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It Happened!

March 24th, 2014 at 04:40 am

We are now officially a stereotype. The corporate gravy train has ended. This is such a typical scenario I can't believe I didn't see it coming. Hubby has worked (hard) for the same company for 24 years, although in recent years the company has undergone acquisitions about every two years. In the past, each time the company sold, hubby would come home with the bad news that he had to lay off some of the employees he managed. Now it has happened to him. His whole department was let go which at least helps him feel that it wasn't personal.

Amazingly, though, this time we are well prepared. For the past several years we have been living off my wages from my company and saving Hubby's salary. Even on what I make, we were saving about $1,500 a month and can probably even save $1,000 more.

Also, during the last company acquisition three years ago, after Hubby was laid off he was rehired by the new company a day later. This meant we were able to take Hubby's 401 K and transition it into a self-directed IRA consisting of rental houses. This year we saved a bunch of money and are paying the taxes on most of the IRA to convert it to a Roth IRA. After we convert the remainder of the IRA this year, when we retire we will be making around $5,000 a month tax free.

Compared with many Americans going through a layoff, we are in great shape. That being said, though, I wish Hubby could have held onto his job until he was around 60 as he is just 57 now.

WHERE ARE WE NOW? Well, we are in the second week of Hubby's layoff and he seems to be doing pretty well with it. He is actually doing some free-lance work for his former employer and also taking care of some of our rentals which are not in the IRA. We need to make a new budget to get a better handle on keeping our expenses down. We have a paid off house and cars and no credit card debt -- no debts of any kind so we are in good shape. We always said that in retirement we hoped to live on $5,000 a month, so I guess now we will be getting a head start on starting that lifestyle. I bring home about $8,000 a month and things are going very well at my company. I would like to save about $3,000 a month and live on the remaining $5,000.

My former overspending ways are now a thing of the past. It is funny but it was hard to control my spending when money was "growing on trees" but when the going gets tough I am easily able to stop spending. Every time we go through something like this as we have at two other times in our lives I am always able to truly rein in the spending and I vow to never fritter away money again, but inevitably, once the income returns to normal levels I forget my wiser ways.

I have to admit that this is NOT a great turn of events and I am a bit scared of this new reality, but I also realize we are in good shape.

Hubby is going to put his resume out and slowly begin looking for a new job, so we will see what happens. But if he isn't able to find anything, he can focus on the rentals which are outside the IRA. I just want more than anything else for him to be happy. I know this sounds sexist, but if he were a woman he could just happily retire. Since he's a man, though, his self-worth is more tied up in the corporate world. Hubby is my world and I will support him in whatever direction he wants to go.

Ironically, just a couple of days before he was laid off, Hubby's boss had sent out a wonderful email about him to all the higher ups saying that he had been with the company 24 years and lauding his excellent work ethic and many wonderful accomplishments. Just two days later his boss had to call him and tell him they BOTH were being laid off. Doesn't the new corporate reality suck??

Thanks for listening.

Back Sliding!

July 9th, 2013 at 11:11 am

Ouch. I haven't been watching the savings or my spending for the last couple of months. I think I got a little over confident because we had met our goal for the year in terms of having about $135K to pay the taxes on the Roth IRA, $30K in our emergency fund and $7K for hubby's jaw surgery.

I am naturally such an overspender, that if I stop really focusing on my spending, it is easy for me to get out of control and waste money.

I finally went to Mint to look at our savings and came to this blog and realized that in the last two months we have saved nothing! In fact, we have lost about $1,707 from where we were.

Well, I can't look back and get upset. I just need to start writing down my numbers and tracking my spending again today. I WILL DO THAT!!!

I really like my life much more when I am using my resources wisely. It appears the only way I can do that is to really track my spending. OUCH!!! This has been a wake-up call.

Kids, Cancer and Other Unknowns

April 1st, 2013 at 11:48 am

Wow! Tracking spending has really opened my eyes to how much it costs to live and where the money goes. We are in about the third month of this and it is going very well, except that I have had a couple of realizations of which I was never aware when I was spending like a drunken sailor:

1) When it comes to my kids, I can really overspend. For instance, I just returned from a weekend of moving our oldest son from Nashville to KC. He is 30 years old but I ended up buying him about $600 worth of decor items for his new apartment. His bday is coming up in May and I said I would buy him more decor items then. I have decided, though, that I have spent enough and I am going to limit him to $100 more for his bday. It will be hard to do that because I want him to live in beautiful surroundings, but he will have to buy some of that stuff if he wants it.

