Jana Says

Living life from cover to cover

budget

Just in time for spring: A spending freeze

For the last several weeks I have been on an unexplained, unnecessary, full fledged spending binge. From lunches out to Zumba gear to nail products to a sewing machine (yes, a sewing machine. For my pioneer project. Which I probably should explain at some point), and all small things in between, I have purchased something probably every day. Fortunately, it is all out of my personal income, not our family's shared income, so I am not really screwing anyone except myself. But still, it's bad. And it needs to stop. And I have a plan.

My friend Steph (remember her? She had a great guest post last week) used a phrase earlier in the year that I quite enjoyed. She used “spending freeze” to describe her attempt to rein in her budget. I am going to steal that phrase for the next 6 weeks when I challenge myself to start paying attention to what goes out of my wallet.

So why a spending freeze?

Besides the simple fact that I am using up all of my discretionary income and it's making me nervous, I've realized that I simply just have too much stuff. There is no need to bring more crap into my house when what I have will make due. The only exception is clothes because I really do need a new bathing suit and some summer attire. And that's a need. Truly.

I am choosing to look at this as a “spending freeze” rather than a “no spend challenge” (full disclosure, I am a HUGE fan of no spend challenges; I find them to be very helpful) for a couple of reasons: one, it's much more positive. When something has a positive rather than punitive connotation, I am more apt to stick to it; two, it implies a more temporary situation, which also makes me more prone to sticking to a challenge; and three, I really just like the term.

So, a spending freezing we will go.

Are there rules?

Of course there are. No challenge is complete without rules. My life isn't complete without rules. Not too many, of course, but just enough to give me some structure and force me to get my nose out of a book. But that's neither here nor there. So we'll move on.

For this challenge, I am working with these parameters:

  1. Any preplanned expense does not count. Besides bills and other expenses of daily living, I have to pay for a Zumba master class ticket, an anniversary something for my husband (our 9 year wedding anniversary is next month), a pedicure (I swim now. No gross feet), and some fabric for a quilt for my daughter. I know these are coming up and I am ready for them.
  2. Shop with what I have. When I feel like buying a new purse or nail polish, I need to dig into what I already have at home and use that. Perhaps something that hasn't been used in a while. I know I have a ton of that stuff. It's like what I used to do with my daughter's toys–rotate them so when I brought out a toy she hadn't seen in awhile, it appeared new.
  3. Resist. And return things on time. Free crafting events, library books, Redbox movies rented with a coupon, and free family events do not remain free or inexpensive if I have fines or buy crap (oh, craft stores. Why are you so tempting with your 40% off sales and coupons?). These two are a huge leak in my budget and I really need to fix it.
  4. No Amazon. It is my weakness and I have to stay away. Not even to browse or make a wish list. The gift card is gone. Purchasing anything from that site is prohibited for the next 6 weeks.

To keep myself accountable, I'll post a weekly update on DMS's Facebook page and, if I don't, please feel free to bug me about it.

My goal for this is simply to regain self-control with money and shopping. I have become too careless and for a person who advocates being careful with money, I feel like kind of a hypocrite. I don't like that. So I am going to fix it.

I know this isn't a unique or even remotely original idea. That's okay. Sometimes the most mundane, boring and overused ideas are that way for a reason.

They work.

Note: I tried a no spend challenge last May and even wrote a post about it. Not only did I monumentally fail at that challenge but after reading that post and comparing it to this one, I have realized that my financial habits definitely fall into cycles. There are certain parts of the year that it is much easier for me to manage my money than others. And I tend to overspend at the end of the winter/beginning of spring. I have some theories on why. Let me know if you'd like me to discuss.

 

What would you do with $25?

The moment you realize you’re officially getting old? It happened to me a few weeks ago.

I was not happy.

I was having a conversation with someone, I don’t remember who (yes, this is also a sign of my impending aging), about going to the movies. We were discussing how expensive it is to go, particularly if we take our kids and they want to go to a 3D movie. We joked that we needed second mortgages to do so, especially when we factor in the cost of babysitting, and then I said this:

“I remember when I could take $10, buy a movie ticket, a snack, and still have money left over for the next week.”

