cash: winning the Target war

This is an example of one significant way cash budgeting has changed my behavior in the short month and a half we have done it.

I love Target. I love shopping at Target. I love casually strolling down the aisles and looking at all the bright colors and the beautiful patterns. I love the home section, and the clothes section, and the accessories section, and the candle section, and the food section, and the kitchen section. Plus they have those red stickers poking out from the shelves alerting you to “good deals” down an aisle you never intended to visit.

You can probably guess why this is a problem. In our old budgeting system, which was spends money and see where it went afterwards I had a category called “general house stuff”. We don’t like to get too fancy in naming our budget categories. On average over 2013 this category was $55 a month. You might be saying “$55 a month on general house stuff, I don’t even know what that means!” Yeah, me neither and I spent the money and categorized it. I like to think it has happened to us all, we go to Target to get plastic sandwich bags and a birthday card and boom we leave having spent $60. How does Target do this? It is like magical retail drunkenness. You walk in sober, by the time you get to the birthday card section you’ve also seen a candle you want, and you need a new hair thing, and nail polish, and that rug is exactly what you’ve been looking for! Bam! You sober up at home with all your regrettable purchases.

After switching to a cash budget I realized exactly what I had been doing at Target. Target was a free-zone, when I went into that store I could convince myself I needed anything. Target doesn’t have exaggerated prices but offers an atmosphere is more inviting than some other commercial retailers. The environment created by Target makes you feel comfortable…until you get to the cash register. So I was going there and spending money without thinking and analyzing whether I really needed or even wanted the thing I was buying. When I would sit down at the end of the month to see where our money went I would look at the debit charges at Target and have no idea what I had purchased. I knew that I had intended to buy toilet paper, sandwich baggies, and a birthday card but what else did I but? I didn’t know so I categorized it as “general house” because 2 of the 3 things I had gone into buy were for general house use. After doing this for the length of our marriage (2.5 years) I had trained myself that anything bought at Target would just get buried as a house expense. I had basically trained myself to use a slush fund. I was cheating us.

fox canisters

these are way more adorable in person, the foxes are more foxy and less red panda bearish  in real life

This all came to an end when we switched to a cash budget in January 2014. We each get $70 a month in personal money, and there is also $30 a month for general house stuff, which is now defined as: paper towels, toilet paper, soap, tooth paste, shampoo and any of the other small stuff that sneaks into your grocery budget. There is no more room to fudge the “general house” budget. Last month $30 was the exact right amount of money for general house stuff. The other night I was at Target buying a few grocery items and I walked by the one of the kitchen utensil aisle and saw these little cuties:

Now I have eyeballing these cute little guys since before Thanksgiving. I just love how vintage they look. And the whole family of canisters with foxes would be so cute and fun! And they are on clearance now! So I waited long enough for them to go on clearance and now I should reward myself for all that waiting and buy them because I had REALLY wanted them for months! But what would I do with them? What could I store in them? They aren’t really big enough to store any food  in them? I already have cotton balls and q-tips stored in recycled candle jars. I could put my necklaces in them but then they would get all tangled. Did you see that?  That was the magic moment right there. The use of cash caused me to think beyond the reward of buying something I wanted to what I would actually use it for. I only have $70 a month to spend on whatever I want and it doesn’t really qualify under any other category of spending. If I had just been swiping my debit card I would have not even thought about it. But since I needed to choose a cash envelope to pay out of I had to think about how it would fit into my life after I left the store.

It was a really clear crystallized moment for me when I could feel the benefit of spending cash over just using our debit cards. Has anyone else accidentally lost copious amounts of money to Target? Tell me I’m not alone!

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when opposites attract

heart-candy

Since tomorrow is Valentine’s Day I want to talk about my Husband; about how great he is and how much he has helped me grow.

