photo credit: pthread1981
Happy 4th of July!
The 4th has always been one of my favorite holidays. The food, the swimming, the heat, the food, the fireworks, the late night, the food. Did I mention the food?
We made a yummy BBQ (more on that tomorrow) and now everyone is resting so we can head out to fireworks later.
Having young kids means we don’t often stay out late, this is the first year we’re all going. I’m super excited. Maybe I’ll get some good pictures if I can stop oohing and ahhing long enough.
Happy Independence Day!
July is No Spend Month in our house.
The premise (borrowed gratefully from Rachel at Small Notebook) is that you pay all your bills, and set a limit on spending for the remainder of your expenses. If you don’t know what you spend in a typical month, try tracking your expenses at Wesabe. You can see the last few month’s data and come up with a game plan.
Rachel’s family spends $250 for the month on everything they need. I wish that we could spend that little! We have more expenses that tend to be more expensive, so I’m setting out limit at $800 for the month. You should set your limit based on your typical expenses minus a bit. For example if you normally spend $500 a month at the grocery store try cutting it back to $400. (most US families waste 25% of their food anyway!)
This breaks down to:
$450 for groceries
$70 on pets
$80 on gas
$100 on allowances ($50 for the kids, and $25 each for us)
$100 misc. (household repairs usually)
Hopefully we’ll stick to it!
Will you join me? If so, share how much you are budgeting and make sure to check back in next month for my results.
Kelly
We returned late last night from our mini vacation to San Francisco. I spent the entire time offline, enjoying the views, the sightseeing, and the company of my hubby.
It was extraordinarily relaxing.
I’m taking the rest of the week off because I have both a mountain of laundry (we filled a suitcase full of dirty clothes), a lawn that needs mowing, and some children who need my undivided attention for the next few days.
My parents rocked the babysitting (big thanks to them!), and thankfully they and the kids survived.
I’ll leave you with a photo of one of my favorite places we visited on vacation, Alcatraz Island. Beautiful views, amazing history, and chilling stories. Just make sure you leave before the last ferry leaves for the night!
Kelly
If you follow financial guru Suze Orman, or read financial news it’s likely you’ve seen the big turnaround Suze made this week. If you haven’t here is an excerpt from her article on Oprah.com.
“If you have an unpaid credit card balance and not much saved up in emergency savings, I need you to listen up. My advice has changed.
I want you to only pay the minimum due on your credit card balance, and instead, make it your top priority to build as much of an emergency cash fund as you can.”
Suze goes on to say that she wants you to save 8 months worth of emergency expenses. Remember we’re not talking about your current budget, we’re talking about bare bones living. you wouldn’t be paying for Internet, cable, cell service, etc.
Her rationale is that as credit tightens you may end up paying off cards (or paying them down) only to have them closed or the limits cut leaving you with no recourse should you lose your job.
In my opinion, each person or family will have to assess their situation and figure out what works and makes sense for you. If you are in an area or field where layoffs are happening then her advice is definitely spot-on.
Being in a position where we’re relatively secure, paying off debt is still our number one priority. We have a mini emergency fund, and will continue to add to it with snowflakes over the course of the year, but our main focus is on paying off debt, and not incurring more debt by consciously spending what we have.
Another consideration for me is how much those pesky monthly minimum payments are. Some people report their minimum monthly payment has gone up (one of ours has doubled), so by only paying minimum payments you will have to save extra in your emergency fund.
If the debt you carry is a small amount it may be worth paying it off over the next month or two and then focusing on emergency savings. If you don’t carry debt you may be struggling with how much to save versus how much to put towards retirement and other goals.
The key is to just get started doing something. A good place to start is to figure out what your bare bones living expenses are. I love Rainy Day Pennies’ mindmaps for budget planning. Cathy has one for regular income, and one in case she were to lose her income. This is definitely something to consider doing before you start panicking about how long it will take you to save 8 months of expenses.
You can also start cutting expenses now, so you have more money to save or pay down debt. See my previous post on cutting expenses. You may also consider adding more income by taking a 2nd job, selling things you no longer need, or finding some other way to use your skills. I would even consider giving yourself a raise as an option to help give yourself a raise.
Have you changed your financial goals due to the grim financial/unemployment news, or advice like Suze’s?
Kelly
Trent at The Simple Dollar covered this topic today. You can see his take on Suze’s advice here.
