The Weight of Money

Since the partner and I are still mapping out our financial relationship, I figured outlining goals for 2007 would be a good way to help us work together toward something and help us stretch a little to see what is possible.

Now that is it March, it’s time for a quarterly review of our goals, current progress, and projects for the next quarter.

Goal: Increase Savings for Home Purchase to $20,000 by July 2007. 2007 Plan of action - increase current savings from $300/month to $700/month - this comes at the cost of scaling back our debt reduction. The additional $500/month will come from ebay sales.

Progress: We’ve managed to put $1,400 towards savings in January and February — keeping with the $700/month contribution. However, we’ve not matched the $500/month from additional income streams. At this point, we have $3,000 in our joint-savings ($2,200 short of expected/planned progress) and about $5,000 in each of our individual accounts. We need an additional $7,000, at least, within the next four months to make this goal.

Our income tax return should give us a boost of $3,000. To get the additional $4,000 we need to put $1,000/month into savings for the next four months. My sewing income is about $200/month and I’ve recentlly been offered telecommuting work from my last job. Hopefully these things, combined, will help us reach that goal.

Goal: Reduce Credit Card Debt to $10,000 by December 2007. Plan of action - this will be worked out in quarterly steps with a credit card debt load of $13,000 in March, $12,000 in June, $11,000 in September, and $10,000 in December.

Progress: Our current debt is $13,500, approximately on schedule.

Goal: Buy a house in July 2007

Progress: Looking has begun, but some recent concerns over my credit history may put a ding in this. ALso, our expectations of 5 acre minimum may need some reconsideration.

Goal: Increase retirement investments to 15% of income by December 2007. Plan of action – increase to 5% in April, 10% in August, 15% in December.

Progress: We’re actually ahead of ourselves with this goal. I currently contribute 10% of my salary ($2,808) and the partner recently upped his contributions to 6% ($3,300) thanks to the new employer matching program. So, we’re currently putting away 7.4% of our income for retirement.

Goal: Increase Passive Income to $200/month. Plan of action - expand internet revenue and investments. Also, build passive income into the purchase of the new home in leasing out property or space.

Progress: I think we might need to modify this to include alternative/additional income. Our passive income is currently less than $50/month. My new side job is bringing in about $200/month. If we modify our goals to include additional income streams, then we’ve already met this goal for 2007. But, we’ll have to see how it spreads out over the year.

Overall, it looks like we’re doing pretty good. Our savings goals are a little bit of a stretch at the moment, but hopefully we’ll be able to reach enough to make things happen. For the next three months we need to focus on increasing home savings and preparing to buy a home (which will include dealing with some credit demons).

Here is a short summary of February spending. No screenshot this month due to lack to patience for transferring and manipulating files. One downside to joint-finances is keeping our files on a jointly accessible computer and not being able to use all the wonderful resources on my mac for doing as I wish with the data.

Income Overview:

• Income for February: $4,299.31*
• Budgeted expenses for February: $4,398.99
• Actual Expenses for February: $5,211.22
• February Overdraft: $812.23 (We’ll be $800 short for March)

The Good: making progress!

• Savings: $700

• Credit Cards: $465
• Student Loans: $324
• Dining Out: $100 budgeted, $164.11 actual ($55 less than last month)

Middle of the Road: it is what it is.

• Rent: $1,575
• Electric: $114.64
• Internet: $29.99
• Gasoline: $160 budgeted, $235.74 actual ($50 more than last month)
• Personal Funds - The Partner: $300 (making up for the last two months)
• Personal Funds - Mine: $150
• Auto-Insurance: $128.16
• Household: $94.26 actual
• Miscellaneous: $85.20 actual

The Bad:

• Cell Phone: $105.25 — way too high!!!
• Groceries: $300 budgeted, $570.54 actual (Costco Month)
• Business: $61.04 (only made $25 last month)

Summary/Review: Overall, it wasn’t a bad month. While we overspent by $800, it was mostly due to the lack of income from my new job (a week without pay between positions) and holding to a savings schedule that isn’t going to work with our current income levels. We’re already modifying our savings and spending for March to deal with this problem. However, there is no more room to trim anything from our budget, so we may need to kick up the additional streams of income to help make ends meet — more ebaying and more sewing.

*As a reminder, using the YNAB system, our February income is from the paychecks received in January.

I have a whole slew of posts percolating and will be serving them up next week.

Stay tuned for:

• an update on our 2007 goals,
• our cell phone business battle - sprint versus cingular,
• another round of ‘make the call’ savings,
• February spending overview, and
• money-making action update.

Help Needed: In comments, wordpress is not linking to the author’s url (when it is supplied). That information is in the database and, as far as I can tell, commenter names are setup to be linked to. But, it isn’t working and I don’t think it has ever worked — any suggestions? I’ve already done the basic google and codex scours to try and solve it, so any quirky insights would be great.

