Archive for August, 2008

A fight about money

Oh yuck! What a bad start to a Saturday morning. My husband and I had a fight that started off with some simple words – `it’s ok, you just have to tell me when you’re going to buy stuff like that’. Depending on your perspective, those words could be completely reasonable or the rantings of a tyrant! And they came out of my mouth.

My husband went out and bought some stuff for the car – perfectly reasonable things we need to buy anyway before we take our car out into the middle of nowhere for my university rural elective. However, the total was $95. It’s a hard situation – I know we have to spend the money but I was hoping to drag it out for a while before parting with the cash. As my husband pointed out, it’s only a few weeks till we go.

But this conversation ended up beng a catalyst for a fight. He also said he felt like I made the biggest deal about everything to do with money now, and obviously he couldn’t even go out and buy necessary things without checking with me first.

He was tired and we were both upset. I certainly don’t want to make him feel like he has to check everything with me, but I don’t think he sees how hard I work to balance the books! I pointed this out, and that without planning it would be easy to go out and buy lots of things we `need’ for the trip. This was a bit unfair because he almost never buys unnecessary items.

We resolved it, and I said we should just have a chat about how much he thinks we need to get the car ready for travel. Then, once I know, I can allocate money that way.

I think we are just both sick of living on one income, but I also don’t think my husband has quite figured out how much I have changed when it comes to money. He couldn’t understand why we wouldn’t use some of the $2000 we have saved to buy the things we need for the trip. He said he thought that was the point of saving (ie to avoid using a credit card). I said that if we used that money for something like this, then we would start making almost any scenario into an emergency. He also said he couldn’t understand why I would make saving a priority when we are so close to having a second income, and since we have to go on this trip, which will require cash and the cost of mechanical work on the car. I said if we acted like that money wasn’t there, we would probably find another way to pay for everything (besides credit!). After all, we have before!

It’s ok, we will get through it. He actually is on my side about this – he was just having one of those days when he feels sick of watching every dollar. I know days like that well.

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Once I get started …

… you know I gots to keep postin’!

It just occurred to me that I’ve been really down about our financial position. I’ve just been feeling like we have such a long way to go till I’ll feel like I can relax at all.

Yet I just realised that we are closing in on $2000 in savings. It’s not great but it is a start.

Funnily enough though, it’s LESS than we had in savings around this time last year. This post is from August 30 2007, and in it I wrote all about how excited I am that we have $2500 in our account – `one-fifth of the way to our home deposit’. (We later cashed this money out to help get rid of debt.)

That post seems like a million years ago. Back then, we hadn’t factored in a real emergency fund. We also were only aiming for a 5 per cent deposit on a cheaper home. Now we are attempting to save our full 6-month emergency fund, plus a 20% down-payment on a more expensive house. It’s going to take us YEARS to do that.

So $2000 isn’t much. But it is a start. 

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Uggh! Money is flowing from my pockets

I’ve stuck to my efforts to put $100 towards savings over the last two weeks. But I’ve also watched my bill pile grow too quickly for my billpaying account to catch up! I’m not saying the former caused the latter – the two aren’t related. In fact, the fact we have money in the bank makes me happier when I look at the bill pile!

Nevertheless, I have to figure out how to pay for most of these. The bills currently due are:

  • annual car insurance 1 – $350
  • annual car insurance 2 – $200
  • drivers licence renewal – $70
  • quarterly electricity bill- $350

These usually come out of our billpaying account – in to which I put $300/week. But it’s that time of year when the bills are many, and it will take a while to fix some of these up. They should all be paid on time though, and if not, I’ll stick one on the credit card and use up some of the 55 days interest-free time.

Other upcoming expenses include:

  • $100 extra to cover the expense for my hotel bill in China (Yay – only three weeks away!)
  • $500 extra to cover unsubsidised portion of fuel bill for my eight-week rural placement
  • Ball tickets for graduation (we have to pay three months early because we’re all going to be away)

That’s a lot for a family who has very little left after the basic bills are paid!

I guess this  is the first I’ve mentioned in a while that I will actually be away from home for nine weeks – and this starts in three weeks time! First I’ll be in China, then my family is accompanying me on placement to a tiny island township to work at the hospital for my final student rotation! It’s exciting. I’ll keep up my blogging but it will probably be a little more sporadic.

I’ve also decided to save going back to work till after I get back from this placement – I think it’s for the best in terms of getting through. I’ll only be working for them for about four weeks then before I’ll have to quit and start my `real’ job!

