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How do they do that: Finance Questionnaire

Tuesday, October 20, 2015

The following post was a guest post on the blog, How Do The Jones Do It? and was written in April 2015

From How Do The Jones Do It:
"Family friends are heading to Disneyland for the third time this year, your gal pals attend lunch dates every week, and another friend has her kids’ college educations fully funded. Have you caught yourself asking ‘How do they do that’? It’s not a matter of comparing ourselves to the Joneses, it’s the willingness to seek knowledge and understanding so, you too, can make the choice whether or not you’re willing to do that.
The best way to learn from each other is to be open and honest! Perhaps retirement isn’t on the minds of those chronic vacationers, the lunch ladies may not be involved with their family finances, and that college education may be at the expense of something else. What trade-offs are we willing to make?"

First, some background information:
I'm 27 and my husband is 28. Before meeting my husband, I was $10,000 in credit card debt and had student loan debt. Before meeting me, my husband didn't have any debt but didn't have any savings either. Meeting each other in 2012 and getting married in 2014 has drastically changed our finances. Sam encouraged me to pay off my credit card debt, which I did before we got married. We now save half of our income in six different savings accounts: 1. Emergency savings 2. House savings 3. Vacation 4. New car 5. Car insurance 6. Christmas. 
1) What about retirement? Are you saving?
Yes, I save 15% of my salary and my husband saves 10% of his. I also have a Roth IRA that I contribute $200/month.

Edited October 2015: I'm now saving $250 toward my Roth IRA.
2) How often do you vacation? Where does the money come from?
We usually vacation twice a year (one larger vacation and one smaller vacation) and we go on a weekend camping trip in October.

Traveling is important to us, so we diligently save in this category. We have a separate savings account for travel and contribute $500/month to the account. The money automatically gets taken out of our paychecks and deposited into the savings account. We don’t even have to think about it! I plan to increase the vacation savings later this year because we've already booked a trip to Alaska in May 2016, and we'll need to save more.

Edited October 2015: We're now saving $700/month towards vacation.

Big Sur roadtrip camper van
 our road trip in California, photo taken in Big Sur

3) Are you planning for college?
Our answer is both yes and no. Yes, we do contribute to our nephew’s 529 fund. It’s our birthday present to him for the next 16 years. No, we aren’t planning for college for our family because we don’t have children.

4) Do you have a car payment?
No, both our cars are paid off. My car is 11 years old and has a lot of miles on it, so we have started saving for our next car.
5) Are you house poor? What’s that mortgage/rent like?
We just bought our first house in March! We bought a 2800 sq. ft. two story brick home built in 1988. Right now I feel house poor because I’ve never spent so much money in one day (on the down payment). Before purchasing our house, we used multiple house calculators to determine where we felt comfortable spending. We decided $1200-1400/month would be the perfect range for us and we wouldn’t have to downsize our lifestyle to afford a house. Our mortgage payment ended up being $1350.

Edited October 2015: We're currently paying double the usual amount in taxes (in Alabama property owners of vacant houses pay double taxes. Our house was vacant for 5 years when we bought it.). The tax year switches over either this month or in January, and our mortgage payment will go down. 
house in snow

6) How do you fund Christmas?
We get paid biweekly, which means that two times a year we get three paychecks in one month (we both get paid on the same day). In 2014 our extra paycheck fell in October, and we saved half of that paycheck to pay for Christmas. This year I’m trying something new. Every time extra money comes into our hands, I put it directly into our Christmas savings account. So far from January- April 2015 we have saved $300. That money is from random car insurance refunds, ebates cash back, and credit card cash back.

Updated October 2015: We now have $800 in our Christmas fund just from random extra money alone! A large chuck of that money comes from cash back on my credit card. We purchased our appliances during the month that the cash back promotion was 5% cash back on Home Depot purchases. At the end of this month we will put a large chunk of money in the Christmas account because we get an extra paycheck this month (see above).

irish terrier at Christmas

7) Let’s talk home improvements.
We recently bought our first house, and we’re trying to renovate the first floor before moving in. Our plans include scraping the popcorn ceiling, painting all the baseboards and trim white (it was a dirty tan color), painting every room, getting new light fixtures, replacing all the almond colored light switches and receptacles, gutting the powder bathroom, purchasing a dishwasher and refrigerator, and getting all new hardwood floors. When we got married in May 2014, we started a separate savings account to buy a house. After paying the down payment, we had enough money left over to pay for all our improvements, except for the new flooring. The new floors are being financed at 24 months interest free, although we intend to pay off the floors in less than 24 months.

Edited October 2015: we ended up doing more projects than we budgeted for and put a lot on our credit card. I know people talk about credit cards like they're evil, but honestly, I would do the same thing all over again. It was such a convenience to do extra projects (we replaced every single light fixture instead of the 2 we had budgeted for) before we moved in.

8) Do you save for school clothes?
No, we don’t have children.
9) Do you deal with college debt?
My husband got a full scholarship for undergrad and graduate school. I graduated from college with $20,000 in student loans in 2009. I pay 3x the minimum and will have my student loans paid off in October of this year.

Edited October 2015: I actually paid off my student loans earlier than expected, in July.

 my dad and I on graduation day December 2009

10) Is your emergency fund where it should be?
No, we cut back on building up our emergency fund while we were saving for a house. In June, we are going to start back saving $500/month. Our goal is to have $20,000 eventually.
11) Do you carry credit card debt?
I haven’t accrued anymore credit card debt since paying off my debt before we got married in May 2014. I have put a lot of our house renovation purchases on my credit card and have, so far, been able to pay it off every month. Up to this point, we’ve been able to space out purchases, but last week we made a great deal of purchases in one day (including appliances). I’m anticipating that in June I won’t be able to pay off the card. I’m not too worried about this because I expect to pay off the balance in July and only end up paying one month of interest.

Edited October 2015: unfortunately I didn't pay off the balance in June.
12) How often do you eat out?
We normally eat out for lunch (it's cheaper!) on Saturdays and eat out for dinner about once a month (sometimes less). Since we've been renovating our house, I don't have time to cook anymore, so we've been eating out more often. As soon as we move into our house, I plan to start cooking again.

Edited October 2015: we still occasionally eat out for lunch on Saturdays, but not every week. Sam usually eats out for lunch on Fridays with co-workers. The last time we ate dinner out was in August to celebrate paying off my student loans and our 15 month anniversary. We've started doing Blue Apron and that has helped us cut back on eating out. 
13) Do you mow your own lawn and clean your own house?
Yes, my husband just mowed the lawn at our new house for the first time!

14) Name a Frugal Fail?
Accumulating $10,000 credit card debt before I met my husband, which I've discussed on my blog in more detail.
15) Do you get an allowance?
No, I know if I received an allowance I would spend it on frivolous things like gummy bears and nail polish. I knew that not having an allowance would make me more accountable with my spending. I told my husband he was welcome to have an allowance, but we both decided not to. We aren't ruling this out, and may reevaluate in a few years.

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