Category: Budgets

Sustaining a Reasonable Food Budget

~ Justin ~ Leave a comment

If you are new to budgeting and intentionally living within your means, you may wonder if it is sustainable to live on less than you make and not totally hate it. After setting up how much you are going to spend on each category, how do you continually make choices to move towards the financial life that you desire? How do you stay consistent and remain unwavering in your decision to make some short term sacrifices to enable you to succeed in having long term financial success?

If you listen to Dave Ramsey for any length of time, you will hear him regularly talk about living on “rice and beans, beans and rice.” The concept is that while you are paying off debt, you should not “see the inside of a restaurant unless you are working there.” You should not go out to eat during this time frame. I do understand where he is coming from, and where he is trying to get his listeners to. I can relate to this, and did go this direction early on in our debt repayment journey. I was stingy in my allocation of money for nights out or having a bite to eat at a restaurant. And the logic behind it does make a lot of sense.

Spending money on restaurants and drinks out can be a huge drain on your budget. When Jos and I were dating early on, I was eating at restaurants regularly, especially for lunch and dinner. Heck, I even got in a routine for a while of stopping at a place on my way to work in the morning to get a bagel sandwich and a coffee to go. Money, money, money. I wasn’t even eating extravagant meals, I don’t have very expensive taste when it comes to food. But it was adding up. At one point we sat down together and I highlighted on my bank and credit card statements (sadly a lot of this was ending up on credit cards) all of my dining out expenses. It was staggering. Just an example from one of my average months showed I was blowing over $650 just on food. It was out of control.

In light of this, Ramsey’s approach made sense for someone like me. If I wanted to make a change, I need to do some drastic changing. Food was one of the areas where I needed a major wake up call. After we got married, we ate out very little in our first few months as an overcompensation to the large spending I had done in this category beforehand. Little to no spending at restaurants for us. But here’s the thing: extremism applied to any good cause is likely to fail.

After a few months of our fairly stiff frugality, we both became a bit miserable and a bit resentful toward this standard that basically banned restaurant eating from our budget. To make matters worse, we had just moved to the greater Portland, OR area which is notorious for great places to eat. It was a bad combination.

What I have learned after being on both sides of this fence is that there must be a healthy compromise. Beans and rice would be great from a pure spreadsheet point of view. And sure, on the flip side, I would love to say that we have tried every trendy eatery in town. But we haven’t. Somewhere in the middle lies the sweet spot between frugality and gluttony. We mustn’t punish ourselves with the budget or blindly swipe plastic aimlessly at any joint that looks like it’s worth trying out. Find that sweet spot and embrace it.

For us, our number is $80 every two weeks. This allows us to eat out a few times at cheaper places, or once or twice if we try something nicer. It would be a crime to have lived in the Portland area for 18 months and to have not tried some of the awesome food it has to offer. And it would be foolish to think that we can afford a steady stream of food prepared by someone else, outside of our home while paying off student loans. So what is your number? This will probably take some trial and error. Maybe you really do have a tight budget and you need to stick to eating out once a month or less. Or maybe you do have more flexibility as you pay off debt, but you know that you are spending too much on food. A budget is a flexible, fluid tool that is designed to serve you and get you where you want to go. Try a number, and then re-evaluate. Then try again, and see how it goes. You will find your happy medium.

My last thought on this is to identify and embrace that food is a huge part of our social lives. We are blessed to eat three meals a day, and each of those meals offers a chance to break bread with people we love. It provides an excellent environment to share ideas, laugh, catch up, and grow our social and relational connections. Food is important. With a proper perspective on it, we can allow food to be the wonderful gift that it is!

Tools I Use – Mint.com – Account Tracking

~ Justin ~ Leave a comment

mint

Not to be confused with MintMobile, our cell phone provider, Mint.com has been around in some form since its inception in 2006. It is a finance and budget tracking app and website. It has a number of great uses, but for the last few years, I’ve primarily used it as a one-stop hub to keep track of account balances, both positive and negative.

When managing finances and getting out of debt, it can be very easy to get overwhelmed and discouraged by all of the accounts you may have open, and how to keep track of each one of them. You may have three or four credit cards, all with different websites and logins. You may have student loans with multiple loans bundled within them, or your loans might be a combination of government loans and private. Maybe you have a couple of checking accounts or savings accounts, and those too require continual logins (and remembering those credentials) to access balances and other account information. Wouldn’t it be great if all your balances could be clearly listed out and updated without you having to keep track of some insane spreadsheet or checkbook? Mint flexes its muscle in this area, making the complex process of tracking balances quite simple.

