Taking control of our finances

by Erika Torres

We have big plans for our finances in 2012. I even emailed Eric the other day and wrote: “I’m going to make 2012 my financial b*tch.”

It’s a lot easier to think big when you know you’ll have two incomes for the entire year. It’s time to get serious.

Where our Finances stand

As of Dec. 29th–the last day of our 2011 fiscal year–this is where our finances stood:

Emergency Fund: $1,000.00
Travel Fund (aka Side Hustle Income): $1,576.68
Bentley Savings: $1
Car Insurance, Registration Savings: $1
Gifts Savings: $1
Christmas Savings: $1
Roth IRA: $0

I opened those last 5 accounts just last week to help us save each month for long-term expenses. (FYI–Bentley is our dog, not some flashy car we’re saving for).

Seeing our emergency fund go from $8,000+ to $1,000 has been hard. Granted, I did pay off my car but I’m ready to be a two-income family again.

Savings Plan

This is what I plan to contribute toward our savings accounts every month:

Emergency Fund: $500 (beginning April 1)
Travel Fund: ALL Side Hustle Income
Bentley: $50
Car Insurance, Registration: $200
Gifts: $50
Christmas: $75
Roth IRA (Erika): $100
Roth IRA (Eric): $100

By the end of the year, I would like our finances to look like this:

Emergency Fund: $5,000
Travel Fund: $5,000 total contributions minus whatever was spent on actual traveling
Bentley: $600 in contributions
Car Insurance, Registration: $2,400 in contributions
Gifts: $600
Christmas: $900
Roth IRA (Erika): $1200
Roth IRA (Eric): $1200

My hope is to continue to double our Roth contributions year over year until we max them out.

The Debt

Erika Amex: $285.67
Citi Card: $2,128.41
Student Loan #1: $9,101.51
Student Loan #2: $11,432.70
Student Loan #3: $2,050.00

So apparently there is a third student loan (0% interest) that I completely forgot about it until I was sent a bill in the mail. Great.

Debt Repayment Plan

The Citi Card is 0% interest until April 1, so we need to pay it off by then. I am holding off on Emergency Fund contributions until this card is paid off.

Debt Goals
Erika Amex Paid off by Jan. 31 Done, I paid it off last week!
Citi Card Paid Off by March 31
Student Loans under $19,000 by the end of the year

Managing the budget

I created a budget template to track all our finances this year. Unlike last year when the budget was based on months, this year our budget is based on paycheck cycles, which makes sense, right?

How we plan to take control of our finances

We plan to continue to live off my income and use Eric’s salary mostly for savings and debt repayment. Eric is getting paid on Monday–his first paycheck since August 2011!! To say I am thrilled, would be a major understatement. I have already allocated his entire paycheck to try and get us out of the red.

If we plan to save and pay off loans, this also means that we may need to push back our hope of moving out of the shack, which will easily increase our living expenses by at least $500 at the bare minimum. This is something we will need to re-evaluate as the year goes on.

How do you plan on taking control of your finances in 2012?

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I’m curious, how do you denote where certain aspects of your savings go? Do you have multiple savings accounts? Other than the Roth IRA of course. I’m trying to sort out the same type of savings situation for us as well right now!

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To take control of my own finances, I hope to make at least as much working for myself as I did at my day job. 🙂

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Looks like a solid plan! I’m working this year on getting a full-time job now that I’ve finished my credential. With my side income eventually becoming my “retirement” savings. Until then, my plan is to save $500 per month. Need…more…motivation!

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Ana January 22, 2012 - 5:40 pm

I love the idea of saving an exact amount of money for things like Christmas gifts every month.

Great plan! Mine is very basic. I basically said : this is what we’ll save for month and that’ll be for everything (travel, presents, emergency…)

Daisy January 20, 2012 - 6:06 am

I need to take a page out of your book and do a plan like this, because now that I’ve taken on MORE debt with my car, I’m getting a little panicky. Good luck!

Brittney January 19, 2012 - 7:38 pm

I LOVE this! I feel the same way, this year we’re both fully employed and we are going to knock out our student loan debts. It’s going to be a little tricky with me on maternity leave but I think we’ve got a plan. Good luck to you guys!!

Kevin @ DebtEye January 19, 2012 - 2:02 pm

Keep up the great work, it looks do-able. I think everyone here is going to keep you accountable!

Jane January 19, 2012 - 7:16 am

Very happy for you! I know what it’s like to live on one income plus I raised a child on my own too. Like you I paid a lot less for housing – I’m not worried about keeping up with the Jonses. My daughter and I have lived in a townhouse condo for 17 years (which I now OWN) and the lower costs involved meant she could have a highland dancing career as she grew up including travel all over the country. It’s all about priorities. I like your savings and debt goals and am thrilled you’ll have two incomes to do it on. AND the fact that you’re used to living on ONE income will make meeting those goals easier!

Emily January 18, 2012 - 7:10 pm

Fantastic! I don’t know what your student loan interest rates are, but have you heard of the Special Direct Loan Consolidation Program. http://studentaid.ed.gov/PORTALSWebApp/students/english/specialconsolidation.jsp. You have to sign up by June. I am trying to decided if this will save my family any money. Good luck!

Lily January 18, 2012 - 6:40 pm

You are on a roll! Thanks for being so honest about all of your debts and expenses. It is really encouraging to see a real, live person making the smart–and tough–choices. Keep it up, your goals and progress are motivating.

Renee January 18, 2012 - 5:21 pm

Cheers! Here is to making 2012 our “financial biatch’ 🙂 Love it!

Megg January 18, 2012 - 2:38 pm

Great plan!
For most of last year we were putting away $500 a month to save for a trip to Hawaii this February. Since we completed this goal 2 months early (yay!) we’re putting the whole amount towards our credit cards, along with, sigh, my husband’s yearly bonus. Still! I’m proud of us for living around that $500 and saving so much!

Teacher Girl January 18, 2012 - 1:50 pm

Wow! What a great plan! =)

Ashley January 18, 2012 - 1:20 pm

Okay, I just love that cat with the whip! You have a super challenging goal for the year, but I know you can do it!

Tushar@EverythingFinance January 18, 2012 - 11:50 am

It helps to plan it out to the last detail. And now that you have announced it on your blog, you have to do it 🙂

A Super Girl January 18, 2012 - 6:42 am

Can you share your budget spreadsheet and how you divide everything up and track expenses without going insane. You probably have before, so maybe just point me in the right direction 🙂

The FI and I are working to combine finances and would like to be better about tracking expenses and sticking to some amount of a budget. He’s an accountant and we’re still having a hard time with how to actually set it up. Is it as simple as a spreadsheet with different categories that you manually enter your expenses in. Or have you created something fancier that I can steal 😉 ?

Michelle January 18, 2012 - 6:32 am

What a great savings plan! I think it’s great to continue to live off 1 salary, we plan on doing that soon.

jobo January 18, 2012 - 6:30 am

These are great goals, yet again! When you are a two income household again, can you imagine what you can accomplish then?? So great!


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