Um, what? When did I reach the age that I could lament how cheap things were in “my day” (and it be acceptable)? But sadly, it’s true (both the fact that I am old enough to do so and the fact that things are exponentially more expensive. AAHH…Grandma! Get off my blog!). Anyway…

A few days after that, I received a search term referral to DMS, “what to do with $25”. It’s a really good question and one that I feel compelled to answer (because, you know, I do that). It’s interesting, reflecting on my movie ticket conversation, how differently I would have responded 20 years ago than I will now. Twenty years ago, I would have said: buy a concert ticket, buy CDs (the music kind, not the money kind), buy clothes…pretty much all superficial stuff. That’s not to say I wouldn’t have the same answers now, particularly if the person asking the question needs new clothes or the concert ticket is a really good deal. But I’d probably offer some practical advice, too:

  • Start an emergency fund. As I’m a big proponent of the $20 emergency fund, coming into a random $25 is a great place to start that, particularly if you have no emergency fund to speak of.  Many people complain that it’s difficult to find money to save, but if you have found money, why not use it for that?
  • Buy some groceries. $25 can buy a week’s worth of groceries at a discount grocery store like Aldi (for a single person or small family, not necessarily a family of 4 or more). It can also serve as money to stockpile necessities like pasta, beans, frozen vegetables, baking ingredients like flour and butter, and canned tomatoes. With those items on hand, you can make a number of meals and what better way to create a stockpile than with unexpected money?
  • Use it as a “snowflake”. If you’re paying off debt, you know how much it sucks to watch your hard earned money disappear to pay for past expenses. However, when you receive some unplanned cash, your knee jerk reaction might be to use it on a splurge but the practical side of you should prevail and say “hey, you know what? Let’s put this on some debt. It’s only $25 but it still puts us $25 closer to our goal of being debt free”. Remember, every little bit counts.
  • Put it into savings. It doesn’t matter what kind of savings account: holiday shopping, your dream trip savings account, back-to-school shopping, birthday presents…whatever. Just save the money somewhere that it can a) earn a tiny bit of interest and b) provide you with the funds you need to purchase gifts, wants or necessities later on. Or just put it into your regular savings account, and watch it sit there. That’s fun, too.
  • Purchase something practical that you’ve been putting off. Do you need new sheets or towels? Do you need to go to the eye doctor but haven’t had the co-pay? Do you need to rent a carpet cleaner for steam cleaning your carpets? Is there anything you’ve been putting off because you’ve just been a bit short on cash? Use this money for that. If you do, don’t beat yourself up that you could have done something else with it. These are important to take care of, just as much as beefing up your savings or snowflaking your debt.
  • Splurge. I certainly don’t recommend using all of the money on a splurge (well, in some instances I might but for the purpose of giving practical advice, I don’t) but taking a few dollars to treat yourself to a RedBox movie and a box of candy from the dollar store is fine. Taking a few dollars to go to happy hour with friends is fine. Getting an inexpensive manicure is fine. Even buying a new app or songs from iTunes or a bargain book is acceptable. I believe it’s okay to treat yourself now and again, to prevent both frugal burnout and going on a shopping binge. However, splurge with this money in moderation and promise that you will also do something practical with it.

Twenty-five dollars might not stretch as far as it once it (oh, to be 15 again and have $25 in my wallet) but it can still be a decent sum of money as long as your careful and have a plan.

Readers, what would you do with $25?

Daycare is done…let the financial stress begin!

In my house, we just celebrated a huge milestone. We made our final payment towards our daughter’s daycare. That’s $660 per month back into our budget. Or is it?

Due to our precarious financial situation over the last few years, my husband and I have fallen behind in some specific areas; namely, retirement savings, increasing our emergency fund and saving money for our daughter to go to college. Now that we have this money that’s not obligated towards a service, the logical step seems to be to divide that extra money into those areas (which would increase our current contributions made with money previously reserved for debt repayment).  We’re already used to the money being spent so it’s not like we’d miss having it every month. But the more I think about it, the more I think that maybe that money could have some other uses.

