Tag Archives: savings

Why every couple needs a prenuptial agreement

This morning, I read this New York Times article on the importance of financial common ground in marriage. These are basic tips that we all know, but it got me thinking about the underlying theme of basic communication.The article discusses the importance of communication during marriage, but the groundwork for good financial communication begins before the wedding.

I am often surprised at how little my friends share financial information with their significant others. I’m not suggesting that you swap credit scores on the first date, but full financial disclosure is an essential part of engagement. It was easy for Tony and me to blend our finances because we started with so little; it’s more complicated for couples who have already acquired independent assets.

Drawing up a prenuptial agreement before marriage can help facilitate these discussions. A common misconception is that prenups are only for couples with huge amounts of wealth, or that their purpose is to protect one spouse’s assets from the other in the event of a divorce. In reality, a prenup outlines what will happen to all assets if you divorce, even normal assets like the equity in a home that you bought before you met your spouse.

The prenup has gotten a really bad rap, but it shouldn’t be viewed as a way to keep your spouse from getting your money if you divorce. If you come into the marriage with individual assets, a legal document that says what belonged to whom before the marriage and how shared assets will be distributed makes things clearer.

All couples need a “prenup.” It doesn’t necessarily have to be a formal legal document that distributes wealth. For young couples who have no assets, it can simply be a verbal agreement about how you plan to manage your finances.

A prenup allows you to lay it all out there before you’re married, take stock of your individual and shared assets and debts, and have some very important discussions about money that many financially independent adults are uncomfortable having with their partners. Through these money discussions, you’ll discover common ground from which you can build your financial goals and philosophies.

Tony and I agree that money will be an open topic in our family, not just with each other but also with our children. There will be no secrecy about our budget or how we manage our money. I want them to understand that money management takes hard work, and even a grown-up salary isn’t a limitless fortune.

We also share a mutual desire for security above possessions. We don’t want to spend our income, no matter how much we have, on a lot of “stuff.” Our frugality began out of necessity, but we plan to continue living frugally even as our income increases. We will always drive inexpensive cars, cut corners where we can, and live below our means. As our income increases, the only difference in our lifestyle will be that we’ll have more money to distribute in our savings accounts for emergencies, retirement, and education for our children.

We agreed that I’ll continue to work full-time until he finishes graduate school, and then he’ll take over the responsibility of earning our income so I can stay home with our children for a few years.

Finally, we agreed that once we got married, our assets and debts became shared. This may not work for everyone; for instance, your prenup may dictate that you’re not responsible for your fiance’s credit card debt. Tony and I decided it would be easier for us to blend everything and work as a team to pay down debt and continue saving together. The important thing to is figure out what you’re comfortable with before you tie the knot.

We moved in together shortly after we got engaged, and we opened a joint bank account. The lines between his and hers were immediately blurred. Communication eased the transition tremendously, and we’ve had no problems with this system.

Drawing up a verbal “prenup” made it much easier for us to budget, manage our money, and plan our future. We frequently remind each other of our goals during moments of financial weakness (i.e. the clearance cookware that nearly blew our budget last month). These shared goals have strengthened our bond.

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Works for Me: Salon haircare products for cheap

For this week’s Works for Me Wednesday, I’m going to go ahead and disagree with Shannon at Rocks in my Dryer who says salon haircare products are a rip-off.

For people like me with extremely dry, unmanageable naturally curly hair, salon products can be a lifesaver (and a time saver). Many people don’t notice a difference between salon products and cheaper brands, but when I used Suave my hair was a big mess. I could barely get a comb through it, and it was so brittle it crunched when I brushed it. The salon products leave my hair healthier and easier to manage.

So how can I afford salon products on a frugal budget? It’s easier than you think.

I absolutely love Paul Mitchell Super Strong shampoo and conditioner, which runs about $18 a bottle for about 10 ounces in most salons. That’s $1.80 an ounce. Yikes.

