We May Be Living Together, But We’re Not Sinning Financially

One of my readers, Blair, asked:

I have a question – Do you and Lloyd have a joint budget, or do you keep them separate? How do you split bills… is it even, or is it based on salary?

Thanks for your question, Blair!  I meant to write a post about this awhile back, but never got around to it…

As geeky as it is, Lloyd is even more obsessed with his finances then I am (we’re a match made in PF heaven!).  Before we moved in together, we had several talks on how we would split the costs.

All Things Equal

In my humble opinion, I think each man and woman should pay the same amount for the same things and should not be penalized for making more money.  Lloyd feels the same way.  We actually do make about the same right now, so that makes things even easier.

We split everything – rent, utilties, cable, water – right down the middle.  I think this is the right way to do things, but I know that some people split rent differently based on income, size of bedroom, etc.  Splitting expenses down the middle works the best for us.

Bonus:  I get some pretty nice credit card rewards, so all the utilties actually flow through my credit card.  However, we take that into account when we pay rent.  My actual rent check is always smaller than Lloyd’s since I’ve already paid for the utilties.  When you add each of our total expenses up though, they come out to the same amount per month.

We Eat A Lot

The first month or so that we lived together, we attempted to grocery shop seperately.  When you’re living together as a couple, this does not work.  We quickly realized we need to start splitting the costs of dinners and other household essentials.

We go to the grocery store every Sunday and have three orders: joint order, his order, and my order.  The person that foots the cost for the joint order switches from week to week.  But, we still keep a spreadsheet of how much each weekly joint order is so one person doesn’t end up paying more than the other in the end.

Lloyd and I like to eat pretty healthy, so weekly grocery shopping is a must for us.  We prepare breakfast, lunch, and almost all our weekly dinners at home (as much as it pains me since I’m not a fan of cooking).  We have the joint grocery shopping down to a science now, but it’s still pretty annoying!  But…that’s coming from a person that dislikes grocery shopping in general. 😉

Joint Budget

At this time, Lloyd and I do not share a joint budget.  There are many reasons for this, but mainly because our finances are not combined.  We plan to combine our finances when we’re married, but I do not think we should until then.

How do you share the finances with your significant other? 

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In other news, I particpated in two carnivals this week!  Please click on over and check out these carnivals!

**Carnival of Personal Finance hosted by Money Crashers

**Carnival of Money Stories hosted by PT Money

How To (Mentally) Max Out Your 401K

I’ve had a couple readers share with me that even though they probably could max out their 401K, they don’t.  I totally get it – it’s tough to do.  If everyone’s strong suit was willpower, we’d have a bunch of rich, skinny people walking this Earth!

Here are a couple of ideas to help you max out that 401K and get yourself on the fast track to an early and/or prosperous retirement:

• Daydream:  I kid you not.  This works for me.  Lloyd and I often talk about our summer beach house and our winter ski trips that we plan to take when we’re retired.  Not only retired, but retirees with smokin’ hot bods…
• Stay In Shape:  Yep, you read that right.  I think that so many (young) people think of retirement as the end of the good part of your life.  You’re not a young adult anymore, your body is shot, and you have to wear diapers, right?  NO!  50, 55, 60, 65 is FAR from old – and even further from the end of life.  Keep that body rockin’ and you’ll be able to live retirement like a feisty young whipper snapper.
• SSS (Start Small Silly):  A masterpiece isn’t completed in a day, nor is a 401K.  Now, don’t take advantage of the “start small” tip by contributing an extra $10 a year.  Instead, try to contribute an extra $50-$100 every month.  Before you know it, you’ll be maxing out.  And if starting small doesn’t work for you…
• Go All In:  Max out all at once.  Change your contribution amount and never look back.  This is how I did it and it worked for me.  If you need a support system, round up the nearest personal finance blogger and have them do the clicking for you.
• Keep more of your own money:  Story time…last year I contributed 5% of my income to my 401K.  I paid about $9,700 in federal income taxes.  This year, I will make $3,000 more than I did last year and I’m contributing about 23% to my 401K.  Guess how much I’m going to pay in taxes this year?  About $7,000 in federal taxes in 2009.  Not only did I get a pay raise from my employer, but I’m also getting a pay raise from the government in the form of lower taxes…to the tune of almost three-thousand smackers!
• Expand Your Mind: Truly, the big picture is that the  more you invest from a young age (e.g. twenty-somethings should max out), the more time that money is invested, the more money you walk away with in the end.  I used my handy-dandy balance projection calculator on my 401K website and came up with this:

• A Load Off: Maxing-out your 401K in 2009 and beyond…$16,500.  Knowing you’ll be financially secure in your golden years…priceless.

