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Where to go next in personal finance journey?
June 4, 2013 7:03 AM   Subscribe

How to balance saving, paying off debt, improving living situation, having a baby, getting spouse more involved in finances, better managing retirement accounts, and a partridge in a pear tree.

I've been obsessed with personal finance for about 5 years, constantly reading blogs, articles, etc. I've set up my own (very convoluted) budget/income/expense/net worth tracking spreadsheet (spouse and I combine our finances) and use it in combination with yodlee online. I've always tried to control my spending around our values and skimp on what's not important to me while allowing ourselves some extra room on the few things we highly value.

My spouse is mostly on board with me in terms of spending, but hasn't shown much enthusiasm for understanding the details. He tends to get defensive when I talk about "the spreadsheet", even though I continually tell him all I want is his input & advice, especially since he knows excel better than me. I've been struggling in particular with seeing things in black & white (straight income vs. straight spending) since I'm never sure how to track things like people paying us back for group things we paid up front, employer contributions to retirement, etc. Also we do most of our spending on rewards credit cards that are paid off every month, which makes it difficult to know what is really going out on a monthly basis.

We've always spent less than we earned, but I fear that will quickly change due to expecting a baby in December. I feel like we're so behind where we should be, especially if I've been putting in all this effort over so many years. Our net worth is positive but we still have over $30k in student loans (originally borrowed $74,150, so that's something). We only have 2 mos. income in emergency/short-term savings (it was double this but we just replaced our elderly failing car). We decided to make some big travel plans this past year for family and fun, so I know we've made choices that weren't totally fiscally responsible. I can at least count on a good 3-3.5 months of paid maternity leave, so no big gaps in income.

Our retirement is a mish-mash of current and former employer 401ks, 403bs, and a pension, totaling one half of our annual dual income. It's one area that I'd like more knowledge and understanding in, though with our loans I don't feel comfortable socking away more right now. And I have no idea where to even begin getting a better handle on it.

Another issue is that we're talking about moving not only for extra space for the coming baby but also for closer proximity to my workplace and better daycare options. (We've been living in a lower-rent neighborhood that we feel safe in as adults, but not sure what is available for baby support). What we'd want (a slightly larger comparable apartment in a "better" area) is about 300-400 more than what we pay, which sends me into panic mode. Combined with daycare (about 1000-1200 in our area) and other baby expenses, this would leave veerrrry little room for extra savings/debt payoff.

I'm not sure how to show or explain my financial anxieties to spouse easily without negative emotions coming up. I mentioned talking to a financial planner but he scoffs at the idea of spending more money when I'm already worried about our spending as is.

tl;dr

1) If I think I've mastered the basics of personal finance, where to go for the more "advanced" advice on using spreadsheets/yodlee more effectively?
2) On the other hand, how can I simplify our spending/income on a very black and white, understandable level on paper?
3) How do I get spouse more open to involvement with our personal finances?
4) Suggested resources for understanding retirement (ex. managing multiple accounts from previous employers, understanding fund options within those accounts, whether to roll over older smaller accounts or leave them where they are)
5) Am I right to be panicking about increasing our rent to the point where, combined with daycare, we wouldn't have much room to save anything else? Even if it would mean sacrificing time with baby (due to commute) and possible quality of daycare?
posted by wannabecounselor to Work & Money (14 answers total) 17 users marked this as a favorite
 
Also we do most of our spending on rewards credit cards that are paid off every month, which makes it difficult to know what is really going out on a monthly basis.

I'm not too familiar with yodlee, but this is why I personally love Mint so much - my rewards credit card spending is no different than any other spending, and I know exactly where I'm putting my money. This is 2013; if your financial situation is a typical "earn paychecks from employer, spend on rent/bills" one, you definitely have automated tools available to not have to track much by hand. Mint has income, expenses, budgets, and net-worth tracking, all built-in and automated. I'm not saying you have to use it - there are other tools people like, like You Need a Budget. But my strong recommendation is to not lean on your own convoluted Excel inventions unless you have a very good reason to to do instead of using automated tools that will do all the work for you.

3) How do I get spouse more open to involvement with our personal finances?