I’ve never paid $18 for a little bottle. Many salons sell sets with 1 liter (34 ounces) each of shampoo and conditioner for $26 total. At that price, I’m paying 38 cents an ounce. Much better.

Just by buying in bulk, I’m already saving $1.42 an ounce. Then I stretch my savings even further by limiting my consumption.

My hair is extremely dry (I’m talking Sahara here), so it’s actually much healthier when I only wash it a couple times a week. My sister, on the other hand, has beautiful, easy-to-manage hair. I can’t tell you how jealous I was in high school when she woke up 10 minutes before we left, jumped in the shower, and let her hair air-dry beautifully while I was up 2 hours early fussing with my daily bad hair days. If she goes longer than 24 hours without washing it, though, it starts looking oily and limp. She has to wash her hair every day, but the trade-off is she can use the cheapest shampoo and still have good results.

Most people fall somewhere in between — you might not have camel-hair like mine that can go days without water, but you probably don’t need to wash every single day. Try washing it every other day. If it still looks great the second day (and it most likely will), see if you can make it another day. Don’t wash your hair every single day unless you discover you absolutely need to. Trust me, unless you’re one of those people with extremely oily hair, you’ll discover that cutting back on washing will make a world of difference in the overall health of your hair and reduce your haircare budget dramatically.

Even though I have very thick hair, I only use a tiny dollop of shampoo and conditioner. You’d be surprised how little you need to get a good lather and get your hair clean. Experiment with this, too. Remember, you can always add more if you’re not getting enough lather, but you can’t take it off your head and put it back into the bottle if you use too much.

Using these tricks, I’m able to stretch those 1liter bottles out to about 8 months. My combined cost for shampoo and conditioner is roughly 81 cents a week or $3.25 a month.

Side note: Because my husband washes his hair every day and doesn’t care what kind of shampoo he uses, we use separate shampoos. We buy generics or whatever is free at the drugstores for him.

For those of you with no-fuss hair, getting random brands for free or next to nothing at the drug stores is certainly a better deal. But for those of you like me, there is an alternative to cheap brands that won’t break your frugal budget.

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Working an unexpected raise into the budget

Last week we found out that Tony is getting a raise for his monthly teaching assistantship stipend, which works out to about a $160 increase in our monthly income after taxes. Woo hoo!

This is particularly exciting because we weren’t expecting it at all. We thought it was a mistake when the deposit was higher than normal last week. But he called and they confirmed that yep, it’s a raise, and we can expect that amount every month from now on.

Today when we sat down to rework the budget for September, we were amazing at how much money $160 is when it’s put to work in a budget. In the past we probably would have blown that extra money and still felt strapped for cash at the end of the month. Now that we’re budgeting, this extra money will make it a lot easier for us to reach our goals.

We decided to divvy up the extra money between savings and debt. We’re putting an even $300 toward savings, which is about a $75 increase. We also upped our debt payment by $75, bringing it up to $325. We still won’t make our final credit card payment until November, but our final payment will be small.

We haven’t decided what to do with the extra $10 floating around in our budget. We might tack it on to our entertainment budget just to give us a little extra mad money every month. Snowflakes and other miscellaneous income will continue to go into our savings account to save for Tony’s tuition, our future expenses, and emergencies.

Yay for raises! We weren’t expecting to see an increase in our income so soon, but I’ll take it!

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I’m the world’s worst couponer

When I started this blog about a month ago, I also decided to adopt a new habit in addition to writing about my financial progress: clipping and using coupons.

Even though I’d been living fairly frugally for about a year, I never clipped coupons. To be honest, I doubted that they would help me much because 95% of the foods we buy are produce, meats, and other fresh foods.

When I started this blog, though, I wanted to try new approaches to saving money and try to become even more frugal. Most of the other frugal bloggers I read clip coupons, and many people suggested that I try it to reduce our grocery spending. So I’m giving it a shot.