2) LIFE HAPPENS (good things). I am realizing the number of bdays, weddings, graduations that happen in our lives and how expensive they really are. Except for giving to family, bday gifts are really kind of silly in that at our ages, 54 and 55, all of our friends really have what they need and want and my adding yet another small bday gift to their lives doesn't really do all that much. I HAD budgeted $100 a month for gifts. Boy was I ever wrong!!! It really should be 3-4 times that!!

3) LIFE HAPPENS (bad things). A couple of weeks ago we learned that one of hubby's old college buddies has stage 4 liver cancer. This is, of course, terrible news but it also means we plan to fly to Florida in May to visit with this friend. That is an unexpected couple of flights, meals out, etc. we did not anticipate. That could be $1000 even if we economize. Ouch!!

UPSIDE! There is an upside to the above. In the past when I was living in the "financial haze" I would have been spending lots on myself AND spending on the unexpected items without really realizing how much I was spending. I would have just thrown it all on the charge card and then sweated bullets the next month to pay it all off.

Now, I have been spending almost nothing on myself because I really realize how much these "extras" are costing. Also, we no longer use a charge card at all so I don't have the monthly fear of looking at and paying that bill. That feels very good.

I am curious if these EXTRAS do subside in a few months. In our defense, we have had lots of extra expenses with our younger son's marriage, our older son's move to KC and our friend's unfortunate diagnosis. Hopefully, this summer we will see a return to more "normal" spending. OR maybe it is an ILLUSION that spending is ever normal!

Even with the above, we HAVE been meeting our monthly budget/savings goals. When we have an unexpected expense I pull the funds from one of the other categories we didn't spend in that month. For example, I have $200 a month in clothing budget and we may pull needed funds from that category. It is called a zero balanced budget and keeps us from spending more than we had budgeted for.

Thank you for listening. This process is helping me a lot.

Gifts, gifts, gifts, Oh My!!

March 17th, 2013 at 09:55 am

I am interested in your thoughts on the high price of gift giving and/or how much you budget for gifts.

It's funny, but I never really realized how much certain things cost until we started this spending plan two months ago. For instance, I always thought the gift category in our budget would be rather small.

Boy, was I ever wrong!! Although in my "fantasy" spending plan, not including Christmas, we would spend about $1,200 a year on gifts or $100 a month, for the past two months we have spent a WHOPPING $483.28!!

Walmart cards...$8.52
Victoria's Secret...$54 (girlfriend gift)
Victoria's Secret...$102 (son's fiance's bday gift)
Dick's Sporting Goods $161.96 (son's fiance's bridal shower - outdoor wear, go figure)
Target $117.00 (add'l wedding gift for son - after giving him $5K for wedding gift a couple of months ago!)
Cash...$100 (friend's daughter getting married)

Admittedly, since my youngest son is getting married, we had lots of gift expenses, but we have a MAJOR family bday month coming in April w lots of bdays...mine, hubby's, son's.

We will try to stay at $100 for son's gift and this year we will LIMIT our spousal gifts to $100 each.

In my previous financial haze period, GIFTS as a spending category was never really even on my radar screen. I now have learned two things about them:

1) Gifts cost much more than you think.
2) Buying gifts for others IS an investment in relationships so maybe it IS a worthwhile investment...much more so than buying myself yet another handbag.

ALSO, it seems there is ALWAYS an event which comes up and takes more money than you think. For example, at the end of March I am flying to Nashville to help my older son move to KC which is closer to home. To do that I will have more expenses than in my standard budget...already paid for flight, but hotel room, meals out during the move, new comforter I plan to buy for son's new place. There seems always to be a reason to spend money.

Once good thing, though. I now realize that these other things take so much money that maybe I don't need to SPEND my clothing allowance. Maybe there are better uses I have for that money right now. In fact, I have spent nothing on clothing in two months due to these other expenditures.

Gifts, who knew?

Do you all out there find gifts to be a pricey area? About how much do you spend? And, do you have any ways to keep it more reasonable or do you just accept it?

Changing My Evil Ways

March 14th, 2013 at 09:29 am

We started following our spending plan around January 15. I am pleased to report that it is working beautifully! I was the real spending problem in our household as we had lots of disposable income and I was pretty good at disposing of it!