When you first create a Mint account, you can start adding your accounts one at a time. For example, you can start with your main checking account. You are prompted to sign into it once, and then whenever you sign into Mint again, voila, there is your updated account balance for your checking. You can then add your credit card accounts, one at a time, by logging into them and letting Mint import all of your transaction and balance info. Say you get logged into your four credit cards. Next time you want to know how much total you owe on your credit cards, just sign into Mint! It will have your grand total neatly listed out with all of the credit card account balances beneath it.

Another great use of Mint is to track student loans. Jos and I each have our own login portals for our loan providers. Instead of having to access each set of loans separately, we just added them both to my Mint account. When we make one of our big loan payments, we can log into Mint and see the Loans section drop by whatever amount we paid on. It’s very rewarding watching that balance drop over time.

Lesser used and less important for our stage in the game are the Investments and Property portions. Here you can add your investment accounts to track your account balance there, very similar to how you track student loans or checking accounts, for example. And with Property, you can add things like cars or a house. We have our two cars added in this section. Mint reaches out to KBB (Kelley Blue Book) to get approximate values for private party value based on the car’s age, make, model and mileage. A nice feature, but not super useful day in and day out.

One last feature that Mint added not too long ago is a free credit score monitor. I have another favorite app dedicated for this (spoiler alert: it’s Credit Karma), but it is a nice freebie that lets you keep an eye on your credit score and track its trends, as well as giving you some advice on how to raise your credit score. Just be aware, they do try to sell you things from some of their affiliates.

Some of you may be wondering if it is safe to have one site handle all of this important financial info. That is up to you, but I find it to be just as safe as logging into any other financial institution through a web browser. The site is secure (it uses encryption technology) and has the same if not better security standards as the other sites you would access anyway for banking and account information. As usual though, never log into any sensitive banking site while using public wifi or from a device that is not yours. Also, always use secure, long and complex passwords.

Mint can also be used as a powerful budget creation and tracking tool. They have an excellent app for iPhone and Android alike, and the website is pretty streamlined and easy to use. We do not use it for budgeting (we use Simple bank, another tool you’ll hear more about later), but I know many people use the budget features and enjoy them.

Mint is a great way to view your zoomed out, “big picture” financial standing on one site. It minimizes the need to log into multiple sites. Its interface is easy on the eyes and easy to navigate. Everyone can find value in what Mint has to offer its users. Did I mention, it’s free? Happy budgeting, friends!

2018: Debt Paydown Year in Review

~ Justin ~ Leave a comment

Ali

Up until this point I’ve been a little sheepish about exposing real numbers in our journey to financial freedom. It’s scary to expose your financial self to the world. Some will disagree with this and say that these are personal matters to be kept to one’s self, but I think for this journey to have the most positive impact on others, transparency and honesty are both important.

In 2017, Josilyn and I got married. With it came a lot of changes. We shuffled through a couple of cars. She had a Subaru Outback that had some mechanical issues, so we ended up getting rid of that for the Toyota Prius she now has and we love. I finished my dance with car loans and other vehicle stupidity and landed in my Mazda Miata. We got married in July of that year. We made a multi-state move away from home to Oregon. We got our first apartment together. Jos started Grad school and I was unemployed for the first 2 1/2 months we were there. There were a lot of moving parts and a lot of “firsts” for us as a newly married couple. All in all, it was a financially volatile year. We made a bit of progress, but most of our time was spent just trying to keep our head above water financially.

2018 marked a new chapter and we began to turn a corner. Our budget settled down and settled in. We integrated tools on our phones and computers like Mint, Simple, Credit Karma, and a very cool, little know site called Undebt. We caught a vision for where we could be financially, with a sober knowledge of the not-so-great place we were. Basically, we started to pay attention to our finances. As my treasured and wise mother in law says, “You get what you inspect, not what you expect.”

