No Spend November

no-spend-november

Much like No-Shave November, except for your wallet. If you have never heard of a no spend month, it is a spending cleanse where you do not spend money on anything other than what you determine to be a necessity (tip: determine what that is before you start – usually it’s food, toiletries, gas, etc.). I know I’m posting a bit late but this isn’t an exact science so it’s not too late to give it the ol’ college try!

Our big goal for this month is to finally not exceed our budget. Budgeting is très hard, people, and we are still working at it.

So the hardest thing with a no spend month is not figuring out what the concept is or the goal, but rather how to keep that razor sharp focus. So here are the pointers:

  1. Christmas is coming up. Either your shopping is done (lolz.) or you have December to do it to it. I know. Black Friday is a thing. But not in this household and you can get your restraint on too. I mean how many scarves and skillets does one need?
  2. Splurging on yourself? see Numero uno. What’s the point of a splurge
  3. if Christmas gifts are coming right around the corner.
  4. Goals, baybe GOALS. December 31st is coming up and that also means so are your year-end goals. Don’t got um? Make um. It doesn’t just have to be financial, go for a run to meet that fitness goal instead of putting wear on that plastic.
  5. Don’t celebrate Christmas and goals are not your game? Plan a reward for yourself – a special day off, an inexpensive outing, a little gift.
  6. Cleanse. Consumerism is a thing and it doesn’t need to be. Remind yourself of what else is out there and how much we are restricted by an urge to have more stuff. 

These are just some things we trying to keep our mind on so we don’t spend the moolah … even if it’s not a “no-spend” month.

Have your own way of keeping the cards in your clutch? Lemme know.

xoxo -Kate

 

photo cred

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Debt Talk: Setting Reasonable Goals to Tackle Debt

debt goals travel blog

Maybe I’m a goal person. I am the weirdo that creates to-do lists and adds things I’ve already completed just for the satisfaction of having an additional thing to cross out. (oh man, did I really just admit that?!)

Anyway… debt is no different. And I do not think you have to be crazy to see the benefit and reap the benefit of setting a goal and reminding yourself of it – constantly.

While our end game (as evidenced in the picture above) is to have the freedom to travel – using cash – it is important to set additional goals while you are still working to achieve that overarching *supreme* goal.

Where do you start when outlining your goal?

Again this is highly personalized and extremely depends on how much debt you have. For Garrett and I, who topple the $200k range – sans mortgage, people – we know are in this cruise boat dingy for a pretty long haul.

So in making our goals we have to consider things like, Garrett’s residency is only for three years and after that he will start a new residency and we don’t know where we will be living, with what cost of living, what his salary will be, etc. We also don’t know if / when we will have kids before our debt is completely paid off. Life is happening and we can’t just pause our lives to pay off our debt and it’s not very reasonable or financially savvy to expect everything to mellow out in a few years and assume we will take care of the debt then. So we made some assumptions to help us shape our goals and projections for the future.

In total we would ideally like to have our debt paid off within the next seven years. We know this sounds extreme and it might not happen (which is okay) but that is our current goal. On a smaller scale (which I find necessary since we owe so much and that sounds seriously like ions away) our second goal is to have all private student loans paid off by July 2017. On an even smaller scale, our goal is to have all our credit cards paid off by September 2016.

Breaking it down like this makes it so much more manageable so if you are carrying a large debt load – hell, especially if you are carrying a large debt load – then set milestone goals along the way.

Keep with it – stick to it. Obviously budgets are hard to keep. Obviously it’s even harder to not spend money when you have extra money you are allotting to debt. I mean why not take that money every once and a while and instead of paying you debt, just go a little crazy?!!? … haha. We both know why and that is because it will not put you any closer to your goal, financial freedom, or building your wealth and empire. A big splurge that you will forget about in two weeks is so not worth it. Instead, associate splurges with meeting goals. Reward yourself only after you have met a goal – but keep it reasonable.

