As advised in all of the personal finance books, we are getting our financial house in order. We already have wills that were drawn up less than 5 years ago. We are looking at insurance now. Life insurance isn’t cheap if you get it on your own. Tonight we are going to look through Hubby’s benefits website to see what kind of insurance is available to him and how much it would cost. No matter what, it’s going to be expensive, I’m sure. But we need it. He already has disability insurance through his work that kicks in if he can’t do his job. We upped our retirement account contribution so that we’re this close to maxing it out. That means that, even though Hubby got a raise this month, we are going to see a pay cut. That’s OK though, it’s worth it.
I have money squirreled away in several places for summer vacation, tuition for next school year, retirement, summer vacation two years from now (Universal Studios if everything goes right), and for debt repayment. It’s funny how it always feels like we’re low on money at the end of the pay period, but it’s because I’ve not taken all that squirrel money into account. And I’m not supposed to. If I think about it as temporary savings, it’s way too easy to nickel and dime our way through it. Oh, money’s a little tight, let’s just “borrow” a little from savings. NO! I’m teaching myself that savings is like a big black hole – once the money goes in, it takes real effort and a seriously good reason for it to come out again. Retirement comes out before we ever see our paycheck, into a pre-tax account.
One of the things that we are looking at during our little housecleaning is how much money we spend and where it goes. Neither one of us feels like we spend that much, but it still seems to disappear. We can’t go to the grocery store without it costing at least $30 though. And we go to buy chips and beer and ice cream. Not healthy for our pocketbook or our waistlines. So, I’m instituting the once a week shopping trip again. If we are running low on something or we run out, it goes on the shopping list and I will go ONCE A WEEK to the store to pick everything up. If I forget something because it wasn’t on the list, tough cookies, we are out of it until next week and will have to make do. I will still scour the sale flyers for loss leaders that I can stock up on so that we don’t run out of things, but I will shop from a list – after I’ve eaten – and buy only what’s on it. No more going shopping whenever I feel like stopping in. Shopping will be a planned excursion. A surgical strike. Me vs. the grocery stores.
I just looked at our spending report on Quicken (that’s what I love about computer based programs, I can look at a spending report for the last year and not have to do all the totals myself), and we are spending about 15% of our income on food. Groceries and dining out. That’s a lot. A whole lot. Granted, we love to eat and we love eating out, but that’s excessive. So, back to my grocery plan, and back to planning our eating better than we have been. I keep saying we’re going to plan meals and cook more at home, and we have been a little, but not nearly enough. This proves it. Yikes! And that’s mostly me. Running out for a quick something and coming back with $40 worth of groceries, a couple of times a week. So, we’ll plan and get into the habit of putting things on the list rather than going out for them immediately. It’s great to have this software to run reports for me. As long as I categorize things when I put them in, I can see how much is going where. I don’t always categorize things correctly, so some of my estimates are off, but not by a whole lot.
Investing is the next step once we get a little money put by in savings. Index funds for me! No one beats the market consistently, so the smart place to put your money seems to be in the market itself. That’s where index funds come in. I’m not saying this is what you should do necessarily, you need to do some research and find out what feels comfortable and right for you. However, this is what most of the personal finance books say and where I’m going to invest. Take that for what it’s worth, I guess. Of course, if the stock market tanks again (which it will someday, it always has), you stand to lose quite a bit if you don’t have money in other places as well. I’m reading yet another book and I’m going to be taking their asset allocation advice into account when I’m setting up my portfolio. I’ve read enough of these books to get an idea of where my risk tolerance is and what the general rule of thumb is for asset allocation for my level. That will change over time as Hubby gets closer to retirement though, more conservative. I would STRONGLY advise reading a few books on investing for yourself so that you can find your comfortable risk tolerance and figure out generally what kind of allocation makes sense for you. The watchword though is DIVERSIFY! Don’t put all of your money in the stock market, spread it around between savings and bonds and things like that as well that won’t get dinged as badly when the market tanks again. And that’s all I’m going to say about investing. Do your research, read until you understand what you are doing and what your risk tolerance is (and then read some more), and diversify!
It feels like so much money is going out right now. We upped retirement by 5%. That’s a significant chunk of change that we’re not going to see anymore, even with his raise taken into account. We are going to increase his life insurance to a level that will actually make sense given two young children and a wife who doesn’t work. (Of course I’d get a job if anything were to happen to him, but it wouldn’t come close to replacing his income.) We haven’t looked at how much that’s going to cost, but I’m sure it will be another chunk. Thankfully we already have the wills drawn up. It feels like money is going out hand over fist, but in reality, we are in a good place. We are getting into an even better place by doing all of this. Now all we need is an emergency fund, and we’ll be on our way. That’s going to take a while. That’s OK though, we’ll get there eventually.