Phase 2: ?

Phase 1 of the Master Plan was all about plotting and saving. The Husband and I thought and talked, talked and thought for months about one question: What do we want out of life? As the answer became clearer, we worked on plotting our course to that life, and financing that course.

So what was that answer? Simplicity. A life where I can spend every day with my children. A life where The Husband can do the work he loves on his own terms. A life filled with cats and books and nature. A life where our home is a refuge that calms our spirits, rather than a receptacle that holds our possessions. A life that does not revolve around money and things and busyness. A simple life.

At the outset, I was discouraged and felt it would be completely impossible to finance our way to this life. But a dream is a powerful thing, especially once you start to believe it’s attainable. We met and exceeded our financial goal, and we did so ahead of schedule. This has been a journey that has changed everything I ever thought about money.

We are about to set off for Phase 2 of our adventure. We will move to our new home in one week. The Husband will be launching his firm, Wright Law, the next day. We are so grateful for all the ways our friends and family have supported us throughout Phase 1. We look forward to sharing more as Phase 2 unfolds in the next few months.

Advertisement

The Fitbit of Finance

Whenever I’m wearing my Fitbit one of two things happens. I either feel very motivated to be more active, or I just start believing my day-to-day life counts as exercise. In the first instance, I’ll start taking the stairs, taking far-off parking spots, and going on long walks with Little Guy; the Fitbit pushes me to do more and be more conscious of my fitness. However, there is a basic amount of walking required for existing and for me it’s around 3500 steps; so in the second instance, I get to the end of a lazy day and instead of feeling like the lump I was, I look at the Fitbit and think, “Wow, I got 3500 steps today without even trying! I’m basically Usain Bolt.” Getting credit for my existence tricks me into thinking I’ve exercised when I haven’t.

Hiking with Little Guy! (not pictured: Fitbit on left wrist)

Budgeting is the Fitbit of finance. A budget can be insanely motivating. I know once we started budgeting with YNAB, my spending habits changed dramatically. It was like playing a video game and everything I didn’t spend in was like bonus points. I make a veritable sport out of spending as little as possible on groceries. I strategically plan meals based on cost of ingredients and make a detailed grocery list, then shop at the cheapest grocery store around with Todoist and a calculator. (Yes, I’m the geek who uses a calculator in the grocery store.) I often send The Husband a text to brag if I’ve had a particularly good week. “ALL OUR GROCERIES FOR $27 THIS WEEK! GO WIFE!”

But just like the Fitbit, budgeting has its own dark side. Setting a budget can feel like a license to spend up to that amount. Where we really fell prey to this was when we were still eating restaurant meals regularly–we would impulsively go out to eat on the pretense that there was plenty of room in the restaurant budget. We’ve greatly improved since then, but this mentality still plagues me at times. For example, maybe I have a lot of “room” left in the grocery budget after picking up all the necessities, so why not splurge a bit in the Aldi Finds aisle? Just like patting myself on the back for 3500 steps, this defeats the purpose of the budget.

Here are a few things I recommend for avoiding this pitfall:

 

1. Think of your budget as your 3500 steps. Meeting the budget is just existing–it’s when you come in under budget that you’re getting financially fit. Make a budget that is challenging but realistic. I could say I’ll spend $10 a month on groceries, but it’s not going to happen and my budget will be shot once I go over. But $250 a month is just the right balance of reality and challenge–I usually beat this number, but I can definitely stay in bounds. Think of those leftover dollars at the end of the month as your bonus points.
2. Find your motivation. Budgeting was a challenge for a long time because we didn’t have a meaningful goal driving us. Sit down (with your spouse if you’ve got one) and figure out your Master Plan. For us, it was our move and The Husband’s solo practice. For you it might be buying a cabin on a lake, traveling more, or getting out of debt. Whatever it is, you’re going to need it to sustain a budget and build savings. Start thinking of every dollar you spend as a dollar you’re stealing from that goal. Take those bonus points and put them in a savings account for your goal. Watching your dream get closer as the numbers grow will be addicting.
3. Keep up. There are lots of awesome tools out there to track your spending–Lifehacker has list of reader favorites. Find one that works for you, link up your accounts, and keep it up-to-date so you never think you have money available that you don’t.

Your Fitbit and your budget are excellent tools for physical and financial fitness, but they can encourage a false sense of security and accomplishment. What are your tricks for avoiding the trap?

