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Archive for May, 2008

Negotiation

May 22nd, 2008 at 06:02 am

DH and I received a small income tax refund. We actually negotiated what we were going to do with it. This is a big step for us - in the past I made most of the financial decisions. While for some people that might sound ideal it doesn't lead to building togetherness in a marriage. I've been pushing for more involvement on DH's part for several years. There are things going on in our lives, but not reported here, that are making that more likely.

Here's how our conversation might have sounded before:

Me: DH, we got our income tax refund. What do you want to do with it?
DH: I don't know.
Me: What do you think about putting 1/4 toward the mortgage, 1/4 in the mutual fund and spending the rest on (whatever the current project or need was)?
DH: Okay.


Here's how our conversation sounded this time:

DH: What do you want to do with the income tax refund?
Me: What do YOU want to do with the income tax refund?
DH: Let's put it in our checking account. It can pay for our trip this weekend, and the shortfall in the checkbook.
Me: Hmm, how about if we put 1/4 toward the mortgage, 1/4 in the mutual fund and spend the rest on our trip? (**Yes, this is the same thing I would have said before. I like this strategy for windfalls.)
DH: How about if we put half in the mutual fund and half towards our trip?
Me: Okay.

Can I just say that I'm thrilled at this turn of events?

Reinventing the Wheel

May 21st, 2008 at 07:26 am

I was listening to Dave Ramsey on the radio the other day. A caller said that he and his wife had just started doing a budget, and that they kept having all these unexpected expenses - software for his wife's college class, something for the kids (don't recall it specifically) etc. Dave said that these type of expenses could be anticipated, that as time went on and they continued to work on their budget they would be able to anticipate them, that it took people generally about three months to get the hang of it, and that when these things came up the couple needed to have an "emergency budget committee meeting" and decide what they would do.

DH and I have never really had a budget. We've had a loose spending plan that worked reasonably well when our income was higher. We continued this when I left paid employment. Since neither of us are big spenders it worked okay for a while and now isn't working so well.

When DH and I talked about our spending for May we listed out several expenses that we saw coming that month. Soon after May started I noticed four things:
* We had expenses that we should have been able to anticipate, like Daisy's end-of-year dance photos.
* We had potential expenses that are unexpected, like our cordless phone breaking.
* If it was written down we were likely to think about it and come up with a different or lower-priced alternative.
* I've gotten really used to buying "little stuff" that catches my fancy, and I'm going to have to break that habit.

We paid for Daisy's photos. We haven't yet replaced the cordless phone. Since it has an answering machine that still works, it's been moved to another room and we're using a corded phone for our main phone now. Instead of buying a new bicycle DH decided to borrow a relative's bicycle for a while. And I started to keep a list of the little stuff that I wanted to purchase instead of just buying it.

I guess we are reinventing the wheel in many ways. . . and the wheel still works.

Empty Checkbook

May 20th, 2008 at 06:17 am

It's May 20th, and Checkbook Number One is looking pretty empty.

We got rid of The Dead Zone, so what happened?

Well, several things: the grocery/eating out dollars spent is way over budget, less is being put on the credit card (and thus being put off until next month) and there were some math errors.

I'm hoping and anticipating we'll be able to squeak by until June with another fill-up for both vehicles, and about $100 for our Memorial Weekend Camping trip (this includes about $60 for a ferry ride).

DH and I had a discussion about this last night. He had a pretty negative reaction. In reality though, this is nothing different than what's happened here in the onion patch for the last several years. The main difference is that he is now aware of it. While it's challenging to deal with his reaction, we are talking and that is a huge improvement in my book.

He Asked

May 17th, 2008 at 06:44 am

Last night I was out running errands. When I got home DH asked where the Dave Ramsey book was. He had left it on his library book shelf. I had taken it off the shelf in the morning (and finished reading it) and hadn't put it back.

Do you know what this means?? DH is taking the initiative to read the book! Well, at least he was yesterday.

Trying not to get too excited. . . trying not to get my hopes up. . . trying not to get too excited. . . trying not to get my hopes up. . .

Up in ARMs

May 16th, 2008 at 07:43 am

We have an ARM and our interest rate will readjust at the beginning of June. Although many people have gotten burned by ARMs we have done well. There was actually a strategy behind the ARM, and it paid off for us.

We bought our house 11 years ago when we were both working. The strategy was to pay down the ARM during the first three years before it adjusted. When it adjusted our payment would be lower. As we paid down more and more it would enable us to live on one income.