I have WAAAAY too much to do between now and when we leave!

Our money situation is frustrating me because I want to make more headway but there are too many competing demands on my time. We need to get hubby’s tax return in, even though it isn’t worth much – because getting that in will allow us to receive the 07/08 childcare rebates. This could amount to as much as $3500! That would certainly pad out our emergency fund nicely!

We’ll see how things pan out.

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Short on time

Sorry for the lack of posts – I juset need to get some work done and then I can return to the world of personal finance! I’ll be back!

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Lessons from a classic

Yesterday I went back to a charity secondhand store where we recently found some cheap party costumes. While I was there last time, I happened across a travel guide I thought a friend could use on an upcoming holiday. I went back to buy it for her yesterday, but while I was there I perused the rest of the book shelves. I managed to pick up a classic Australian child-rearing text (Toddler Taming) which I knew I could use (toilet training is tough!), but I also came across another classic – a personal finance one.

The book? The Richest Man in Babylon by George S. Clason. I picked it up for $5, though someone had relatively recently paid $21.99 for it. I was intrigued to find that, about four pages in, the previous owner had flipped over the top of the page, as if to mark it to come back to later. It didn’t look (by the condition of the book) that this had ever occurred.

While I’m not sure if the previous owner got the chance to peruse this book properly, I read it in a couple of hours this morning. I found it was everything I’d heard about from others and more. Every little story really set out the realities of wealth creation, and I found it amazing to really consider how the same excuses we use today would have been the same as those used centuries ago. While they might have lusted after fine robes, we long for Guess handbags. They longed for a fine herd, we long for a fat mutual fund!

From the author notes, I found out that Clason’s stories were used in bank pamphlets for many years, and I can see why. Nobody EVER set out lessons as clearly as this for me when I was younger. Back then I NEVER really thought to put money aside for anything more specific than a house deposit. I never thought about building wealth or investing to create cash flow. That was before I embarked on my own efforts to beat debt, and obviously I’m more than familiar with those goals now. But this book is one that can be used at any age or financial stage. I’ll keep it forever, just to remind me every now and then that having a financial purpose beyond `getting through the week’ is the only way to move forward, whether it’s shekels or dollars you seek!

The book has also made me rethink the way I budget. Generally, I have always budgeted the outgoings first, then looked at how I can meet these goals using the amount coming in. This generally works in terms of helping me meet a goal. it can be good if that goal is helpful to my bottom line (ie to build a house deposit) but not entirely if my goal is just to afford a trip, because it means I tend to focus all my spare dollars on attaining that, instead of allotting some towards `getting ahead’. So if I had $1000 coming in, I usually just paid the regular expenses, kept an appropriate amount for food and petrol, and put the rest on debt, or saving for something fun, or miscellaneous spending.

While I have heard the words `pay yourself first’ too many times to count, I suddenly realised I wasn’t living by them, especially in the weeks since I stopped working (still too busy with uni to go back).

I realised I haven’t been taking my incoming amount and dividing it, starting with ten per cent for myself. I’ve been working my budget the other way, deciding how my income can cover my budgeted amounts. Hence, the first thing that stopped when I stopped working was our saving!

This needs to get turned on its head – as of this coming week, I will put 10 per cent of our incoming funds in our emergency fund, then work out how the rest of the budget can adapt. We can definitely spend less on food and petrol, and on our miscellaneous category.

Basically, I shouldn’t be treating our variable expenses as fixed ones – this is stopping me from fulfilling one of the basics of wealth creation and consequently, we are not making any progress!

Ah, goodness! Here was I, many moons ago, thinking that getting out of debt was the only hard part. It seems there is always more to learn, and more behaviours to adapt!

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Holding pattern

There’s very little to report at present – only enough salary coming in to keep us in the black, very little left for saving. I’ve made some progress in terms of taking my lunch to the hospital, but we aren’t exactly feeling flush with cash.

The good part is that I am feeling like I am coping with my studies a lot better. Do I need to just accept that I should stop working until I graduate? If so, I can kiss goodbye my chance of replacing my dodgy car.

I’ll just have to have a think about my priorities.

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Renewed energy pays off

In an effort to care more about the `little things’, I attempted to boost my emergency fund by $100 today by looking for money around the house. I knew I had about $40 in coins, and that was a while ago, so I thought I’d have another look and see what I could find.

