Finances & Budgeting: A Review + Update

10.15.2017

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Recently Jordan and I both needed to get new tires on our cars, along with oil changes, and Jordan's truck needed an alignment. We paid for all of it without going into debt, and I was once again so thankful for our commitment to budgeting and the fact that we can have things like this pop up and not totally stress out about it.

Someone on Facebook recently asked people to rate their level of money awareness, asking how much people know about their current spending, from "I try not to think about it" to "I know where every single dollar goes." Someone commented and said, "Life is too short to do that much math." And while filling out our spreadsheet every month and adding up all the numbers isn't my favorite way to spend an evening, I have to say I disagree with the sentiment that life is too short to spend time on it. I would instead say that life is too short to not do all that math.

I used to write about budgeting on the blog pretty regularly, but I haven't in a while because to be honest, we sort of just have our system and don't do anything different from month to month so there hasn't been much to write about. But seeing as how we are getting close to a new year (crazy!), people are always wanting to revamp or recharge their finances and I thought it might be helpful to recap some of our best budgeting tips and share something new we've added recently. (Related post: 3 Quick-Start Budgeting Tips)

For those who haven't been around for a while, just a quick overview: we paid off our student loans and cars pretty soon after we got married. We saved for four years and were able to put 20% down when we purchased our home in 2015. Currently the only debt we have is our mortgage, which has a 30-year loan. 

We have been budgeting since we got marriage in 2011, and here is why we feel budgeting is important. We keep receipts and write down every single transaction during the entire month. I've tried using an online system like Mint.com, but truthfully our handwritten spreadsheet works the best for us. Although I've heard really good things about Mint!

I won't go into full explanations about any of the following, but I will link to relevant previous posts where applicable. Also, I will talk about some companies below, but none of this is sponsored! I'm just sharing what we personally use and recommend.

Credit Cards
Some people won't agree with this, but we use a credit card for the majority of our purchases. We pay off the balance of our card every month and earn cash back rewards, so our credit card company is essentially paying us to use their card. Over the life of our card, we've earned hundreds of dollars in cash back! Here is a post with more details about our use of credit cards.

We have only ever used a Discover card, which we love and recommend. (My referral link here.) Our favorite feature other than the US-based customer service is that the cash back can be used on Amazon ($1 in cash back = $1 to spend on Amazon), along with other rewards like gift cards or just statement credit. However, last month I signed us up for a second credit card: the Citi double cash card

Our Discover card gives us 1% back on all purchases and 5% back on rotating categories every quarter, but I got to thinking that maybe there was a card we could get that would give us even most rewards. The Citi double cash card gives 2% unlimited cash back: 1% back on your purchase and 1% back when you pay off your statement. So what we're doing now is switching to use our Citi card (which is a MasterCard) for most of our purchases, except the categories where Discover will give us 5% cash back. If we do it right, this should in essence double our cash back earnings! 

Blow Money
Having our own separate blow money is our #1 budgeting tip and the best way to reign in unnecessary spending and cut down on arguments between Jordan and I about how we are spending personal money. Read all about it in this post.

Savings Accounts
We have had a Capital One 360 account (formerly ING) for years. They recently increased their interest rate for their Money Market account from 1% to 1.2%, which is awesome! This is where we keep our emergency fund money and any extra savings. Here is my referral link. (If you do decide to open an account, I'll get a few dollars if you use it!) You can also read more about how we save and budget for different categories like travel in this post.

Mortgage
We don't consider our mortgage a debt necessarily, because most people have a mortgage, and to be honest, $100,000+ just seems like such a big number that it feels a bit like we're talking about fake money. While it would be awesome to be able to get a 15-year-loan or even consider trying to pay off our mortgage years early, realistically for us that isn't going to happen, especially while we are paying for two kids in full-time daycare. 

But one small thing we are doing is something I read on Dave Ramsey's website and it's something I've heard others mention as a smart thing to do if you can: make 1 extra mortgage payment per year, so you are making 13 total payments instead of 12. It's really not that much, but it ends up knocking about 5 years off your loan when you consider interest over the course of 30 years. 

Here's what you do: take the amount of 1 month of your mortgage, divide by 12, and add that amount to your monthly payment on your principal. At the end of the year, you will have made 1 extra payment on your mortgage.

If that sounded confusing, here's an example using numbers: let's say your monthly house payment is $800. 800/12 = 67 So, add $67 to each monthly payment, and in 12 months, you will have made a full month's payment, equaling 13 mortgage payments each year instead of 12 and taking 4-5 years off the end of your loan!

