semi-necessities: transportation

i know that is totally not a thing, but i didn't know what else to call this next section of budget categories i will address. so these are the things that are definitely not necessities, but they're not pure wants either. today we will talk about all things transportation.

jake's car is paid for. in the future, we plan to be able to say that about all vehicles, always. but right now we are still paying for my car. financing a car is about one of the least financially responsible things to do, in my opinion. i don't say that judgmentally; i'm in the boat with ya. i just feel so stupid continuing to pay for something that is losing value every day. a few months ago, we looked into getting a less expensive car, and essentially spending whatever amount we could get from the sale of my car to purchase one. but we decided against that, because my car (a honda accord) is one that holds its value much better than others, it's safe, will be a great family car, and gets pretty good gas mileage. so we took as much money out of savings as we felt comfortable with, and used it to pay a chunk down on the car. we refinanced it with a credit union. we did opt for a longer repayment term (five years), but we are paying the same amount we would have had we financed for four years. it still saves us over $100/month from our previous payment. again, our goal now is to pay off the student loans. when those are paid off, if we still owe on the car at that point, it will become our new goal. so for the sake of transparency here: we owe about $4500? on my car. we pay $115/month. the car is valued at about $13,000. so while our current situation is not our ideal, it's a lot better than the "norm". as i mentioned in the post about savings, we do plan to pay cash for our vehicles in the future. if we need a car and only have $1000 saved, well, we'll be driving a pretty lousy car until we can afford a better one :) but we will be driving our current cars until they plumb won't run anymore.

we have a local insurance agent, and ended up saving a lot over what i was paying previously. i have no idea if it's the best rate possible. ideally we would check around every few years. we do pay our insurance once a year, which is the most financially responsible way to do it. we put back about $75/month, so by the time the bill comes, we will have all we need to pay it. if you decide to do this (and i think you should if at all possible), it will cost a chunk up front. we have both our cars and our home all with the same people, so that also saves.

we put $10/month back for car maintenance. would be nice to do more, but we just can't right now. we would love to get it built up and keep $500 on hand at all times but we definitely aren't there yet. we use this money now for regular maintenance, but at some point we will need to have some saved up for other things as our cars age.

both our cars get good gas mileage - anywhere from 27-35 mpg, depending. we drive straight drives, which helps a little, and enables us to be in a little more control over mpg. we basically try to be smart about our gas usage. i don't make random trips to just one place; i combine stops in one general area and take one trip. we budget $40/month for jake (he gets paid mileage through work, but he has to drive 30 miles to get to his first stop, which is not covered by work), and $100/month for me. those are really not high amounts. but by being smart about it, we can make it work.

so that's that on transportation. the whole not-financing-cars thing is a touchy subject, i am aware. at the very least, please, PLEASE don't ever be satisfied with or adopt the mindset that you'll always have a car payment. you do get to decide that, you know.

how we save on necessities: clothing

i will start off by saying that for about 99% of us, this no longer is a necessity. we have clothes. some of you have kids, and they grow and need other clothes. new clothes, not necessarily. new to them, yes. but i will go into all of that.

hand-me-downs are awesome. ideally, i would love to have a few girlfriends who could get together and swap clothes as we get tired of them, or change sizes, or whatever. because we all have everything we need, and at this point it's about wants. i shop at goodwill and consignment stores for clothes for us, but again, those are all wants. we are actually moving toward a minimalist approach to our clothing (in addition to other areas of our lives), which means we only have a few of each type of clothing. normally people wear about 20% of their wardrobe 80% of the time. so we opted to just own the 20%.

in order to really master the art of thrift store dressing, you have to go regularly. some days you will leave with nothing. some days you will find 20 things. there is plenty of brand name, in-fashion clothing to be found at places like goodwill, and especially at consignment stores (but go to thrift stores first - they are cheaper). then there are those rare, fun, vintage goodies that everyone will wish they could "pull off" too :)

we budget $5/month for clothing. it would be fun to budget more, and maybe we can in the future. but truly we don't need any more. that amount is basically for new underwear when ours all have holes and can no longer be worn. so whenever i buy "new" clothes (rarely for me anymore does that actually mean new!), it comes from any additional spending/fun money i may have.

reading over this, we sound pretty hobo-esque. ha. but it all ties into cutting our expenses to the bare minimum in order to get out of "slavery" (the biblical description of debt/owing anything to anyone).

how we save on necessities: shelter

so basically shelter just means where you live. we do own our house, but are not necessarily of the opinion that owning is always the better option. home ownership comes with additional costs, such as taxes and improvements -- there are always improvements (needed and otherwise). so here's how we save.