Now that I’ve run the figures for our taxes, I need to actually file them. I can’t believe I didn’t do this two weeks ago! For every day that we don’t have the refund, we’re losing potential interest gains. tick tick.

This weeks goal: file taxes. I’m keeping this week simple. Once I manage that task, I’ll list another one that I need to take care of.

January held some difficult challenges to overcome. The biggest was being $500 short in income due to overspending in December (no, not because of gifts). However, as I said I would, I had faith that we’d make it through the month meeting the majority of our goals. Instead of making month-specific goals, we decided to take a running start at our Goals for 2007.

Savings: Increased Savings to $700/month
We followed through with the goal to increase our direct savings contribution from $300 a month to $700 a month. This is a very difficult stretch for January, but I’m glad we made it happen.

Debt: Pay Down Debt
We put more than $600 toward the credit card debt this month. Most of the payments were all minimum payments except our highest interest rate card which received an additional $300.

Cell Phone: Too High
Our cell phones continue to cost us more than $100 a month – too much. I’m hoping to get this resolved before May.

Food: Almost Within Budget
We actually stayed within our dining out budget for the majority of the month. However, we failed to factor in the trip to Oklahoma and the meals that we’d be eating out while there. Overall, $220 on eating out is a good number for us. We also cut groceries down a lot this month to help make up for the shortage we started with. Our pantry left us with plenty of good meals and February will show a spike in grocery purchases.

Personal Funds
The partner continued to pass on taking out the personal funds we both agreed we would get each month. This makes me uncomfortable and we made up for it in February by taking out twice as much as usual for him.

Additional Income
The 2007 plan includes increasing ebay sales and other income streams. January was not a good candidate for this and we’re trying to pick up the slack in February.

Overall, January went much better than expected. We’re still having to catch up on some things in February, but I think things are looking up.

I posted our goals for 2007 and include a stretch for saving $1,200 a month for the purchase of a house later this year. This was to combine $700 in direct savings and $500 in ebay sales. I figured the ebay portion would be the stretch, but we’ve already hit a snag 15 days into January.

Last month we were on budget until the partner and I started stroking checks for magazine subscriptions – most for several year subscriptions. This was more his thing and I just happened to be holding the pen at the time. However, this plus some organization dues (that we’ll be reimbursed for) threw us over budget by more than $500.

Also, as I’ve recently mentioned, we’ve had another round of car trouble to the tune of $350. This time it is the partner’s van that blew out a brake line while going in for the semi-annual emissions testing. Our repair shop must be liking us a lot right now, almost $800 in a little over a month.

So, January’s available funds are short by about $900. I’ve scrutinized all our budget categories and just there is nothing we can reduce spending; everything has already been slimmed down to the bare minimums.

I know that the best plan would be to trim back on our new savings plan to avoid increasing credit card debt and get back on track, but I’m not ready to take that step. Instead, I’m going to take a major leap of faith and hold to our steep savings plan despite the crunch we’re under.

My only real action plan is to push the ebay button very hard this month in the few weeks we have left. We need the $500 for savings and another $500 to help ease the deficit. Considering that the ebay income is less than $100 at the moment, this will take some serious work. Our upcoming vacation is also going to put another kink in sales too.

The remaining $400 shortage will be carried over to February. Thanks to how we manage our finances, we can spread the $900 out over two months to help ease the strain and get back on track.

This comes one month before our finances will really get tight. Next month we’ll be seeing less money coming home because 1) my new job is part-time, 2) medical insurance premiums increase, and 3) the partner signed paperwork for 5% contribution to the 401K since the company began offering matching funds (working out to a 4% raise – free money).

For now, I’m going to have faith that this will work out and that we must keep with our planned savings contributions because dropping the ball in round one jeopardizes our overall success.

2006 has been quite an adventure and has set the stage for 2007 to follow suite with many personal, social, and financial quests. It is now time to consider the choices available for charting a course through 2007. I’ve set up general and specific goals that are attainable with dilligence and a little stretchingwhere needed.

Debt reduction and a new home purchase (and associated costs) are on the horizon and specific tasks are needed to build a successful plan of action.

Goal: Increase Savings for Home Purchase to $20,000 by July 2007.
This goal is a serious stretch, but I’m planning on making it happen. This will require monthly savings of $1,200 a month. While that number look exceptionally high at the moment, I think it can be done.

Plan of action - increase current savings from $300/month to $700/month - this comes at the cost of scaling back our debt reduction. The additional $500/month will come from ebay sales.

Goal: Reduce Credit Card Debt to $10,000 by December 2007.
Having a goal of $0 debt is important, but I really need to nurture those baby steps along the way. It is important to see a debt reduction is just as important as debt elimination.