Do you really need to? I'm serious about this. Is your spouse prone to overspending, or failing to adhere to the plan you've decided on together? There's nothing wrong with division of labor in a relationship; just as one spouse may stay home with a kid, or take lead on home repairs because they're more handy, or do most of the cooking, there's nothing fundamentally wrong with one spouse taking lead on finances.

Your spouse is mostly on board, you say. When you say you want "input and advice," are you really just looking for a second pair of eyes (like you're asking us about), or are you asking questions that only your spouse can answer on account of being the other person in your relationship?
posted by Tomorrowful at 7:32 AM on June 4, 2013 [3 favorites]


It's as corny as all hell, but Financial Peace University is a good starting point. Dave Ramsey himself strikes me as smug and his politics and conservative/Christian slant bug the bejesus out of me, but he's got a great plan and I can't discount that.

It addresses EVERYTHING in your question and it talks about working together as a couple to achieve your financial goals.
posted by Ruthless Bunny at 7:32 AM on June 4, 2013


New babies can totally knock you off your financial game. It happened to us. I eventually made peace with the fact that we just were going to have a few years where we weren't saving (or really getting anywhere with our debt). We also made the decision for one of us to stay home with the baby, which was another financial blow, but one that we felt was worth it for flexibility and being able to have enough family time (this was a decision we made AFTER the baby was already here and we found that the childcare situation wasn't worth it). We also moved to DECREASE our housing expenses, because housing expenses are such a huge part of the budget and one of the things which can really make or break a budget. Think carefully about the housing; I don't think you're wrong to think it's a big deal. Decide if it's really worth it.

One thing that helped us was to stop using credit cards as our spending method. We created three checking accounts: one for groceries, one for my spending money, and one for my husband's spending money. I'm thinking about adding a fourth, for general household expenses, because that's a very clear need. We have money transferred from our main checking account into those accounts weekly, and when that money is gone, it's gone and we're not spending any more that week. When we run out of grocery money on Monday and the account isn't getting replenished until Thursday, we're eating from the pantry and the freezer for a couple days. Having personal spending money, where you don't have to answer to anyone else about what you spend it on, was really important for not feeling deprived. We each get $50 per week in our personal accounts.

As for getting the spouse involved... I have had similar issues and I finally made everything available for his review, but realized that he probably was never going to be as interested in it as I was, so it became one of those things that I do, just like fixing the leaky faucets is one of the things he does.
posted by rabbitrabbit at 7:33 AM on June 4, 2013


I think the answer to (3) is to figure out (2). Your enthusiasm and level of attention to detail probably make it hard for him to understand what you mean without things getting unnecessarily complex. Yes, I personally find those details intersting in my own money management, but part of the appeal is that I had to do a lot of thinking to figure it out, not actually the details themselves. For example, I have "what-if" spreadsheets for various different scenarios, and I've found that hte best way to share them with my husband is to write down what I learned in one (and only one) paragraph. Yes, all the numbers that back up that decision are interesting, but not unless there's already the context of what the question and answer really are. And maybe he's reall yjust interested in the answer, and that's okay. No need to drag him through all the thinking you just spend so much time doing.

I'll skip all the others, but about (5)? Yes. You are right to be concerned. If you actually have $1500 per month that you're putting into debt payoff and emergency-fund-accumulation every month right now, then no, you don't have to panic, but to see that kind of increase in expenses coming up and not be worried would be irresponsible. Do be honest with yourself, though - if don't have $1500 per month unclaimed, where is it going to come from? From retirement savings? That's bad. Leaking into slowly-accumulating debt? Even worse.

You said you're worried that after the baby, you won't be able to continue spending less than you earn. I'm not sure if you quite meant that. If that's true, if you're looking at slowly-accumulating debt and never adding to your savings again, then I'd say you should consider (or not just consider, but prioritise) ways to keep the baby expenses lower.

That all sounds really heavy. I should have started this by saying "holy crap, congratulations on having such a solid grip on your finances, and such a strong will to hold it all together!"
posted by aimedwander at 7:47 AM on June 4, 2013


I think a one-time visit with a financial advisor is worth the money, if only to sort out your retirement situation. I feel like the common wisdom is to roll your accounts together whenever possible to maximize your interest, but obviously every situation might be different. One of your financial institutions may provide such a service. (I used American Express to get one-off advice on a very small, but large to me, inheritance in my 20s. And that was free since I was a cardholder!)

