Kacie, at Sense to Save, has been an inspiration to me since her blog began a few years ago. She's a very savvy young woman with "a good head on her shoulders" as my financially astute Grandmother would have said. She was the one who really got me to face my financial disaster: NO RETIREMENT SAVINGS. I've HAD very credible retirement savings over the course of my working life, but a bout of unemployment, a poor choice and the adoption of two kids left me with ZERO.
Organizing Your Way had a great post that also jarred me into reality: Evaluating Your Performance as a Home Manager. When I asked myself the question "would I hire me to manage our money?" the answer was harsh and to the point: NO.
The Family CEO (found money) and Crystal at Money Saving Mom (freebies, deals, good advice) and many others have provided advice and encouragement, too.
Ok, so, how do I solve the problem?
BABY STEPS
Several years ago, swamped with a house the realtor and bank said I could afford, but which I, in fact, could NOT afford, I found Dave Ramsey and have been trying to replug the financial common sense switch in my brain ever sense.
Getting Started with COMMON SENSE
.
First Step: We Moved. We were miserable in the "house from hell," so I found a much better job (more money, better benefits), let the horrible house go, moved to a different state for the new job and found a smaller, affordable rental a mile from my Mom (emotional support and parenting help).
Second Step: Funding, then re-funding my Emergency Fund. Right now it's back down to rock bottom due to some car repairs. (It's been up to just over $2,000). This month I'm doing all I can to get it back to $200 (and eventually back to $1,000). Here's my strategy:
$50 cash from this paycheck (have quarterly trash payment this time so can't due usual $100)
$100 next paycheck
$59 work reimbursement for mileage ("found money")
$25 medical reimbursement ("found money")
Total = $234 + $42 (current balance) = $276 Emergency Fund by February 29.
First Step: We Moved. We were miserable in the "house from hell," so I found a much better job (more money, better benefits), let the horrible house go, moved to a different state for the new job and found a smaller, affordable rental a mile from my Mom (emotional support and parenting help).
WOW! What a difference!
But, honestly, not much else has changed and it's time to get really at it!
Second Step: Funding, then re-funding my Emergency Fund. Right now it's back down to rock bottom due to some car repairs. (It's been up to just over $2,000). This month I'm doing all I can to get it back to $200 (and eventually back to $1,000). Here's my strategy:
$50 cash from this paycheck (have quarterly trash payment this time so can't due usual $100)
$100 next paycheck
$59 work reimbursement for mileage ("found money")
$25 medical reimbursement ("found money")
Total = $234 + $42 (current balance) = $276 Emergency Fund by February 29.
But wait, there's MORE!!
I'm also going to use some other "Found Money"--the amounts I "saved" by using coupons and store rewards. (Mostly Kroger in-store rewards card savings). I've saved most of my grocery receipts so I'll add it all up and throw that in the Emergency Fund account, too.
Third Step: Track my spending and manage the bills. This is a no-brainer for financial types, but for me it's a panic attack in the making. I've faced it and found this great worksheet to use to track daily spending. I have one sheet at home, one in the car and one at work. I've also been keeping my grocery receipts. I still don't have a complete month, but I'm much closer now to knowing what's happening with the money each month. For the last few months I've been "mostly" using Dave Ramsey's Monthly Cash Flow forms and have a binder for my bills and bank statements that seems to be working out. And, I've faced another hurdle: I've printed my actual pay stubs and stopped at the ATM for a print-out of my account balances the morning after my check is directly deposited. This is HUGE for me. Nothing gives me anxiety like money!
Fourth Step: Create a liveable budget. I once fed us well on what Food Stamps would have supplied had we qualified. While I'm not really wanting to go THAT low, I do need to take a look at what we buy. Happily, food procurement and food optimization are two things I do to a CEO level! I've been working on the budget by reducing unnecessary phone bill items, finally figuring out the programmable thermostat, installing inexpensive insulated curtains that slashed our AC bill a miraculous amount and similar things.
Fifth Step: Upping my 401(k) contribution with each cost of living increase or raise. I'm now to 7% and will go to 8% next quarter to get the full employer match. I need to take a serious look at my fund allocations. As I turn 50 in a few weeks this is no laughing matter--I need to reach whatever "BEYOND Gazelle intensity" is! I also hope to use "found money" to save $2,000 to eventually open a Roth IRA within the next few years. (Tax Checks the next two years are dedicated to used cars and insurance for the kids.)