During this past year, we’ve had ups and downs with finances. There were unexpected expenses here and there, and living on one income proves to be challenging as Jos continues in her studies. But we also had some major victories. During this year I received raises on three different occasions, two bonuses, and I started working in early October as a pizza delivery driver, all helping to bolster our income. We finished paying off our credit card debt in May of 2018, which was a wonderful feeling not being indebted to high-interest rate lenders. Another win came later when Josilyn received a settlement from a car accident she was involved in. Getting a lump sum of cash is great, but it can be very tempting to spend it instead of saving it or applying it to debt. I applaud my wonderful wife for her willingness to apply most of that to her student loan debt.

Well enough hoopla about victories, let’s get down to the nitty-gritty and the numbers (let’s be honest, the numbers are what I live for anyway). Here are some totals of who and what we paid off during the 2018 calendar year, and what we have left to accomplish:

Visa Credit Card – $906.77 – PAID IN FULL

Chase Credit Card – $2,066.86 – PAID IN FULL

Citi Credit Card – $3,399.00 – PAID IN FULL

FedLoan Servicing (Justin’s Undergrad Loans) – $13,880.56

Navient *cringe, I hate these guys* (Josilyn Grad Loans) – $19,542.66

*Side note, this Navient number is inflated a bit because we took out more loan than we needed, so we turned around and paid back some of that disbursement with that money*

Total Debt Paid in 2018: $39,795.75 – Which is probably about $30,000 flat if you subtract out the note above regarding Navient. Still, a bunch of money!

So where does this leave us looking into 2019? Thankfully we only owe student loan debt at this point. Here is the breakdown:

FedLoan Servicing (Justin’s Undergrad Loans) – $7,792.61

Navient (Josilyn’s Grad Loans) – $54,422.22

Projected Loans for final Grad semester – $12,500

Total Debt to Pay before Financial Freedom: $74,714.83

It is pretty intimidating to look at this total. But I look at the year ahead and I have to remind myself of a few key items:

  • This year Josilyn will begin working in May or June so we will have a second healthy income that will all go towards paying off debt.
  • I will work at Pizza Hut two days a week at least until May or June when we might have a potential move. I only worked there for 3 months in 2018.
  • With my raises last year, I will be working at a higher pay rate all of 2019, so my total income should be significantly higher than it was in 2018.

Moving forward, we are focusing on accomplishing this feat one payment at a time. We will apply our entire 2018 tax refund to our debt. We are not going to change our budget when Josilyn starts working, so that will help accelerate the process significantly. We will target our smallest loans first, knocking those out systematically, working our way to the larger loans.

Whew, this has probably been the toughest post for me to write thus far. Lots of emotions as I write this: feeling motivated yet overwhelmed, confident yet uncertain, hopeful but somewhat anxious. Thanks for reading, I hope this motivates you to begin or continue in your debt free journey this new year! Happy 2019!

Using Wisdom during the Holidays

~ Justin ~ Leave a comment

Spending around Christmas, especially in the United States, can get pretty crazy. Some surveys last year estimated many intended or guessed they’d spend nearly $1,000 on gifts. We all want to spread Christmas cheer where and when we can, so how does personal finance fit into that picture?

Some would say that if you are climbing out of debt, you should go cold turkey on the gift giving. I find this to be a little bit extreme. At the same time, we have a goal of shedding debt, not going further into it. So how do we strike a healthy balance?

For us this year, we set a dollar amount on the total that we wanted to spend. We named a number, listed out the people we wanted to buy gifts for, and then divided our gifting total by the number of folks we were buying gifts for. This way, we wouldn’t feel guilty about swiping our debit card over and over again with no spending limit in sight. Budgeting is important year round, but I would argue that it is particularly important around the holidays.

In addition to setting healthy boundaries with our giving, consider what you could do with any cash you get for Christmas. While most gifts tend to be clothes, electronics, home furnishings, or other items, cash is flexible in what it can be used for. Consider setting aside a portion of any cash you might receive from friends or family, and earmark it for making a debt payment. Christmas bonuses from employers are also another good windfall to leverage against debt with.

This year, I received a pretty decent chunk of cash from a very generous family friend. I was taken aback by her generosity, and thankful for the boost that it provided our finances in what is typically an expensive month. I could go out and get myself a nice new gadget (my biggest shopping weakness), or I could use it to get ahead on where we want to be with our debt payments with eyes on the new year ahead.