My husband and I are opposites in a lot of ways. He is the life of a party, people are naturally drawn to him because he makes them feel at ease and comfortable, lots of people want to be his friend, he is really compassionate and generous, he can be boisterous and gregarious, he solves problems in his head without reassurance from others, he is naturally fun-loving and free-spirited. I am pretty much exactly the opposite of everything I just wrote about him. I am never at ease in a crowd, I mostly repel people with my awkwardness induced by undiagnosed but clearly genetic social anxiety disorder, I am anything but gregarious and I tend to be less forgiving and compassionate towards those in trouble. I have to talk about a problem with no less than 3 people before I can come to a solution. I’ve never heard anyone call me fun-loving or free-spirited in my entire life. But I’m not all bad; I am organized and detail oriented. When we closed on our second home the loan officer said to our realtor, “Isn’t she amazing, she is so organized and on top of things”. I get compliments from loan officers, my husband gets compliments at parties and social functions – we each have our strengths. Luckily my strengths are usually his weaknesses and vice-verse which leaves us pretty capable of dealing with most situations.

Financially we initially viewed the purpose of money very differently, and we still do for the most part but we have found a common goal that serves both of our views. I have always thought the purpose of money is security and safety. Money protects me from bad things like homelessness and starvation, it provides medicine and comforts like heat and hot water. My husband’s thoughts tend more towards money as a vehicle to enjoy life in all its glory. See – polar opposite views.

When you are single and making all your decisions alone it is so easy to become fully absorbed with your way of seeing the world. It took me a while to appreciate the fact that marriage made me look at the world in different ways and embrace some things that made me uncomfortable. I can  be stubborn and absolutely sure that I am 100% right.  If I were still single I would be socking away every penny for a rainy day and still be incapable of compromise, but instead I joined my life with a wonderful person and he is slowly teaching me that there is more to money than security. Sometimes money should be used to enjoy life and enjoy the things that really matter like spending time together. Especially if the security part is basically handled – hello emergency fund!

The goal of paying off our mortgage serves my security based mind-set because having a paid for house provides a lot of security for me; paying off our mortgage serves his way of thinking because we will have more freedom, flexibility and free time after we accomplish it! We started on opposite ends of the spectrum but we both found a reason to move towards our common goal; a goal that really mattered to both of us and has brought us closer than ever. As corny as it is, he is the balance to my amortization schedule building, detail obsessed, socially awkward self. He brings me out into the world and points out the beauty and I am so incredibly thankful that I got him!

What is the purpose of money in your mind? Do you an your partner usually agree on the topic of money?

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our best friend the library

maybe Walter is upset about how much he spent on entertainment

maybe Walter White is upset about how much he spent on entertainment

We are big fans of our local library. It blows my mind every time I go in there, they let your borrow things for FREE! Our local library has generous lending periods, 14 days to month to be exact. Our State library system also lets library card holders check out anything from the other libraries in the State system so if our local library doesn’t have what we are looking for chances are we can order it from a different library. This isn’t your Grandma’s library either, while it may still have the musty book smell they also provide very modern amenities, like Televisions series, blu rays, popular movies and computers.

One of our favorite things to do together is watch (and by “watch” I mean get really emotionally involved in and obsessed about) a TV series. Luckily for us our library system has a wide variety of TV series to choose from. Now I know there is a good chance you will think I am a pathetic TV junky after you read the list below but that’s a chance I’m willing to take in order to prove libraries can be awesome. Also keep in mind we watched these over the two and half years we’ve been married.

