Monday, October 1, 2018

Living on a Tiny Budget

Some moments, I hate money. I hate budgeting. I hate that spreadsheet. I hate feeling poor or like I have no money to have fun with...

But other times, when I can see the bigger picture - retiring early, traveling, eating well, spending quality time as a family - I don't feel so terrible.

Budgeting in a spreadsheet has certainly opened up my eyes over the last few years and contributed to our living in a smaller space and with less stuff. When we first married, Randy and I we had the big house and filled it with our wedding registry gifts. We had a car loan. We ate out all the time (who can resist the best restaurants in New Orleans?). But we also had stress. Loads of it. We didn't know where our money was going each month and we often ran into tight situations. Within a year of living like this, we decided we had to make a change. 

I was gifted a book that sat on a shelf for years and that's when I took it off my bookshelf to finally crack the pages. That book was Dave Ramsey's "The Total Money Makeover." After reading it, we both sat down to look at where our money was going. And boy! Was that eye opening. We knew we had to make a change and this book presented a method for us to use. So we started with a fresh month and built a budget based on the previous month's expenses. There was a lot of adjusting over time, but it slowly came together. In conjunction with budgeting, we decided to use our savings from wedding gifts to pay off the vehicle we still owed on and free up some money each month. While that hurt initially (WHERE HAS ALL OUR SAVINGS GONE?!) , it was one of the best steps we've taken in our financial plan thus far. We no longer have debt other than our house and that feels great! But, it's still not perfect. And it's still a struggle.

Over the last few years, we had financial obstacles to overcome like a layoff, moving, and bringing kids into our family that have each taught us how to better manage our money. In some way or another, we skimmed by and made it through the challenges on our own two feet. That is definitely something we are proud of. We learned from those challenges and now have an emergency fund that could last us close to 6 months if anything should happen to our regular income stream. That alone is a huge comfort. We also began contributing a decent amount to retirement. And thankfully, the girls have savings accounts for their future education thanks to very generous family members. Overall, I feel much better about our finances today than I did when we first married. But lately we've been a bit lax and I went to check on things...

It wasn't until recently that I realized we have been slacking on our sinking funds and retirement savings (other than the automatic 401k withdrawal that we never actually see). We are less than 4 months from the end of the year and our IRA? Yeah, it hasn't been touched since April. I look at savings accounts for things like our vehicle maintenance or pet related expenses and they sit there at $0. Something kicked my butt into gear again and I'm on a mission (hence, writing about this). My end of the year goal is just to make sure that IRA gets maxed our so we hit near our goal - 15% of our income going into retirement. 

Beyond that, I'm planning for next year on a larger scale. I decided that looking at our funds on a monthly basis helps us know where our money is going, but it doesn't take into account things on a bigger level. So, I stepped back and planned for a year in advance. I have built out the spreadsheet so that our sinking funds will be fully functioning next year with a dedicated amount each month going to things like car maintenance, house projects, yearly pet expenses, a vacation fund, a gift and Christmas fund, etc. Each month I have a set amount to go into the IRA so we aren't crunching at the end of the year like we are now. 2019 budget? Done! 

And when I was done budgeting for the year, I took a step back and thought, "this feels good, but now what?" As of now, each month for 2019 has a little money leftover... do we use that for fun things? And then I thought about the book. What was the next step he suggested?
  1. Get rid of debt? ✓
  2. Build emergency fund? ✓
  3. Contribute to retirement savings? ✓
  4. Contribute to kids education fund? ✓
  5. Pay off house... Oh.

I don't know how I feel about this. Part of me doesn't want to put the money into this house. We feel things may change within a year or two and aren't completely satisfied with where we live. Part of me knows it will go straight to the principle and save us money in interest. Part of me wishes we didn't owe on a house and could live our best tiny house / mortgage-free dreams. Part of me is thankful we don't waste our money on rent any longer. I'm stuck between wanting to be financially free and enjoy the moments we have here in Colorado because things could change at any given time (if you had asked me just months before moving to Colorado, I would've said New Orleans was our forever home).

Since Randy is the "bread winner" and I'm the "household manager (aka the spender)," it can still be challenging at times to figure out where each penny goes. But with time and lots of communication, we are learning how to best manage our money. And thanks to Dave, I can say our mindset has definitely shifted away from the "American Dream" of having a new car every few years or a bigger house or all the stuff that needs to go inside said house. We don't care for those things any longer and can see the big picture. But we are still figuring out how to achieve that bigger picture. How to make it a reality. This is something I'm not sure we'll figure out anytime soon. Yet as I look back and reflect on where we once were, I can say that things will fall into place once again.

Has anyone dealt with mixed feelings toward the steps of financial freedom (both within yourself and between you and your partner)? How do you come to terms and figure out what the next step will be? How do you balance the here and now with the bigger picture years from now? I'd love to hear from you!

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