For the past three weeks, I’ve bought a Sunday paper every week and clipped the coupons that caught my interest. I’ve also been checking out some of the printable coupon sites, but I’ve been having trouble printing at some of them because I use a Mac and Firefox. Ultimately, after fighting with it for 20 minutes, I get frustrated, decide all the frustration isn’t worth the 50 cents I’ll save, and give up.

As I suspected, most of the coupons don’t really interest me, anyway. But I have found some good ones for toiletries, cleaning supplies, and other non-food items that I buy.

For the most part, I really haven’t been impressed with the savings-to-work ratio. However, most of the deals I’ve been reading about in the frugal blog world include coupons that were clipped weeks ago, so I’m thinking it might be a few weeks before the coupons I’m clipping now really pay off.

I’ve only used a handful of the coupons I’ve clipped. However, I’m having a hard time getting into the habit of redeeming them. I keep forgetting to bring the coupons I have, or only remembering that I have a coupon at all when I see an item on sale for which I also have a coupon. The problem is, the coupon is at home and I’m in the store. Oops.

The one time I did remember my coupons, I brought a list that included the items I planned to use the coupons on. Then after browsing a while and picking up other things, I actually forgot to hand over my coupons at the register. I had to take them up to customer service to get a $1.30 refund for my coupons. How embarrassing. Looking at the $1.30 in cash that I’d saved after all that hassle also didn’t do much for my lack of enthusiasm about coupon clipping.

Despite my skepticism, I’m determined to give this a real shot before I dismiss it. I feel like I need to get organized before I can really know if coupon clipping is going to work for me.

There’s been a lot of buzz in the frugal blogs about coupon organization systems, but I honestly don’t want to spend any money on this. I am, however, looking for tips on frugal or free ways to get my coupons organized.

So I’m asking you: What methods do you use to organize your coupons?

10 tips for happy renting

As a happy renter, I’m continually amazed at the fact that people are in such a hurry to become homeowners. Don’t get me wrong, I plan to be a homeowner someday. But right now, I’m enjoying the freedom of renting.

When our air conditioner broke at the beginning of the summer and the maintenance man showed up to fix it for free, I was pretty relieved that we weren’t homeowners. And in two years when we pick up and move again, I’m sure we’ll be relieved that we don’t have to deal with selling a house in a down market.

If you know how to get what you want as a renter, it can be a happy experience for everyone involved. Here are some tips I’ve picked up after living in four different apartments in two different states for the past 5 years:

1. Stick with professional leasing companies that own multiple units or properties.

There are always exceptions to the rule, but for the most part, the majority of renter horror stories I’ve heard were from people who rented from a part-time landlord. In other words, someone who isn’t a professional leasing agent. These are people who own an extra property that they choose to rent out, but a lot of times they don’t know what they’re doing. Part-time landlords often don’t have the money to maintain the property. They collect your rent and spend it every month, but if there’s a major problem, they can’t afford to fix it for you.

Leasing companies that employ leasing professionals have the resources to maintain your home. They also employ full-time agents and trained maintenance staff to address your problems. In my opinion you’re less likely to get ripped off and more likely to get professional service. Your part-time landlord might show up with a tool box to fix your sink when he can’t afford to hire a plumber, but he probably doesn’t know what he’s doing.

2. Figure out what would make the apartment perfect for you, and ask for it before you sign the lease.

The only time that you have the upper hand in the leaser/leasee relationship is before your signature is etched permanently onto the lease. The more you appear to be reconsidering, the more your landlord is willing to give you. For example, when we were apartment hunting, we were blown away by the ridiculously high security deposits and pet deposits. By telling the landlord that we felt they were too high, 9 times out of 10 the landlord offered to lower them. One of them even offered the completely waive the $300 pet deposit. That’s a lot of money for just asking.

This also works for upgrades. Do you love the layout, but hate the carpeting? Tell the landlord, and they might throw in an upgrade as part of your lease. I’ve gotten new appliances, new bathroom and kitchen flooring, and new carpeting just by asking before the lease was signed.