Paying down debt is an arduous process. Getting out of it takes self-control, and wise decision making down the stretch. Instead of using gifted cash for something you may or may not use in only a few months, give yourself the gift of getting one step, big or small, closer to becoming debt free. Your future self will thank you in due time.

As a reminder, feel free to subscribe to Figuring Out Finances by click the button in the bottom right-hand portion of your screen. You should be able to enter in your email address to receive an email update whenever new posts come out. Thank you for your continued support as we all Figure Out Finances together. Merry Christmas, Happy Holidays, and a Happy New year as we wind down here in 2018.

Vehicles: Avoiding an Expensive Automobile

~ Justin ~ Leave a comment

A quick Google search will reveal a startling statistic regarding car expenses: the average new car monthly payment is north of $500 per month.

We love our cars here in the United States. We have a wide variety of reasons for loving cars, from needing a truck to haul home improvement supplies, to two-door sports cars for a weekend getaway. There is a lot to like about cars, but they have their drawbacks.

In budgeting, I’ve found it important to identify and highlight high-cost items each month. Before I started budgeting, I was shelling out nearly $300 per month on the loan for my 2010 Ford Taurus SHO. You can read about that car debacle here. Owning new or newer cars can be extremely expensive. But getting into a more affordable car that you still enjoy doesn’t have to be out of reach.

Transportation costs account for a large chunk of most of our monthly expenses. There are probably four main items that contribute to this total cost annually: loans, maintenance, insurance, and depreciation. That last one is an item you may not think about often, but let me explain.

Car loans are brutal, in most cases. Although there are some smoking 0% APR deals out there from time to time (we’ll soon find out that depreciation still makes these a dumb decision), most loans come with an interest rate ranging from 3 or 4 percent all the way up past 10 to even 15% sometimes. I’d consider lending at that rate to be predatory, but that is for another discussion. Interest is a killer. Say you take out a $30,000 loan at a 4% rate for 72 months, somewhat normal loan terms. During the course of you paying off that loan, you will have paid out an extra $3,794 in interest. Interestingly enough, you could buy a decent used car for that interest amount alone.

During that time that you had the loan out on this example $30k car, you drove it around an average amount, putting a standard amount of miles on it. You kept it in good shape, but when you go to check out the value of your car after those six years of ownership, you also find that your car has lost a lot of its value. Your car is now only getting offers from people willing to pay about $9,500 for your used vehicle. Your car has lost over two-thirds of its initial value, and let’s not forget that you didn’t just pay $30,000 for it, you paid $33,794 in total for it! That’s a big loss.

Loan costs and depreciation aside, new cars generally call for higher insurance rates. Since the insurance company is providing insurance on a higher value item, rates reflect that higher value. Instead of paying $50 or less per month for insurance on a car that is a few years old, your premiums could be $100-150 per month or more. That cost stretched out over a year or more really begins to add up.

The last item here, maintenance, is maybe the most interesting. There seems to be a general school of thought that says that older cars, or higher mileage cars, always have higher maintenance costs than new cars. Perhaps I’ve had incredibly good luck, but this has not been my experience. Here is a quick rundown on the cars I’ve had in the decade or so I’ve been behind the wheel:

1995 Buick LeSabre – 229,000 miles

1999 Ford Mustang V6 – 155,000 miles

1998 Buick LeSabre – 145,000 miles

2010 Ford Taurus SHO – 76,000 miles (this is the outlier, the newest car I’ve ever had)

2004 Ford Mustang Mach 1 – 82,000 miles

1993 Mazda Miata – 84,000 miles

Both Buicks were incredibly reliable. In its old age, the ’95 had a transmission that was starting to show signs of getting older, but we sold it before it was truly an issue. It was not far from a quarter of a million miles! The ’98 is still owned by one of my best friends and it is still faithfully getting him around with almost 155k on the odometer. I believe shocks and struts have been the only parts replaced there.

Two Mustangs, both of which never gave me any trouble. Ford’s aren’t even generally thought to be all that reliable in older models, yet all I ever did for either car was replace tires when needed and change the oil, as well as spark plugs.

Most recently, I drive a ’93 Miata with very low miles for the year. This is a 25-year-old car! Yikes!!! Would I trust it on a long road trip? The answer is a resounding yes. It runs like a top. I just took it on a 150-mile round trip this past weekend. When we moved to Oregon, it made the 570+ mile trip without breaking a sweat. The only maintenance on that? Had to replace the AC and serpentine belts for a little over $100. Now comes the interesting part.