So that's a basic overview of our budgeting right now. I've written a lot more about these topics in individual posts. For a list of all of my budgeting posts, go here. Budgeting can seem intimidating and overwhelming, but it's so nice to feel in control of our own money and know exactly what we are spending where.

I'd love to hear any budgeting tips you've implemented to cut down on spending or save more! And feel free to leave any questions for me in the comments or shoot me an email!

*For a list of all my past budgeting posts, click here.

27 comments:

  1. We still have a LOT of debt to pay off before we start thinking about our mortgage, but Iblive that tip!

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    1. It's really such a simple way to add just a little bit that cuts off 4-5 years on the back end. When I read that before we bought our house, I knew we had to try to fit it in if we could!

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  2. I know a lot of people who use their credit card for all of their purchases and pay it off monthly. It's definitely not a bad idea if you do it right. We have a small credit card with a balance but that's it. We have no other debt and it's really nice.

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    1. Yes! Since we pay off our card every single month, it's a no brainer for us because we get so much cash back. Discover has been paying us a couple hundred dollars a year to use their card ha! It is so nice to not have debt. Congrats!

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  3. We do the old-fashioned writing down everything we spend and everything we make in an old-school account book. We've been doing it also since we got married so at this point it's just a habit. Everything here is cash--it's possible, but not easy to get a Malaysian credit card as a foreigner so we're not going to bother with that. We have two credit cards in the US and when we're in the US we use those for the points, and we have to use them if we need to make online purchases--we've found it very necessary to have two credit cards because even though we've informed them of our location, we still run into problems like one card will refuse to purchase plane tickets because the Malaysia IP address looks suspicious to them. Having two cards has been a lifesaver on a number of occasions when one gets flagged for suspicious activity. They just can't get used to our SE Asia locations. :P

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  4. I always love your budget posts! Even though we don't have a mortgage yet I'm going to keep that above tip in mind because 4-5 years is a big deal! We used to be allll about the spreadsheets for budgeting (one I custom made for us) but with us being swamped with school and work we just didn't have time to keep up with it so we switched to Mint. I will say I've been impressed with it but there are still a few things I miss about the spreadsheet and I think once we have more time we may go back to spreadsheet but we'll see haha. Can't say I have any tips for you friend- our money patterns are very similar! (Blow money for the win!!)

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    1. I tried Mint and just couldn't give up my spreadsheet! Haha. But it's a great tool and I see why people like it.

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  5. Oh, guurrrrllll, you know I love your budgeting posts! Here’s my tip for the citi double cash-back card: I was in the habit (and would prefer to be in the habit) of using credit cards like debit cards; i.e. real-time money. With a couple of my cards, I pay them off weekly so i’m never too far off from a realistic picture of how much cash I actually have. BUT! The citi double cash card only goves you that 2nd 1% AFTER your statement closes and you pay it off. So, if you make a payment before the statement closes for the month, you don’t get the second 1% of the purchase. I’ve had to adjust my payment habits to make a payment on that card only once a month so I get the full benefit. Anyway, I love using credit cards and getting the cash back—totally a no-brainer!

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    1. I was also reading that you shouldn't use the cash back for statement credit because you won't get the full amount of your rewards. If you put cash back to pay down your statement, you won't get the additional 1% for I think the same reason you're talking about! Good to know. This is our first month and our statement hasn't actually closed yet!

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    2. Yes! I believe it takes a month to complete the cycle, so, let’s say in Septemebr i spent $100. If I paid my balance on Sept 30th, I’d only get the first 1% in cash back. The second 1% will be documented once that payment goes thru, so my Oct statement would show the 1% from September’s payment + the 1% of oct’s expenditures. I feel like I’m talking in circles now!

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  6. I would be in the category of "life's too short to spend time figuring out where every dollar goes." Luckily we are not really crazy spenders. I do have a savings account and contribute to retirement; I don't live paycheck to paycheck. We don't have kids so I think that is really helpful for (non-) budgeting. I'm doing a lease to own on my vehicle and I do have a mortgage that I make additional payments on. I just can't imagine spending time to calculate where every dollar goes. It sounds too much like WORK.

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    1. Once you have a system it's really not that much work. But I understand how it can feel that way! Not being crazy spenders helps for sure!

