Personal Finance – Getting My Financial House in Order

I’ve decided to revive this blog once again in order to start a new series of posts I’m calling “Getting My Financial House in Order”.  The reason for my sudden interest in personal finance and frugality arrived after noticing that my little nest egg/buffer fund wasn’t recovering from our spending like it normally did.  I investigated further and learned that we were spending about $1,000 more than I earned each month.  Yikes!

So how did I end up so upside down?  Well, long ago I decided that the best way to handle money was to simply have enough of it stuck aside that I wouldn’t really have to watch it that closely.  As long as I didn’t let our spending get out of control, I figured we’d be in good shape.  I came up with that nonsense back when I was young and living paycheck to paycheck.  Back then all I wanted to do was not have to worry about being broke all the time and stop the overdraft fees.  Fast forward 15 years to today and that way of thinking just isn’t cutting it.

Over the last 15 years I did do a few things right though.  I cleaned up my credit report a long time ago and today I don’t have a single bad mark on it (I’m pretty proud of that).  In 2007 I refinanced our mortgage into a 15 year loan, so we’re already down to 7.5 years left on it.  My wife’s car is paid off and my car is half paid off with a low 2% interest rate on the loan.  Other than the house and my car, we have no other debt.  I think we’re in better shape than most, but we’re a family of 4 living off of one income, so things are still tight.

My goal in all of this is to reduce our spending, find some ways to save or earn some extra  money, start building that nest egg back up, and start putting some real money towards retirement.  Below are some of the things I’ve done so far.  I want to write a separate post for each item and I’ll add links to this list as I add the posts.

  • Refinanced my mortgage (again)
    I reduced my interest rate from 6.125% to 2.75% which will save me almost $7,000 even after figuring in closing costs.  It also reduced my monthly bill by $300 which frees that money up for other things, like contributing to my IRA.
  • Re-evaluated all of my bills and expenses
    I ditched cable TV ages ago and saved some money by switching the home phone over to a VOIP service, but I was also able to save a few more dollars by cutting out some unnecessary stuff, consolidating my home owners insurance and car insurance to one provider (Geico), and changing to a 6 month payment plan with them.
  • Sold some stuff I didn’t use/need anymore on eBay and Craigslist
    Selling stuff on eBay has gotten so easy that there really isn’t any reason to unload your old stuff on there.  I was able to earn about $300 just by clearing out some stuff that had been sitting in the closet collecting dust.
  • Started actively monitoring our spending with Mint.com
    I considered other budgeting software options, but for now Mint fits the bill.  I’m able to easily see where all the money is going and pull up trends to see if we’re really saving any money.
  • Consolidated my retirement accounts
    I finally got around to rolling over all my old retirement accounts into a new account with Vanguard.  Along the way I learned a lot about expense ratios, index funds, and IRAs which should help me maximize my retirement earnings potential.
  • Adjusted my federal tax withholding
    I usually withhold more during the year so that I get nice big tax return, but that’s dumb.  Why not take that money and invest it throughout the year so that it’s earning you more money?
  • Started using rewards credit cards
    I decided to get a couple of credit cards so that I could earn some cash back.  I went with one card that gives me 5% on gas and groceries and another card that gives me 2% on everything else.  According to my calculations this should earn us about $60 per month.
  • Started contributing to a Roth IRA for myself and my spouse
    I thought I was going to be limited to $5,500 in contributions per year to my IRA, but found out that I could also contribute $5,500 for my spouse, awesome!
  • Started using GasBuddy to save on gasoline
    I carpool to work and I even telecommute one day a week, but we still spend about $200 a month on gasoline.  On the days that I drive, I’m driving about 130 miles round trip to go to work and back.  It doesn’t help that my car requires premium gas too.  GasBuddy helped me find a few gas stations near work and home that save me about 20 cents a gallon.  Doesn’t sound like much, but when you burn through something like 60 gallons a month, it adds up.

Some other things I’m considering doing that I haven’t yet tried out:

  • Switching to a high deductible health insurance plan and opening a Health Savings Account (HSA)
  • Couponing more
  • Buying discount gift cards (GiftCardGranny)
  • Buying grocies in bulk (CostCo, Sam’s Club)
  • Calling my current service providers and negotiating better rates
  • Using Amazon Subscribe and Save or Amazon Pantry

Stay tuned and I’ll update this post with links as I add more posts to the series.

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