Plan of action - this will be worked out in quarterly steps with a credit card debt load of $13,000 in March, $12,000 in June, $11,000 in September, and $10,000 in December. This will include monthly debt reduction of about $300 or an additional $100 over the current minimum payments and is a drastic cutback in our current debt reduction. Obviously, debt reduction is more financially beneficial when compared to savings, but we can’t put down a lower monthly interest charges on a new house – we need to have cash in hand to make that happen.

Goal: Buy a house in July 2007
This is a logical step after the first two goals. The house should have a minimum of 5 acres of land, a house sound enough to live in, preexisting outbuildings, and no restrictions on the construction of structures or the maintenance of livestock.

Goal: Increase retirement investments to 15% of income by December 2007.
This needs to be a year of positive investing. I currently put away about 11% of my income in a 403B while the partner put pennies in his account. We need to make this a household income goal. A stretch goal would be to max out my retirement account and maybe his too.

Plan of action – increase to 5% in April, 10% in August, 15% in December.

Goal: Increase Passive Income to $200/month.
A common goal for many writers, but an appropriate one just the same. We’ve been struggling with this goal for a while and still haven’t broken out of the “must work hard to earn money” mindset. Current passive income is about $30/month. I’ve got some work to do.

Plan of action - expand internet revenue and investments. Also, build passive income into the purchase of the new home in leasing out propoerty or space.

Just five goals for the upcoming year with smaller milestones being addressed through monthly assessments and adjustments. I’m still working out the excel budget kinks and plan to have it fully functional by January 1, 2007. Best of luck to all of those planning out their year and to those who like to let life take them where it may.

I’m starting to feel pressured to complete the goals for 2007 and meet my December goals of getting our budget prepared for next year. I need a crash course in advanced excel to whip YNAB into shape and the partner and I are still not quite set on an actual debt/savings plan yet. Also, the work change may have a significant affect on the finances if I take a part-time position and start toward the personal business plans I’ve been working on.

Obviously, the self-imposed deadlines are not worthy of the possible stress they may be inducing, but I really want to meet these goals - not to keep up with others who are one step ahead, but to feel like I’m starting the year off prepared. Of course, if I don’t make my deadline, I’ll get over it and just get it done when it gets done.

I often get turned around with simple math problems and I used to think this meant I’d never be able to manage my finances. However, lots of patience, double-checking, and perseverance pays off and I’m proud of how far I’ve come in the past 5 years in terms of managing cash flow.

When I added the Credit Card Debt Reduction meter to my sidebar, I made a mistake in my calculations. Our debt goal is to move from $30,500 in credit card debt to $0 and when I went to update it today, my calculations were telling me that we were doing worse even though our debt had reduced by $5,000 – obviously there was a problem. I realized that I had failed to factor in the fact that I was counting down to zero (not up from) and that inverted the percentages.

The problem is fixed and I’m proud to announce that we’ve accomplished 53% of our goal and now have a credit card debt of only $14,336. I’ll update the numbers every other month or so, because the monthly reductions usually are not great enough to recalculate the numbers for each time. November was a special reduction month because of the special found money that was put 100% to debt reduction.

Also, I’ve updated our home savings and the percentage has gone down. We’ve not touched the money; it was never $2,500 to begin with. The partner and I each have individual savings accounts that equal about $10,000 and we will certainly make use of those funds, as needed, for a house purchase. However, since our joint savings account is starting from the ground up and I want to start tracking its actual progress and not factor in any dedicated contributions from our individual accounts. I’ll also be updating this meter every other month since, unfortunately, it too moves at a snails pace.

These are all just small steps to help shape our personal and financial plan for 2007. This is a great week to get all of those ducks lined up and accounted for.

I’ve been lamenting the fact that I don’t have a proper winter coat. My first attempt to solve this was a trip to the thrift store without success. Saturday, I won a $50 department store gift card at the partner’s holiday party. The partner, noting my lack of winning enthusiasm, reminded me of the winter coat I’ve been wanting and I perked up.

Sunday morning we headed over to the mall so he could complete some holiday shopping (which came home in an oh-so-obvious pink bag) and I could find a coat. I wasn’t impressed with the coats and was overwhelmed by the prices.  The only coat I thought I could tolerate had a price tag of $500. $500 for a coat! The other coats of possibility were closer to the $200 range. $50 off $200 is not a good deal to me.

I browsed some other stores, found similar price tags on the wool coats I liked and decided that the new coat was more of a want than a need. Upon leaving the mall coat-less, my partner began his insistence that if I needed a coat I should get a coat regardless of my price concerns. He said he would be happy to give me a coat for Christmas and we should go pick one out.

However, I held firm that a purchase of that scale just didn’t fit in our financial goals at the moment and he eventually gave up. I said I’d try the thrift store again because even a tolerable coat for $20 is a better choice than an acceptable coat for $2000-500. Of course, I didn’t tell them that I’d also decide that the wool coat I’ve owned for 10 years is going to have to be good enough for another year, despite all its shortcoming.