You have this advantage again every year when your lease comes up for resigning. This year, we got free washer/dryer connections (an upgrade that normally costs $30/month), a free carpet cleaning, and a $5 rent increase instead of the $15/month they originally wanted to raise it. We got all of those things just by telling them we were thinking about moving and asking before we resigned.

But this is important: if they offer it, get it in writing. Landlords are notorious for making false promises, but once it’s written into the lease they’re bound by the law. If they’re not willing to put it in writing, then they’re not really willing to do it. Run away from these dishonest landlords as fast as you can, no matter how great the apartment is.

3. Look at the actual unit before you sign the lease.

In Indiana, landlords are required to show you the actual unit before you sign the lease so you can make sure it doesn’t have problems.

We came to look at apartments in North Carolina two months before we moved here, and were disappointed to find out that none of the landlords were willing to show us the actual unit or even tell us the address due to “privacy laws.” They had a well kept, decorated model that no one had ever lived in, but that isn’t really an accurate representation of the apartment you’ll be renting.

We looked at 10 different apartments, and the story was the same at each one. I’m still skeptical about the legality of this, but we were in a hurry to get a lease signed because we were only here for a weekend. Always ask if you can see the actual apartment, though.

4. Read your lease front to back before you sign.

This is easier in some states than others. In Indiana, I always signed the leases months before move-in day, and could take it home and look it over before signing. This is ideal. It gives you time to look over the lease and make an informed decision.

In North Carolina, none of the landlords were willing to let us sign a lease in advance. All of the landlords gave me the same story. In North Carolina, they told me, you have to wait until move-in day. Again, we were in a hurry, so we went with it, but I was wary. Reading the lease was a lot harder on move-in day with the landlord standing over me with keys in hand, especially with a moving truck full of our stuff in the parking lot. What were our options if we found a problem with the lease? We didn’t have many.

To be fair, most leases are pretty standard. I’ve never found anything outrageous in a lease. But it’s important to know who’s responsible for what when you enter into a legal agreement. Believe me, they’re going to hold you responsible for what’s in that lease, whether you know about it or not. Ignorance isn’t an excuse.

On the flip side, thorough reading familiarizes you with what they’re promising to do in the lease so you can hold them accountable for their end of the bargain. Do they promise to pay for an exterminator if you get a pest problem or will you be responsible? Do they offer a free carpet cleaning? Are they responsible for changing light bulbs in built-in fixtures? What kind of fee will they charge you if you violate the terms of your lease? You won’t know unless you read it.

5. Ask for what you want, and ask often.

Every time someone tells me a renter horror story, I alway ask the same questions: “Did you tell your landlord, and how many times did you ask them to fix it?” I am amazed at how many people either don’t bother to tell the landlord or give up after one try. Whenever there’s a maintenance problem with my apartment, I park myself in the landlord’s office until it’s fixed. I’m not rude or aggressive. I just make myself very visible.

When we moved into the apartment where we live now, the previous tenants had left meat in the refrigerator. The power was turned off for weeks before they landlord sent in the cleaners. The refrigerator smelled like rotten meat. For a week I fought with the landlord, who casually told me, “Try putting baking soda in it.” Um, I had scrubbed out the refrigerator 5 times with bleach and it still stunk … baking soda wasn’t cutting it. Finally, after a week of visiting the office every day, they replaced my refrigerator. But they wouldn’t have done it if I had given up.

You have to remember, most landlords are dealing with the problems of many other tenants. I’m not saying it’s the right way to do business, but they often fail to remember you, or they prioritize their to-do list based on who’s annoying them most.

They also want to spend as little as possible to keep you happy, so they won’t offer to spend money to fix your problem unless you make it clear that you’re not going anywhere.

You don’t even have to be annoying for this to work; you just have to make yourself memorable. Stop in and say hello even when you don’t have a problem. Make sure they know your name, and they’re less likely to forget about you when there’s a problem.

6. Make friends with the maintenance staff.

This one is invaluable. Every time I move into a new apartment, I keep an eye out for the maintenance staff. When I see them, I always introduce myself, and I try to chat with them whenever I can. We also make cookies for the maintenance staff during the holidays and send them a special thank you card.