A Peaceful December

Saving for our move has made this December a bit different for us. The Husband wrote last weekend about spending less during the holidays and how it’s reduced stress, and I whole-heartedly agree (also in his post, you’ll see an adorable pic of Little Guy with our Christmas tree). Besides the reduced stress, living frugally this holiday season has made Christmas shopping more thoughtful–and thus more enjoyable.

Our gifting budget is smaller than usual, especially for each other (I’m normally ready to spend our entire savings showering The Husband with gifts). Knowing this, we started thinking about gifts really early. We wrote down everyone we would get gifts for and started brainstorming ideas. I followed items on Amazon to await a good deal and checked out used options like Facebook resale groups and Abe Books.

I love giving gifts so I generally just get everything I think someone might enjoy and end up with a heaping heap of disposable novelties. Fun stuff, but with little lasting value. Do you know what it’s like to buy someone a million gifts and still feel it’s not enough? This year, the limited budget and advanced planning forced me to put careful thought into each gift and make sure it was just right. As a result, I feel great about every gift and am so excited to give them. 

I shopped the local baby resale for Little Guy’s gift, an activity cube which is about $60+ new. I lost out to someone quicker several times, but with patience and some haggling I snagged one for $30. It is in like new condition, and Little Guy will never know the difference! I’m bad at hiding so he’s found it several times, but at least I know he likes it! 

With all this forethought, I am actually nearly done with Christmas shopping. I know, I hate me too. Unlike past years, I got there not only early, but also without anxiety and stress. I only went out shopping  twice, and got most everything online. I do not miss my usual last minute shopping frenzy.

The frugalized Christmas shopping experience made the whole process about doing something kind for the people we love, not about consuming. Our focus has been on the people we’re giving to–what they want, what they need, what would put smiles on their faces–not on spending X-amount of dollars, and it has reignited the joy of the season.

(Oh, and another auxiliary benefit of a frugal holiday season? I’m baking ridiculous amounts of homemade cookies! They’re cheaper than holiday-themed Oreos, and baking is a fun Christmas-y activity that doesn’t require going out. Plus firing up the oven warms up the house, which is great since I now keep our thermostat at approximately Siberia° most of the time. WIN-WIN-WIN!)

PANIC!

So, for a blog partially about finances, I’m probably about to alienate most people interested in reading on that subject. Here goes! I reject the debt emergency mindset, at least for student loans. (I might think differently about 18% interest credit card debt.)

When I first started to face the cold reality of our student debt, I started to panic. For help figuring things out and calming the heck down, I turned to the debt gurus of the world wide web, your Dave Ramseys and the like. And you know what their sage advice was? PANIC!

So I spent the next few days doing just that. I stared at our debt summary for hours whilst crying and panicking. It is one of the least productive things I’ve ever done. It left me insanely frustrated because no matter how hard I tried, I could not think of a way to move forward (other than me going back to work, which is frankly not on the table for us).

Taking a step back, I realized we are already moving forward. We are on track with our payments, and making strategic extra payments when possible. We have frugalized our lifestyle a lot and are constantly brainstorming more ideas for saving. We are avoiding credit card debt like the plague. And we have plans to sell our car and buy a cheaper one to eliminate our car loan.

Our plan for paying off debt is about nine years. It’s a long-term plan no matter what. Even if I were working, it would probably shave off a couple years at best. I worked in higher education, so it’s not like I’d be flush with cash. Working would certainly help, but with daycare for one kid now and a second in a year or so, the extra would not be much. We cannot panic for six to ten years. It helps nothing.

Dave Ramsey would tell us we are gazelles about to be killed by a lion. But that’s kind of bullshit. There is an end to our debt, we are planning for it, and it is definitely not going to kill us. We acknowledge our debt, we manage it responsibly, we pour our energy into eliminating it. Essentially, the same things we would do in emergency mode, but without the completely unproductive panic. It’s a marathon, not crisis.

We want to get out of debt because we want our life to be about more than money, so why would we make our life all about money for the next several years to make it happen? We can’t get those years back, and we can’t short-cut through them either. What we can do is live our life accepting that debt will have a place in that life for a while (because it will whether we go into crisis mode or not). We plan for our debt, we take it seriously, and we are going to beat it. We don’t panic.