Wednesday, October 19, 2011

$60K Project On Vacation

Did you listen to The $60K Project podcast interview at The Consumerism Commentary? Download episode 131 to your iTunes and take it with you wherever you go! And don't forget to tell your friends!

Hi everybody!

The $60K Project has decided to take a two week vacation - after all, it's been a year since this site started and I need some time to relax, unwind and figure out what the future holds for us. Don't fret because we will be back in full force on November 1.

Content Requests?
Do you have any specific types of content you would like to see in the coming months? Be sure to leave a comment with any suggestions you have.

What Should I Read?
There are so many good reads on this website. While I'm away, keep yourself busy with:

The 12 Steps To Debt Freedom: My 12-step method for successfully paying off debt.
How The $60K Project Started: Check out Day 0 and Day 1 of our project and find out how all the madness started.
The Salary Myth: Income vs. Debt: One of my favorite posts. It taught me that bringing in a decent income doesn't necessarily mean you are in good financial shape.
Word of the Day: Another one of my favorites purely because of the word Awesomesauce.
Lessons Learned From Duke: My dog has taught me more about living life than most humans I know. Let Duke impart his wisdom on you in this post.
The Hidden Cost of Cheap Gas: A lesson learned personally - the gas grade doesn't matter (87 vs. 91) as much as the brand. Certain brands of gas just have gunk in it that will choke up your fuel line.
Keeping Up With The Joneses: The infamous Mr. $60K Project (aka Mike) wrote a really good guest post about the pressure to keep up with the Joneses and how it can impair your financial health.
5 Money Tips From My Nephew: I interviewed my 11-year-old nephew about money and I'm pretty sure he knows more about fiscal responsibility than I do.
June is Myasthenia Gravis Awareness Month: Something I am all too familiar with as I have been recently diagnosed.
Lowering Your Cost For Medical Procedures: Did you know it's possible to pay less for certain medical procedures? This is something I have recently found out.
Smashing Debt With A Snowball: Challenging the economic notion that we are rational beings when it comes to the purchases we make.
How I Paid off $60,000 in Ten Months: And how you can do it, too!

Thanks for your patience and understanding. It's hard to believe but, yes, there are other things going on besides working on this blog!

Stay tuned,

Friday, October 14, 2011

You Can Choose To Be Happy

I am a closet philosopher. My undergraduate degree was Philosophy, Politics & Economics (aka pre-law) only because I thought a straight philosophy degree wouldn't be as practical in the real world. I think about the meaning of life - and any and all related tangents - on a more than regular basis.

Lately my random thoughts have turned towards the concept of happiness. A lot of financial decisions are made to achieve a certain level of happiness. But can you find happiness by seeking/searching/accomplishing? Or could it be that happiness is simply a choice - something that you don't actively seek out but just need to accept into your life?

Think about it - there are so many situations in life that are going to be unpleasant. Work, relationships, money, social pressures, family. You can't control these situations so what are your options? The only thing you CAN control is how you react to these unpleasant situations. Let's use that guy who cut you off on the freeway this morning as an example: how many minutes after you laid on on the horn, shook your fist (or your finger) at the window and screamed an obscenity did it take before you let go of the situation? Did you mention it to your coworkers or to your family when you got home? Did it alter your mood for the rest of the day? Or do you just shake your head and move on while singing the Zac Brown Band at the top of your lungs?

Choose Happy
Happiness doesn't seem to be something that can be obtained. It exists and is within your grasp at all times. You just need to let go and allow it in
1. Start your day with thoughts of gratitude
2. Smile
3. Hang out with people who bring happiness
4. Make other people happy - it will probably make you pretty happy too
5. Try to figure out how you can get something good out of your crummy work/relationship situation until you have the means to move on. My dad wrote an entire book at work!! Shh...don't tell anybody!
6. Say it out loud - I choose to be happy

I can wake up everyday and focus on what it is that I don't have yet, where I should be in life, how awful I feel, horrible I look, how dirty the house is, tired I am......the list goes on - negatives seem to be so easy to find. Or I can wake up and make a concerted effort to be thankful for what I have accomplished, where I am and the people who surround me. 

Next Steps
As I congratulated myself on my AHA! moment, I Googled 'Choose To Be Happy' and figured out I'm actually late to the game when it comes to this concept. So check out these additional resources to help you decide whether you agree with this philosophy.. 

Some Happiness Resources
How We Choose to Be Happy: The 9 Choices of Extremely Happy People--Their Secrets, Their Stories
WebMD: 7 Steps to Becoming a Happier Person
The Happiness Project: Or, Why I Spent a Year Trying to Sing in the Morning, Clean My Closets, Fight Right, Read Aristotle, and Generally Have More Fun

Do you consciously choose happiness? What do you do to promote happy thoughts and feelings in your life?

Stay tuned,

Monday, October 10, 2011

September Budget Review

After you create your budget, do you take the time to go back and review to see where you actually ended up compared to where you wanted to be? It's a good idea to do this on a regular (monthly) basis so that 1) you can see whether you are sticking with your budgeted goals, and 2) determine if any of your budget line items need to be altered. Let's take a look at our September 16-30 budget to give you a bit of practice.