Here are a few ways I think we can spend that money:

  • School. Even though she’s no longer in daycare, my daughter will be in school. And along with school comes expenses. Clothes, class pictures, field trips, book fairs, teacher gifts, school supplies…a whole list of items to pay for. Perhaps it would be a good idea to set some of that $660 aside every month for these types of quasi-surprises. That way the money is there and we don’t have to scramble.
  • Extracurricular activities. I am a huge supporter of extracurricular activities. I think they give kids a chance to enrich their education, meet kids from different schools, and apply their skills in other areas. As a result, my daughter is usually enrolled in 1-2 activities. Because we do most of them through our YMCA, they’re a lot less expensive. However, less expensive doesn’t mean free. Maybe some of that extra money can go towards paying for these activities and whatever “equipment” might come with them.
  • Student loans. My husband still has student loans to pay off. Like a lot of student loans to pay off. We have a plan to pay them off before we turn 40 (we’re 34 and 35) but putting this money towards his loans would make the payoff that much quicker.  This is probably the only debt we have that I resent (it’s a long, sordid tale) so the sooner we can get rid of it, the better.
  • Add it into our monthly budget to pay bills. Right now, I’m on leave from my job and we’re not sure if I’m going to go back. If I don’t, we’re going to take a huge financial hit by losing my salary. Having that $660 per month in our budget to cover expenses will ease that burden and give us peace of mind.
  • Do nothing and wait to see where we need it the most. This is probably what makes the most amount of sense to do but I am so crazy with allocating my money that to leave it there, without a purpose, makes me twitch. I feel like if it sits there, we’re going to spend it frivolously and then when we do need it, it’ll be gone. Which is a terrible, horrible, awful, no good, very bad feeling.

Then there’s the matter of private school tuition. Although we’ve signed Erica up for private school, we’re still debating if it’s the right choice, mainly due to financial reasons. Our feeder school isn’t as bad as it used to be and provided all goes well with selling our house, she’d only be there for one year. However, if we can opt for private school, that money we’re saving by not having daycare will most likely go towards tuition.

So. Many. Choices.

Since I’m a planner, I like to have every situation mapped out before I make a commitment to one thing. Figuring out what to do with this money is going to mean my husband and I need to have a long talk. And although we don’t fight about money, I’m a little nervous for this discussion (because we have completely different opinions on the whole school issue).

I’ll let you know how it turns out.

What’s the going rate for teeth?

I have crossed many thresholds in my parenting journey thus far: sleeping through the night, teething, potty training, weaning off bottles, ear piercing, finishing daycare and preschool (2 more payments, or 4 more weeks, to go and then we’re done!)…lots of accomplishments in her 5 1/2 years. But this weekend we crossed one more. And it is by far the one I’ve been dreading the most.

My daughter has her first loose tooth.

Loose teeth are disgusting. They completely and totally gross me out. I can’t even think about one without shuddering (much like I cannot think about lice or the chicken pox without having severe bouts of itching). In fact, it is the one thing I’ve told my husband I cannot handle. Blood, vomit, diarrhea, broken bones, bee stings, splinters…I can handle all of that. But a loose tooth sends me running for the hills (or underneath my desk. Whichever is closer). So when I realized my daughter’s tooth was loose, I got freaked out.

This will soon be making a visit to our house. How delightful.

And then I thought of the tooth fairy. Which freaked me out even more.

When I was a kid (back in the 80s), I’m fairly certain I got about $1 for my first lost tooth and about a quarter for every tooth after that. My parents were cute about it at first. They did the whole tooth fairy thing and went out of their way to make me think that she was sneaky enough to come into my room and leave money under my pillow. I believed it, too, until I was about 7 and they would just fork over the money after the tooth was out. I was thrilled with that quarter and raced to my room to put it in my  “piggy” bank (ah, to be 7 again. Or need quarters for laundry day). But if I’m to understand it correctly, the tooth fairy has increased her prices dramatically. And I’m not sure why.

I don’t think teeth are more valuable now than they were 30 years ago. So I’ve been trying to speculate on why, from what I understand, the going rate for a tooth is around $5 a tooth yes, $5 a tooth. I’m as shocked as you are. Unless you have kids. Then maybe you’re not so shocked). Maybe the tooth fairy’s expenses have gone up and she’s just passing that along to the rest of us. Maybe she feels that she needs a raise because, unlike Santa who works one night a year, she has to work every day, dammit, travelling all over the world and having to remember the exchange rates and not leave a Canadian coin under an American child’s pillow; that’s a shit ton of work. Maybe she’s sick of people thinking she’s not real and she’s just extorting us as payback. I don’t know. What I do know is that the price of teeth is out of control.

My husband and I haven’t discussed how we’re going to handle payment for the lost teeth (which, if you think about it, is kind of weird. We’re giving her money for losing a tooth. I would like to get money for losing something. How about the next time I lose my keys, I make my husband give me $3? Do you think he’d go for that?). We do know that losing the whole set is going to put us back $100. In the grand scheme of things, $100 isn’t a great deal of money since she won’t lose all of her teeth at once but still–$5 a tooth seems a bit steep. I’m thinking we do an inflated version of what my parents did. $5 for the first tooth and $1 or $2 for every other tooth.