Maintenance people are the hardest working people at any leasing company, and they deserve credit for their hard work. After all, they keep everything in our apartment running smoothly.

But there’s another reason. If the maintenance person knows you, he or she will be more likely to make your needs a priority when they see you on their to-do list.

We also make it a point to never blame the maintenance staff in the event of a problem. We always take it up with the landlord, even if it’s possible that it’s the maintenance man’s fault (it usually isn’t). Ticking off your maintenance staff is a sure way to end up without air conditioning for a week while they take their time about fixing it, because they’re just “too busy.”

7. Carry a renters insurance policy.

I talked extensively about this in an earlier post that you can read here. But the gist is, renters insurance covers damage to your personal property in the event of theft or disaster. Landlords rarely cover your personal property, so renters insurance is worth the money, especially since it usually costs under $20 a month.

8. Only move if it’s absolutely necessary.

Many renters are unhappy with the temporary nature of apartment living. It doesn’t have to be this way, though. First of all, if you follow these tips, I guarantee you’ll have a happy renting experience … most of the time.

If you’re considering moving at the end of your lease, do like we did and figure out what exactly you’re unhappy about with your apartment. For us it was the carpeting that was starting to look a little dingy, the lack of a washer/dryer, and the rent increase. We told our landlord why we were considering moving, and they gave us everything we wanted.

The point is, moving is very expensive after you’ve paid movers, truck rental, and ponied up for new security deposits (after losing the nonrefundable portions at your old apartment). The longer you stay in an apartment, the less you’re paying per year in nonrefundable security deposits. We saved about $1000 by staying put this summer.

That being said, it is true that some landlords really are just con artists. And the worst part is that if you’re cheated out of money or treated badly, too often your only recourse is to hire a lawyer. By the time you’ve paid your legal fees, you’ve spent more than the landlord owed you. If you’re being cheated or ignored despite your attempts to get problems fixed, it’s time to move at the end of your lease.

If you’re in a really bad situation and you feel like your only option is to break your lease, check the laws in your state. Most states require landlords to maintain the property in “habitable conditions,” and they’ll allow you to break your lease under extreme circumstances. If this is the case for you, consult local or state resources such as the Housing and Neighborhood Development department in your city to find out your options.

9. If anything breaks, report it to the landlord while you’re still a tenant.

This one can save you tons of money. Often times, renters don’t bother to report minor wear and tear or broken items in the apartment unless it’s something huge like an appliance. This is a big mistake. I’ve never had a landlord charge me to fix small problems due to normal wear and tear while I was still a tenant, but those charges have shown up on my security deposit deduction list after I moved out.

For instance, in college a particularly rowdy friend broke the latch on our door. My roommate and I were worried that we would be charged to fix it, since it was our guest that broke it. (Technically, I believed we should have been held responsible.) But we called the landlord, and they fixed it free of charge as part of our maintenance agreement.

The following year, we had some vertical blinds that broke due to normal wear and tear, and we didn’t report them. They showed up in the itemized list of deductions from our security deposit after we moved. I’m sure that if we had reported them before we moved out, they would have replaced them for free instead of charging us $50 out of the security deposit.

10. Clean up after yourself when you move out.

Many people don’t realize this, but in an apartment with normal wear and tear, the bulk of security deposit deductions usually go to cleaning fees. If your apartment isn’t up to snuff after you move out, your landlord will hire a cleaning crew that is paid by the hour. Typically, every penny of that comes out of your security deposit. (The policy on cleaning should be in your lease, so be familiar with it.)

Make sure you clean thoroughly when you move out. Don’t just dust and vacuum. Clean the windows, scrub the oven, clean out the cabinets, and scrub out the refrigerator.