Recurring Budget Items
First up are the recurring expenses - these are expenses we pay every month and can reasonably estimate what the cost will be (rent, utilities, food, gas). As you can see, we overspent in the food category by quite a bit but were way under for gas (yay working from home!). Overall we were about $55 under budget on recurring expense items. If you find yourself way over or way under on an expense item that should have little to no variance in cost every month, think about changing your budget to better reflect these recurring items It may free up some money that you could put towards another budget item.

Non-Recurring Budget Items
 Non-recurring expense items are a little more difficult to deal with. They may include unexpected expenses such as a car repair, one-time expenses such as your dog's birthday present (guilty), or any "splurge" items you buy during the month that shouldn't be included as a recurring item (Groupons). As you can see we had quite a few non-recurring items in September. Both car registrations were due and we decided to splurge on a Groupon for a bartending class for Mike (potential career move???). We also transferred my post-tax bonus amount to our savings account. Finally, we had some personal expenses (haircut) and some medically related expenses (that parking money is because Mike has to pay to park when he goes to physical therapy- which just seems lame to me).

How Did We Do?
Overall, we were right in line with our recurring expense budge, but one area we need to try to keep more in check is the food line item. This period we did go out to eat a few times when we felt busy and hadn't properly prepared for food during the work week. To reduce our expense, we really need to plan our meals for the week and create a Sunday shopping list for these meals. We have found that when we go to the grocery store multiple times during the week we end up not shopping with a list, buying "extras" and spending more.

As far as the one-off non-recurring items, we need to better determine if the purchase is truly necessary - wants vs. needs. We definitely had a few items we could have done without or tried to spend less on. Duke's $25 toy wasn't too necessary even though he did turn 10 this year which is a huge milestone!!!

Overall Budget Grade - B

Upcoming Challenges: We are swimming in medical expenses right now with one of use recovering from surgery and the other trying to find alternatives to surgery but most likely preparing for it in the near future. This is one of the reasons we have started an emergency fund because we are aware that medical expenses could be a large part of our budget over the next 3-6 months.

Successes: Despite some unexpected and pricey vet bills in early September and some one-off expenses that couldn't be avoided, we are happy to report that we are paying cash for everything. We don't really feel like we have very much money right now since it is being eaten up by these one-offs. But a few years ago many of these items would have gone right on the credit card. Progress!!

Stay tuned,

Do you do a monthly review of your budget and compare it to what you actually spent? Do you get any value out of an exercise like this? Do you use any more automated ways (like Mint) to do your analysis? Send your suggestions our way!!

Friday, October 7, 2011

Is it Time For Us to Buy a House?

When do you decide that it's time to buy instead of rent? This is a conversation Mike and I have been having recently. We currently pay $1,250 a month to rent our 2 bedroom, 1 bath townhome. We pay for water and electricity, and the yard is taken care of by the Homeowners Association (the HOA fee is paid by the landlord). Any major repairs are also paid for by our landlord. If we bought a house, we would potentially be paying more for utilities (assuming we buy a bigger place) and would be responsible for basically any home-related expenses including utilities, yardwork and home repairs.

Admittedly, there are so many different ways to determine whether it is a good time to buy. I am taking a relatively simple approach at this early stage in the game and just trying to determine how much house we could purchase and still maintain a similar monthly expense budget. So below I look at what amount of loan we could afford that would be equal to our current rent payment of $1,250. Based on the mortgage calculator below (you can upload this Excel spreadsheet to your computer if you like and mess around with it), Mike and I could take on a $231,000 home loan assuming a 3% interest rate, 30 year loan term and taxes estimated at approximately 1% of the total value of the home. If we can put 20% down when we buy, we can afford a purchase price of about $289,000 and still pay $1,250 a month in mortgage and taxes.

Front-End Ratio is Hooey (IMHO)
Do you know the rule of thumb that you should apparently use to figure out how much house you can afford? As a general rule, your monthly housing expenses - including mortgage principal, interest, real estate taxes and homeowner's insurance - should not exceed 28% of your gross monthly income. If I followed this rule, then my total monthly housing expense would be more than 50% of my take home pay!! This doesn't seem anywhere near reasonable to me. How did I get to 50% of my take home? Taxes, health insurance and 401(k) deductions take a big chunk out of my paycheck each period. It seems more reasonable to base the calculation on monthly take home pay as opposed to gross monthly income. Otherwise, there is the potential to become house poor real quick.

So if we can find a house we like in that price range, then it might be reasonable to consider buying given that our monthly mortgage payment would equal what we currently pay in rent. Rather than that amount going towards someone else's investment, why not pay it to ourselves?

So should we consider buying? Mike and I are considering it if we can buy a home and keep our expenses close to where they are currently. But we will not be using the front end ratio rule to determine what we can afford.

Stay tuned,

Tuesday, October 4, 2011

Finance Lessons Learned - FINCON11

I was lucky to be able to spend three days with some of the most influential personal finance bloggers at the Financial Blogger Conference this past weekend. I brought home a notebook completely filled with notes from presentations and inspirational quotes from the big hitters to help me improve my blog content, design and reach. My action list is now a mile long after the great ideas that came from both impromptu conversations and formal presentations. Even though these bloggers didn't specifically discuss strategies for improving personal finances, I thought I would share a few snippets of wisdom with you that can provide essential advice for those of us trying to get our financial act together.

"What does your dream look like? How do you get there?" 
~ Kelly Whalen, The Centsible Life
If you are reading this, you most likely know that you want to pay off debt and get your finances in order, but do you know what it is you are working towards?
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