Generational Savings Pitfalls

The founder of Mint.com (Have I mentioned how much I love Mint.com?) talks about how people are cutting back, and where the biggest spending pitfalls are:


I think it's interesting that the younger generations have a penchant toward spending on food- eating out, and social eating or drinking- while the older generations spend on status symbols. The observation is true of me: while I don't have a coffee habit, I do love to eat at restaurants, and this is a habit I'm trying to break,or at least lessen.

Interesting stuff.

No Spend Month Day 22: Emergencies Happen.

Every time we get on a roll saving up an emergency fund, some Actual Emergency hits, and we deplete it back to where we were before. One of the goals of this month was to seriously cut back on spending so that we could make significant progress on our Emergency Fund goals, So far, so good.

'Emergencies' wouldn't be emergencies if we could see them coming. Replacing an aging appliance isn't an emergency if I knew it was getting old and likely to fail- I could have the foresight to save up for it. Replacing tires on a car due to wear isn't an emergency- I can check the tread and see that I need to start a Tire Fund. Replacing tires due to a nail causing a flat tire, or replacing a newer appliance that dies unexpectedly is an "emergency"- the distinction can be made.

Tonight, I was up past my bedtime finishing canning some green beans, when I drained the sink, and heard rushing water- not through the pipes, but under the sink. Awesome. Water was pouring out of the drain pipe, and I quickly yelled for my husband and plugged the sink again.

Will we need to call a plumber? Hopefully not, but freak things like this are what the Emergency Fund is for. There will probably be a trip to a hardware store tomorrow to find a solution to the leaking pipe, though, but I do want to use my sink again. Someday. Preferably, before the end of our No-Spend Month.
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Today's spending:
$7 at the grocery store for milk, 3 loaves of bread, and cereal.
$1.05 at JC Penney for a shirt and a necklace.

Previous total: $121.65
New total: $129.70

No-Spend Month Day 14: Payday Routine

Today our paychecks come in.

When we get our paychecks, they direct-deposit into our checking account, and my husband does his budgeting magic. He transfers some money for non-monthly bills (like car insurance and trash) and accumulating budget categories (like Dog Fund and Gift Fund) to an online checking account for that purpose, leaves money in the brick-and-mortar checking account for monthly budget categories (mortgage, gas, food, electric, etc.), and transfers the rest to a separate Emergency Fund online savings account.

Commercial Break: All our savings accounts are with ING, and we're beyond delighted with them. I've got referral links- which can only each be used once, so email me at itsjustchange-at-gmail to get a link, which will get you $25 in your account and $10 for me. In addition, it will get you anywhere-access to your accounts, a pretty good interest rate, and access to ATMs all over the country. Seriously, I'm a big fan. (I'll write post full of gushing later)

And we're back.

In a normal month, at the end of the pay period, after paying all applicable bills and buying gas and getting cash out for our cash budget categories, our checking account is pretty low. If we spend all our cash and need to use our check card for anything, it's dangerously low. This low balance is buy design- if we left more money than we need in the account, it has the potential to get spent. With just a small buffer beyond our budgeted categories, we can't easily spend beyond our budget. Our credit card and online accounts are accessible, sure, but we have to consciously choose to use them, which makes us pause and think before we do- is this over-budget spending worth it?

All that said, we've just completed the first no-spend pay period, and I'm happy to say our checking account had barely been touched (except for bills). It's nice not having to watch the balance carefully the last two or three days before a paycheck comes in.

The month is almost halfway over!

Today's failure: We BOTH forgot our lunches at home because we had a disrupted morning routine. I'll have a bagel here at the office for lunch, and look forward to dinner. My husband will probably go out for an inexpensive lunch. The lunches that are already conveniently packed and in the fridge will turn into a picnic lunch downtown tomorrow night. A night on the town for nothing? I'll take that!

The No-Spend Experiment: Coming Soon!

It all starts on Saturday. August first through the thirty-first. Thirty-one days of nothing.


Amy's done it.
So has Kim. And Mary. And Crunchy Chicken. And Molly. And all sorts of other people.
MSN Money talked about it. So did Bankrate.com and Reader's Digest.

But can WE do it?

What's the project? Not spending money for a month. Sounds straightforward enough. Everyone makes rules that work for them. Here are mine.