A hugely helpful way to stick with your debt is to constantly remind yourself of it. Put a sticky note on your work computer, on your fridge, in your car, etc. to be a reminder of the end game. Personally, that number is severely depressing for me so I prefer to stay motived by a different means. I do this by reading articles, books, blogs, etc. about debt and wealth management. I obsessively research finances. Whatever method you choose, the point is the same – keep your mind focused!

At the end of it all…

Know that your goals are flexible. Of course you want to stick to them but also know when you need to cut a little slack. Did you just have a brand new baby so you are out of work a few months? Don’t shame yourself for having to push your “pay off date” back a few months as well. Like previously mentioned, life is happening, just stay on top of your goals, make the right adjustments, and stay focused on the end game.

>>> Kate

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Debt Talk: How (almost) Depleting your Savings can Help you Save More

computer debt budget blog talk

So I know it is a day earlier than Friday but this week it’s going to be debt-talk duo. 😉

Last week we talked about setting a budget. After that budget is in place it is time to start implementing a debt pay-down to see some results as quick as possible. I’ve talked previously about different debt pay-down methods and after you have decided what will work best in your situation – after making a list of all your debts and their associated interest rates – it is time to implement the next phase, which is depletion.

So I know this probably sounds counter-intuitive but I am sure you can tell the key word here is almost*.

The reason this can help you save more is because your interest rates – especially if you have credit cards – probably farrr exceed any “good” interest you have coming in from what is in your savings account.

So how do you determine how much to leave in savings? This answer varies but do keep in mind you will always want to keep something in savings. You never want to have to revert back to piling on credit card debt after you freed yourself from it. So how much? Some debt experts say just $1000 is all you really need to scrap by if things got ugly for a little bit. This is what I first heard when I started really researching this about a year or two ago but I just could not come to terms with that low number. Does this person not know what kind of world and economy we live in?! Do they not know that there are more graduates than jobs and things can change in a moments notice? Is this person unaware of my #teamparanoid status?! At any rate, your girl decided that I just could not be comfortable with that amount. Instead I decided I was comfortable with leaving $3000 behind and luckily, my husband could agree with that number.

The number you choose may have to do with things like: are you a two-income household but could get by on one? (if so you probably don’t need as much in savings) or do you have a job that is seasonal or temporary? (save save save)

At the end of the day, this number is highly personalized, as you are the one that has to be okay with it. If you are really struggling to pick a number and $1000 seems too low, perhaps calculate your expenses for a month and start with that number. After you set the amount you are comfortable with keeping in savings, everything over that number gets thrown at debt. If you haven’t reached that number – build it into your budget so that you can reach it and after it is reached, throw what would have gone towards the savings to the next line item on your debt list.

After you have made these decisions and it is time to move on to goal setting, which is the topic of tomorrow. Having clear goals about where you want to be and when you can realistically get there is crucial to financial freedom, stability and – for me – overall happiness. Stay tuned 😉

>>> kate

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Debt Talk: Creating a Monthly Budget

 

debt talk computer budget

 

Creating a budget is ground zero for getting your finances, debts, and wealth under control.

I firmly believe there is no way you will get where you wanna be, when you wanna be there without a budget in place that you are sticking to. yeah, yeah … there will be screw ups but it is a process and here is the beginning step-by-steps:

  1. Outline everything you are spending money on and categorize. This sounds so much easier than it is in practice so let me lend a little advice. Of course the obvious ones are there: rent/mortgage, car insurance, electricity … but what about food? Of course you are eating but are you going to lump all your food into one category versus groceries, date night, alcohol, etc.? These are decisions that are flexible and at the bottom of this post I will blueprint what we do.
  2. Allot the cash. Again, easier said than done and you may have to play with some of these numbers in the beginning when you are first getting the hang of it. Determine what you spend on each category and fill it in next to it. For things like food and gas it may be easier to calculate what you are spending weekly and go from there. It may also be helpful to look in terms of percentage of income to category when determining these numbers but for us that didn’t make much sense. Where we are living, the rent is high high high but I work from home so what I need for gas isn’t the same as someone else. It also doesn’t make sense for us right now because we are already locked into our rent, car payment, etc. If we were to move or make a large purchase that would factor into our budget, we would look at percentage of our income while making our decision.
  3. Add it up. This is a pretty crucial step. Once you have a column of all your “allotted cash” you need to total the sum. This is how much money you intend on shelling out each month towards expenses. If this number exceeds your net income, you need to take out the scissors and start cutting. If not – figure out where you would comfortably like to put the extra money: credit cards, debt, 401k, etc. Every dollar should have a purpose to avoid frivolous spending.
  4. Track it – Regularly. Whether you are utilizing the envelope system, tracking your receipts after every expense, or using a service like mint.com you should know where your money is going to ensure you are actually sticking to this budget. You won’t always. That is okay. But learn from where you are spending … were you unrealistic with your food budget or are you eating out too much still? Either way – this is a learning process that will require adjustment as you go and as your life evolves.