The one car that was going to have an expensive repair was the 2010 Taurus. It started throwing engine codes, and from what I could tell, the catalytic converter was in the early stages of failing. I took it to a shop and they confirmed that before too long, it would need a new catalytic converter. For that car, I was quoted over $1,000 for parts and labor to replace it. I ended up selling it before the replacement was needed, but the moral of the story here is that the newest car I have ever owned would and could have cost me the most in maintenance. It’s not always the newest or lowest mileage cars that have the fewest or least expensive repairs. It can be quite the opposite in fact.

My advice is to find a vehicle that can provide for your needs, and do so reliably, without ballooning your transportation costs. Our 2008 Prius has been an excellent example of this. We paid cash for it, insurance is very reasonable, maintenance costs have been close to non-existent. Because we bought it after most of the depreciation had occurred, we won’t lose much at all once we decide to sell it.

In an ideal world, we’d all get to drive brand new cars, fresh off the lot. But for those of us working towards becoming debt free, cars can be a big hurdle in getting where we want to be. What are you driving now? Is it hurting your financial future? Maybe you drive an older car that you love. Continue enjoying it and watch the savings benefit the other aspects of your budget!

Mint Mobile – Saving on Cell Service

~ Justin ~ Leave a comment

Taking control of expenses and trying to minimize them can be a daunting task. Some expenses seem immovable. For example, you will always have to pay your utility bills no matter what. Sure, you can try and trim usage here and there, but the bill is coming around each month either way. Same with things like food, rent, Internet, and other similar expenses. But there are some expenses you can make changes to in order to minimize them.

When I was first looking into saving money in our budget, one of the line items that consistently bothered me was our Verizon bill. We were on a family plan, but still shelling out about $80 per month for our share of two lines. This is very much on the low side. I’ve heard of friends that pay $100+ for Verizon just for their own line. Charges can get out of hand with any of the major carriers when they go unchecked.

I started shopping around and read about MVNO’s, or Mobile Virtual Network Operators. They are cell service providers that run off of large network infrastructure. One of the services I found that intrigued me was called MintMobile (it was actually MintSIM at the time). Their approach is very “Costco” in nature. You buy cell service in bulk. Instead of paying month in and month out, you pay for your service ahead of time, and since you are buying multiple months of service, you get a discount. I had to learn more.

I ordered one of their trial SIM cards where you could try out the service. They have a page where you can punch in your IMEI number to check if your phone is compatible with their service here: https://www.mintmobile.com/byop/

I have a used iPhone 6S Plus, and it supports 4G LTE with MintMobile so I was in luck. You will be too if you have an iPhone, as our experience has been very good overall. I believe it works well with Android too, although I have no first-hand experience with it. When you download their app and then go through the instructions on porting over your existing number, the instructions are fairly easy to follow, and the port is almost instant. I was a bit worried because MintMobile runs off of T-Mobile towers. My wife actually stayed on Verizon for about three months while I was on MintMobile so we could compare service. I had service in almost every place that she did. I ran some speed tests on both phones and MintMobile was actually faster in some areas in and around Portland, OR. T-Mobile is doing a pretty good job of expanding and bolstering their service quality.

Now that we have both switched over, I hardly ever even notice that I am on a different carrier. Speed is there when I need it to watch the latest tech video or browse social media. iMessage works just as well as it did before. Service has been good all along the way from Portland back to Missoula, MT and even to Bozeman. The Idaho panhandle was the only place where service struggled, but that was the case before even when we were on Verizon. Something about mountains and lots of trees that cell towers dislike.

All in all, our experience has been a very good one now that we are almost seven months into it. Would I make the switch again? Absolutely, in a heartbeat. Do I miss anything about Verizon? Mmmm not really. Their current ad campaign has me particularly annoyed, so I smile every time I watch one knowing I’m not contributing to that hot mess anymore.

So, the big question: what does it cost? Well, right now their deal is actually pretty crazy. During this holiday season, you get three months of service with unlimited talk and text + 5GB of LTE data for only $20… total. 90 days of service for 20 bucks. Come on now, that’s good stuff.

