Tag Archives: goals

I’ve got a new attitude

This morning, like every other morning, my alarm went off at 6 a.m. Since daylight saving time began, my morning wake up call happens before the sun rises. Some mornings, it feels like I’m waking up in the middle of the night.

I’ve been getting up at 6 a.m. for the past couple weeks to work out for 30 minutes, but I don’t have to be at work until 8:30. I lay in bed for a few minutes, and I found myself considering staying there for another hour.

What finally motivated me was a compromise. The thought of getting through my whole workout was overwhelming, but that didn’t mean I should skip it entirely. I made a bargain with myself — in exchange for getting up and making it to the gym, I’d shave 10 minutes off my normal workout.

My first thought this morning was that it had to be all or nothing. Either I’d get out of bed and make it through my whole workout, or skip it and stay in bed until 7 a.m. It didn’t occur to me right away that it’s okay to compromise, and it’s okay to do only what you can do right now.

As I pushed myself through my workout, I started thinking about how often the all or nothing mentality interferes with my diet and exercise — and my finances. When a surprise expense forces me to set aside money in the budget that normally goes to something else, it feels like my goals are shot for the month. If I can’t send the usual amount to savings and debt, then I’ve failed.

When I convince myself I’ve failed, then I start to lose the motivation to do it at all.

If I didn’t make it through a 30-minute workout this morning, then I failed. When I start thinking that way, why even push myself to get out of bed at all? If I’m failing either way, I might as well get an extra hour of sleep.

Instead of all or nothing, I’m going to start just giving my all. If a surprise expense reduces the amount that I can send to debt and savings, then I’m going to happily send what I can and praise myself for coming this far. If I can only make it through 20 minutes on the treadmill, then I’m going to be proud that I still got out of bed an hour early and made it to the gym.

Goals are important, and I’m going to continue setting them for myself and striving to reach them. But I think I’ve been missing the point for some time now. Instead of setting a hard and fast rule and beating myself up if I can’t reach it, I’m going to set broader goals and work to do a little more each time.

I’ve realized that my rigid goals are limiting me. If I’m just pushing myself to save a certain amount every month or make it through 30 minutes at the gym, then I’m less likely to do more than that.

Instead of setting a goal to work out for 30 minutes every single day, my new goal is to go to the gym every morning and work out as long as I can. Instead of saving the same amount every month, I’m going to look at my budget, set a number based on my expenses for the month, and make sure I’m saving as much as possible.

Hopefully, this new positive attitude will motivate me to exceed my previous goals. Most importantly, I won’t feel like a failure every time I hit a setback.

Planning a frugal European vacation

eiffel-towerLast weekend during one of our long talks, Tony and I ended up discussing the things we’d like to do before we have children. At the top of both of our lists was a trip to Europe.

There are a lot of things we’d like to do someday, but international travel is the only one we can’t imagine doing with a baby.

Ever since we met, we’ve talked about traveling to Europe while we’re young — one last big trip before we settle down and start a family. When we first started planning our wedding, we briefly considered a European honeymoon. Our budget and my inability to find a full time job after we moved quickly nixed that plan. But when we decided to take a brief (and frugal) trip to Washington D.C. instead, we told ourselves that we’d plan for a European vacation the summer after he graduated in 2010.

When we committed to becoming debt free, I shelved this lofty dream. “We can’t afford anything like that until we’re debt-free,” I told myself.

But now that we’re credit card debt free and making serious plans for a family, I’ve realized something — we’ll be paying our student loan debt for a long time. No matter how aggressive we are, we’ll be paying those debts for years after we’ve had children. I’ve come to terms with that, and I’m ok with it.

We can’t wait until we’re completely debt-free to live our lives, though. My first plan was to be 100% debt-free before having children, but there’s no way I’m waiting 10-15 years to start a family. I’ve decided to add the dream of a European vacation to that list, too. We don’t want to wait until retirement to take the trip we’ve always dreamed of taking.

So we’ve set a new goal for ourselves: we want to plan a trip to London and Paris for May 2010. If it works out, we’ll be spending our second wedding anniversary in Paris! :)

That doesn’t mean we’re sacrificing our other goals, though. We’re not going to add to our debt for this trip or stop working toward our goal to be debt-free. After some planning and discussing, here’s our rough plan:

  • We’ll pay for the trip in cash.
  • We’ll be as frugal as possible in planning the trip, and plan ahead to make sure we’re getting the best deal possible on airfare, hotels, and other expenses.
  • Our emergency fund is still our top saving priority, so any saving for Europe will start after we’ve fully funded it.
  • We’ll continue to pay a little extra on our student loans to cut the total time we’ll be repaying. After the trip, student loans will be our top priority.
  • All extra money (including gifts and extra income) will go toward emergency and vacation savings.
  • We’ll cut spending in other areas to free up money for savings and debt.