Garrett and I utilize an excel spreadsheet.

Our categories include:

  • rent
  • my car payment (Garrett’s car is paid off)
  • car insurance (we pay this semi-annually to save cost but “collect” the money for it monthly)
  • internet
  • electricity
  • cellphone
  • food
  • renters insurance
  • private student loans
  • federal student loans
  • gas
  • car repair
  • medicine / eyewear
  • shopping / clothing
  • misc. (we allot ourselves a little “whatever we want” money)

 

We log what we want to spend in each of these areas. Currently, we are tracking everything through mint.com but for areas that we are not always spending monthly on like clothes, car repair, medicine/eyewear and car insurance, we are “collecting” the money each month keep it separate and ready for when we actually need it. In terms of food we actually do separate groceries and eating out but if at the end of the month we still have extra in eating out but need more for groceries, we will spread the love. Any extra that we have goes towards student loan debt.

Additional word from the wise: be realistic with the food budget. This is the area that most people tend to go over on and if you are going over month after month no matter how many coupons you are clipping – it can really hurt the motivational vibes. So best to keep it real upfront and some budgetters say they actually like to “budget” themselves a large amount in this area with the knowledge that they will definitely stay under because they tend to spend even less than they would if it was a small budget. Yep. Budgeting is also about psychology and mind games, not just money and numbers.

 

Are there any categories in your budget that are different than mine or do you have a different want of planning out monthly expenses? let a girl know in the comments 😉

>>> Kate

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Debt Talk: Where to Start When You Have Nothin’

desk budget edit

Ahhh, so here it is, the first of the “Debt Talk” series. Every Friday I will be posting about debt: my personal debt, where we are in our payoff journey, and what we are doing to get to the place we want to be a little bit quicker. There will be a bunch of tips and tricks that I have heard about along the way or have implemented myself to get the debt out the door that much quicker.

As some of you know, I have become quite obsessed with paying off my debt post-graduation and around the time Sallie Mae showed me the final balance (except it’s not, because interest is a alive and well – but that’s another story). Literally nothing would be more fulfilling to me than having a debt-free life because that just screams of freedom in my world. Plus, what kinda #girlboss is okay with debt constantly looming over her existence?!

…But since Garrett was still in medical school for the last year and we were a one income household, planning a wedding, trying to figure out how to merge our finances, and also patiently waiting for match week and where we would be moving to – our debt payoff unfortunately took a backseat. … We didn’t ignore it entirely though – we did some great things since December 2015 like paying off two of my credit cards with help in part from my entire Holiday bonus.

At any rate, here we are on the other side! Garrett started his residency this week (whoop whoop!! Go baby, go!!) and we have always kinda thought July would be it. Well. That plan took a serious hit when Garrett found out last Monday that he won’t see his first paycheck for 3 weeks. Three. That is basically August. So my first thought, to be honest, was to wait to start this series – and wait to start our intense journey – until we were really seeing both incomes. Then I realized that isn’t exactly fair. There is plenty we can start doing now to help ourselves in the long run and tons of families AND single people pay off debt with just one income.