Some landlords really are just con artists who will deduct from your security deposit unfairly, but an honest landlord will return your security deposit aside from a few automatic deductions like carpet cleaning or painting costs (these are also written into your lease). It’s important that you know if they automatically deduct these charges so you don’t run out and rent a carpet cleaner, do it yourself, and end up paying twice.

This may sound weird, but make sure you change every burned out light bulb. I had a friend who worked in a leasing office, and she said they deducted $5 from the security deposit for every light bulb they had to change! When I looked at the security deposit deductions from my apartment, managed by a different landlord, I found $5 charges for light bulbs. This seems extreme, but it takes very little effort and cost to change a light bulb, and it’s worth it if this is something that other landlords do.

Just say no to the birthday lunch

It’s lunch time, and I’m sitting at my desk eating last night’s leftovers alone. Don’t feel sorry for me, though. The hardest part is over.

You see, I’m a faithful brown bagger. The majority of my colleagues go out to lunch every day, but there’s usually one of two fellow brown baggers who stay behind. It’s someone different every day, but I usually have someone to eat with me. But today is someone’s birthday, so I’m eating alone.

Saying no to the birthday lunch is no easy feat. In addition to the email reminders I’ve received for the past few days, about 10 people stopped by my desk this morning to remind me. “It’s Susan’s birthday today! I know you normally bring a lunch, but you’re coming today, right?” I politely declined. “You’re not coming? Oh, come on, you can eat leftovers any day! It’s Susan’s birthday!” Through all the pressure, I stood my ground. Not easy considering the fact that birthday lunch pressure is even greater than the everyday pressure to go out to eat.

Many people just cannot fathom why I wouldn’t want to join them. They think that if they ask me several times with varying degrees of insistence, I might change my mind. Some people get downright pushy. While I appreciate the invitations, enough is enough.

Now before you label me an evil antisocial birthday hater, hear me out. I love birthdays. I’m usually the first in line to offer well wishes and sign cards. I even used to make an exception to my brown bagging rule and join my co-workers on birthdays.

Then I started noticing how much those little exceptions were costing me. It’s not just birthday lunches. It’s all the little things that aren’t a part of the budget, but you tell yourself, “Oh, just this once can’t hurt.” Then it’s the end of the month, and you’ve blown a hundred dollars on “just this once” exceptions.

Birthday lunches used to be one of those little exceptions for me. The last office birthday was two weeks ago. There is another birthday today, and another in three weeks. I know, it sounds like I’m overreacting. Surely with all the penny pinching we do, I can afford to go out to lunch to celebrate a colleague’s birthday once a month. After all, don’t I believe in making extra room in the budget for the little luxuries? But I just can’t justify spending $10 on a lunch out when I have leftovers from last night that will be wasted if I don’t eat them today. To me, that’s not a luxury; it’s just wasteful.

Going out to lunch isn’t just a waste of the $10 I would spend at the restaurant. It’s also a waste of the delicious chicken Alfredo that my husband made last night … enough to feed a family of four, and just the two of us to eat it.

It’s hard to say no, especially when people act dumbstruck. They have a point. Who doesn’t enjoy getting out of the office to enjoy a nice lunch? I know I do. But I’ve made a commitment to save money, and unnecessary restaurant meals were the first thing to go. We have plenty to eat at home, and it costs a fraction of what I would pay at a restaurant. If I don’t draw the line at this birthday, then when will I? If we don’t set limits and stick to them, then what’s the point of setting limits?

I do believe that it’s important to make room in your budget for extra luxuries that are really important to you, but lunches out just aren’t a priority for me. I’d rather use my entertainment budget to enjoy a meal out with my husband once a month or a Sunday matinee. It may sound selfish, but if you don’t make those choices and stand by them, then you’re no longer making “little exceptions”; you’re just overspending.

I don’t want to blow my budget with a hundred little exceptions this month. So I’m just saying no.

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Savings vs. debt: What’s your priority?

Most personal finance gurus agree on a wide range of money topics, but there’s one that causes continual controversy: When creating a budget, should debt or savings take precedence?

