Where Would You Like to See Yourself One Year From Now? My 31 Day Financial Challenge Goal Update

Nearly two years ago I undertook the 31 Day Financial Challenge I found on The Simple Dollar. I decided it was time to review the goals I set during that challenge to see how things are going.

 In 25 years I would like to:

 Have 3 children (possibly 4)

  • Be living in a detached house with 4 bedrooms, family room, office space, 2 bathrooms, driveway and/or garage
  • Have published 3 books
  • Be debt free (the one exception to this is that we may still have a mortgage, but hopefully it will be at least half paid off).
  • Cultivate a family lifestyle of fitness
  • Develop a meaningful relationship with Jesus and be able to pass that deep faith on to my children

 What about 1 year from now?

 Put at least $1,500 toward principle of our student loan debt

  • Have finished two chapters of my novel
  • Query all potential publishers for my Advent Devotional
  • Be pregnant with our second child
  • Participate in physical activity (walking, Pilates, dancing) at least four times a week
  • Have developed a daily devotional habit and finished reading the entire bible
  • Have completed a list of no/low cost renovations and landscape projects on the house

I don’t think my opinion on the 25 year goal has changed much. If anything I feel less strongly about the urgency of moving to a larger house and more strongly about living debt free. So I still hope to be in a larger house, but I hope that will only happen while being relatively if not completely debt free.

As far as my goals for one year from then, well I don’t know if I actually accomplished them in the following year, but I was pleased to see that I’ve made progress in the last two years. We did pay off another $1,500 of our student loans in 2011 and another $1,700 this year. I’d like to be further along, but every little bit is encouraging. Hopefully we’ll pay off another $2,500 at the end of this year and then maybe another chunk after next year’s tax returns. Our biggest hope is that my husband’s soon to be published novel will be a success and allow us to finally free ourselves from those student loans for good.

I am several chapters further into my novel. I have also sent many queries regarding my advent devotional. Sadly, I haven’t gotten any interest from the religious publishing market, so I’m considering self-publishing, which I never thought I’d be doing.

As far as growing our family is concerned, our second child joined the family in March of 2012, our son Robin Isaac.

I am currently very physically active, usually 3-4 days a week, though I shoot for 5.  But that hasn’t been the case consistently. One year after I made that goal I had just gotten pregnant for the third time, after miscarrying earlier that year. So exercise, while important, wasn’t high on my priority list. But I am attempting to make it a priority again now, mostly because I know that it helps me to control my anxiety and because it makes me feel good about myself.

Well, I am currently working on building a daily devotional habit, something I continue to struggle with. My times of daily prayer and bible reading ebbed and flowed for the past two years though I currently feel like I’m on a good track with a system that works for me. Though I still haven’t finished reading the Bible all the way through, but hopefully I will have by the end of the year.

Probably the biggest failure of my goals is the lack of progress made on our house. With the two pregnancies in a row and now with a new baby in the house, we haven’t accomplished much. I have made some minor additions to my garden but mostly we’ve been trying to declutter; giving items away or selling them on Ebay. Last year we divested ourselves of an entire box of my husband’s childhood He-man toys, which helped pay for Christmas expenses. They also helped make extra student loan payments and contributed to our hospital co-pays when the baby was born. Though we haven’t done any more Ebay selling since the baby was born, I’m hoping to get back into it soon, both for decluttering and financial purposes.

While overall I’m more pleased than I expected with my goal progress, being the perfectionist that I am, I’d rather be making larger strides. But as a parent of a newborn and a toddler I’m also learning the meaning of “good enough.” I think my success is good enough for now and I’ll keep plugging toward the future.

My 31 Day Financial Challenge- Day 30: Live What You Love

http://www.thesimpledollar.com/2007/01/30/31-days-to-fix-your-finances-day-30-live-what-you-love/

In this step Trent recommends creating reminders of your goals and values in light of your expenses as well as reevaluating various areas of your life to help support your goals. I really appreciated several of his points.

Reevaluating social situations: I have had to learn that not having any money doesn’t mean we don’t have a social life. We’ve been getting better at inviting friends to our home for a simple meal and a board game or movie. Since we are blessed to have family members nearby who will baby-sit for free, we have been able to accept invitations to others’ homes without having to pay a babysitter.

Engage in inexpensive activities that match your life goals: I’ve continued to be active in my writer’s group and my husband has also joined. This has been a great opportunity for us to explore our creative sides and also spend time together on something not involving our daughter.

