find these coveted pennies, I don’t always know where to put them. And I suppose that’s from where this blog stems: what do I do with my extra not-so-fat stacks? And how do I find more? I don’t know, but I’m sure as hell going to figure it out. Join me fellow tapped-out GenY-ers as I search for pennies and decide where to put them.

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Talk Baby to Me.

It’s no secret to our friends and family circles that my husband and I are hot on the baby makin’ trail. I also think it’s not surprising that these two logical, well-mannered products of the American middle class are scarily concerned with how Baby will affect Budget. I recently read a Huffington Post article about the cost of raising a child in the US? “The average cost of raising a child born in 2013 up until age 18 for a middle-income family in the U.S. is approximately $245,340 (or $304,480, adjusted for projected inflation)”.

I’m sorry, a sphincter says what?

So, while we’ve been trying to make a baby, we’ve also been trying to figure out how to pay for it. At least one of these activities is designed to relieve any stress that may be brought on by the other. This projected bump (read: “gaping pothole”) in our financial road sent us straight to the drawing board to figure out how we are gonna pay for all those diapers and extra loads of laundry. We wisely decided on the obvious:

FINALLY TRULY FREAKING TACKLE OUR LINGERING CREDIT CARD DEBT. So, here is my GenY penny picker nugget for this post.

Anywhere you look, you will see two main schools of thought on paying down credit card debt:

School 1: Pay off the credit card with the highest interest rate first by adding any extra you possibly can to your payment whilst paying the minimum on all other cards. Once this card is paid off, tackle the card with the next highest interest rate. This method ideally saves you the most money in the long term because you are paying less in interest.

School 2: Snowball repayment. Pay off the card with the lowest balance first by adding any extra you possibly can to your payment whilst paying the minimum on all other cards. Once your lowest card balance is paid off, focus on the next lowest balance, adding to its payment whatever you were paying on the former card. And then move on from there until all cards are paid in full. The idea here is that you feel a sense of accomplishment sooner and more often in the beginning, so you are more apt to continue your debt-repayment battle.

These are both well and good and make sense, but I like a specific plan and, more importantly, a specific timeline. I like to know when I can expect results, and I love to be able to solidly track my progress along the way. Today, my friends, I found this beacon of Type-A hope (brought you by CNN Money):

CNN Money: Personalized Credit Card Debt Payment Plan

This badass motherfucker tells you EXACTLY how much to pay which card when and how long it will take you to pay that nonsense off! I love it so hard, I have to swear about it. Sorry.

Here’s how it works:

1.) Enter your credit card information, including current balance, APR (or interest rate), and minimum payment. All of this information is on your statement. Don’t know where that statement is? Google the customer service phone number for the card company, put on your big boy/girl pants, and call.

2.) Select from three payment strategies: Minimum Payments, Fixed Payments, and Debt-Free Deadline.

Minimum Payments tells you how long it will take you to pay off debt and how much interest you will inevitably pay if you only make minimum payments on your cards and no additional purchases.

Fixed Payments tells you how long it will take to pay off your credit card debt with a set budgeted amount for credit card payments each month assuming no additional purchases are made. You tell it how much you have to put towards your credit cards each month, and it lays out what you need to pay when and to whom and your timeline for debt-free euphoria. Perfection. (I used this method, and the plan was promptly printed and put on my refrigerator.)

Debt-Free Deadline is if you are a badass and have flexibility in your budget. This method allows you to enter when you want to be debt-free, and then it tells you how much you need to pay when and to whom in order to accomplish that deadline goal.

*The key here on all three of these is “no additional purchases”. If you’re trying to pay them off, don’t use them. I’ll post another time about using credit cards to build credit. Right now, I’m focusing on getting debt-FREE. My personal credit card is currently preserved in a block of ice in our freezer - not joking. Desperate times call for desperate measures.

To give you an idea of how my new BFF knows just how to put things into perspective, it showed me that if we only make minimum payments on all the cards, it would take us 23 years and 4 months to pay off all of our current credit card debt, accruing over $9,000 in interest. With the Fixed Payment plan, my new BFF showed me that we can pay off our debt in 3 years and one month, only accruing $1,090 in interest by comparison. Now, I know. And as GI Joe once said, “knowing is half the battle”.