As you can tell, I’m a big advocate of the 401K Max-Out.  Even though it’s tough putting aside all of that money today, I know how much more rewarding it will be in the future.  After all, it’s the most difficult obstacles in life that have the biggest payout (pun intended).

Question:  Are you maxing out your 401K?  Why or why not?

Bye Bye $10 Drinks; Hello Friday Night In With Pals

Like most post-college 20-somethings, I enjoyed the bar-hopping nightlife scene for a few years after I graduated.  Many young adults coming out of college are single, finally making their own income, and just looking for a good time.

As we grow older and settle down into serious relationships, get married, and even have kids, our preferences for what constitutes a rockin’ Friday night seem to shift.  While a loud, dark club blaring the latest hip hop music was once high on my list of weekend to-do activities, now it seems I would rather snuggle up with my honey, a movie, and a sweet glass of wine on a Friday night.

Enter: adult game night.  Of course I still want to socialize with my friends on the weekends, I just don’t want to do it shouting at the top of my lungs as I get bumped into at the average rate of 2 strangers per minute.

Game night in my group of friends has started to become a regular occurrence over the past couple years.  My friends and I generally rotate houses and each host/hostess will provide an array of appetizers and drinks.  We usually sit around and have a few drinks and chat for about an hour before getting down to business on the board games.

After being out of the board-game scene for a good 10+ years, I completely forgot how much fun they can be.  We all find ourselves doubling over with laughter at some point during the night (alcohol may also be a factor here).

The days of Trouble and CandyLand are long gone in the much-improved board-game industry.  Some of our newer favorites are:

• Loaded Questions: this game is hilarious.  Each person has to answer a (usually funny-answer-provoking) question and then one person guesses who had what answer.  Towards the end of the game, people start coming up with pretty interesting answers!
• Apples to Apples: similar to Loaded Questions, but one person picks the answer that they would have answered with.  Also ranks high in the “LOL” category
• Scattegories: an oldie but a goodie!
• Scene-It: some of our favorites are “The Office” and the pop culture editions.  I can’t get enough Michael Scott on Thursday nights, so Scene-It is my perfect weekend fix.
• Poker/Texas Hold ‘Em: you can never go wrong hussling your pals with a good, old-fashioned poker game!

I recently picked up the new “Loaded Questions: On The Go” for a weekend trip that Lloyd and I took with some friends this summer.  It was just as hilarious as the regular version and perfect for long, boring trips in the car!  It also came in a cute little compact case so it was easy to stash in a suitcase or overnight bag.

I know our game night tradition will keep going strong as we get older and as each of our lives continue to change.  What it really comes down to is having a good time with my circle of friends versus a room full of strangers (on the cheap, too!).  Game night is the perfect solution for those of us in our late-twenties that just can’t party like we used to.

Do you have game nights with your friends?  What are your favorite games to play?

What You May Be Forgetting When You’re The Victim Of Identity Theft

As if taking advantage of modern-day technology to cheat someone out of their hard-earned money isn’t bad enough, identity thieves also leave each and every victim with a lovely little “To-Do” list.

If you follow me on twitter, you might have seen that I was the victim of identity theft this weekend.  It was a typical Saturday morning.  I was enjoying a steaming cup ‘o joe and went to log into my bank’s website like any other day, when I saw it – an unusual $850 increase.  Dang, movies really are getting expensive!

Turns out, although movies are outrageously over-priced, it was just some confused guy in India trying to pay his $836.47 Cellucom bill and must have accidentally used my credit card!  Whoops!

Luckily, my bank declined the charge without a second thought.  I made a mental note right then to stop using so many four-letter words when describing my bank to people.