Here’s a list of Television shows we’ve watched:

Band of Brothers (1 season, 6 discs)

Big Love (5 seasons, 19 discs)

Boardwalk Empire (3 seasons, 15 discs)

Breaking Bad (5 seasons, 16 discs)

Carnivale (1 season, 4 discs)
Axmen (1 season, 4 discs)

Dead Wood (3 seasons, 19 discs)

Extras (2 seasons, 4 discs)

Lifes Too Short (1 season, 2 discs)

Mad Men (5 seasons, 20 discs)

News Room (1 season, 4 discs)

Nurse Jackie (4 seasons, 12 discs) *my favorite

The Pacific (1 season, 6 discs)

Planet Earth (5 discs)
The Tudors (1 season, 4 discs)

The Big C (2 seasons, 6 discs)

Walking Dead (2 seasons, 8 discs)

The Wire (5 seasons, 23 discs) *my Husband’s favorite

 Totals:   18 shows, 177 discs 

(if you are just going to comment about how lame we are because we watch so much TV don’t worry we already know)

Why am I putting all our TV viewing obsession and shame out in public? Simply because I want to share with you what a money saving resource the library has been for us. If we were to rent all these hours of entertainment at the local video rental place it would have easily cost us roughly $680. Most movie rental stores charge by the disc and most series have more than one disc per season. For example, for us to watch The Wire we would have had to rent 23 discs at $3.99 each for a grand total of $91.77 to watch one single series. And that $91.77 is if we remember to take everything back on time. I know a lot of people are probably thinking why don’t you get Netflix or Hulu? Valid question. Here’s the answer, the library is completely free. FREE! Why not take advantage? Our taxes already go to support the library so our money is being spent there whether we like it or not so we might as well use it.

Of course there are draw backs to the using the library as our TV watching entertainment source. We have to wait for a show to come out on DVD before we can borrow it from the library. We will never be “in the know” when people are talking about a current show because we are always at least a season behind. Sometimes other people have rented the series we want to watch and we have to wait weeks, or a month for it to be returned so we can our hands on it. But I’m always in need of a reminder to be more patient. We wouldn’t have watched all these series if we had had to rent them, but because they were free we got to widen our viewing horizons. Not all of the series were slam dunks. Some of them we only watched the first season and called it quits. But the price tag of $0 gives us more freedom to explore more series. Our local library has saved us over $700 on entertainment in the last couple of years!

What series are you into now? We’re always on the hunt for something good to obsess over. Have you ever used your local library?

Disclaimer: we don’t only watch TV, we also use the library for books but that is a different post.

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i think we’re normal

our first house

Our 1st house, picture offered as evidence that we aren’t rich.

Pushing “publish” Tuesday’s post triggered a fear for me. I’m afraid that people will be disheartened by our story instead of encouraged. I am afraid that after mentioning we received year-end bonuses people will think we are making over $100,000 a year and that only “rich” people can pay off their mortgage early*. Rest assured we are not banking tycoons receiving bonuses several times our annual salary at the year end. While I’m not entirely comfortable putting exactly what we make out there yet I don’t want people to assume we’re “rich” and no one that isn’t “rich” can do this. What I want for people to understand from our story is that it is entirely possible to get rid of your mortgage early.

We aren’t special, or extraordinary in any way that is different from you. We have been very blessed and lucky in finding good jobs. But we have also stuck with these jobs when times were tough or co-workers were making us hate going to work.

I landed my job 3 days before College graduation and have been working at the same job since. I started at $12/hour and through perseverance and dedication I’ve steadily moved up in pay. My husband has been at his job for 6 years and through drive and determination continues to earn a little more each year. We are securely in the middle class, I think. Definitions of middle class are really complicated. After deductions my take home pay is less than $25,000 a year – see we’re not millionaires by any stretch. But I also think it is easy to always need more money so I try to be mindful of the fact that we are very comfortable compared to most people in the world.