we got a great deal on our house. fortunately, it was already pretty cute. but even if it wasn't "my style" or what i would have described as my dream house, jake would have bought it anyway, because of it being such a great deal. so i guess the first savings step would be to not be too shallow when it comes to your home. because we saved so much on the house, we were able to renovate the interior. another great thing was that jake has always been a terrific saver. because of this, we were able to put 20% down on our house. this makes our overall debt lower (although we won't really be satisfied until it's all gone), but also allowed us to avoid PMI. don't understand that whole thing completely, but i know finance people say to get rid of it asap, and you can't do that until you have at least 20% equity in your home (i think i worded that right). all of that adds up to mean that our monthly payment on our home is less than what we would pay to rent anywhere. we did finance for 30 years at a fixed rate of like 4%, which is awesome. as i've mentioned, our primary goal right now is paying off student loans. any extra money we have goes to that. when those are gone, we will likely refinance to 15 years, unless the interest rate is crazy, in which case we will just pay extra. either way, it is not our intention to be "slaves to the lender" (biblical description of debt of any kind, fyi) for 30 years of our lives, or even 15 years, if at all possible.

i will also address utilities here. as far as electricity, we do pretty great. we don't leave on lights. we rarely use our dryer. in the summer, our thermostat is at 74, and we leave our ceiling fans on; in the winter it's at 67. i am going to begin using my crockpot as often as possible, because it takes way less energy to heat it up than the oven. we set up the equal payment plan with duke power - it's a free service - so that allows us to plan our budget more accurately.

water/trash is where we find we sometimes go over what we've budgeted. in the winter, when i don't sweat, and even some throughout the rest of the year, i don't shower daily. jake really needs to because of his job and being around animal guts and all. we actually do use our dishwasher, but only when it's full. a lot of our things have to be hand washed, such as wood cutting boards and utensils, pizza stone (not just for pizza), cast iron skillet, etc. i still have no idea which is the greater evil - more energy by using dishwasher, or more water by hand washing - so we try to be wise in our use of both.

i think i've addressed all things shelter-related, but let me know if i've left something out or you have any further questions. :)

how we save on necessities: food

first, let's define "necessities": food, shelter, clothing. there are varying degrees of all of those, but keep in mind that the most basic forms are the necessary ones. that being said, i will address how we plan for all of those, and some ways we save.

"food" encompasses groceries and eating out. eating out is not a necessity, but i will include it in this post anyway.

we spend about $190/month on groceries, which for us includes household products such as toilet paper, etc., and personal products, such as toothpaste, etc. jake eats the same as two adults. so this really is a pretty low number (i am not trying to be prideful here; it began out of necessity, but now it's fun to see what we can get on that amount!). how do we do it? i only grocery shop every other week. that is the only time i enter a grocery store. we recently got a chest freezer so this next month will be my first attempt at once-a-month shopping. the less times you enter the store, the less you are exposed to temptations at the check out, or even walking the aisles. so the whole going to the store every day to get stuff for supper? definitely not the way to save money (yes, this does take planning. but trust me--you end up saving tons of time in the long run, too). i go in with a list, and only get what's on the list. i keep a tally of what i'm spending along the way (i know some can do it mentally, but i literally make a tally mark on my list -- this is vital, in my opinion!), so if i find i'm way under budget, i may pick up a few extras for fun. i try to not spend the entire amount every time, in case something comes up and we do have to run to the store between shopping trips -- but those times are few and far between. whenever i have it on my list to pick up dry goods, i get more than i need. that way i have a mini-stockpile in case something were to prevent me from keeping to my shopping schedule. we store the extras in our basement (regardless of where you live, you likely have room for a stockpile of your own...although it may require some decluttering, and that is a subject for a whole other post!). this way, we never fully run out of food. we pull from the stockpile to fill our pantry. so when we are out of something in the stockpile, that's when we put it on the list; not when we are completely out of it altogether. i coupon a little bit for some of our household and personal supplies. you can see some of my previous posts (sorry, i don't know how to link them :/) for more info on that. we use un-paper towels that i bought on etsy instead of regular paper towels. these can be washed and reused 40 bazillion times, rather than having to buy paper towels constantly. we do end up purchasing paper towels, too, but we rarely use them. i meet my mom at costco every now and then for things we can buy in bulk, like toilet paper and coffee and other random things. we do buy freezer bags, because i buy meat in the larger quantities, then split it up and freeze it. but as for regular ziploc bags, we don't use them. we also bought reusable sandwich bags on etsy, and wash them as needed. as for cleaning supplies: i plan to begin making my own as i run out of those in my couponing stockpile. that goes for laundry detergent too. we do not use dryer sheets. we only use our dryer for sheets and towels anyway - and that's only until sweetheart puts me up a clothesline - but we have wool dryer balls (guess where they're from - etsy) that cut down on dryer time (also saving on energy costs!). so i think that addresses everything grocery-wise.

right now our budget for eating out is $20/month. that is so super duper low. and no, it's not always fun. but cooking at home is so much cheaper and healthier! that basically allows for a meal out every month, or maybe two fast food meals every month. eating out technically falls into our "everything else" section of budget categories (see "our freaking budget", a finance blog i previously suggested), so we do allow ourselves a little extra some months. but for the most part we rarely eat meals out. there is a little bit of genius that goes into our plan: whenever any parent or grandparent offers to eat a meal out together, take it! they feel bad because they think we're way poor (when really we are only slightly poor, but way cheap). don't tell them our plan ;)

and that's it for food. you now know how much we budget for it, and how we save. as always, any questions are welcome!