STEP 1

Everyone knows this step.  As soon as you see the theft, call your bank and cancel the card immediately.  If you didn’t know that, then you should probably have all credit cards in your name immediately destroyed.

Step number 1 took me all of five minutes.  After I hung up the phone, I was done, right?

WRONG.

Step 2

Most people forget this step until it’s too late.  After I had cancelled my card, it quickly dawned on me how many automatic bill payments I had filtering through that very credit card on a monthly basis.

After you’ve cancelled your card, you’ll have to go through and switch every automatic payment from that credit card to another card or bank account.

This is the catch-22 with those handy-dandy automatic bill payments – they can always come back to haunt you if your credit card changes or expires (or gets hijacked by some scammer halfway across the globe forcing you to cancel your card).

When a company tries to bill you for your automatic payment and your card gets declined, guess what they do?  Do they have their secretary call you to remind you that your credit card expired?  That would be nice, but unfortunately, that’s not the case.  They immediately charge you penalties and late fees, which can end up on your credit report in the end.

These two steps are two things you must do immediately when you’re the victim of identity theft.  Your bank may have declined the initial fraudulent transaction, but if you don’t switch all your automatic bill payments, companies can just as easily rob you on a late fees.

Of course there is always step 3 which involves booking a plane ticket and tracking down the jerks that took advantage of your credit.  Unfortunately, step 3 carries a high risk and a low success rate, so it’s generally not highly recommended…

If you’re ever the victim of identity theft – and I hope you’re not – always remember there are 2 steps (not just one!) when closing down your exposed credit card.

Book Review: Secrets of a Stingy Scoundrel

Author, blogger, and “stingy scoundrel” Phil Villarreal recently sent me a copy of his new book.  To say I was surprised by the book’s content would be huge understatement.

If you’re a regular reader of my blog, you probably know that I enjoy the more “personal” side of personal finance more than long drawn out blog posts about housing rates and the stock market (yawn).  If you are like me, then this book will be right up your alley.

Everyone in America has recently hopped on the frugal train to financial freedom – but let me ask you this: Have you considered buying a ticket from the nearest scalper for the “Stingy Scoundrel” train?

Phil’s book is chock full of “dirty little money-grubbing secrets” – 100 to be exact.

Readers, you’ve heard of being frugal and you’ll probably bored with it.  I dare you to try stingy on for size and have a little fun with these hard times.

Here are a few tidbits from Phil’s book:

“Who says soup kitchens are only for the homeless?  Every night, especially in the dead of winter, there’s a bounty of free, delicious food available without a catch.”

“When it’s time to propose to that special lady with whom you’ll spend the rest of your life, do so with a cheap cubic zirconium ring you picked up at a department store…”

My personal favorite (which I’ve actually been guilty of doing back when I was younger…):

“Whenever [my friend Tim] goes out to the clubs, he always keeps a tin flask filled with vodka inside his coat pocket.”

Phil’s book is a hilarious read; it’s perfect for those cold winter nights at home since it’s too damn expensive to go out these days (unless you bring a flask).  Although you may not be able to use most of his tips with a good moral conscience, I think if you get a little creative, you can use some form of his stingy secrets to save you a couple bucks.  If anything you’ll have fun doing it!

Secrets of a Stingy Scoundrel: 100 Dirty Little Money Grubbing Secrets is a great book for a good laugh if our country’s economic situation has got you down – especially if your sick of reading article after article on how to save money clipping coupons or taking ice-cold showers.  This book is just the refresher our country needs right now.  Get to a bookstore and check out Phil’s book today – and then try to sell it to your friend for more than you spent on it!

Phil Villarreal is a freelance writer for the Consumerist website, Arizona Daily Star, and OK! magazine.  He also write a blog and posts pictures of his book protestors regularly on twitter.

Top 100 Female Personal Finance Bloggers

Fellow blogger – Her Every Cent Counts – recently posted a list of the Top 100 Female Personal Finance Bloggers!  I feel so honored to have made the list since I still feel like such a newbie.  Plus, I’m in such good company with the other outstanding bloggers on the list!

Check out the list here – your sure to find tons of new blogs to read!

My Finances Weren’t Always This Good: The Finale

This is the fourth of a “My Debt History” series this week.  If you missed Part 1, Part 2 or Part 3, check them out here, here, and here!