When we set our first zero-based budget using mint personal finance software,  we struggled with this one. Right now we’re focusing on paying down credit card debt. As of November we’ll be completely credit card debt free, and that money will then go toward a sizable chunk of student loan debt.

I’ve read “The Total Money Makeover” by Dave Ramsey, and I think his plan makes sense for people who are settled into a home where they plan to stay long-term. Unfortunately, that’s not the case for my husband and me.

We decided that focusing on debt isn’t the best option for us. Instead, we figured out how much money we have left over at the end of the month once all of our bills and living expenses are paid. It’s about $500. So we’re devoting $250 to our savings and $250 to student loan debt.

I know, this might not make sense to some of you. However, all but 1/3 of our student loan debt is low-interest federal loans. The interest rate for those is 4%, which isn’t much higher than the 3% interest rate on our ING savings account.

I briefly considered putting the high-interest private student loan debt before savings. If we devoted all $500 of our extra money at the end of the month to those loans, we could pay them off in 3 years. After that, if we continued to devote $500 a month to paying off the federal loans, it would take another 8 years to pay those off. Of course, I’m hoping that as our income increases, we’ll have more money to put toward debt so we’ll be able to pay them off faster.

The problem is, we need to save to pay my husband’s tuition for the next two years so we can avoid even more student loan debt. With so much to save, we really can’t afford to leave our savings alone while we get out of debt.

So for now we’re splitting the difference. Aside from the minimum payment for the federal loans, all $250 of our debt money is going toward the private student loans until they’re paid off. When those are paid off, we’ll start paying off the federal loans.

It’s not completely equal, though. At the end of the month, unexpected income or surplus money that we didn’t spend goes toward credit card debt for now. Once we’re out of credit card debt, our savings accounts will take precedence and extra income will go there.

The $250 budgeted toward student loan debt is fixed until further notice. If our income permanently increases through a raise or other source, we’ll reconfigure this plan. Once my husband is finished with school, bringing in a full salary, and we’re settled in a city where we plan to stay long-term, we’ll rent a cheap apartment and start attacking our debt. We don’t plan to start saving a down payment for a house until those student loans are out of our lives.

The point is, no solution is one size fits all. This is what works for us right now, but we’ll adapt our debt to savings ratio as our lives and plans change.

What are your thoughts? Does debt or savings come first in your budget?

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Spending money can save you money

When it’s time to tighten your budget, the first rule is “cut all unnecessary spending.” Since we started cutting expenses, there have been many “extras” that we’ve cut out. Restaurants, movies, and shopping trips for unnecessary items, to name a few.

Budgeting has changed the way that I look at my money. I’ve begun to dread extra expenses outside of our normal monthly living costs, because it forces me to renegotiate the budget to avoid overspending.

This can be a good thing. It forces me to really examine unnecessary spending and put it through a basic litmus test: “Do we really need this?”

It can also be dangerous. It makes me hesitate spending money on some things that may not be required, but could ultimately save us hundreds of dollars in the long run.

When considering whether to cut “unnecessary” expenses, it’s important to consider the future, too. Maybe you won’t see a return on your investment immediately, but shelling out the money for certain expenses can end up saving you money later on.

Here’s a list of the “unnecessary expenses” that we’ve added to our budget because of their long-term saving potential:

1. AAA membership

We signed up for AAA right before we drove back to Indiana for our wedding. It’s a long trip, and we didn’t want to get stranded in the middle of nowhere by a flat tire, car problem, or stupid mistake like locking our keys in the car. Membership normally costs $42 per person for a year, but we received a direct mail piece offering membership for a discounted rate of $20 per person for a year.

In my opinion, it’s worth it even at $42 per person. AAA Members receive roadside assistance that includes towing, jumping, fuel delivery, tire changing, and lockout services. If you use just one of those services even once in a year, it pays for itself. We haven’t had to use it yet, but even if we don’t, I think it pays for itself in peace of mind, especially when you’re traveling far from home.