Third Step: Track my spending and manage the bills. This is a no-brainer for financial types, but for me it's a panic attack in the making. I've faced it and found this great worksheet to use to track daily spending. I have one sheet at home, one in the car and one at work. I've also been keeping my grocery receipts. I still don't have a complete month, but I'm much closer now to knowing what's happening with the money each month. For the last few months I've been "mostly" using Dave Ramsey's Monthly Cash Flow forms and have a binder for my bills and bank statements that seems to be working out. And, I've faced another hurdle: I've printed my actual pay stubs and stopped at the ATM for a print-out of my account balances the morning after my check is directly deposited. This is HUGE for me. Nothing gives me anxiety like money!
Fourth Step: Create a liveable budget. I once fed us well on what Food Stamps would have supplied had we qualified. While I'm not really wanting to go THAT low, I do need to take a look at what we buy. Happily, food procurement and food optimization are two things I do to a CEO level! I've been working on the budget by reducing unnecessary phone bill items, finally figuring out the programmable thermostat, installing inexpensive insulated curtains that slashed our AC bill a miraculous amount and similar things.
Fifth Step: Upping my 401(k) contribution with each cost of living increase or raise. I'm now to 7% and will go to 8% next quarter to get the full employer match. I need to take a serious look at my fund allocations. As I turn 50 in a few weeks this is no laughing matter--I need to reach whatever "BEYOND Gazelle intensity" is! I also hope to use "found money" to save $2,000 to eventually open a Roth IRA within the next few years. (Tax Checks the next two years are dedicated to used cars and insurance for the kids.)
Sixth Step: Additional income. I'm not in the market for another job instead I'm just looking for extra income--freelance writing, Ebay sales, that sort of thing. Every penny will have to go to my retirement for a long time yet. Buying another home may happen someday only because it can be part of retirement "security," but it will be small and affordable.
But, what about the kids college? Since neither is a very motivated student, I'm not really loosing sleep over this. My retirement will come first. That protects THEM most of all. The bills to put Mom in a home could leave them homeless!! But if later on they get serious I'd want to help them financially to get a degree. Right now--no. I was "sent" to college and played. I paid for graduate school myself and learned. If they are really determined they'll get a degree. They get free tuition thru my job, but the mandatory housing is $600 a month. Multiply that by the number of months in a semester and that's equivalent to a semester's tuition at our local community college! So, free isn't always "free." They can find part-time jobs and start college part-time to see if it's for them. If it is, we'll figure it out then. I have stressed often how silly it is to go into debt for anything short of medical school and do not plan to give in and take out student loans.
So, over the next many months I will be posting my progress as a form of accountability for me and to help anyone else who maybe in the same boat.
Simplifying Life
Years ago I cut off cable t.v., internet, ridiculous cell phone contracts, eating out, credit cards, magazines or going to the Mall without a real "need" (and then only on sale!). So finding more things to "cut" is rough, but I'm trying.
More important than more little cuts is the fact that I've identified my main financial goal:
FUNDING MY RETIREMENT.
And, I've identified and begun taking the steps necessary to achieve my goal.
FUNDING MY RETIREMENT.
And, I've identified and begun taking the steps necessary to achieve my goal.
But, what about the kids college? Since neither is a very motivated student, I'm not really loosing sleep over this. My retirement will come first. That protects THEM most of all. The bills to put Mom in a home could leave them homeless!! But if later on they get serious I'd want to help them financially to get a degree. Right now--no. I was "sent" to college and played. I paid for graduate school myself and learned. If they are really determined they'll get a degree. They get free tuition thru my job, but the mandatory housing is $600 a month. Multiply that by the number of months in a semester and that's equivalent to a semester's tuition at our local community college! So, free isn't always "free." They can find part-time jobs and start college part-time to see if it's for them. If it is, we'll figure it out then. I have stressed often how silly it is to go into debt for anything short of medical school and do not plan to give in and take out student loans.
So, over the next many months I will be posting my progress as a form of accountability for me and to help anyone else who maybe in the same boat.
3 comments:
YAY! This is awesome, Lisa! I think you have a great goal and you are so right, you preparing for retirement is good for you AND your kids.
Keep going with the baby steps and keep your eye on the goal.
Wow. That really hits home. I am still in "ostrich-mode". Thanks for the wake-up. And a challenge of sorts to get my house in order.
Thank you!
Way to go, Lisa - I give you major kudos for actually making a change in your lifestyle. That's about as rare as an obese person losing weight "the old fashioned way." You are an inspiration!
Also -- off-topic -- I'd love for you to blog about your time in a third-world country. I do vaguely recall that you'd lived there, but I'd love to know more!
Post a Comment