Pricing after that intro offer is still crazy good. If you opt for the 12-month payment like I have, pricing works out to $15/month for 2GB, $20/month for 5GB, and only $25/month for 10GB of data. What about overages, you ask? Well, they rock on that too. If you go over your data allotment, your speeds just slow down. No overage charges. And they don’t auto charge you for any data over your allowance for that month, it just comes in at a slower rate. If you need more data at full LTE speeds, you can tack on 1GB at a time for $10 each. Pretty sweet deal.

I realize I am starting to sound like a bit of salesman here, so I’ll cut the crap. I think the major carriers gouge users like you and me. I don’t think cell service should cost an arm and a leg. We have saved a lot of money making this switch, and I don’t imagine we will be going back anytime soon. Feel free to reach out to me in the comments or the Contact page and I’ll do my best to answer questions you may have.

As one last plug for MintMobile, they now have a referral program. If you are interested in signing up for service, you will get a $15 account credit if you sign up using  this link:

http://fbuy.me/laxO7

If you’ve enjoyed this blog and you want to make the switch, this will help me out too! I will receive a $15 account credit for my account as well. Win-Win!

Zero-Balance Budget

~ Justin ~ 1 Comment

There are a plethora of different ways that people choose to budget. Each one has its strengths and weaknesses I am sure. In the reading and research I’ve done, and what we’ve practiced as a couple, I have found that a zero-balance budget makes the most sense for us. Right now I would like to simply outline the approach that we take to budgeting each paycheck.

First off, I get paid every 15 days or so; twice a month. It makes the most sense to me to budget for whatever time frame your pay comes in. I used to get paid once a month, so we did a monthly budget before. I know that many people have irregular incomes, or are commission-based so I won’t speak to that for now, we’ll save that for a post on a later date.

First, I list out all of our expenses and give them a value. Over time, you can figure out where you can cut back, or where you might need more. For example, we first started budgeting about $150 per month for gas. I work from home, and we almost live on campus for Jos, so our gas budget moved a bit and shrunk to the $80 that it is now (benefits of a Prius). On the other hand, our first budget had no “fun” or travel money. We both have loved exploring Oregon, so we started factoring in $100 per budget to get out and about. Paying off debt is a sacrifice, but it doesn’t have to be a death march. So here is an example list of expenses. You may have some we don’t have, or may not have some that we do.

  • Internet
  • Rent
  • Gas
  • Compassion International (child we proudly sponsor in Ecuador)
  • Missionary friend we support
  • Oil changes/car maintenance
  • Cell phone bill
  • Medication
  • Electricity
  • Insurance
  • Allowance (we each get a bit of fun money that doesn’t count toward the budget)
  • Miscellaneous expense
  • Eating out
  • Student Loan payments
  • Fun/Trips
  • Groceries
  • Tithe (we are followers of Jesus and believe in supporting the Christian body and others through our local church)
  • Haircuts

This is just an example list that we start from each pay period. It’s a decent place to start. The next step is to assign an amount to each category. Some expenses are easy like the Internet is always $40. But some expenses are variable, like electricity. Make an educated guess based on past bills or what you usually expect to pay. Reviewing past months’ spending can be helpful. It may also shock you, so brace yourself! 🙂

Once you have listed an amount next to each expense, add up all your expenses. Then subtract your expenses from your paycheck. For example, let’s say my check was $1,000 and my expenses came to $920 for this two week period. I would have $80 “left over.” However, with the zero-balance budget, we need expenses + savings + debt repayment (insert other items here) to equal our paycheck. So in this example, that extra $80 goes towards an extra student loan payment! Now our paycheck of $1,000 is equal to our total expenses of $1,000.

You may be discouraged if you find that your total expenses are larger than your paycheck. This is the case for a lot of people, they just don’t know it. So they might make $1,000 but unknowingly spend $1,200 in that same time frame. That extra $200 can probably be found on their credit card balance. Yikes! With a budget in place, you spend what is in each category, and when it is gone, it’s gone! No more eating at restaurants or fun money for a couple days until that next paycheck comes in. A little self-control goes a long way.

The point of creating the budget is to analyze what you need and don’t need. Are you paying for cable? How about an expensive $1,000 phone you’re making payments on? Maybe you have a car payment you can’t afford. Even little things like a $10 subscription service to a music service might need to get the ax. Creating a budget can be extremely eye-opening. And it should be! We are trying to make a positive change!