Ask your spouse to come to one appointment, and after that, agree that you can and will take the lead on your plans, but keep them in the loop.

Finally, I often recommend LearnVest, and I will do it again here. In addition to tracking services similar to Mint's, LV's primary audience is working women, and their site focuses on becoming financially savvy. They even have free "bootcamps" for both retirement planning and bringing a baby into your family. I think they also offer individual consulting for a fee.
posted by juliplease at 7:50 AM on June 4, 2013 [1 favorite]


1) If I think I've mastered the basics of personal finance, where to go for the more "advanced" advice on using spreadsheets/yodlee more effectively?
2) On the other hand, how can I simplify our spending/income on a very black and white, understandable level on paper?


I am a big fan of door number 2. Specifically, I simplify finances by automating the big stuff and not worrying about the small stuff. We do this through separate accounts: we have one checking account for all our fixed bills, and another with a smaller direct deposit for our day-to-day spending (groceries, gas, whatever little stuff). That way we don't have to worry about having enough money in the big checking account to pay the bills, because the money going in and coming out stays pretty steady every month. I think about money a lot less as a result, and we never fight about money even though we aren't exactly rolling in it.

In other words, because it sounds like you have sufficient income, figure out what your financial goals are (how much you want to save for retirement/emergencies, how much to debt payoff, how much for big fun expenses like travel) and make that stuff happen automatically through direct deposits, payroll deductions, and automatic transfers. Then it doesn't matter what you do with the rest.

I agree about not reinventing the wheel on spreadsheets. YNAB is great if you have a single account (it's not so great with multiple accounts). Mint and Microsoft Money are free.

3) How do I get spouse more open to involvement with our personal finances?

Agree with the above that there is nothing wrong with one person handling the finances, as long as you agree on the overarching financial goals. I am the finance person at home and I love not having to consult with the other half about every transaction. I just sent a big payment to our car loan without consulting him. We both want to pay off the car and our expenses are taken care of for the near future so it's fine. If he wanted to be involved in the day-to-day, that would be fine, but we are both happy with this arrangement.

4) Suggested resources for understanding retirement (ex. managing multiple accounts from previous employers, understanding fund options within those accounts, whether to roll over older smaller accounts or leave them where they are)

I adore this portfolio checklist because it goes beyond just the basics, but it's concise enough to use as a reference whenever you want to review your savings and allocations.

5) Am I right to be panicking about increasing our rent to the point where, combined with daycare, we wouldn't have much room to save anything else? Even if it would mean sacrificing time with baby (due to commute) and possible quality of daycare?

I would be anxious about this, too. One guideline I like is the 50/20/30 plan - you keep necessary expenses under 50% of your net income, you save/pay down debt with at least 20%, and the remaining 30%ish you can spend on whatever you want. If you are over the 50% you could look for other expenses to cut, but it can be difficult. Raise insurance deductibles, switch phones to prepaid, cut cable to basic, step down in cars, drive less - all this makes a difference but at some point you can't go any lower.

Most of all, though, I would say to go easy on yourself. I find that the more I think about money, the more it stresses me out and the harder it is to step back and appreciate how far we've come. You have paid off significant loans, you have several months of expenses saved, you are planning for the future - you're doing great.
posted by payoto at 7:59 AM on June 4, 2013


Oh, and another thing - you could consider meeting with a tax adviser to figure out what you will get in terms of exemptions, deductions, and credits when the baby comes. It may ease your mind and help with the planning to know how much of your new expenses will be offset by a lower tax burden.
posted by payoto at 8:02 AM on June 4, 2013 [1 favorite]


You don't say your age, or how long it's taken to pay down those school loans, but it sounds like you're ahead on payments. You're doing pretty well to have some emergency funds. Most important, your only debt is school loans - that's terrific. I tend to be very financially conservative, and worry about financial security, as you do.