I did some preliminary research and determined that we’ll need to save about $6,000 for the trip. Including our emergency fund goal, that means we’ll have to save about $12,000 in 16 months.

I realize this plan will delay a lot of our other goals — including being debt-free and buying a house. We’ve considered all of this in our decision, and I can’t imagine a scenario in which we’ll regret the trip (as long as it doesn’t add to our debt).

I’m more excited about this goal than I’ve been in a long time, and I’m feeling good about our decision. As excited as I’ve been about paying debt, it can be so overwhelming and depressing to devote every extra penny to what seems like an endless black hole of debt. Adding an exciting goal to our plans has given me the lift I needed. I can’t wait to get started!

photo by franz88

A difficult decision about student loan repayment

Once we became credit card debt free, we had an extra $200 a month available. We decided to put some of that money toward retirement savings every month, so we only have $100 left to work into the budget.

Yesterday, Tony and I looked at our budget, and talked about where we’d like to put the money.

We have a huge amount of student loan debt (about $60,000 all told). My plan has always been to pay off credit card debt first, and then move on to my private student loans. Private loans account for about 1/3 of our student loan debt, but they carry about a 7% average interest rate. We also have about $40,000 in federal student loans with a much lower interest rate (about 4%).

When I think about all of that debt, I feel so overwhelmed. To make it easier on myself, I’m focusing on one loan at a time — for now the private loans (about $22,600).

I plugged some numbers into a loan repayment calculator to figure out some scenarios. The numbers are disappointing.

  • If we continue paying our current amount ($200 a month), it will take us 10 years to pay off my private loans.
  • If we put the extra $100 toward student loan debt (my original plan), it will be 8 years before the private loans are paid off.
  • Even if we could come up with $500 a month to put toward the private loans alone (while continuing to pay the minimum payment on federal loans), it would take about 4 and a half years to pay off just the private loans. Then we’d still have to pay off $40,000 in federal loans.

“Don’t worry,” people tell me. “Your income will go up.”

The problem is, it probably won’t. Right now I work full time, and Tony makes the equivalent of a part-time salary teaching. Sometime after he graduates, we want to have children. At that point, our roles will switch. He’ll bring in a full time salary, while I work part time (hopefully from home). So we’re looking at quite a while before we see a significant increase in our income.

Tony and I had a long talk about our short- and long-term goals. As much as I want to be debt free (and believe me, I really want to be debt free), at this point in our lives with our limited income and the economy a wreck, my gut is telling me that saving is more important.

Once we’re settled somewhere that we know we want to stay long term — and we have an emergency fund in place — our focus will shift. At that point, we’ll be able to put everything we have into debt. But for now, I want to have as much money stashed as possible.

So we made the decision to continue making minimum payments on student loans for the next year and a half while we beef up our savings. After that, we’ll reassess our financial situation. Hopefully we’ll have enough in savings that we can hold off on saving and shift our focus to debt.

I’m disappointed that we can’t do both, but I’m also confident in our decision. When I look at the difference an extra $100 a month will make in our savings, I feel calm and reassured. I don’t feel that same calm when I see the minor change in our debt that would result from paying an extra $100 a month on it for the next 18 months.

I also don’t regret putting $100 toward retirement every month. If we don’t plan for our future, no one else will. Putting $100 away for retirement every month makes me feel incredibly empowered.

The important thing is that we’re doing what works for us. The best part? Liquid savings is, well, liquid. If we change our minds, we can always pull that money out of savings and put it toward student loans.

When is the right time to start saving for retirement?

Obviously, the answer is as soon as possible. But it’s hard to know when it’s time to really buckle down when you’re young and in debt.

Tony and I are 24 and 25, and I had hoped to start saving for retirement this year. But the more I look at our finances and goals, the more I hesitate to start now.

As a grad student, Tony obviously doesn’t have access to an employer-based retirement fund. Neither do I in my current job. So any retirement saving we do at this point will be on our own.

