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Money saved/money earned

January 14th, 2013 at 02:25 am

We decided to completely cancel Netflix today. I just did it online. We were only doing the 1-DVD-out-at-a-time plan for $7.99 plus tax, but we figured out we could do it cheaper through Redbox. At most, we watched one movie a week. Plus, Redbox texts me coupons and free movie codes a few times a month. So we figured with Redbox, we can have our movie entertainment for $5 or less each month. I know, not a huge savings, but it's something.

Yesterday I got my updated Discover card in the mail. I haven't used my Discover card in years, and it just expired so they sent me a new one. As an incentive to activate it, they sent me an offer for $75 in cashback bonus if I spent $1000 or more on the card between now and the end of March. Since we charge a lot of things on our credit card and pay it off at the end of the month, I decided it would be worth the $75 to move some stuff over to Discover to get the extra bonus. Between gas and groceries for the next 3 months, we should have no problem hitting the $1000 mark.

A humbling experience at the grocery store

January 7th, 2013 at 04:59 pm

On Saturday I went grocery shopping at Aldi. It's a weekly habit, since the prices there are so cheap. If you've shopped there before you know that you have to pay with cash or a debit card only, as they don't accept credit cards.

I transferred some money from our main account to my checking account to cover my debit card transaction. Apparently I didn't transfer enough and my card was denied at the cash register. I took one thing out of the cart. A manager had to be called to void the item. It still wasn't enough. I had to take another thing out of my cart. Then it went through.

The line was building behind me and I felt like all eyes were on me. I was really embarrassed.

I wondered if people pitied me. We had the money, just not in the right account. But that got me thinking about people who don't have enough money and have to do this all the time. How do they feel? Do they feel embarrassed or shamed? Or are they used to it?

I certainly made me think.

College Funds for the Kids

January 3rd, 2013 at 10:41 pm

The grandparents gave us some money at Christmas to contribute to our kids' college funds. Sadly, the last time we contributed to their funds was last Christmas with money from their grandparents. In 2012 we made our emergency fund a priority. We are hoping to contribute a modest amount to each of our 3 kids' college funds monthly this year. Either $50 or $100 per kid each month, but it will depend on how DH's take-home pay shakes out when we see his first check of 2013 in a few weeks.

I should mention that both my parents and DH's parents helped pay for our college tuition. Both DH and I worked on campus during college, but the majority of our education was paid for by our parents without any student loans. We didn't realize at the time how lucky we were, but now as we see people struggle to repay student loans, we are so thankful for that gift from our parents. (We did each pay for our graduate school tuition years later--I took out a small loan but paid it off in a few years).

I really struggle with the kids' college funds for a few reasons. First, the calculators say that by the time my kids are college-aged, college will cost $150,000-$200,000 for an in-state school. For each kid. So we might be looking at $450,000-$600,000 total. Gulp. We have about $50,000 total saved so far, and over half of that has been from both sets of grandparents.

Second, all the experts say to prioritize saving for retirement. Which I totally agree with. Which is why this month we are back to 15% 401k contribution and extra principle payments on our mortgage, to put us in a good position when we retire.

I also feel like the cost of college is a huge guess at this point. I think at some point, if the costs keep rising at the rate they are, college won't be affordable for anyone. And maybe my kids will get scholarships, or go to community college for the first few years, which would cut the costs dramatically. The costs of college are just so unknown.

I did one of those online FAFSA guestimate calculators to see what our expected family contribution will be for college. It gave me an answer of $25,000 a year for my oldest. Which is basically the full cost of an in-state college with tuition and room and board.

I also struggle with just the balance of it all. Because sure, we could contribute more to their college funds if we didn't go on vacation ever again. But then we'd lose those experiences and memories, and our kids will never be this age again.

So I really hope that by prioritizing our retirement, paying off our mortgage early, but still having some fun memories along the way, we will free up some cash when our kids start college to help pay their tuition with current salary.