Ladies and Gentlemen, a pie chart:

   This CNN Money tool was incredibly helpful. It took a dizzying financial day and somehow made money problems seem manageable. 

What methods do YOU use for getting out of debt? I’d love to hear them!

See also this smug lass bragging about her incredibly respectable and enviable commitment to getting out of student loan debt and her arsenal of creative tactical forces to do so. I mean, it’s no red and blue laser GI Joe-style warfare, but it’s worth a read: How I Paid Off $90,000 In Debt In Three Years.

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Ladies and Gentlemen, a budget.

A couple people have asked about my monthly budget sheet.

I’m lying. Literally, no one has asked, but I’m going to give it to you regardless. For those of you currently living paycheck to paycheck or for those of you who check your bank account before you buy lunch to make sure can afford it, getting a budget in order is most certainly step one. And lucky for you, it's easy.

You can get my very fancy, custom-made YEARLY BUDGET WORKBOOK here. (It will open as a Google Doc.) More explanations on its intricacies are further into the post. Read on!

Let me start by saying that there are a bloomin’ million sample budget sheets on the cyberspaces (say “the cyberspaces” like a little old grandma would). Undoubtedly, you have to find the one that works best for you and your financial situation. I created ours last July and have been fine-tuning it since. Here are reasons why ours works best for us:

1. It tracks progress. Each calendar year gets a new Excel workbook, so we get to watch our trends as we collect our financial data. Learning from mistakes and successes has been paramount as we learn our personal financial ropes.

2. It enables flexibility as income changes. As mentioned in a previous post, I work three part-time jobs. We both also work freelance "passion jobs on the side. Our income section allows us to alter income as it varies slightly month-to-month. We just enter the numbers, and it calculates everything else for us. The flexibility is great, but our sheet also works for fixed-income ninjas as well.

3. It accounts for incidental spending. After a couple months of buying gifts, shampoo, and toilet paper with our “Fun Money”, we got frustrated. Why should we spend FM on TP?! We then added the Monthly Incidentals box. This allows us to put in any additional expenses that are not necessarily reoccurring and things we don’t deem worthy of FM – gifts, travel, prescription refills, etc. Also, if an unexpected expense pops up mid-month, you can easily add it in, and the sheet automatically recalculates your FM accordingly.

4. It keeps us saving. As is, this spreadsheet automatically calculates and holds back 15% of our monthly income after monthly expenses are subtracted. We can adjust that percentage calculation on a month-to-month basis as well if we want to increase it or need to decrease it. This keeps us honest in making sure we are setting aside at least SOMETHING each month for savings. Towards the end of the month, when almost all our bills are paid, we transfer that amount to our savings account. Viola! Savings = Adulthood.

5. It keeps our “Fun Money” honest. My favorite part. Once your month’s income is determined, your expenses and incidentals factored in, and your savings held back, the worksheet automatically tells you how much FM you have for the month. Additionally, it breaks this amount down to how much FM you have each day. This way, the “Can I afford this new _______?” question is always easily answered. It’s clear as day whether or not you can. We initally tracked our FM spending by adding up each purchase from our online bank statment every couple days. This was exhausting, so we now use the “envelope method”. On a set day each week, we withdraw a bulk cash amount which equals 7 days of FM. We then divide this cash amount between the two of us and spend away! We don’t have to answer to each other on what we spend it on, and there is no argument over if someone is spending more than their fair share. When our individual cash is gone, we stop spending. If we want something more than our weekly allotment, we have to save up the following weeks’ cash to get it. No cheating! Sometimes it’s lame when I have to wait all month to buy my coveted candles from Bath & Body Works, but I never feel guilty when I finally do, which has become more valuable to me. Additionally, this envelope method enables us to secretly stockpile cash to use for purchasing gifts for each other. The other is none the wiser since we never see a large purchase on our bank card or a large cash amount withdrawn.

So, again, you can check out my YEARLY BUDGET WORKBOOK here.

NOTE: I’ve put arbitrary numbers in on January’s sheet to give you an idea of how to fill in each area. I’ve also put in comments with helpful tips, calculation changes instructions, additional options, and explanations of certain areas. Just hover/click on the little red/black triangles in top right corners of select cells. If you have additional questions, please feel free to leave a comment on here, and I’ll reply.

What budgeting tools do you use that work for you?

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