Regular bills will still get paid. We're not going to cancel any phone or internet service for just a month. Bills include: Electric, Mortgage, Cell phone, Internet. I think that's it.

"Staples" and necessities can still be bought. If I run out of milk or flour or sugar or toothpaste, I'll go to the store and get more. Trying to work around not having a staple on hand is more difficult than it's worth. I want to succeed. I just realized I'll probably need to buy dog food before the month is put. That falls under the 'Necessity' category. Gas is also a necessity- we won't be carpooling to work, so we'll probably spend our normal amount in that category.

Grocery spending will be kept at an absolute minimum. I made a meal list for the whole month, and took stock of what I'd need to make all those meals. I already had most of the ingredients on hand, but spent $40 at Aldi and $10 at Meijer to round out the list last weekend. Theoretically, I'm set for the month, but I know something will come up.

Other than necessities, no spending. House projects that require supplies will be put on hold. No new clothes purchases, or new tools, or gadgets. No eating out! Not even for ice cream runs! Hardest for me, I'm going to set aside deal-hunting and couponing for a month. If I can get something free, I'll do it, sure (and I do have $13 in ECBs that will need to be used!) but I won't go out & buy something (with money) just because it's on sale. Not in August.

So can we do this? I have no idea. I think it will be interesting to see what the minimum amount of money we can live on is, with our current responsibilities (the house, dog, commuting to jobs, etc). I think it will be eye-opening to go cold-turkey from some of our current habits- perusing Goodwills for impulse buys, eating out 2-3 times a week, running to the store to pick up what we need, almost-weekly house projects. I think finding free things to do around town will be fun! My friend the Queen of Free will surely be a help in this! I'll try to post every couple days on the new challenges and progress.

I think the project will also show us how blessed we are- how much room there actually is in our budget, how much more we could, or should, be giving to others. With the project planned, before I've even started, I've already felt blessed-like-crazy.

The Importance of Tracking

Budgets are hard.

Some people say that budgets just don't work for them, and throw the whole idea out. Others insist, to be responsible, every single penny must be accounted for. As for me, I'm a budgeter. I like to know where my money's going and approximately how much I have to spend in a variety of categories. I'm not as legalistic as some about it, and I appreciate that my husband and I see eye-to-eye on the matter.

Budget or no, an important first step when working to get out of debt (and stay out) is to track your spending. If you don't know where your money's going, you have no idea what needs to be fixed! For the last six months, I've given a free online tool called Mint.com a try.

Mint is different than other services I've seen because of how automated it is. There is no time-consuming saving-of-receipts and manually-entering-data. Mint is able to connect with your bank, credit card, investment and loan companies electronically and download account activity each time you log on. The downside to this feature (for me) is the fact that I'm giving all my most important passwords to one database, one company- one place for them all to be discovered if it is ever hacked. This took me a while to get over, and I didn't sign up for the service. When my husband decided he wanted to try it, I relented- and I was very, very pleased with the site!

Why I like it:

• Allows me to see, in one list, all my accounts- my brick-and-mortar bank, my online bank, my mortgage, my credit card, my investment accounts, even Paypal!
• I don't need to log into 6 different websites to track all of these accounts (because, seriously, that's what it would take)
• Pulling my expenditures from all of these together gives me a full picture of where I am financially.
• Categorizations gives me an idea of what I spend on groceries, home improvement, etc each month, letting me know how reasonable my budget is.
• Graphs are pretty. Seriously, though- the graphs showing how my investments are doing or how much I'm spending in different categories give me an at-a-glance idea of my financial health.
• Recently added: the ability to add "assets" like the value of cars and houses into the "Net Worth" calculation.
• There's also a feature that allows you to compare your spending in any category to those in your city (or whatever city). I take this with a grain of salt since I'm not sure others tag their purchases as carefully as I do.

Overall, Mint has helped my husband and I stay to the same page and both watch our finances carefully, with minimal hassle.Since we've been using it for six months, we'll hopefully sit down this weekend and crunch some numbers, to see what we really spend in our budget categories, and adjust accordingly. In my mind, budgets are living documents rather than rigid ones, and can and should be adjusted to reflect reality. Tools like Mint are useful in tracking how 'reality' is matching my budget on paper.