What are your thoughts on paying for college? Did your parents help you pay for college? Are you going to help your kids, and if so, how are you planning for it?

First big extra payment to the mortgage

December 14th, 2012 at 04:10 pm

The bonus check came last week. We paid off our Disney cruise and mailed a check for $1000 to our mortgage company for extra principle. Since we refinanced earlier this year, we've been rounding up our automatic payment and therefore already putting an extra $150/month towards the mortgage. But writing that check for $1000 was a little harder than I thought!

I think it was hard because we have such a long road to paying off our mortgage. Our plan is to pay it off in about 8 years. I've worked up a schedule by month to get us there. Sure, if we have any "extra" money floating around we might make it there faster. But I don't want to get too obsessed with paying it off early because I'm afraid I will start going too extreme on penny pinching and regret it. We also need to pay off the rest of our car loan (1.9% interest) and save up for another car.

I'm going to figure out what our 2013 extra principle goal is and have that to shoot for. Because otherwise it's just too overwhelming!

Yesterday I mailed off checks for our HOA dues and property taxes. So this is the first year that we've ended the year with all our bills paid (including our vacation pre-paid) and money in our emergency fund. Yay!

Looking ahead to our big picture goals

September 27th, 2012 at 06:34 pm

I'm so excited because this is going to be the year, that we FINALLY achieve our goal of having an emergency fund! I know we technically have our desired number in the bank right now, but I'm not going to count it as official until we also have enough cash to pay our house property taxes in December. But, barring any more "emergencies", we are on track to make that and possibly have a little beyond that for a slush fund.

I'm excited to get this emergency fund set up because that will lead us to getting back on track to our bigger picture goals. DH and I decided that we'd like to pay off our house early, before our oldest son enters college in 10 years. We'd like to be completely debt-free at that point (no mortgage, no car loans, etc.) so that we will be set up to retire without depending on our kids, and so that we can help pay for whatever remains of our kids' college expenses.

Earlier this year we re-financed our home loan to a 20-year note. When January rolls around and our Emergency fund and taxes are all paid for, we are going to make several changes:

* Increase DH's 401k contribution to 15%

* Continue to have less taxes taken out of DH's paycheck so that we don't get a huge refund at the end of the year. Put $500/month into savings so that we can pay for our property taxes at the end of the year.

* Contribute $100/month per kid into their college funds (3 kids = $300 total)

* Contribute additional principle to our home loan every month. I actually have an amortization spreadsheet that I can play with. To start with, we are going to contribute an extra $300/month. Starting next Fall, we will have 9 months where I have no kids in pre-school, so we will roll that extra money over to the mortgage as well. When my youngest enters kindergarten in 4 years, my plan is to start some part-time work that will go towards the mortgage as well. With these extra payments, we are showing that we could actually pay off our home in 8 years. But I'm giving ourselves a 10-year-goal.

* Eventually, after our car is paid off in 3 years, I'd like to set up a separate car savings account and roll over our current car payment amount into that every month. Then we will be all set to buy our next car with cash.

* I'm also going to start a separate vacation savings account in January. Even with our goal of paying off our house early, vacations are still a big priority. Our kids will only be young once. Two of our kids are adopted from Russia, and we'd like to take them back there to visit before our oldest turns 17 (they are still Russian citizens and they can be conscripted if they visit between the ages of 18-26). So that trip will cost a bundle and we will definitely need to save for that. DH and I would also like to take a kid-less trip to the Olympics in Rio in 2016. Plus we'd like to take one more Disney Cruise and go to Disney World in an off-season time before our oldest leaves elementary school. Washington DC, Seattle and New York City are also on our wish-list for family trips.

So that's where we're headed. I'll admit that paying off the house sure seems like a daunting task. Our mortgage is about $140,000 right now. I just think the feeling of being debt-free by the time we are 50 is going to be great! We just need to have the discipline to stick to our plan.