For Jos and I, we subtract our expenses from our paycheck, and then the entire remainder goes straight to student loan debt. Might sound crazy, but we’ve made some awesome progress with this approach. It becomes a bit of a game, doing your best to maximize the leftover to make a large payment. Remember, making a payment now saves your future self a lot of money. Do your future self a favor!

Zero-balance budgeting is great because it gives every dollar an assignment. There is no guilt for spending money in a category that is allocated to that expense. And it helps establish healthy boundaries. When a category runs out, wait until that next check comes in. Don’t forget, you can make adjustments. You may find you consistently have money left over in a category. Go ahead and reallocate those funds elsewhere. Or perhaps your grocery budget just isn’t enough to get you by so you may need to expand it by a few bucks. Find what works for you. Be reasonable and do your best to be a bit frugal where there is room for it.

“Budget” can be a swear word to some people. But it doesn’t have to be for you. A budget can spell freedom if it is followed and refined along the way. Don’t know where to start? I would love to get you pointed in the right direction. Feel free to reach out to me through the Contact page on this site.

The Power of the $1,000 Cushion

~ Justin ~ Leave a comment

Until I started making smarter financial moves, one of the things I did regularly was use credit cards. Most of us have been there. It started as just wanting to “build my credit” a little bit, then I started using it for things like gas, and then the occasional dinner out, and then Christmas presents. All of a sudden I found myself bumping into the max balances on a couple of my cards. The dangerous thing is how easy it is to simply open another card and continue the trend.

One of the most powerful shifts that I saw in my finances was when I started implementing a cash buffer, or cushion. We decided on $1,000, but it could be whatever amount you are comfortable with. The power of it comes out when the unexpected arises in life, which it always does at some time or another.

Say you are cruising along, making progress on your financial goal of eliminating some debt. You’ve got your expenses from month to month, but one day your car starts making a noise. It gets worse and you find yourself at the shop. They tell you it’s going to be $650 to get the issue repaired. If you are living on credit cards for these kinds of expenses, you pull out the plastic and dig a deeper hole for yourself. OR, you tap into that cash cushion that you’ve cleverly saved up. Now you can pay cash for the repair, and still have a couple hundred dollars left just in case. You survive the rest of the month, and when the next paycheck rolls around, you can simply replenish the cushion fund.

Using this cushion helped us get off of credit cards once and for all. As unexpected expenses arose, we had the flexibility to keep the credit card in our pocket and instead pay cash (we use debit cards, but you get the idea).

Credit cards debt has a very nasty way of sticking around longer than we want it to. An expense that we expected to pay off with no interest in 30 or fewer days trickles into the next month, and the next, because you know, life hits. Before you know it your $650 repair ultimately costs you $800, $900, maybe more after interest is applied.

If you are wanting to start making progress on putting your credit card away and keeping it there, this is the place to start. Establish a financial cushion for yourself and you’ll be surprised how much less you’ll need your credit cards. Paying off credit card debt starts with putting the card down and not using it. It may seem obvious, but it took me a long time to figure out, and I can only speak from experience.

Why not start your financial cushion fund today?

Not By Mistake

~ Justin ~ 2 Comments

In the big scheme of life, it’s easy to look back and see why some things turned out the way they did. Why did LeBron James become one of the best basketball players of all time? Why was Tiger Woods such a dominant golfer? Why was Peyton Manning so good at diagnosing defenses and putting the football right where it needed to be for his receivers?

We can talk about all the things that they did to get to where they were. But one thing is abundantly clear. None of it was by mistake.

Whether it is learning a new skill or trade, picking up a hobby, or trying to Figure Out Finances, there are steps that need to be taken to take you where you want to be.

When Josilyn and I were dating, I was managing a hotel in Missoula. The pay was good, but I had bad habits. I was eating out almost every day during the work week. I started doing it every once in a while, then three times a week, then almost every day. It became a habit for me. It should come as no surprise that I wracked up a healthy amount of credit card debt due to my lack of attention to the details of my financial life.

One day I was honestly just curious to see what I was spending. I printed out three months’ worth of statements from my credit cards and my checking account. It was bad. Really bad. Some months I was spending over $600 on dining out alone. OUCH. I knew something had to change.

