Budget

Delicious Savings

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With my wife in-between jobs, we are working on stretching our dollars. One area we can have an immediate affect in is our grocery/dinning budget. We allocate $400/month to groceries and $130/month to dinning out.

Plain and simple, we waste too much food. My wife buys nice groceries so that we can enjoy delicious healthy meals together (she’s an awesome cook), but sometimes these ingredients go bad before we get around to eating them. I’m especially guilty of letting my workouts and surfing get in the way of a nice meal together. When I’m in a hurry, I’ll pick something up on the road, compounding the problem (wasting food at home + spending unnecessary money).

So, we’re consciously looking to see what food is about to expire, and eating it first.

Here’s and example: My wife bought ingredients to make Tex-Mex meatballs for a work potluck. Since her company laid everyone off, these ingredients have been sitting in our refrigerator. We also have a $50 Roy’s gift card that we’ve been wanting to use. Well, we spent Saturday at the beach and when we got home, Roy’s was sounding pretty good. However, we knew the Tex-Mex ingredients were close to expiration, so we did the right thing and stayed home for dinner. The meal was awesome and we have leftovers for today.

I know this sounds kind of a basic, but think about how much food you throw out each month. Stale bread, expired yogurt, moldy fruit, etc.

It all adds up.

Budget, Career

Cash Flow

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My wife’s 2nd to last paycheck arrived last night via direct deposit. We were expecting it to be somewhere between $1,000 and $1,100. It ended up being $1280.88! That extra cash is a God sent at a time when cash is critical.

One element of our finances that we have never included in our balance sheet is our checking account balance. This number fluctuates each month, depending on our expenses, and is not worth tracking in our balance sheet. With my wife currently searching for a new job, this number is important given that we’re much more focused on managing our cash flow.

We typically keep a few hundred dollars above and beyond our normal monthly expenses in our checking account. This “extra” money is usually somewhere between $300 and $600. Whenever this “extra” money gets higher than $600, it is moved into our online savings account.

Thankfully, it looks like we will have somewhere between $500 and $600 “extra” in our checking account at the end of August. This will help greatly as we manage our cash flow during my wife’s job search. In fact, our cash situation is looking so strong that, with reducing expenses and receiving unemployment benefits, we should be able to get well into October before having to resort to tap into our saving accounts.

That is a very good feeling.

Career

Wife Laid Off

There have been rumblings at my wife’s company that trouble was on the way. Well, yesterday, trouble arrived.

My wife’s company laid off 75% of their employees, agreeing to pay them until September 5. The remaining skeleton crew will likely finish the final business before the company closes their doors.

My wife receives her standard paycheck via direct deposit tonight at midnight. We’re not holding our breath on the final check they promised her on September 5. Unfortunately, it’s hard to get blood out of a turnip. Thankfully, this happened at a time when our savings is higher than it’s been in months ($3,326.97). In addition, my wife is expecting a final commission check from her old job (~$1,000) and a commission check on a job that she referred to her dad’s company (~$700).

It’s disappointing because my wife enjoyed her work, got along well with her co-workers and bosses, and had an opportunity to earn great money. She also quit her old job only a month ago and is forced back into the job search. Other employees that were hired by her company just a month or two ago moved here from out-of-state to start their careers. Now, after spending the money moving out here and signing apartment leases, they are left without a job. What shocked me the most was to hear is that they hired another group of employees just last week. These people probably left decent jobs, just like my wife, only to be unemployed a week later.

There’s no time to cry over spilled milk. My wife has hit the ground running. In less than 24 hours of receiving the news, she has already updated her resume, had one face-to-face interview, had a phone interview, and spoken with a recruiter. Tomorrow, she has a phone interview (set-up by a retired VP of the company that she knows), plans to do some marketing for her father’s company, will investigate her unemployment benefits, and will continue her online job search.