Use the 10 second rule: My father taught me an expanded version of this known as the two week rule. He would think and pray for two weeks about a purchase, especially an expensive one. This is especially hard when the item seems to be “such a good deal.” I have not always adhered to this as much as I would like. My dad’s perspective is that in most cases there will always been another sale, another deal, another opportunity. Waiting two weeks gives you the perspective to decide if the purchase is a wise financial move and if it will really add value to your life.

Live what you love: I have not always done this. I want to spend more time of my days doing the things that really matter to me and working towards my primary goals.

 

My 31 Day Financial Challenge- Day 29: Paying Cash

I guess this has always been an obvious step for me. Not to say that we have never financed anything, but we never finance anything that has interest attached. For example, several years ago we bought furniture. We did have the money in cash, but at the time interest rates in our savings account were fairly favorable. So we opted to finance the furniture for 12 months at 0% and pay make self-imposed payments every month, assuring that it would be paid off before the time was up. We did something similar when buying supplies for a home remodeling project. This is not something I recommend for everyone. It worked for us because we didn’t want to tie up such a large portion of our savings when it could be earning interest. Now currently, there is no real benefit to opting for 0% financing instead of paying cash because interest rates are so low. Unless the purchase is unusually large, I’m not going to miss the 1.5% I’m earning on my money in the mean time.

This gets dangerous if you finance more than you actually have in cash. If you were to suddenly lose your income, you would be sorry you now have to make those payments from your almost nonexistent monthly cash flow instead of dipping into your savings account.

But as Trent pointed out, whenever possible, paying cash saves you so much money in the long run vs. paying interest.

 

My 31 Day Financial Challenge- Day 28: Preparing for the Inevitable

The inevitable is not a topic I like very much. Mostly because I know we aren’t that prepared for it. We have enough life insurance to replace my husband’s income in case of his untimely death, at least for a while, and enough insurance for me to replace all the tasks I complete with hired help like childcare. We also have a small insurance policy for our daughter through my husband’s job that would off-set some of the funeral benefits if, God forbid, anything ever happened to her. The other more important thing that we not yet have is a will. We have been discussing this since I got pregnant with our daughter, but we never get around to dealing with the paperwork; partly because we are very unsure of what decision to make and because I have trouble pinning my husband down about it. Trent recommends hiring a lawyer, but this can be expensive. I’ve heard very good things about Legalzoom.com but our financial planner also recommends that we work with a lawyer. But either option is going to cost money, money that will have to come out of our ever dwindling savings.

That being said, I understand the great necessity of this. We have a young child, she needs an appointed guardian. Our will (and possibly a trust as well) needs to be filed in such a way to protect her financial future from unnecessary taxes and court fees if anything should happen to us so that the money can be used to provide for her. My original goal was to get our wills filed before the end of the year. Now I’m probably shooting for January. I probably would have continued to ignore it entirely if not for my desire to finish this Financial Challenge.

My 31 Day Financial Challenge- Day 27: Keeping Good Records

There is nothing more crucial to your finances than keeping good records. For the first seven years of our marriage my husband handled the finances almost completely. He had the time and the expertise and I didn’t. I found the whole concept overwhelming. But once I got started, about 8 months ago, I’ve actually enjoyed it. Just trying to avoid seeing my Excel spreadsheet show amounts high lighted in red helps me to curb my spending. While it can be tedious to evaluate the budget every month, it takes me less time each month. By January I hope it will be second nature. One of the hardest parts about keeping poor finances records is that it allows you to create your own false image of your finances. This can be a positive or negative image. I always imagined things were better than they were because my husband said everything was fine. But then I would be irritated when we couldn’t buy things because he said we couldn’t afford it. Now all it takes on a given day is to glance at my spreadsheet to see where we are for the month. I figure out how much I have to spend at the grocery store before I go. When there isn’t any money to spend on clothing, I don’t shop for it. I realize it sounds simplistic, but keeping the family financial stats straight really saves us from unnecessary expenditures. At times the cold hard numbers can be depressing, but better to be depressed by reality than live in a rose colored dream world. Reality always breaks in eventually.

As part of this particular step, Trent also points out the importance of keeping your records organized. Paper filing has been a serious struggle in my house. There was a point when we actually had three year’s worth of paper work in crates waiting to be filed. Finally I just made it happen and it took a long time, especially while trying to keep my toddler from strewing my carefully stacked papers. I swore I would never let it happen again. But slowly the papers are piling up again. Certainly not to previous levels, but it is still getting unwieldy. Since our filing drawers are in the back of an unused upstairs bedroom, I try to file papers once a week. Now it’s more like once a month. Perhaps in the future I need to find a place to store my files on the first floor so I can quickly tuck them away before they become a file. Plus we have gone paperless with as many bills as possible to avoid unnecessary paperwork and all of our financial tracking is done electronically. Most people don’t enjoy filing and regular number crunching but it has the potential to save you money by preventing unnecessary expenditures and financial errors due to lost paper work.