Another option is to agree to pay her $5 per tooth and then have a “tooth fund”. Since we know they’re going to fall out and she has 20 of them, we know we’re going to have to pay $100. Also, we know that we have some time before the first one falls out, which gives us time to save the money. I feel kind of ridiculous having a savings account for teeth but I don’t want her to think the tooth fairy is stiffing her. That would be unfair.

I feel ridiculous that I’m agonizing over her losing her teeth but it’s a pretty big deal. The tooth fairy is almost a rite of passage; every kid deserves to have a visit, including my daughter. I just don’t want to be extorted by a make-believe fairy responsible for making parents pay, literally, for the most disgusting part of raising a child.

Parents of kids who’ve lost teeth, how much did you pay? Any suggestions on how we should handle this?

The biggest financial mistake I’ve ever made

I readily admit that I’ve made a substantial amount of financial mistakes. In fact, if I didn’t, I probably wouldn’t have much to write about. But there’s one mistake I’ve made that I’ve never shared with you.    I’m not sure why I never shared it before (that’s a lie. I completely know why. It’s because I’m ashamed).

What’s interesting about this mistake is that it’s not something I did; rather, it’s something I didn’t do. And by not doing this, I caused myself years of debt repayment and minimal choices instead of saving my money and having options.

So what did I do? I didn’t listen to stellar and practical financial advice when it was put in front of me. For free.

My first job out of grad school was with the federal government, working in the Philadelphia region. In our office was a trained statistician who was extremely friendly and very nice. He and I would spend lots of time talking, particularly about money. He was a few years older than I, owned a house, and really seemed to have his finances in order. He would talk to me about the importance of paying off debt, saving for retirement, and would often share strategies than he and his wife used to manage their money. He even went so far as to create amortization spreadsheets for me for my credit card debt! (I told you, he was very nice.)

Here are some other tips he shared with me:

  • Have a budget. He advocated that knowing where your money is going is the first step to having a handle on your finances. He told me that he and his wife had a pretty strict budget but there was always wiggle room for fun and extras. 
  • Once a month cooking. He would tell me how he and his wife would take one Sunday a month and prepare most of their meals. They would cook chicken and hamburger and casseroles…all kinds of different foods. They would freeze them in portions for dinner and lunches. Not only did he share how this saved them money but time as well.
  • Having a 15 year mortgage. He and his wife owned their home on a 15 year mortgage and made extra payments every month in order to pay the house off even quicker. He showed me an amortization spreadsheet (he really liked these) to illustrate how much interest they were saving in the long run.
  • Pay off your cars. My co-worker was a big advocate of buying used cars, taking care of them as much as possible and then driving them into the ground. I agreed with him because at this point, I didn’t have a car payment. However, I wanted to buy one and he discouraged me from doing so until my credit card debt was paid off. He did share that if I did buy one, I should purchase a used one and do whatever I could to pay it off quickly. He then told me how much money I would save per month without a car payment.
  • Don’t use the credit cards at all. He suggested that I pay with cash because it controls your spending and there’s no interest. He made the point that when you pay for something in cash, the payment is done. It doesn’t crop up on your later in the month. He did say that if I have to use a credit card, pay it off in full. 
At the time he was giving me this information, I would listen politely, but in my head I scoffed at the information. I couldn’t, for the life of me, understand why he was telling me all of this. I had a hard time believing he was only 27 because he sounded like an old man. And, in what’s probably not very shocking, I dismissed the majority of what he told me. Why? I just wasn’t ready to hear it. I thought that I knew exactly what I was doing and the way this guy was living was boring.
But I was wrong. Completely and utterly wrong. I should have listened to what he told me and followed his advice as closely as possible. Had I done that, I would have spent the last 5 years saving money and being comfortable with some choices I want to make rather than paying off ridiculous amounts of debt and working in jobs that I hate just for a paycheck. I would have had the freedom to have the life I want.
Years later I found out that he and his wife were certified leaders of Dave Ramsey’s Financial Peace University. Finding that out made so much click in my head, particularly with what he was sharing with me at the time we worked together. I totally got it.
So let this be a lesson. If the guy at work is preaching to you about ways to manage your money, listen. He probably knows what he’s talking about. And it will literally save you in the long run.