So – hence the name for the post – it kinda sorta feels like we have nothing compared to the incomes we thought we would be working with at this point. So we started with creating a plan:

  1. Creating a Budget
  1. (Almost) Depleting the Savings
  1. Determine What Our Reasonable Goals Are

 

Over the next few weeks I will be detailing these starter steps and then really dig in. 😉

xo , kate

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Credit Scoring

credit cards

photo cred: bankrate.com

Why hello there friends! This post is about credit scores (did the title tip you off?). This is big people talk. I have been caring a lot about my credit debt for a quite a bit now but the credit score has only recently come back up (thanks to a friend that has been asking me about how to get her own finances in check).

There are so many whammies when it comes to credit. As she realized (and as did I when I began my debt pay down journey) if you are wanting to consolidate your debt to make the pay down easier or to get a lower interest rate, good luck! If your credit is already down the drain it is unlikely you will get approved for what would essentially be an additional line of credit — be it a personal loan or a lower interest rate credit card.

This can make the whole process that much more annoying and frustrating.  But! Don’t despair! There are options out there for the downtrodden debtors with crummy scores trying to get their financial health back in check…

  1. Review your credit report. Did you know you get three free?! yep. My advice is to space each out over the calendar year and pull one every 4 months to make sure all is well. This my number one piece of advice because doing just this helped my credit score rise over 100 points in just one month! (more on this later…)
  2. Work with your creditors. I get we all are not spewing money and the reason we are in debt in the first place is because we are not loaded with cash. Or at least I don’t think. Anyway … creditors are usually really understanding people if you can show them your budget, payment plan, etc. and will work with you to come up with a payback plan that fits with your income and necessary expenses.
  3. Pay on time. This sounds too good to be true but it can really help with your credit score. Pay your bills before becoming due just requires some calendaring and budgeting. If you see the due date approaching and the funds are just not there, go back to step 2 and give them a call to explain – hopefully the creditor will cut you some slack and extend the due date (just don’t make this a habit).
  4. Do not close accounts. Okay. This one didn’t really make sense at first to me and you definitely should research any and all of what I’ve written here before making decisions that can impact your financial well-being.  So, yeah. It would make complete sense to me to close credit cards that you do not use any more or after you clear the balance to reduce temptation but  halt! It is actually helpful to keep these lines open since when your credit score is calculated, your income debt and available credit will all taken into consideration. Thus, if you close off avenues of available credit, it will make your debt appear “higher” in the ratio.
  5. Pay off your most damaging debt. This goes with the debt paydown plan you choose but usually your most damaging debt will be credit cards that have the high interest rates versus student loans or a mortgage. This will provide more “open” credit for you and show you are reliable in paying back what you owe.

So to explain how I raised my credit score well over 100 points in just a month… it pretty much had to do with just taking an interest in my credit score. I had already been making payments on time and consistently to avoid late fees and raised interest rates and I was already on my debt paydown journey (I now only have one credit card with a balance!!) so pulling my credit report is almost all I had to do. I had pretty much contributed my low credit score to just all my student loans coming due as a recent graduate and just owing sooo much. It turned out it was actually the result of a *ding* on my credit score from a mistake with my doctor’s office. Getting it resolved took less than an hour and just a few phone calls to the collections agency and doctor’s office and submitting the right paperwork to the credit agency. It was all resolved by the following month and my credit score soared up!

 

Do you have any tips for raising your credit score?

 

Kate

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Snowball or Avalanche?

snow avalanche

If you have already started researching debt pay-down and how best to “attack” your debt (assuming you have more than one source like a lot of debt holders) you have heard of both the snowball approach, as well as the avalanche approach. While experts disagree on which approach is better of these two, all experts seem to concur that the best approach is to pick one source of debt and pay that one off entirely while making the minimal payment on all other sources.

But how do you choose which debt to pay off entirely?

Snowball approach would tell you to start with the lowest balance and pay that one completely off – regardless of the interest rates. To some this is counter-intuitive but the concept is basically to build momentum towards those large – sometimes five or six figure balances – and keep the debtor encouraged to keep paying off the debt.

Avalanche approach tells you to figure out which debt has the highest interest rate and completely pay this balance off first before moving to the next debt with the second highest interest rate. This approach can take a while since sometimes high interest rates are attached to the largest debts but it is encouraged because interest rates can tack on quite a bit to the balance due and in most situations you would end up paying less in interest rates during the course of your debt pay-down then you would by taking a different approach.