My 31 Day Financial Challenge- Day 26: Refining Your Budget

While it has been taking me much longer than a month to actually go through all of the steps of this challenge, it has given me opportunity to further refine my budget, as Trent suggests. Through more careful monitoring of our usage and avoiding waste I have been able to significantly lower our utility bills. Electric, gas and water have all been consistently below what we budgeted, even during the hot summer months where I expect the electric bill to be higher. I didn’t exactly used Trent’s recommended weight averaging, but I did something similar to decrease how much I set aside each month to pay the utility bills while still funneling a little extra into the savings account to cover sudden increases.  I won’t bore you with the minutia but overall I’ve been pleased by how much we’ve saved just by tracking our spending. I hate seeing our accounts go into the red, ever, much less for something silly like fast food when I’m feeling too lazy to cook. Having to look at the numbers in black and white (or my in my case, black and white and green since I use Excel) really forced you to see reality. There are things I simply can’t afford. I could ignore this and run up credit card debt, or resent it and use it as an excuse to be jealous of anyone who has more than me, or simply accept it as the current state of my life, be grateful for what I have and make plans to improve my situation in the future.  For now I’m focusing on the last option, and trying to keep either of the earlier options at bay.

I will however take a brief moment for a private rant at the frustration with bills you can’t control. I understand why taxes are necessary, but I hate paying them. I REALLY hate paying them. Our county, city, state and federal taxes are all going up next year, in spite of the fact that wages haven’t gone up in two or three years for most people in this area. In the case of our real estate and school taxes this equals a higher monthly mortgage payment, something we really can’t afford. When I look at our budget and I think about having a smaller paycheck it scares me. How will people like us who are already trying to live as frugally as possible survive when the government takes a larger chunk of our money? I can try to spend less at the grocery store and stop buying new clothing for myself and my husband unless absolutely necessary (I draw the line at letting my husband go to work with holes in his pants and the soles coming off his shoes) or buy my fast growing daughter the bare minimum needed. I already depend on hand-me downs as much as possible. I can try to lower our utility usage even further and shop around for a new insurance company if my premiums go to high. But I can’t negotiate with the government or shop around for a better rate.

Sorry for the brief tirade. I’m done now and looking forward to finally completing this 31 Day Challenge. I realize it has taken me way longer than 31 days, but I suppose it didn’t have to be 31 consecutive days.

My 31 Day Financial Challenge- Day 25: Evaluating Your Expenses – Credit Cards

Trent covers four important ways of dealing with your credit cards and their associates balances and interest rates. I won’t reiterate them here, first because he explains it so well and second because none of them apply to us. We have three active credit cards. Technically we have others, but they sit in the safe and are never used. We’ve simply delayed canceling them because of the potential impact on our credit. When my husband and I first met, he had just recovered from significant credit card debt that had helped to wreck his credit rating. As he paid off each credit card he cut it up. He swore he would never get another credit card. I had never had a credit card, and thus had no credit at all to speak of. But we recognized that if we wished to own a home someday, barring the ability to pay cash which we knew was unlikely for us, we would need to build our credit. So I applied for one card and my husband applied for another. We chose a card that would earn cash back bonuses. One card was for groceries and the other for fuel. Then I opted to apply for a Kohls store credit card. This gave me access to regular coupons and sales and actually saved us a great deal of money in the long run since I shop for clothing there most of the time and now we buy things for my husband and daughter there as well. At the end of the month, all we had to do was look at the credit card bill to see if we were on budget and them pay off the bill entirely. We have never carried a balance and none of our cards have yearly fees.

I know that many personal finance gurus will tell you to avoid credit cards like the plague. This is good advice if you cannot control your spending. I have actually found cash to be more of a temptation. I don’t make small useless purchases with my credit card because it seems silly to bother, but I’ll spend loose cash I have floating around in my purse. We have expanded toward using our credit cards for other things, such as large purchases and medical bills. We still have three cards, but the original credit card my husband applied for has been replaced with a card that funnels money into my daughter 529 college savings plan. We now have great credit, thanks to responsible use of these cards. I believe that credit cards used responsibly have an important role to play in your personal financial plan. You just have to know your limits and resist temptation. In our case, it’s nice to get those rebate checks throughout the year we’ve earned through our credit card purchases. That money gets socked way to help make extra payments on our student loan debt.