investing

whenever i talk about investing, i feel like it comes across as though we have loads of money. well, we don't. you can invest regardless of your income. we choose to do it because we are able to right now, and we know there may come a stage in life (like, when we have a million kids we're trying to feed) that we are unable to continue doing so. so here are my suggestions.

if your company offers to match contributions to your 401k, DO IT. do the max amount they will match. this is free money. the more you contribute at a younger age, the better off you will be. dave ramsey has some chart that shows if you invest x amount from ages 20-30, and never again, it is exponentially better than investing 2x from ages 50-60. the longer you let your money grow, the more you will have.

we have an edward jones man. while we know a bit about everyday finances, we know nothing about investments. so basically we told him that we want to put a certain amount back every month (which is not very much), and he handles where that goes.

to be completely honest, i'm kind of torn on the issue of investing. i strongly feel that as a christian, i should depend on God to provide. i know He will provide for my needs. and jake and i are not the type to desire to go on extravagant world adventures in our old age. also, the idea of "retirement" is really not biblical. so for us, on one hand, investments are basically savings that are doing something (growing) rather than sitting around in a bank. they are something we could use should an emergency arise. on the other hand, jake may have to stop working at a certain age because of health reasons. he's very healthy, and so is his whole family, but with powerlifting, at some point his joints or something may decide they're no longer happy with him.

to summarize: we don't invest because we want a luxurious retirement; we invest because we feel it's a wise way to save our money for whatever the future holds. we invest through edward jones, contributing a certain amount every month for now. if your employer matches, you should contribute to your 401k. hope this has helped :)

saving

what i will be talking about today is liquid savings, as in an actual savings account.

we don't follow dave ramsey's method exactly. technically we do the 10-10-80 budget (10% tithe, 10% savings, 80% everything else), and beyond that we apply dave ramsey's basic principles, with a little suze orman thrown in (we follow her advice regarding credit -- dave says no credit, suze says protect your credit). dave says to put away an emergency fund of $1000, and then don't save any more until you have all debt paid off. but we save anyway.

if you'll remember from my budget outline, we actually save 5% and invest 5%. we feel it is wise to do both of those things, but we can't afford to save 10% and invest right now (we do put 10% of my "net" pay into savings). tomorrow i will talk more about investing.

we define "net" as being after our tithe too. so we take jake's take-home pay (the actual amount on his paycheck), subtract the amount we tithe (see yesterday's post for more info), and the amount we're left with is our "net". so multiply that by 5%, and that's how much we save. similarly to yesterday, we had to set a specific amount for this category, since we aim to end up with -0- after we have paid all our "accounts" (see our budget outline). it sure doesn't feel like much on a monthly basis. but we don't touch that money, and it adds up -- slowly, but surely.

once we have transferred the specific amount to our savings account, we have some mini-"accounts" within savings that we keep track of (for separate line item on our budget list, we have a spreadsheet we keep up with). we aim to have certain amounts in each of the following savings categories: emergency home repair, emergency medical, car replacement, and unemployment. so when we are tempted to take money out of savings to buy, say, a new coach purse, it's a pretty big deterrent to see that money coming out of the "car replacement" fund (knowing we desire to NEVER again have a car payment).

i know i didn't explain this very well. so seriously, please ask any questions you may have! hope this has helped :)

tithing

i am not going to attempt to persuade you to begin tithing, or tithe any more or less than you already do. actually, that last phrase was incorrect. "tithe" literally means "a tenth". so if you are a christian, and you desire to tithe, but you only give 2%...well, you're not tithing. but i digress.

jake and i have always tithed, but only recently have we been convicted that we were doing it wrong. we have always gotten a paycheck and given 10% of that paycheck to our local church. but really, we weren't tithing on our income. we were tithing on our take-home. you know the whole "give to God what is God's and to caesar what is caesar's"? well, caesar was getting a whole lot more from us than God was! so we decided to begin tithing on our gross pay. but then we thought "how in the world can we afford to do that?" we had trimmed our budget down so far. but we prayed, and we crunched, and we just decided that we would do it, even if we couldn't see how it could possibly work. and you know what? it works just fine.

because we operate on a zero-based budget (from jake's income), we needed a specific dollar amount to allocate to our tithe. so we looked at the past six months of his pay, chose the highest amount, then rounded up. just to be safe. and that is the dollar amount we give. so yes, technically it's more than 10%. but guess what? we are told to tithe, as christians. we aren't told to only tithe, but we are told to at least tithe.

i challenge you to pray about how He would have you handle your finances. and if you're mad at me and still think i know nothing about you...you're invited to dinner. we'll pull out the checkbook registers. and i will show you what it looks like to not be able to afford to give any more, but do it anyway.