When I left off last, I had $13,000 left in car loan debt and $3,500 in credit card debt (accrued due to the post-college-young-single-lady-lifestyle, a new boyfriend, and newfound independence).

Like I said, I went on for about a year with all that credit card debt.  Gradually, I started to despise living paycheck to paycheck.  I was a professional accountant!  I should have a handle on my finances!

I was desperate to pay off my debt and couldn’t seem to wrap my head around self-control at that point.  I had heard of something called a 401K loan and picked some of my co-worker’s brains about it.

I didn’t know much about this type of loan, but I did know my job was very stable and I didn’t have any fear of being laid off (which I now know is the biggest risk you take when you take out a 401K loan).

I debated for a couple weeks and then pulled the trigger.  I took out the exact amount of money from my 401K that I was in debt on credit cards – $3,500.  There was a $50.00 service charge and I would pay about $200 in interest over the one year of the loan.  Since $150 was deducted automatically from my bi-weekly paychecks, I couldn’t get out of paying $300 back to my 401K every month.

The timing actually worked out perfectly because I ended up getting a pretty sizeable raise around the same time – from about $45,000 to $57,000.

I know that all financial gurus practically forbid you from taking out a 401K loan, but in this case it worked for me.  I took out a fairly small amount and my job was extremely stable.  (Note: I am NOT recommending anyone do this without talking to your personal financial advisor.)

During the year that I was paying back my 401K loan, I did NOT use my credit cards under any circumstances.  Ironic as it was, I was teaching myself how to use credit cards properly, while paying them off with a loan.

I took out the loan in May 2007 and my final payment back to my 401K was in May 2008.  As luck would have it, I received another hefty raise right around the same time.  It felt like such a blessing since it was just the extra bump I needed to get my last debt paid off: my car.

In May 2008, my car loan had come down to about $10,000.  I enjoyed the summer of 2008 and didn’t think too much about paying off my car.

However, something hit me in late August 2008.  I just got angry again.  I absolutely hated the fact that I had to make a car payment every month.  As much as I love Toyota, I hated logging onto their website every month.  I got serious.  I meant business this time.

I stopped buying ANYTHING.  By anything, I mean anything at all that I didn’t need to survive.

I spent $40 on groceries per week, I didn’t go out to eat with Lloyd, I stopped buying drinks at bars, I forbade myself from buying ANY clothes, I learned how to make coffee at home.  I only spent money on necessary food and utilities.  All my extra money went straight to my car loan.

It was around this time that I started my very first budget.  Something I’m sure you all have heard of, right? 😉 The budget kept me on track and gave me a mental amount that I could follow on a daily basis.

I made a goal to debt-free in December 2008.  I paid anywhere around $1,500 per month towards my loan – many times more than that.

It was hard – very hard.  I wore the same clothes over and over to work even though I wanted to go out and buy the latest fashion trends that fall.  I ate peanut butter sandwiches quite a lot of work (which…actually wasn’t too hard because those things are amazingly delicious).  If I wanted to have a drink, I’d drink whatever was in my fridge and meet my friends out later and just have water.  Lloyd and I really got into cooking dinners at home around this time.  It becomes very easy to stop spending money on anything when you combine a female’s wrath (toward debt) and a crazy ridiculous goal.  I tell you what, that combination gets things done! 😉

In December 2008, I made my final payment on my car loan and never looked back. 

It took about 6 months to pay off about $9,000 in debt with these things:

HOW I PAID OFF MY DEBT:

• 401K loan (not recommended)
• Substantial raises (read: work hard)
• Lots of self-control
• Highly restrictive spending
• Staying busy
• Making a Budget

As funny as it seems, I am so grateful for my debt history.  There is no doubt that it changed my way of thinking about finances forever.  I am now in more control of my finances than I ever thought anyone could be.  I was one of those people that thought it was normal to always carry high credit card balances.  I thought it was a way of life.  It’s NOT.  Now, I never have to be in debt ever again.

It’s coming up on one year since I paid off my debt, and I have no intentions of ever going back.  It helps to have someone in my life that shares the same values of debt-free like Lloyd.