Well I found another $10 in coins just by scratching around the drawers and my husband’s pants (always plenty of coins there!). Then I hit the jackpot – 2 winning cheques from the lottery. These totalled $33.80 – much less than he has spent on these, that’s for sure – but I thought he’d cashed these ages ago. This is exactly why I usually am the one to take things to the bank – I actually go! 🙂

Anyway, I looked a little harder and was able to find another $16.20. So that makes an extra $100 for the emergency fund!  To be sure it goes where it’s meant to, I’ve already transferred the cash to the emergency fund and will take this money in to the bank on Monday.

I’ve also looked at a dinner plan for the week and have organised my lunches (brought from home) till Wednesday.

So it’s a start. I’m very pleased!

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A new day dawns

OK, so our crazy spending is back in check – all credit cards now remain at zero and our emergency fund is intact. It really is time to get back in control of our finances – a new day dawns in our household as to how we handle our money.

I’ve realised that I’m good with `big picture’ saving but not the small-scale stuff. I let lots of little amounts of cash fall through our fingers. I don’t shop around the way I should and when I do, I don’t apply the savings to something meaningful. I’m hoping to move this blog in that direction – exploring the possibilities in respect to being more frugal – in coming posts. I also hope to meet our goal of $5000 in an emergency fund ASAP, and need to brainstorm about how best to do that.

Looking at all our accounts and analysing how best to manage this little spend-up made me realise that I’ve never really outlined our full financial position before. Maybe I was too shy. 🙂  However, I thought maybe it would be worthwhile to do this (for you and for me).

Here is our state of play:

  • $140 in everyday account (I can’t make myself call this a savings account!) – NEXT WEEKLY PAY IS ON FRIDAY, $140 remaining includes petrol and misc budget items.
  • $105 in billpaying account (cleaned out today to get our financial house back in order after our spend-up)
  • $88 in son’s managed fund account ($25/wk is sent here, $100/mth removed to his managed fund – current value of his investment is about $1600)
  • $1600 in our emergency fund
  • no credit card debt
  • no personal loans

Superannuation (retirement accounts):

MINE: $26,166  This is down $3K from last year because of the downturn in share markets. With my super company (like any other) you can allocate the kind of investments you want your accounts in. Last year I changed mine to High Growth (25%) and Growth (75%) on the advice of just about every personal finance book I’d ever read. That’s because I am so many years from retirement, so I can cope with a high exposure to the share market. The $3K drop this year is not unexpected and doesn’t worry me at all. The other thing is that last financial year I managed to find $1000 to make a voluntary contribution to my super (in Australia, your employer must make involuntary contributions on your behalf). As I’ve said previously, this means the Australian Government will throw in the maximum co-contribution of $1500 to my account because I was a low income earner last year. In some respects, it is good for me that the markets are down because when the government throws in that money, it will buy more units in the fund at a lower price.

PARTNER’S: About $40,000 We don’t track this online so this was the value in last year’s annual report that he received. I would have expected it to drop markedly over the year, however we recently heard from another employee that their fund was one of the few that maintained a small amount of growth in the past financial year. I won’t believe that till I see his statement but if so, it’s fantastic news.

STUDENT DEBT: $30,000 – As stated previously, this is interest free and paid back to the government once earnings reach a certain level. I will start paying it back at about $50/week with my salary next year. I don’t consider this to be a significant debt as it would be last on any priority list to make extra payments on. Louise at Eliminate My Debt (another Aussie) put it well when she described HECS as more like a tax on Aussies who went to uni. If I came into some extra money, I would put it towards a home deposit or other investment before I considered paying this off.

If I get really brave, in the next few days I might post our weekly income and spending allocations. Let’s see whether I am really ready! 🙂

So that’s our financial state of play. It’s not great, given that apart from our cars and furniture, we don’t own anything. But given that I just completed eight years of university and am about to start work as a doctor, I guess my earning potential is going to go up quickly (though not as fast as many would think!).

Our priorities remain a home deposit and emergency fund. I am opening it up to the universe to provide any opportunities to speed up our achievement of these goals!

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Lazy spender

What’s happened to me? I am not keeping track of my spending properly and am not keen to go back to work. I’m still worried about keeping our money in check but I am certainly not gazelle intense about anything financial!

I think I am maybe in recovery – I’ve put my studies on the line a bit to get rid of the debt, and now I have to catch up. I also didn’t get a lot of rest for a year or so, studying full-time (at hospital 8am-4pm, plus night-time study), being a mum and working two nights a week.

I need to get back to work soon to help boost up that EF but it’ll be at least a week yet. I think I may have turned a corner now though – my energy is returning – and I would like to move on to the next goal.

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