What am I doing?

I am taking the hybrid approach. I am not sure if it’s “a thing” but it is what is working best for me. Here’s what I did. I took all my debts (credit cards, federal student loans, private student loans) and made a list of what the balances were and what the interest rates are. I looked at both instead of just one or the other. For me, my high interest rate was also my lowest balance on a credit card so that was a no brainer – that became numero uno priority. After that I was in a  situation where I had two credit cards with balances only about $1,000 dollars apart and the less balance credit card had a lower interest rate. It just did not make sense to me then and nor does it now to not factor that in to at least some extent. So I paid off the credit card with the lesser balance but higher interest rate, first. Then I moved onto the slightly higher balance, yet lower interest rate, card. Then goes the private student loans following this same method of comparing balance and interest rate; and then will go the one consolidated federal student loan payment.

While this is working for me, I think what you ultimately choose will greatly depend on you, your dedication and your own situation.

 

Do you have your own method to get in the green sooner? Let me know!!

xoxo. kate

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To Rent or To Buy ?

house buying financials

To rent or to buy is probably an age old question. There are pros and cons to both but I personally feel like buying is just so substantial. It means that you did it. This is concrete and you are a grown up. Your roots are planted and you shall flourish. lol. All these ideas that populate in my mind that I correlate with home ownership are probably half-truths if even true at all. It is much like seeing someone driving a shiny new Porsche and immediately assuming they must be loaded then having the desire for a shiny new Porsche too. When in reality, it is quite possible that their finances are a mess and they are living above their means. Whatever the situation, I have learned that I need to look at our situation to make the determination of what is best for us.

So now that my fiancé and me are about to get married and two months after we say “I Do” our lease expires, we have been faced with the question: rent (again) or buy?

For the last two weeks at least I have been dead set on buy. Like any apartment dweller my upstairs neighbors are giants who bowl for sport and on any given Saturday night we have to deal with the ridiculous debauchery that is our neighbors arriving home from (or perhaps just leaving for?!) their night out. I have been dreaming of painting walls and growing a garden since practically forever and at 27 years old and having grown up in a small-ish town (where almost everyone from my local HS has bought and settled down), I feel like I am behind on this life milestone.

So instead of looking at our finances, I looked on zillow.  (this is the obvious and responsible next step – right!?) I guesstimated what I thought we could afford and started picking out “must-haves” and listing out “ummm nos“. We mentioned it in passing to my fiancé’s parents and they were happy for us but started pointing out all the cons (we were clearly already team-pro). At first I was pretty offended. We were adults – making adult decisions – and how could you possibly squash that for us?!  Two weeks laterrrr (yep – I hold onto things) I understand that they only have our best interests in mind and some of their concerns were pretty valid.

I also started thinking about all that was said and started really researching all that goes into home buying – not just researching and designing my future home.

Here are the best pieces of advice I have found and things to consider:

  1. Are you making your decision by just comparing the amount of rent you pay to a proposed mortgage payment? Yessss. This is the one that got me too. I mean really – doesn’t it pain anyone else to hear what some people’s (there goes the comparison trap again) mortgage payments are and feel totally taken advantage of knowing you pay 50% more in rent?! But it’s true. There is so much more to consider than monthly payment amounts.
  2. Do you have your down payment and some? A down payment is a necessity. It doesn’t matter if your bank requires one or not, you are going to want one to make your mortgage as low as possible to pay the least amount possible in interest. You will also want to make sure you have extra. Buying a new house comes with unexpected costs and repairs (even if new).
  3. Do you have a real understanding of how the process works, what costs will be associated, etc.? If you do not, you are not ready to make the purchase. Before buying anything – especially as something as expensive and monumental as a house – you should do your homework and this includes knowing everything about what to expect.
  4. Are you planning on staying where you are? This was a huge one for my fiancé and myself. We are not sure where will be moving and living and where we think we may end up living, we found out that the housing prices have not budged in quite some time. Meaning that we would actually lose money by buying since our house would resell for about the same, we do not plan on staying in our first home all that long, we would still have to pay costs associated with just the buying and selling, and we would inevitably have to do some types of home repair while living there (repairs that would probably be covered by your apartment management, btw).
  5. Have you considered who’s income you are relying on when calculating the mortgage payment? This question may be a little dicey and I may hurt your feelings but it is not without reason. But something major to consider is whether you are looking at your own income or your income combined with someone else’s or just someone else’s when deciding to buy as well as the stability of the income being considered. It may be advantageous to proceed with caution if you are considering the income of a recently acquired boyfriend or if one of the incomes stems from employment that is recent or temporary (your lending source may flag this anyway).
  6. Have you researched and considered in your budget home-ownership expenses ? While renting, usually a lot of things are included. Some perks that you may have while renting that you will not have when buying include: the cost of lawn and landscape maintenance, pool care maintenance, if you join a fitness club that was once included in your rent, homeowners insurance (more expensive than renters insurance), HOA dues, and the expense of miscellaneous repairs that would be covered by the maintenance men in your building.  We are both active people, not very handy and have very busy schedules so this was huge for us and a $20 dollar lawn cut and $10 a month gym fee add up quick.

 

When forced with the reality of all these major considerations, it dawned on me that even I – master arguer for what I really want – could not argue with myself that this would be a worthy endeavor at this point in our lives.

Most importantly and perhaps most surprisingly, when we both sat down to discuss buying, we both knew it was not a good time. It was liberating actually. We didn’t even have the mortgage and I felt like that expense and liability had been lifted. Renting provides the ability to move somewhere more inexpensive easily and allows us to better attack the debt. So while I’ll have to wait a little bit longer to plant my garden and paint some walls, it is better in the large scheme of things.

What big decisions have you recently made in your quest for intentional, debt-free living? What do you think I am missing from this list?

xoxo. kate

 

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why hello there, debt.

debt finances

 

Is it just me or are all your friends and former classmate buying new cars, houses, reproducing and gadgetizing their lives. What’s up, $$$?! It seems like everyone is carefully cultivating a cash tree that I probably would kill with my less than green thumb. I am torn between feeling like I am doing this all wrong or maybe the Joneses cannot even keep up with themselves (it just appears like they can). Either way, it makes it super. crazy. hard. to be financially disciplined when you just see all these new things and people your age getting them.

I would like to think I’m responsible with my money. I track where it goes, I monitor my bank account, I save payment confirmation numbers… but the more I think about it – the more I realize that I am just controlling. Don’t worry. I’m not offended. *I am WELL aware.* But controlling does not equal financial discipline.

So now that I am a big person. ya know – in my career, done with school, about to get *ahem* marrieddddd – it is high time that I get my finances in check and start seeking this elusive financial freedom bloggers blog about. Oh – and stop worrying about what everyone else is doing with their money and where in WORLD it must be coming from. Because really – it just doesn’t add up.

It will take some discipline and it will also take some brutal *freaking* honesty. But herewego. Let’s just be frank with each other. just so we all understand the gravity of it. With undergrad, law school, and a my-future-self-will-cover-the-tab attitude behind me, I now am sitting not-so-pretty with over 214k worth of debt. *pausing for reaction*yep. The most I’ve seen out of all the fellow bloggers I’ve stalked and read advice from. So I am determined to pay it down ASAP. It’s a little difficult at this current juncture to set a time frame due to the flux in my life right now (getting married, my hubs getting a job after finishing medical school, etc.) but I am hoping that by the end of the year I can have a concrete projection.

Because contrary to public belief (or at least half of my law school’s graduating class) it doesn’t just go away. no matter how long you wait, in some form it will be there. but more on that later. 😉

I didn’t really intendddd for this blog to become about finances but this is going to be a huge part of my life (for better or worse and hopefully not until death do us part……….) for a while so it seems natural to have it become apart of this blog. 🙂 So excited to share all the knowledge I gain along the way about everything debt, finance and living intentionally!

 

xoxo.  kate

 

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