Our house is by no means palatial; let’s say it has a lot of potential! Some people probably wouldn’t want to live in our home. We’ve made “sacrifices” in some areas of our life to make a goal like paying off our house feasible.  I say “sacrifices” because they don’t really seem like sacrifices to us. Our first house was very modest. So modest it didn’t have a working stove and was just under 700 square feet. We worked hard on improving our first home and all the stress and sacrifice paid off when we sold it and bought our second home. Our second home is also  modest but this time it was in a better area and with more land. Our vehicles are 11 and 12 years old. We’ve never lived in a home newer than 55 years old. We buy a significant portions of our clothes from Goodwill and on clearance at retailers or at wholesale prices through my husband’s work. We’ve never had cable, Netflix, or Hulu – not because we didn’t want it, it just isn’t a priority for us. We only have one smart phone between the two of us. I have a burner phone, like drug dealers use – it such an inexpensive phone and plan that you can just drop it in the trash and walk away. Our computer is 8+ years old. All of our furniture is at least 10 years old. We do as much DIY as we can on our house and only hire out stuff that has potential to be dangerous or hazardous to our home’s structure. We make more than the national average for a household income but our income alone would not make it possible to pay off our house in 3.6 years without all the other cost cutting we do.

It is entirely possible for you to pay off your mortgage faster than the bank has asked you to. Whether it is the right decision for your family is entirely up to you and I don’t assume it is the best decision for everyone. But for us it is. And if you want to pay off any kind of debt it is entirely possible, whether it is your mortgage or school loan or consumer debt.

There are so many blogs I’ve found about paying off debt. If you are looking for more inspiration check out: Anna @ And Then We Saved, she paid off over 24K in student loan debt, visit Joanna and Johnny @ Our Freaking Budget, they have great advice about budgeting and tackling debt, if you still need inspiration go visit Eric & Kelsey @ Words of Williams they paid off almost $40K in debt! All of their stories are inspiring and I find myself combing through their archives looking for encouragement all the time! I offer these other blogs as inspiration. There are people from everywhere, in different situations, with different kind of debts, in different phases of life who are making their dreams a reality by living on less and working harder. Our story is just one of many, but I hope you’ll follow along.

*somewhere along the life path $100,000 a year income seems to have lodged itself in my mind as the definition of “rich”. “Rich” is totally subjective as anyone living is America is richer than the majority of the world, and our gratitude and thankfulness can leave us feeling “richer” than anyone making $1,000,000 a year. So yeah it’s all subjective. *

january recap

month recap

Hello February! Goodbye January!  January was an experimental month for us in many ways. But it is also the first month of the year – so full of possibilities. This was also the first month we used a cash budget system to curb spending. I’ll delve into the cash budgeting in another post. I’d like to recap the Month of January as it was the first official month in our journey to pay off the house!

It was also the first month we put a significant chunk of change towards our mortgage. We are both thoroughly blessed in that we received year-end bonuses from work and with those bonuses we were able to pay $5,285 towards our mortgage. So we paid an additional $4,470 that goes directly to principle! Awesome! This big lump moved us ahead to where we would be in September 2015 if we just paid the regular $815 month. It was a bit difficult to not fall into the “I worked hard all year and I should do something fun with this bonus money. It is a BONUS after all.” I just kept reminding myself that nothing I bought would be a bigger reward than not having a mortgage 3.6 years from now.

We also had the joyful opportunity to make use of our Emergency Fund in January. All our savings in 2012 paid off! Our fridge has been making loud noises for a while now, we assumed it was just usual fridge noises. Then it began to warm up and by Saturday it was a mild 50 degrees in the old ice box. My husband tried to fix it and we thought it was fixed until Sunday night when it again refused to cool below 48 degrees. Food should be stored between 32 and 40 degrees for safety, for a fun reference point. But we like to live dangerously! No, just kidding. We were keeping our food in a cooler on the porch. Then Sunday afternoon I went to do a load of laundry only to discover that sewer water had backed up in the basement! So we spent part of Saturday, Sunday and Monday acting like we were camping in our own home. No showers, no running water, no laundry, no peeing indoors (thankfully our house is semi-remote), going outside to get our food out of a cooler. So Monday we bought a new fridge and waited for Roto-Rooter. In the end all the problems were fixed by Monday night to the tune of $860. We have a new fridge and that tree root trying to pry it’s way into our sewer line is fixed – for the time being. (As a side note, here is a good way to get a deal on a fridge at Lowes. Say to the department manager, “My Husband keeps looking at this fridge at Home Depot, but I really want to buy it here. Can your work with me?” It also helps that my husband really was looking at a fridge at Home Depot). We also had the electrician come and start on updating the electrical the same week. For a while it felt like we were hemorrhaging money and that can be a scary feeling when you are trying to make every dollar go as far as it can.