I was never frugal or mooched off anyone.  I merely tighten the grips on my wallet and learned to tell myself “No!”.  I think this is the best way to pay off debt.  It worked for me and I know all you readers suffering with debt right now will become debt-free someday, too.  Realizing that being debt-free is the way to live is already half the battle!

Thank you so much for following along this journey with me!  I hope this series makes me a little more relatible to my readers.  Now you know – I was once there, too!

My Finances Weren’t Always This Good: Part 3

This is the third of a “My Debt History” series this week.  If you missed Part 1 or Part 2, check them out here  and here!

After about a year of living with my parents (which was productive since I paid off my student loan and bought a new car), I decided it was a better idea to move out on my own than to continue my incessant complaining about having to live under my parent’s roof again.

Since I wasn’t making much at the time, my “budget” was a little tight.  Having a new car payment and living the post-college-young-single-lady-lifestyle made my funds even tighter.  You know the lifestyle I mean – you have a new career, you go to happy hours every  night, you go out of the weekends, you spend way too much money on going out clothes and events with friends.  It’s a very expensive, yet very fun, lifestyle to lead!

I continued to make the minimum monthly payment on my car loan.  It shrunk ever so slowly.  However, at the same time, I was funding my post-college-young-single-lady-lifestyle with my credit cards since my paychecks weren’t quite covering the new lifestyle as well as rent.

Don’t forget: when a young girl moves into her very first apartment, she instinctively gets the urge to decorate and make it her “own” style.  This urge is so powerful, it’s almost like the nesting instinct I hear about when women have babies (only kidding).  But, it’s true, when a young lady gets her first apartment, she must decorate like a mad woman.

The new decorating instinct was funded by my credit card as well.

It was around this time that I met a guy you all may have heard of…he goes by the name of Lloyd.  I was only out on my own for a mere 6 months before Lloyd and I started dating.  Dating someone new has a direct relationship with your spending.  It’s a well known fact that when you start dating, you generally always spends gobs and gobs of money during the “honeymoon phase”.  When Lloyd and I were first dating, we would meet for lunch many weekdays, have dinner several nights a week and on weekends, and of course go out for breakfast many Saturdays and Sundays.  Then there were the movie dates, the drinks with one another’s groups of friends, ice skating, miniature golf, and other gag-worthy – yet adorable – things to do that all couples do when they’re first dating.

Guess what I funded my new boyfriend with?  My credit card.

Before I knew it, both of my credit cards were maxed out.  My credit limits were low (Thank God!) and the credit companies never raised my limits when I maxed my cards out (I thought they usually did, but maybe I’m wrong).  My credit card balance sat at $3,500 for a long time – about a year – before I got down to business.  During that year that I couldn’t charge anymore on credit, I would just live paycheck to paycheck.  My lifestyle had slowed down a bit – Lloyd and I were settling into a more comfortable relationship and I wasn’t decorating as much – so I was able to live that way for a whole year.  I would pay off $100 here and there, but I would always charge it right back up.

Here I was with about $13,000 left in car loan debt and $3,500 in credit card debt that was raking up interest like nobody’s business.

How did I pay them both off over the next year and a half? 

Stay tuned for my big debt payoff finale!

My Finances Weren’t Always This Good: Part 2

This is the second of a “My Debt History” series this week.  If you missed Part 1, check it out here!

As I said yesterday, after I paid off my student loan debt, I quickly went into debt again with a new car.

I’m an avid Toyota and Honda fan since they are so reliable and we’ve had a loving and respectful car-owner relationship over the years.  I think buying one of these cars is one of the smartest financial moves you can make.  But since this isn’t a Car Tips Blog, I’ll move on to the point. 😉

I drove a cute little old Honda through the latter part of high school and all of college.  Even though my Honda was fast approaching the 200,000 miles mark near the end of my college days, I was really hoping that I could keep her for at least another year or so after college.

Hope as I might, my little Honda just couldn’t make it that far.  Bless its heart, it made it about 6 months after college before the ‘ol speedometer went out.  And then the  RPM-ometer (rev-ometer? I don’t know.) went out.  And then the car itself went out.  She was the little Honda that couldn’t – anymore.  After a couple hours of mourning, I went new car shopping!  Hooray!