We have put together an action plan to limit our expenses and increase our cash flow while my wife is between jobs:

Thanks to my wife’s extra commission checks, and our plan to reduce expenses, we probably won’t have to dip until savings for at least one month. After which time, our savings should last a couple of months. Worst case scenario, if we blow thru our savings, we can consider placing charges onto our credit cards or pull contributions from our Roth IRAs. I don’t see it getting to that point as I’m confident that we will pull thru this hiccup without any long term damage.

Budget

I just received a subscription renewal notice from Surfer Magazine. Surfing is one of my passions. Living 3 miles from the beach allows me to indulge in my obsession multiple times per week (when there are decent waves).

I have subscribed to Surfer Magazine for years and have always enjoyed the content. That being said, I was preparing to send in my check for $37.97 (2 year subscription) when I decided to stop and think about my decision.

Lately, I’ve been doing most of my reading online (cheap, easy, and convenient). The Surfer Magazine website has tons of information, as well as an interesting forum. This realization, along with the fact that I seem to have less and less time for flipping thru a magazine has lead me to a decision to forego my subscription for now.

I realize that $37.97 is nothing in the grand scheme of things, but I am trying to get myself out of the habit of spending money on auto pilot. I want to do a better job analyzing my purchases to ensure that I am getting the most bang for my buck.

Debt, Goals, Investing

What A Difference A Couple Of Years Make

Over the weekend, I was looking at an old copy of our financial spreadsheet from 2 years ago. It brought me back to a time of financial struggle and uncertainty.

At the time, we were renting an apartment, in a lot of debt (my fault), and had little in the way of assets. Comparing the numbers from 2005 with 2007 reminds me how greatly we have been blessed. Here is a brief breakdown of where we were financially in August 2005 and were we are today:

August 2005

Liquid Assets
$5,157.00 401(k)
$1,547.00 Cash & Savings Accts
$759.00 Taxable accounts
$7,454.00 Total

Credit Card Debt
$10,630.56 (9.99%- 15.49% interest rate)

Net Pay Every 2 Weeks
$1,390.00 (Husband)
$1,180.00 (Wife)
$2,570.00 Total

August 2007

Liquid Assets
$12,805.68 401(k)
$3,326.97 Cash & Savings Accts
$6,278.41 Roth IRA’s
$838.79 Taxable accounts
$23,249.85 Total

Credit Card Debt
$1,249.49 (0% interest rate)

Net Pay Every 2 Weeks
$1,880.70 (Husband)
$1,200.00 plus bonuses and commissions (Wife)
$3,080.70 Total plus Wife’s bonuses and commissions

Health

The Cost Of Not Flossing Enough

During my visit to the dentist six months ago, I was informed that I needed to floss more because my gums were in bad shape, and might require special deep cleaning. The dental hygienist told me it can cost ~$1,000 to have the deep cleaning performed. Needless to say, I was scared into submission. Since that visit, I have been flossing every other day or so.

I visited the dentist again last week and was told that my flossing had paid off in all but one area, the upper left-hand side of my mouth. In that area, my gums have accentually worsened. With my insurance, it’s going to cost $165 to have the deep cleaning performed. I have a call in with a friend of mine who is a dentist to get his opinion, but, it looks like I’m going to have to have it done. Learn from my mistake about the cost of not flossing enough.

I am so paranoid, I now bring floss with me to work.
Roth IRA

Additional Contribution to Wife’s Roth IRA

With the market down, my wife suggested that now would be a good time to do another contribution to her Roth IRA, which is invested in the Vanguard 500 Index Fund.

She opened her Roth IRA back on May 8, 2007 by purchasing $3,000 of Vanguard 500 Index Fund at $139.02/share. It is now trading at $132.16/share. With $1,000 left to fully fund her Roth IRA for the year, we decided to invest another $500 this month. We will likely invest the final $500 in her Roth IRA next month to get her to the $4,000 fully funded level.

After her Roth is fully funded, we will have just $1,000 left for my Roth IRA to be fully funded for the year, which will likely be done just before year end.

That will bring us to a total of $8,000 invested for the year in our Roth IRA’s. Next year, the maximums increase and we will be able to invest up to $10,000 in our Roth IRA’s ($5,000 in each) . Good stuff.

Our path to financial independence and retiring early.