Even though there were things that were challenging or annoying in January I am so incredibly thankful for so many things that made this first month in our journey to pay off our house possible. My husband’s great plan to live on one income, my employer, my husband’s employer, and our ability to earn income.

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diggin’ deep for motivation

timeclock  1.29.14If we are going to stick with a plan to pay off our house for 3+ years we have to dig deep to find enough motivation to carry it out. The way we got ourselves psyched up to do this was to dream about what life would look like after we accomplished our goal. Basically for both of us it came down to freedom. Freedom to make choices not based on paying the bank, freedom from working regular 40+ hours a week, freedom to explore what we really want out of a career besides a paycheck, freedom to do what we want with our money, freedom to give more money to the charities and people we value, freedom to take time off work and travel. Freedom. My husband and I both like our jobs, but they aren’t jobs we dreamed of as children. Astronaut and Ballerina curriculum wasn’t offered at our in State University and we both made more practical/feasible choices.

Without a house payment we could comfortably live off one regular, full time income, or two part-time incomes which would give us more time to enjoy the real parts of life that work just pays for. These are our big dreams; slowing down, having more time to be together, being more relaxed, have more time to enjoy our real life and less time at work. A break from a regular job would give each of us the opportunity to figure out what we actually want to be doing. It would also afford us the opportunity to take on more volunteer work or more meaningful work that doesn’t pay as well as our current positions. Basically our options would be wide open.

The idea of actually owning our home, not owning it with the bank lurking right over our shoulder as partial owners is very appealing also. I find the idea of nobody having any rights to our home except us comforting.

These are the big dreams that are driving us to make smaller sacrifices in order to achieve our BIG goal. Why would you want to pay off your house? What are some of your big dreams?

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financial history

In October 2012 we reached our 2012 goal of saving $20,000. We decided to include 401k and retirement savings in that amount to make it more feasible. Once we reached our goal we took November and December off from saving large chunks of money. It felt really good to not be thinking about how to put $1700 a month in savings each month. We had done alright considering we met our goal in October instead of December as originally planned. It felt like a break to not worrying about putting money away for a couple of months. The money we saved in 2012 went to several things. First we started and finished an emergency fund that would cover six months of household expenses or a major disaster/repair. Secondly we put aside money to update the electrical system in our house. In June of 2012 we sold our fist house and bought a new (to us) house. So with $20k socked away for a rainy day we relaxed and spent in November and December.

Then we started thinking if we were able to meet so a challenge in 2012 what could we do in 2013?  I started crunching numbers and discovered that if we took the $1700/month we were putting in savings and applied it to our brand new mortgage we could pay off our 30 year mortgage in roughly 5 years. I told my husband and he readily jumped on board with the plan. Then one day in December he came home and said, “What if we paid it off even fast?”. My initial reaction was that it wasn’t possible. But the thought kept rolling around in my brain. We had already saved 80% of my take home pay in 2012, which meant we lived off of my husband’s take home. What if we switched and lived off my take home and put all of his take home towards our mortgage since we brings home more money? Living on just one income while we had two was my husbands idea; and after I cut down some spending here and there we saw that while challenging it was completely within reason to live off one income. The same day my husband suggested we live on one income and use the other to pay off the house this post from Kelly at View Along the Way was delivered to my inbox. It was a sign, proof that real people could do exactly what my husband had just suggested! I knew it couldn’t be coincidence. And thus the plan to pay off our house in 3.5 years was officially born!

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