Since then, eating out has become a once in a while nicety. Jos does an incredible job of cooking meal preps each week for both of us for lunch. She makes awesome homemade dinners. We eat a lot of cereal, eggs, and toast for breakfast. We almost always have coffee at home instead of going to pick it up at a coffee joint.

Intentionality is what gets us where we want to go. I realized I didn’t want to live with debt forever. It took some growing pains to get to where we are now, but the reward is great as we watch our total debt balance drop like a rock each month. Our choices matter, and where we end up is not by mistake.

The Age of the $1,000 Smartphone

~ Justin ~ Leave a comment

I for one am all about cool new gadgetry and technology. I keep a steady pulse on a number of tech blogs and sites to see what is coming next, what cool features we can all expect out of our next smartphone in its next iteration. There are some incredible innovations and technologies being rolled out every week it seems.

I’ve always been an early adopter, one of the first to purchase and embrace these new flashy devices. Back in high school, I think I had one of the first iPod Mini’s (you know, the one with the aluminum body and the black and white screen. Yeah, soooo retro!). Later I got one of the first Verizon smartphones that spearheaded the move to 3G data. It was a slider phone, the Motorola Droid! Remember those commercials, “Droid Does”? Quite the ad campaign.

I am all about the latest and greatest. But I think this is also a time for a reality check.

I just hopped on Apple’s website to spec out an iPhone XS Max with 512GB of storage. $1,449 for that bad boy. Oh, and you should probably get Apple Care since you wouldn’t want such a big “investment” to get busted or stolen. So that will tack on $299. Wow, we are looking at a $1,748 phone. You’ll probably want a case too, right? And maybe some Bluetooth headphones since these super advanced phones don’t have a headphone jack anymore… what are we at, $2,000 now?

Maybe you have the means to spend $1,000 to $2,000 on a phone every year or two (don’t get me started on what the plans cost these days for unlimited data that isn’t really unlimited at all). I don’t have that kind of money, and unless you make six figures a year I would argue that you might not be able to afford it either.

I think companies like Samsung and Apple are trying to find what the threshold of insanity is on the price of a flagship smartphone. If I were them as a business, I would keep pushing the price up until sales slump. Hell, even if they slump a few percentage points at these prices, they are still making an absolute killing. Don’t let them take your hard earned money!

What do you do 99% of the time with your phone? Text regularly, check social media, check your bank balance (if you don’t, it’s a good time to start 🙂 ), maybe read a few articles, maybe take a couple of pictures.

I think for me, I had to come to the realization that is unreasonable to pay the asking price for these new phones. It’s ludicrous. Probably about a year ago, I picked up a used iPhone 6S for $180. I paid cash for it and have not made a phone payment since. It has a large screen, great for reading and checking email, watching my Denver Broncos highlights (let’s be real it’s been a rough year), the camera works really well when I need it, I replaced the battery at Apple for $29, so it is just as fast and lasts just as long as the day it came off the shelf. It is a great phone, and it cost a fraction of what these new phones cost. Ah, and mine does have a headphone jack. Nice!

Phones and cell plans can be a huge drag to you meeting your financial goals. Do you really need the latest and greatest to scroll your Instagram feed? Is it just a status thing? Maybe take stock of why the newest phone feels like a need when indeed it is a want. With a little shopping around for a nice, lightly used phone, and some more shopping for a good discount service provider (I’d be happy to give you advice on finding both!), you could save hundreds of dollars every year. Maybe even $1,000. No joke! I’ll leave you with some math since I’m making that a bit of a theme here in my  writing:

Scenario A / Lowest end iPhone XS 64GB on 24 month payment plan: ~$50.00/month

Add that to the lowest end “unlimited” individual plan from Verizon: ~$75.00/month before taxes and fees

Monthly cost for Scenario A: $50 + $75 = $125/mo. times 24 months = $3,000/2 yrs.

Scenario B / Used iPhone 6S Plus paid in cash divided by 24 months: $7.50/month

Add to that a 10GB/month plan from MintMobile: ~$25.00/month

Monthly cost for Scenario A: $7.50 + $25.00 = $32.50/mo. times 24 months = $780/2 yrs.

 

Scenario B would save you $2,220 over the course of 2 years. That’s a 74% savings. Astronomical savings.

Let me know if you want to learn more about these discount MVNO’s for phone service on the cheap, or if you don’t know where to start getting a used phone. I’d be happy to help you start saving today!