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  7. We're planning on paying down our mortgage early if possible too, but like you, we're not exactly at a place financially to be able to work on it too much. What I HAVE done is just round up my payment to the next "tidiest" number (so I added like, $8.60 to my monthly payment), which STILL shaves off almost a year of having to make payments! I'm hoping that in the future, we can eventually go to the extra mortgage payment a year and then continue to increase it, but you do what you can with what you've got!

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  8. We use many of the same budget techniques as you! It has been really helpful for J & I to have our own "fun money" budgets - I can't imagine all the gripping otherwise at too much $$ spent on clothes (me) or records (him)! We do the same with the Discover card too although now I'm contemplating the Citi card - Love the cash back! Really great idea about the extra mortgage payment per year - It would be great to pay it off 5 years early.

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  9. Like you guys, our only debt is our house, but we happened to get lucky with our house. We bought it as a foreclosure during the recession so we got it for super cheap (just shy of $100k) so we've been working on paying it off. Also like you guys, we pay extra on the mortgage every month in an effort to pay it off a little faster. Initially I wanted to pay it off really quickly because I don't like debt of any sort, but our interest rate on it is pretty stellar so we can actually make MORE money with our money by investing it elsewhere. And the extra we make there can go into retirement (or could even loop back around to pay off the house even faster). Hopefully that makes sense. Anyway, I think it's so good to be aware of what you are spending money on!

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  10. that mortgage tip is so good - I'm going to remember it for when we buy a home!

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  11. That last one especially makes sense if you get paid every 2 weeks instead of 2x a month at your job.

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  12. We don't budget well, but I do write down the bills and make sure the funds are there to go to each one (comfortably) each month. We also still have separate accounts which really tends to work for us!

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  13. I love reading (and writing) financial posts so thanks for sharing all your tips! We used to do that extra mortgage payment thing and then stopped after we had Caleb. We need to start it up again though. Actually, I want to move in a couple of years so it might wait until we get into our "forever" home since I no longer consider our house to be our forever house.

    I've always liked the idea of the cash back credit cards but it all seems so complicated to me so I've never tried lol.

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  14. Love all things finance talk :) And YES to credit cards! We are huge fans for the rewards

    The blow money idea is great. I need to talk to Colby about doing that!

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  15. Yes! We use credit cards (we have two each plus a Target card) for the same reason. Just sold our points for 12 Amazon gift cards each with a decent amount of cash on them. The only debt we have is my minivan. I don't include the house either when I talk about debt. Great tips!!

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  16. Thanks for all of the tips! We have been looking around to take advantage of high interest savings accounts. I tried to use your referral link for Capital One Money Market account, but it said the code wasn't valid. Any ideas?

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    1. Thanks for trying it! When I click on the link, it goes to a refer a friend page, so I'm not totally sure what the issue is. You can try it again, I guess. https://r.capitalone360.com/fSjSy8xtXq
      If not, that's okay! :)

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  17. You two sound like budgeting pros--well done and so inspiring! I'd love to say we budget every dollar, but that's just not the case.

    One thing I am proud of, though, is that I managed to pay my own way through undergrad (private) and grad school (public) without going into debt (other than owing my Dad 2k, which I paid off within 3-4 months of my first job out of undergrad), something most people claim is impossible. I kind of had to, since (a) our family of 5 lived off one teacher's salary, so my parents couldn't afford tuition, and (b) they didn't believe going into debt, with the possible exception of a mortgage. Believe me, I found this a frustrating scenario to find myself in, but I wanted to respect their values.

    Basically I worked various jobs since age 10 (saving at least 50% for college); worked hard in high school to earn merit scholarships; applied for financial aid; worked through college; didn't spend money on entertainment or unnecessary items during college; scheduled my classes so I could graduate one semester early; worked several years between my bachelor's and master's programs; and applied for a teaching assistantship in grad school.

    Not the least stressful or most fun way to experience college, but ultimately I think it was worth it.

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  18. i totally agree about life being too short NOT to do the math. i used to be horrible with money, but i shopped a lot and did all sorts of fun things that i got into debt for. super fun. and then i had to work my butt off to pay for all that fun, plus interest. life is way more fun now that i know where every dollar goes. we also use credit cards for everything, and we get miles for it - hopefully our next trip home will be free! that would be nice.
    the extra mortgage payment a year is BRILLIANT. i was always like why, but now that you spelled it out that it will knock 5 years off? yes please!

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  19. I love the way you broke down adding a little bit of extra to a payment to equal one entire payment at the end of the year to help pay off a loan quicker. That is a great idea! I will have to look into that!

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