Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
AW: 2011 goal to be debtfree... and question for you all
Our goal for 2011 is to get out of debt (with the exception of my student loans). We want to start TTC in early 2012, so 2011 is the year of finances for us! In December we were able to pay off 2 credits cards completely. I have one store card left, and DH has a personal loan to pay back. My store card (Loft) has a super high interest rate and has been so hard for me to pay down because of the interest rate. My shopping addiction is under control now, but I did some serious serious damage at Loft over the past few years. After much research and deliberation I opened a card with 0% interest for 12 months on balance transfers, so that I can actually get rid of the interest rate issue and be able to pay off my store card. With my plan I will have it paid off in 3 months. DH's loan will be next on the list and we will pay off the rest of his loan with some of our tax money. It is such a relief to be getting out of debt. I feel like I can breathe easier now!
After the debts are gone, we need to do some serious savings. DH was laid off in the fall and only went a few weeks without a job, but we had to pull a good amount of money from savings to keep up on bills, etc. He found out he was laid off about a week after I had to buy a new car and put a down payment on it, so we were in a bad financial spot in September/October.
Anyways, when it comes to saving money, what do you all do? Do you automatically have money pulled from your bank account each month? Just make a transfer after your monthly expenses are accounted for? Invest? Etc? What do you consider to be a decent amount of money to having in savings? I was just on the Money Matters board and someone there said that having $6,000 in savings was nothing. This freaks me out! We have about a month's worth of living expenses in savings, but live in a very expensive area with long commutes (Eek to gas prices), and not very high paying jobs. DH never went to college and is working in a trade industry right now since being laid off. Hearing that $6k is "very little" to have saved is terrifying to me. I know it's just one person's opinion, but still!
Mr. and Mrs. est. September 6, 2008 Expecting Baby #1 October 1, 2013
Re: AW: 2011 goal to be debtfree... and question for you all
This is such a hard question to answer because I think it varies so much for every person! For us, a good savings amount is having a full year of living expenses in our savings account. But even before we got married, we have always been very serious about building up our emergency fund. With this economy and seeing so many friends/relatives lose their job, it really freaks me out!
But I think having the debt paid off before kids is a very good idea! We will be completely student loan/ car payment free in MAY! Talk about good timing! I really can't wait. It's been a long journey and I am so glad that we've kept our focus and stuck with prioritizing that before other things. It'll feel so good once that amount is at $0!
My Married Bio
Love, marriage and a baby carriage
Ana's right. It really does vary from couple to couple what is right for them. To me though, 6K in the savings is a good e-fund, IMO, but not for a true savings.
At the moment JP and I only have a money market savings account where we're putting literally as much as we can toward it each month after living expenses/loans/bills. We just paid off the rest of his car loan, which was a hit up front but will save us $1,000 in the long run.
When we finally get back into full time jobs, we'll eventually invest, and hopefully, I'd like to see a good chunk of my pay automatically withdrawn and put into savings... that way I don't ever see the money and am not tempted to do anything but save it.
ETA: I also think it was absolutely brilliant of you to transfer your remaining LOFT balance to a CC that you're able to pay off so soon. Three months sounds like an excellent timeline!
This is what I do. I know it probably isn't the best way. They say to pay yourself first (that is last), so doing some sort of automatic transfer is probably the way to go.
FWIW- Money Matters girls scare me. Don't get me wrong, you can learn alot from them. But I think alot of the girls that post over there are gung-ho about the finances etc, so it can seem scary. Sure $6000 may not be enough for them, but it may be for you or me or someone else. We currently have my regular savings account at my bank. I usually transfer money to it at the end of the month with whatever is leftover in checking. When the savings account starts to get "high" then I transfer some over to an ING account that we have. This ING account is our efund. Currently we have about 2 months of both our income in that account. Our expenses are of course less than our income. This account is the "untouchable" account. DH calls it my secret Swiss account (he actually has access to it, just doesn't know it!). We basically "forget" we have it. But it is there if we need it.
I think that since you recently went through a period with unemployment for your DH, you probably have a decent idea of how much money you need in savings. How much money did you have to pull from savings for those months? If you could have had extra, how much would have allowed you to feel "safe?"
I was just actually talking to DH about our finances the other day. I really wish I could get him more on board with an active savings/debt paying plan. We don't carry balances on our CC's, but it would be nice to work towards paying off the SUV and student loans faster.
Blog
I think the challenge of what to do with the "extra" is more difficult than when you're in debt payoff mode. At that time you know where your extra money is going.
We sit down and set some goals. For us, we don't have retirement accounts through our employers. That sucks because it means we have to do 100% and it's post-tax dollars.
