So! We want to move to Maine. The first step is to get our finances back on track. We have a lot of work to do.
A. Lot. Of. Work.
A two-year timeline is kind of imperative, as we’re starting almost from zero. While we’ve been getting along okay financially, we haven’t had a decent safety net in some time. This became especially evident in February when we did our taxes and discovered we owed money due to my freelance work last year. (Note to my readers: if you do enough freelance work that you’re going to report it on your taxes, do yourself a huge favor and save 20% of every payment. No, seriously, do it. Better to have it and not need it than need it and not have it.) Then our car’s radiator broke and needed to be fixed RIGHT AT THAT MOMENT. Any savings we had went right into the car repairs, thus wiping out our meager emergency fund.
Without even that money to fall back on, I immediately had to create a budget for the following eight weeks in order to ensure we paid everything AND managed to pay our taxes on time. I accounted for nearly every dollar we had coming in and going out. If I was Kristin, I would already have had a budget, but I guess this was the catalyst for us to finally put one together.
I’ve made budgets before, some detailed and some not so detailed. But I have never had a reason to keep following them. Something always came up to derail the plan, or I lost track of the numbers and never recovered. One of the biggest issues, though, was that we never had a driving force behind saving money. ”Emergency fund” or “someday we would like some extra money” just doesn’t have an urgency to it, or a focus.
When we moved in 2009, we earned less money than we do now and our credit was in worse shape. We decided in February that year that it was time to move, as our rent had finally approached the amount of a mortgage, and by July we closed on the condo. In less than 5 months, we scraped together a tiny down payment, got approved for financing, hunted for houses, and bought our condo. I’d also like to point out that while all that was going on, we planned and paid for a trip to San Jose for my brother’s wedding, including plane tickets out and cross-country train tickets back. We had almost no time to improve our credit scores. I’m embarrassed to say that my personal credit score wasn’t even high enough to be considered. We had to go on my husband’s alone – good thing he was much better about his finances when he was younger.
This time, I want things to be different. I want them to be better. That means no more bills, no more debt, no more late payments. We can’t afford to let things slide. By the end of December, I want us to be debt-free with the exception of our mortgage and my student loan. We’ll have a fully restored emergency fund and we should even have some savings above and beyond that. By January of 2015, I want to be able to focus on saving. By January of 2016, we should have enough for a more respectable down payment. By June of 2016, we should be ready to move.
I created an Excel spreadsheet to track all of our incoming and outgoing money. Because my freelance income is highly irregular, I don’t actually plan for it in the budget. I only track the income from my day job, which is much more predictable. I did, however, decide that any freelance income is to be pure savings. It’s a bonus, not something to be squandered. (Of course, the savings is only AFTER I put aside the 20% I mentioned so that next year’s taxes won’t be a burden!)
Once I got past the initial 8-week timeline to pay the taxes, I started to see a pattern emerging from the numbers. Most of my bills can be paid on days that I select, so I grouped them toward the end of the month. I put my mortgage and condo fees to the middle of the month, and left the first week or two of the month fairly open. My husband and I get paid on a biweekly basis, but our checks come in on alternating weeks. This is REALLY lucky for us! It means we always have something coming in every Friday. I have a lot more flexibility in how and when I pay bills because of this schedule.
From the end of February to the end of April, we operated at a “zero fun money” level. Aside from things that we’d already set up (which were put in the budget), neither of us has been allowed to spend a dime on fun stuff like dining out, movies, or games. We’ve employed the gift cards we got for Christmas whenever we wanted to go out (such as going to see Captain America – so glad we had that Cinemark gift card!). I augmented our grocery budget with bottle returns and gift cards as well. We even chose not to attend some parties and events in order to save on gas. It paid off – we managed to squeak by with our taxes and everything else.
One thing that we’ve been pretty bad about is talking about money together. My husband generally leaves the household finances to me, which is fine, but we end up with a disconnect about how much we have and how much we owe. Since I made the budget, we now take an hour or so a couple of times a week to check in about how we’re doing.
Starting in May, we’re instituting a new fun money allowance as well as a strict grocery allowance. I’m trying out a few tactics that Kristin recommended, things like withdrawing the entire grocery budget in cash and spending ONLY that much. Once the cash is gone, that’s it. We have to make the budget work within the limit, which means being smarter about how and where we spend the money. The fun money allowance is the first thing to be cut if we need to find money somewhere, and it covers ALL fun spending, from my beloved frou-frou coffees to our own portions of food when we dine out to the Kickstarter campaigns my husband loves to fund. Next we can shrink the grocery budget if needed, since that, too, is flexible, and in a pinch we can eat from the pantry rather than buying fresh foods.
After cleaning the house so intensely in January and February, I know that I can make a plan work if I keep myself accountable and have a clear goal in mind. A less expensive house in a new state is a pretty good goal. Every day I do something to keep myself focused – I work on the budget spreadsheet, look at house listings (which has the bonus of helping me learn about the market in Maine), or simply talk to someone about the plan. I make lists of things we’ll need to do before moving, things we want or need when we move, and possible costs if we need to buy things like appliances. I know that every minute I spend in research and planning will help us buy a better home.