I know there are some folks out there that absolutely swear by used cars and will only buy used cars.  That’s fine and I think that works well for a lot of people.  My next car will probably be used.  However, I had always driven used cars, and just once in my life, I wanted a brand-new car.  I think buying a brand-new car is just fine if you plan to pay it off quickly AND you plan to drive the shiz out of it (excuse my slang).  I mean it, I am a firm believer in driving a car until the day it absolutely won’t move forward without someone pushing it.  I’ve said it before and I’ll say it again – cars are a horrible investment and should be treated just so.  Don’t go out and buy the newest and latest edition every year – you’ll only be digging your financial grave!

Ahem.  Now, where were we?  Oh yes, I had just decided I wanted a new car.  After about a week of courting several models, I picked my dream car-mate (kinda like a soul mate, only mechanical).  Of course with my shiny new ride came a heaping load of debt – $17,000 to be exact on a 5-year loan.  My first car payment was December of 2005 for $320.  My original plan was to pay my car off as quickly as possible – which is very easy to do when you live with you parents…

I plucked down the minimum monthly payment for a couple years and my total loan amount inched downward at the pace of a snail.  It was frustrating to say the least.  Here I was again with a mountain of debt!  I wanted to get this paid off – fast -because who knows how my life would change in FIVE years – that’s a long time!

But I couldn’t pay it off.  And there was a reason why – I moved out on my own in April of the next year and found myself funding my new independence with credit cards and a lack of self control…

Stay tuned for Part 3!

My Finances Weren’t Always This Good: Part 1

After my last post painted my financial life as practically perfect, I felt the need to elaborate just a bit on my history.  Yes, my finances may be smooth-sailing right now, but that wasn’t always the case…

I’ve been in debt three seperate times in my life:

• Student Loan Debt to study abroad (2005): $5,500
• Credit Card Debt (2006): $3,500
• Car Loan Debt (2005-2008): $17,000

Unlike many personal finance bloggers, I started this blog after I became debt-free.  For this reason, I have to decided to tell you all about my debt history this week.  I learned a lot from being in debt – in fact, I think that debt itself showed me the way to financial peace.

MY FIRST DEBT

I’ve mentioned before that I was lucky enough to have my parents pay for my college experience.  I realize this is a huge blessing and many people come out of college with tens of thousands of dollars in student loan debt (including Lloyd!).

My junior year of college, I was given the opportunity to study abroad in the beautiful country of Spain.  (Side note – if you ever get the chance to study abroad, do it!  It’s a life-changing experience that only presents itself during the college years.)

My parents had always agreed to pay for 4 years of college and no more.  Studying abroad didn’t fit into that category, so I took out a student loan for $5,500.  The loan covered room & board with a host family, round-trip flight, classes at the Spanish college, excursions, and spending money in Spain (including many, many nights out on the town that I can’t detail on my blog 😉 ).

Just over five-thousand dollars seemed like a great deal for everything I was getting – and it was!

Of course, I had no money to pay off the loan during my senior year of college so I waited until I had graduated to start paying towards the loan.

After college, I endured living with my parents for about a year to get my finances under control.  I remember feeling just sick to myself that I had five thousand dollars sitting out there that I owed to the federal government (you know that sick feeling that debt gives you?  That’s what I mean).  I hated having debt so much that some months I threw 75% of my income to my debt.  My biweekly paychecks were about $950 at the time and I always had a goal to put at least $700 of that to my loan.  Sometimes I met that goal, sometimes I didn’t.  I didn’t even care that I couldn’t buy a fancy new wardrobe for my new full-time career.  I had a debt to pay off and I was going to do it fast.

Living with your parents is the best thing you can do for your finances.  On the flip side, it can sometimes be disastrous to your relationship with your parents after you’ve been on your own at college for 4 years! 😉  Since I had no expenses whatsoever when I was living with them, I was able to pay off my student loan debt in about 6 months – from July through November of the same year I graduated.

This seemed like quite an accomplishment to me!  I think at this point, getting into debt again in the future didn’t really cross my mind.  I think I figured that student loan debt was it and I wouldn’t have to deal with anything like that anymore.  Wrong…

Very soon after I became debt-free for the first time, I turned around and took on the biggest debt I’ve ever had: a new car loan.

Stay tuned for Part 2!