We were able to do this, and I think the following is why:
* We bought a relatively small, inexpensive (for our area) house. The bank was willing to give us about twice the mortgage that we ended up with, but I didn't want to be tied to my corporate job forever.
* Our mortgage is through a credit union. There has been no upheaval with the mortgage being sold to another entity. I've heard all kinds of horror stories about what happens when loans get sold.
* We actually DID pay down the mortgage during the first three years, and have paid more to the principle since then. Our contract includes language that allows us to pay extra towards the principle and pay off the mortgage early with no penalty.
* With nine different rate adjustments (including the upcoming one) only two have been higher than the initial loan rate. The rest have been lower, including one year during which the rate was almost four percent lower than the initial rate. This was totally outside our control and was just good fortune on our part.
* We did not tap into our equity with a line of credit.

Most of the time our financial strategy feels like a house that people added to randomly. There are doors that open up to walls, rooms with no windows and a porch you can't get to from the inside of the house. But our ARM strategy is a nice, comfortable living room.

Dave and Me

May 15th, 2008 at 04:09 pm

I hadn't heard about Dave Ramsey until recently. I think he's on to something.

I've read a number of frugality/financial philosophy books and most of them assume that you and your spouse have agreed on or worked out how to handle finances. They also assume that you and your spouse have similar financial philosophies. While I haven't read (or listened to) Dave all that much, he appears to give way more information about the process of working out and agreeing. And his work seems focused on getting you and your spouse to work together.

I talked DH into reading The Total Money Makeover book. DH hates to read books of this nature, and generally he'll agree to it and then not follow through. (I, on the other hand, read this kind of stuff as bed-time reading. Go figure.)

So far DH has read to part of the way through Chapter 4. His response - "I already know all this stuff except the thing about the Visa debit card."

Since he "already knows all this stuff" I started with Chapter 5. I know a lot of this stuff, but not all, and the way he prioritizes finances into steps could be really useful. I think I need to read a different book of his to learn more about working out a budget with a spouse.

Stay tuned. If DH is not done with the book by the end of June, he's not going to read it. And I'm not going to bug him about it - that won't turn out well.

Conversation Results

May 14th, 2008 at 07:57 am

DH and I did talk, on Sunday evening after Daisy was in bed.

I have taken the information that I had on a file card and put it in a pocket-sized notebook. What you see on the side bar for April fits on one page.

On the next set of pages are the May spending plan (looks a lot like April) and the month-to-date totals. The next two pages after that hold the things that we talked about spending money on May, with estimate and actual expense columns. These are items that fall in the "Everything Else" category. There aren't many, or the list wouldn't fit on one page of a pocket-sized notebook.

DH wanted to see the April figures. I had already told him about The Dead Zone, so that even though it looks like we under spent by about $200, we actually over spent by about $100. He looked at May. Then he told me about a few expenses he could see coming in June. I wrote them down, although only one of them has a dollar estimate.

That was pretty much the end of the conversation. It took about 10 minutes.

Even though we have a long, long, long way to go, this conversation was way more than I would have anticipated back on April. I need to keep reminding myself of that when I feel completely frustrated by his non/under-involvement policy.

Another Step

May 9th, 2008 at 06:17 am

I've been entertaining my mother, as well as hosting a family event last weekend - kind of puts a crimp in my blogging. Mom will head home tomorrow and I'll get back at it.

But, while I have a couple of spare minutes, I'm suprised to report the following:

My DH asked to set up some time this weekend during which we could talk about how we did in April. He also volunteered some information regarding expenditures in June.

I'm still in such a state of surprise over this turn of events that I haven't figured out what to think about it.

April Update and The Dead Zone

May 2nd, 2008 at 09:07 pm

Here's the update for April for Checkbook Number One:

Income: 1372.55
Expenses:
Budget:
Groceries 500.00
MC 500.00
The Rest 372.55
Total 1372.55

Actual:
Groceries 565.62
MC 274.61
The Rest 326.86
Total 1167.09


Looks good, doesn't it? We appeared to spend 205.46 less than we made. However, we seemed to run about 100.00 short this month. How can this be?

I've determined it's because of The Dead Zone.

DH gets paid once monthly, but usually his paycheck comes in and is deposited 3 to 5 days prior to the end of the month. That paycheck is then used for next month's expenses. Those 3 to 5 days were The Dead Zone - before the end of the month, so anything spent during The Dead Zone didn't count for the current month because it was next month's paycheck, and didn't count for next month because it wasn't next month.

Clear as mud, eh? Basically some of April's money was spent during the last few days of March. It didn't "count" for March - partly because I wasn't really counting then, and partly because it was a new check. And it couldn't *really* count in April because it wasn't there.

The Dead Zone should disappear this month - all expenses now count for the month in which they are incurred. The tricks we can play on ourselves are mind boggling.