We’d like to open a Roth IRA and start saving a little every month, even if it’s just $50 each. We can always increase that amount later. But then I start thinking about our debt and our likely cross country move in less than two years and all of our other goals, and I can’t help but feel like that money would be better spent on debt and liquid savings at this point in our lives.

I know that saving for retirement is essential, especially for my generation. But I feel like 20-somethings in debt should focus more on becoming debt free. Otherwise, we could wind up paying student loan debt until it’s time to send our own kids to college.

Even though our income is relatively low, I almost never feel deprived. This is one area where I really feel the constraint of our low income, though. After our bills are paid and our necessities are covered, there just isn’t enough left over to save for emergencies, save for our future, and pay down debt. If I split up the extra money between the three, I feel like we’re not making any headway on any of them. But if I concentrate my efforts on one or two, then I feel guilty for foregoing the third.

My fear is that it will only get harder, especially since we plan to live on one income. If we can’t find room in the budget for retirement savings now, how we will be able to once we increase our financial responsibilities and have children?

I trust I’m not the only 20-something in this predicament.

When did you start saving for retirement? Is it crazy for me to wait another couple years?

Finally home & ready for a new year

We had an absolutely wonderful time visiting our family and friends. After a fun, relaxing vacation, we’re back home and ready to start reaching for some new goals.

As much as I loved seeing everyone, the best part of our trip was the time we spent together. We spent a total of 34 hours in the car together driving. It was plenty of time to talk about our priorities, our goals, and what we hope to achieve in the coming year(s).

I hadn’t realized it, but the regular hustle and  bustle of daily life was leaving us very little time to talk to one another, reconnect, and make plans. We’ve only been married 7 months, but we’d already fallen into a routine that didn’t include much time for philosophical heart to hearts.

If you haven’t done it in a while, I really suggest spending some time with your spouse, one on one with no distractions, to talk about your plans, goals, and future together. If you have a date night coming up, spend it in a quiet place talking instead of at a movie or a loud restaurant.

It’s so easy to get caught up in talking about day-to-day life — jobs, kids, bills, etc. Tony and I like to occasionally have conversations like the ones we had in our first months as a couple when we had few responsibilities — long, windy philosophical discussions about our relationship, the future, and other things we don’t get a chance to discuss during the busy work week. These conversations help us look beyond what’s happening in our current daily lives, set new goals, keep us working toward achieving them, and leave us feeling like two teenagers in love with a world of possibilities ahead of us. :)

We talked about our careers, our finances, and our plans for after he graduates in 18 months. It was a lot of fun, and now we’re starting the new year with a renewed sense of purpose and a clear path to achieve our goals.

With just 18 short months until the next chapter of our lives, we’re deciding now where life will take us next. Hopefully there are big changes ahead. Don’t you just love the new year?

Resolutions for another frugal year

I’m so excited about the year ahead! For the first time, I feel like I’m looking ahead with a clear set of goals and the resolve to actually achieve them.

In the interest of keeping myself honest, here’s what I hope to accomplish in the coming year:

  • Finish building our 6-month emergency fund. We’re a third of the way there now, but I hope to finish it by the end of the year.
  • Spend less than our budget. We’re doing a lot better than we used to, but we continue to go over budget by $50-$100 every month. Technically we’re not spending more than we make because we save at least $300 a month, but we’re cutting down our actual net savings by going over budget each month.
  • Make a dent in our student loan debt. Now that we’re credit card debt free, I want to really crack down on our spending and send every extra penny to our student loans so we can be completely debt free sooner.
  • Learn more at my job and grow my skill set. Someday when we have children, I’d like to work from home, so it’s important that I learn as much as I can now to build my credentials and qualifications.
  • Enjoy the present, and try to stop looking ahead to the next big thing. This is a constant work in progress for me. Planning ahead is essential to reaching long term goals, but sometimes my constant planning makes me lose sight of the present. I need to find a balance between appreciating what’s now and planning for the future.

What are your resolutions for the new year?

Merry Christmas!


Photo by sideshow blues

I hope you’re all enjoying a safe and happy holiday. Now is the perfect time to take a step back and think about all the people and things that are truly important in your life.

