Money! Get away! May 1, 2008
Posted by spacemom in : Current Affairs , add a commentI think this will be the last installment of the money thread! Jay and I both learned some things in grad school on money management, mostly due to need. So I figured I would list what we learned and most of these we still use today.
- Budget. Oh yes, that terrible word, but it works! We do a yearly budget. We discuss what we expect our income to be (based on raises and COLA), what things we expect to pay for this year (home improvements? car? current loans? Play set?) and set ourselves a budget that covers what month we expect to buy things and what items we want to put off until next year. For example, I want to investigate LASIK. That’s a rather pricey thing. I am holding off until the winter to make sure it fits within our budget. Our budget also includes the necessities such as electricity and gas.
- Savings. Part of our budget includes savings. In 1998, I bought my car, Carl. At that point, to afford the payments, I lowered the amount I was putting into my 403b. When I could, I raised those contributions to 403b. Now that I got a small raise this year, I am adding even more into the 403b. This money is money I never see. I don’t think about it. It’s there, but I don’t care. I’m 37 and I don’t want to touch that until I am 59.5. Jay also has a 403b account. We also have ROTH IRAs and investments. This money is for the long run. We started saving by putting money in CDs and spreading them out across the year so we could tap those for emergency money (like when our heater died in our last house).
- Spending money. Both of us carry a certain amount a spending money. When that is gone, we don’t spend. Pretty simple, eh?
- Credit Cards. Another tool in the financial tool box, credit cards are the most misused items. Jay and I both pay off our balance every month (unless I forget like last month). When we first moved to Boston, we accrued some debt of the move. About $3K. We then put a spending moratorium on the cards. Nothing could go on the card unless it had to. We used our spending money and that was it. Once the cards were paid off, we went back to using them.
When we have a chance to buy something on a no interest for 12 months deal, we will get that credit card for that purpose. The idea there is that we calculate monthly payments so we pay it off over the no interest duration. I bought Jay a $1,000 camera this way. It was more affordable to me because I could just pay $40 or $50 a month for 2 years on it and then it was paid off. If I had to pay $1000 in one lump sum, it would have messed my cash flow. We use the no interest deals quite often for large purchases such as appliances and furniture. - Waste not: I buy alot of the girls’ clothes either on Mega sales or consignment. We get alot from friends. I recently bought the girls dresses at full cost and I swear I stood in the store for several minutes debating on this. I was also buying panties for them. The panties were on closeout because, get this, they were last year’s prints. I kid you not! Good panties that don’t get holes in them for $2.50 for three instead of $7.50 for three! Just because the design was different. Hello? I love Eddie Bauer and Lands’ End stuff. I buy on-line when the end of season sales show up. If there’s no shipping? I go for those. I also go to the stores (EB and Sears) because you can order ANYTHING from the catalog there and get it shipped to your house sans shipping costs.
- Tom Petty: To quote him "You don’t have to live like a refugee" Really. Money is a tool. We live quite comfortably without feeling out of our means. Even as poor grad students, we never felt poor, just careful. We still enjoyed ourselves.
So there you have it. Spacemom’s money guide…