We also sit down and talk about what we want to do with the extra. This year I'm adamant about getting our front porch built. That's going to take a large chunk of money that we'll pay cash for as opposed to doing an equity loan.
I agree with pay yourself first.
I also agree that the MM girls are over the top. You have to live too... To me, it's all about finding the balance between savings/retirement/life.
Planning bio My DIY blog The Maine Bio
2012 Reading Challenge
You can never have too much money saved, right? The "right" amount is all in the eye of the beholder. It depends on where you live, your expenses, etc. Obviously the more the better if you ever have to use your e-fund. But you definitely want to have a number of months expenses saved in case one of you were to lose your job again and didn't find another too quickly.
Most of our bills are due at the beginning or the middle of the month. Once DH gets paid again on the 15th I have a good idea how much we will need for the last remaining bill, food, gas, etc. So after we gets paid the second time I transfer an appropriate amount to savings, keeping what we need to get us through the rest of the month, plus some buffer.
What I would recommend is making a list, an Excel sheet, or something listing all your expenses as you pay them (heat, water, electric, food, rent/mortgage, internet, phone, etc). Add that all up and subtract from your income to find a target amount you should be putting into your savings each month. If something comes up and you have to spend a little extra one month or another, account for that and put in a little less, but don't forget to transfer money. If you get into a routine it will be easier to stick to. GL!
As always you all are incredibly helpful. I feel SO much better about our finances now, and I do agree that the MM board is over the top. DH and I are in the best financial situation we have ever been in, and it's only my first year teaching full-time (PT last year), and DH is going through his temporary job situation. I am sure that by 2012 we will be in an even better financial spot considering we will be getting out of debt!
Ana, congrats on paying off the last of your student loans! Such perfect timing for you! I can't wait for that day to come!!
Jasonsgirl (please forgive me and remind me of your first name!) - I do like the idea of doing automatic payments to savings, then you don't even know it is there. Hopefully after my debts are gone and we are more in control I will be able to do this! I currently contribute to my stocks on a monthly basis, so I consider that to be my automatic "savings"/investments.
Mary - I do the same thing with my ING account, which is our savings account. DH doesn't even remember that it's there! Aside from the ING account, we only have the keep the change savings which I transfer to ING when it gets over a few hundred dollars. Good suggestions about using DH's experience being unemployed as an indicator of how much we should have in savings. We went about 5-6 weeks without income for him since it took a while to get the new paychecks set up.
Jamie - I definitely agree! It's important to live your life too! It's horrible to think this way, but I will be making more money in 5 years, so why worry too much about putting money in savings and not having fun. I feel like we have been so strapped for cash since I have been in debt-free mode, so I am so thrilled to have paid off 2 cards. Yes, we still went on vacation this fall, but I don't want to feel guilty for going to the bar for Happy Hour, etc. I'm thankful that I have an awesome pension plan as a teacher, but I do still need to set up my own retirement account too!
Holly - Yes! I started doing an excel spreadsheet last year and it has been SO helpful! I have tabs at the bottom for different sheets so that I can see monthly expenses on one tab, student loans on another, and credit cards on the last tab. I feel super organized that way! I've been using mint.com too to keep track of everything. I love it!
Mr. and Mrs. est. September 6, 2008 Expecting Baby #1 October 1, 2013
I'm late [eta: fixed formatting]... but just a few things...
I love the MM board but some of them are crazy. Anyway, I think one month in living expenses saved is fine if you are paying off debt.
A lot of it is just comfort too...in our case, we - mostly me - have a lot of student loans, about 3/4 of our grosss salary once I start my new job. We've paid over 25k down in two years too, way above the min payments, but it never ends (we are trying to pay them off, but it'll still be seven-ten years barring a major raise or change in COL...our mortgage is double what we pay, and just going to rise when we move). Money Matters would likely argue we should live in a shoebox and never do anything until theyre paid off (and we could do it in three ish years if we rented a one bedroom I think) but we also do not want to put life on hold (and that includes TTC, which may extend our repayment plans).
Even emergency funds are relative....we have about 4 mo expenses...in stock. I am ok with this since if one of us was laid off we coud probably make it (with cutting back) on one salary plus unemployment for several months without touching savings.
For normal savings, we do normally pay ourselves first into earmarked ING accounts. Sometimes we have to skip it (eg, Dec, because of a big car repair, Christmas, Christmas plane tickets, dog boarding for the holidays and a dire need for need work clothes...it had been almost a year) but we never buy anything we cannot pay in cash from savings or checking. Being out of debt entirely is certainly the light at the end of the tunnel.
This totally made me giggle.