Members also receive a huge array of discounts on car rental, hotels, and other travel and driving related expenses. This perk is secondary to me because all of the discounts are for things that we shouldn’t be spending money on anyway.

Next time we need an oil change, we’ll check the rates at the AAA Auto Care station near us, but we’ll only go there if it really is a deal. And of course, if we do need to get a hotel room or rent a car, we’ll take advantage of our AAA discount.

2. Car maintenance

I’ve recently started putting money into a savings account each month to pay for routine car maintenance like oil changes, but in the past these things have come out of our regular budget. It can cost anywhere from $18-$30 for a basic oil change service, but for some reason I hate having it done.

It’s really a no-brainer, though. Cars that are serviced every 3,000 miles last longer. Since we have a new car that was purchased in 2006 (a very generous graduation gift for us from my in-laws), we plan to drive it for at least a decade. That makes regular servicing even more important.

3. Veterinary Services and Medications

When you adopt a pet, it’s important to remember that you’re committing to a lot more financially than just the adoption fees and dog food. Every month our dog, Howie, requires heartworm prevention medicine as well as flea and tick prevention. He also gets a heartworm test, physical exam and several shots every year, including immunizations for rabies, kennel cough, and parvovirus. I think there might be other immunizations included in his yearly boosters, but I’m not sure what they are at the moment.

We get his monthly medication every 6 months through 1-800-PetMeds, which is a lot cheaper than what we’d pay at the vet. It still costs about about $16 a month for the medications alone.

Vaccinations are about $10-$15 each, so they end up costing roughly $40 a year. Our vet offers a 20% immunization discount on Thursdays, so we always schedule his appointments then. Heartworm testing is required to renew his heartworm prevention medicine each year, and that runs about $30.

His yearly preventative exams cost $50. We also spend $18 every three weeks for his dog food. We choose to feed him high quality dog food because it keeps him healthier. (If you’ve ever had to clean up after a dog that eats cheap dog food, you understand.)

As you can see, being a responsible pet owner isn’t cheap. Not including dog food, we spend over $300 a year to keep Howie healthy. But we committed to taking care of him when we adopted him, and in the long-run proper medical care could prevent major illnesses that cost thousands to treat. Putting money aside for these yearly expenses makes it a lot easier when it’s time to order another six-month supply of medicine or take him to the vet for his check-up.

On a personal note, you could argue that the best way to avoid these extra expenses is to not have a pet. That’s true. However, for us, the fulfillment and joy that we get from being pet owners is worth the cost of taking care of him. Studies have shown that owning a pet can increase your overall health and well being, so I would definitely say pet expenses have long-term benefits. Dogs really can be a wonderful addition to your family and well worth the money if you can work them into your schedule and budget.

4. Renters Insurance

We’ll probably be renting for a while, so we invest in a renters insurance policy. It covers our personal belongings in and outside of our apartment for just $18 a month 9 months out of the year. Our policy does cover us for the other 3 months of the year, we just pay the premium over 9 months for some reason. We’re covered up to $20,000, which is probably more than the total value of our stuff because most of what we own we bought second-hand.

I’ve always thought the term renters insurance was inaccurate, because it’s really personal property insurance. The most valuable things we own are our laptops and my engagement ring. Both are covered by our renters insurance, no matter where we are when the damage or theft occurs. For instance, if one of our laptops was stolen from our car while we were traveling, our renters insurance would cover it.

Damage to the property inside our apartment is protected by our renters insurance in the event of a break-in, flood, or other natural disaster (particularly important since we live in hurricane country). Most policies also cover personal injury to protect you from liability in case someone is hurt inside your apartment.

This is another expense that pays for itself in peace of mind. Landlords rarely cover any damage to your personal property, and usually have a provision written into the lease that says they’re not responsible for damage even if it’s their fault. Renters insurance is basically homeowners insurance for renters, so if your pipes burst or a hurricane destroys your apartment complex, you can replace your personal property. I say, better safe than sorry.

What extra expenses do you add to your budget to save money in the long-run?