Here’s what I’m thankful for this holiday season:

  • Seven months of marriage to my wonderful husband, who will be with me every step of the way for the rest of our lives. He’s been incredibly supportive and willing to hop on board the frugal train from the beginning. I’m so thankful for our shared goals and his willingness to make sacrifices to help us reach them.
  • My parents, my sisters, their husbands, and my healthy nieces and nephews. I don’t see them as much as I’d like, but I’m thankful for their well being and their presence in my life.
  • My new in-laws who accepted me completely as part of their family long before it was ever official and have provided us with endless support and love.
  • A job that I enjoy (most days) where I’m learning a million new things every day.
  • An unexpected career in a field I didn’t know existed before I was hired at my job, but that I’m so excited to be a part of now.
  • A steady paycheck that allows me to pay all of my bills on time, put food on the table, and save for the future.
  • Frugality and budgeting. Without it, I would still be financially lost and overwhelmed with no goals and no plan.
  • The people who read my blog. This blog has been such a huge part of our financial journey so far. I truly love blogging, and I’m thankful to the people who take the time to read it. Without you, I’d be talking to myself. :)
  • The coming year and its endless possibilities.

I hope you’re all taking the time to count your blessings this holiday season. Merry Christmas!

Tempted by the end-of-year bonus

I wasn’t expecting to receive a bonus from my employer this year. We’re in a recession, after all. So imagine my surprise when I received a bonus of about a week and a half’s pay. That’s quite a lot of money considering how little we spend.

I find that extra money is a lot easier to control when it’s expected. For instance, we know we’ll receive a tax refund this year. We’ve been anticipating it all year, and we already know where it’s going (savings).

However, when someone hands you a check out of nowhere, it can be tempting to blow it. After all, I was doing fine 5 minutes ago before I received the money. It’s not like I’ll miss it if I just spend it, right?

I have a feeling that no matter how committed I am to frugality, I’ll always have these moments of temptation. In that moment of weakness after I looked at the amount on the check, I started thinking about new furniture, a new TV, and a thousand little, inexpensive things I could use this money to buy. It would be a lot of fun to just blow this money. But then it would be gone, I wouldn’t be any closer to reaching my goals, and I’d regret it.

I quickly reminded myself that we’re in debt, and we’re nowhere near reaching our financial goals. Blowing money on things we don’t need is a good way to keep ourselves from reaching those goals.

So what is the practical side of me considering using the money on? Here are some thoughts I’ve had:

Summer fund

Two months of the year, Tony doesn’t receive a paycheck for teaching. He’ll find a part time job, but chances are it won’t pay as much as his monthly stipend. Last year we adjusted our budget and tightened things up to accommodate for our lower income. I’m considering throwing my bonus into a savings account to help us a little during those summer months of lower income.

Emergency fund

Our emergency fund is about 1/3 of the amount we want. This money could help us beef it up a little.

Debt

This is the least appealing option. After all, my bonus is dwarfed by our $60,000 in student loan debt. However, every little bit does help.

Retirement?

This is a tough one. Tony and I are 24 and 25, and neither of us has a retirement account. We’ve wanted to open a Roth IRA for some time, but it has taken a back seat to debt and savings. I’m considering using this bonus to jumpstart our retirement saving. While I don’t think it’s enough to open an account (I think I need at least $3,000 for that, but I’m not sure), it could at least get us started until we have enough saved to transfer it to a Roth IRA.

While I really want to get started on retirement saving, I’m hesitant since we are considering moving in a year and a half. We really need all of our savings to be liquid so we can use some of it for the move if that’s what we decide to do. So I’m leaning toward putting off retirement savings for another two years until we’re settled down somewhere.

I could use some advice. What would you do?

Starting the new year credit card free!


photo by b.franchina

This morning I sent my final payment to American Express. We’re officially credit card debt free!! In the past year, we’ve paid off almost $5,000 in credit card debt. I’m pretty proud considering how low our income was for a big part of the year. :)

Unfortunately, we still have quite a ways to go before we’re totally debt free — we have a combined total of about $60,000 in student loan debt. :( But we’re a lot better off than we were a year ago. Now I know what works, and I can apply the same principles to our student loan debt.

I’m hoping to have my $20,000 private loan paid off in 2 years. It’s a pretty lofty goal considering it took us a year to pay off less than $5,000 in credit card debt, but we have more income now and we’re getting better at frugal living.

The student loan debt is overwhelming, but I keep reminding myself that I once felt that way about my credit card debt. High balances and high interest rates made it feel impossible to get ahead. But I just kept sending those payments every month, watching the balance slowly decrease until it was manageable.

I’m looking forward to getting those student loans out of my life using the same method.