Tracking our spending in Mint and writing everything down has been a Godsend and has really transformed how I view and use money in the following ways:

1)We stopped using our charge card and switched to the debit card so I am forced to live within our income (also, no more $10-$12K monthly VISA bills to pay off!).

2)I set up a budget and know exactly what we have to live on each month.

3) I KNOW what it takes us to live each month - something I had no idea of before.

4) I now realize that all spending has tradeoffs. If you purchase clothes for yourself, you may have to cut down on entertainment, groceries, etc. For instance, this month we have overspent on gifts and instead of just doing it I had to pull funds from other areas. I pulled some money from the gas budget, for instance, as we won't need as much as I had budgeted for in that area.

My new financial learning is going great! Also, I watched Suzi Orman the other night and she gave 3 great tips:

1) Before you make a purchase, ask yourself if you NEED or WANT it. If you don't NEED it, don't buy it.

2) Live within your NEEDS, not your income. (if you can afford a 3000 sq ft house but only NEED a 2000 sq ft house, buy the 2000).

3) Learn to get as much JOY out of saving money as spending it. For the first time in my life, I am getting lots of joy from saving, where before going shopping was how I filled the emotional void.

I LOVE this new approach to money. Thanks for listening.

Last charge card payment!!

February 24th, 2013 at 05:37 am

On payday Friday I paid off our last VISA payment!!! $1,050! Hubby had made me wait until payday to pay it off. I am so happy as I have been dealing with VISA payments for years. Although we would pay off the card each month, I would have wildly extravagant balances each month to the extent that I was sometimes even afraid to look at them. We moved a year ago and have rental houses so it was not uncommon for us to have monthly VISA bills of $8-$10,000! A few times even more!

It was just terrifying as I was wildly spending money and not really paying attention to our finances. Hubby and I had quite a bit of money coming in and if I wanted something I just bought it. I am embarrased to admit the above as many of you are SO conscious of expenses.

Since February 1, I am proud to say that I have been one of you!! I am so grateful to all of you as reading your blogs encourages me to have a spending plan and write down everything I spend. I have been doing this and am amazed at really how little money it takes us to get by each month. With the spending plan we established hubby and I each have catagories for entertainment and personal expenditures, but we are saving a great deal of money. We are also now using the debit card exclusively so I am really watching what we spend.

We really need to follow this plan this year especially as we still need to save about $82,000 over the next 12 months. Hubby and I have an agressive plan to turn our IRA which contains rental houses into a ROTH IRA. This will mean that after paying $160K on taxes on the account this year, for the rest of our lives all the income in the account will be tax free. My goal is to create 100K in tax free income in retirement.

This will be a frugal year for us but we believe it will pay off for many years to come. Also, when we are able to do this it will have taught me to change my free-spending ways...one day at a time.

It's Working!

February 18th, 2013 at 11:01 am

It's crazy how well just writing down our spending and having a spending plan has worked! So far this month we are 18 days in and have spent just $2,686 of our $8K monthly budget! I am so happy! The 8K is what I bring home each month. We are saving hubby's entire salary and the 8K even includes $2,500 from my salary going to savings.

Hubby and I are both in our 50s in our high earning years, about 10 years away from retirement. Unlike some of our friends who used increasing income to increase their lifestyles to exhorbitant levels, we are trying to realize the blessing of our higher income, live reasonably and save and invest toward retirement. We call this our "10 year plan."

This year is especially important as our goal is to save another $45K toward paying our tax bill to convert our real estate IRA into a ROTH IRA. If we do this, in retirement we won't have to pay any taxes on the rental income generated from the ROTH IRA account.

It's funny, but even though I have designated $150 fun money in the monthly spending plan for each of as an allowance and $200 a month each on clothes, knowing we have such a major savings goals makes me want to save everything I can toward it.

I really have plenty of clothes and except for a couple of pairs of summer sandals I can probably just live with what I have.

Since we started living with the spending plan, I have started feeling such a sense of control and peace about our finances. This is such a contrast to even a few months ago when I shopped on Ebay with a vengence and tried to ignore the monthly VISA bills as well as the many packages which came in each day. I get paid this Friday and will pay off the final $1,100 VISA BILL. HURRAY!!!!!!!

For me, spending can be quite addictive. I always need to remember to write down all my "numbers", not use credit and to take it one day at a time. I have had good, solvent periods before which ended. This time I truly want to change my lifestyle once and for all.

Thank you for your help in this effort God. I couldn't do it without you! Thank you also to all of you out there in internet land. Being accountable to you people I don't even know is helpful.