- Visit the Social Security site to calculate your expected retirement benefit.
- Use the AARP retirement calculator to see how you're doing on retirement savings. But keep in mind that the years of day care expense are pretty financially difficult, and you may be unable to save. That's okay, kids are part of your life goals.
- Get referrals and sit down with a Fee Paid financial advisor. (fee paid = they won't try to sell you stuff) Talk to them about possibly consolidating any retirement finds from previous employers, and any other financial planning questions. In my case, I have 4 different funds, but that has been kind of a good thing, for boring reasons I won't go into, but procrastination isn't always so bad.
- most of our spending on rewards credit cards My Discover card will categorize spending for me.
- Until your child is playing outdoors, the apartment location may not be as important. Start looking at neighborhoods in terms of daycare options and school quality. Start looking for apartments, and ask friends to keep an eye out. You may be able to find that gem of an apt. that's under market rate.
- where to go for the more "advanced" advice I think it's more important to focus on the basics - keeping the electricity, gas, heat, etc. under control, making good choices about eating out and other discretionary spending. I listed some good blogs below.
- how can I simplify our spending/income I'm a fan of Andrew Tobias' The Only Investment Guide You’ll Ever Need.
- How do I get spouse more open to involvement with our personal finances? Simplify the spreadsheet - see sample budget links below. Ask spouse to meet with you monthly to review finances, bills, and budget progress. Limit the meeting to 1 hour or less. Budget in money for vacations, date night, or whatever fun you 2 like. The budget is a framework for knowing what you can afford, and how you're doing, not as taskmaster to quash all spending. Appreciate him for wisely giving you budget responsibility.
- Suggested resources for understanding retirement Use a retirement calculator, see below.
- Am I right to be panicking about increasing our rent It sounds like you're in fine shape. A tight budget isn't surprising when you have a newborn. Think of it as a planned event in your budget.

I find common sense on these blogs:
Get Rich Slowly
The Simple Dollar
Wise Bread

Sample Budget
The First Step to Budgeting
“Ballparking” Your First Budget
Sample Budget
Sample Budget spreadsheet

Years ago, I read Your Money or Your Life. I don't follow their plan, didn't buy their planning kit, but I have always planned financially so that I'd have some stability, and lived simply. I raised my son with hardly any financial support from his Dad, and am on track for retirement. If I were to change anything, I might have spent a little more on fun stuff - I'm pretty seriously frugal - but my son didn't know how lean the lean years were, and we always did fun stuff and made memories.
posted by theora55 at 8:14 AM on June 4, 2013 [2 favorites]


Even if it would mean sacrificing time with baby (due to commute) and possible quality of daycare?

Is it worth sacrificing time with your baby and the quality of your baby's care in order to get ahead financially? For me, it would not be. You have to find the perfect balance for your family. I would suggest stepping back from personal finance blogs/communities; some of them are so focused on, well, greed, they lose sight of the importance of other things in life.
posted by ThePinkSuperhero at 8:33 AM on June 4, 2013 [5 favorites]


You can't change him. He'll just resist more. I think you're going to have to do this alone. The dynamic in your relationship won't enable this to happen, and you can't change someone who is defensive.

Are you certain he isn't in possession of a secret credit card or bank account? If he's defensive, you really need to keep an emergency account for yourself in case there's secret debt or something that he's hiding from you.

I would rethink the baby thing with your husband until you can get through to him on financial stuff. Babies need live and good fathers, but a big part of being a good parent is providing a kid with financial security.
posted by discopolo at 9:29 AM on June 4, 2013


1) and 2) try out Mint. You can use it alongside your spreadsheet for a couple months and see if it gives you all the info you used to get. It's got some limitations but will almost definitely cover your 'track what goes in and out' requirements, and you can also add in your retirement accounts if they are at somewhere big like Fidelity/Vanguard.

4) You should definitely pull all your retirement accounts into one place, mostly because you are paying fees on each account right now instead of on one account. Call the holder of your current 401k and ask them to help you, they will be delighted to assist you in moving money into their accounts.
posted by jacalata at 1:55 PM on June 4, 2013


I would rethink the baby thing with your husband until you can get through to him on financial stuff. Babies need live and good fathers, but a big part of being a good parent is providing a kid with financial security.

The OP is already expecting.
posted by anderjen at 2:20 PM on June 4, 2013


Discopolo, baby's coming in December--I think it's a bit late to rethink it now.

I'm not really able to comment on anything else, but on point five, I want to suggest, as gently and kindly as possible, that you may need to take a few deep breaths and consider the idea that you cannot, in fact, have it all. I don't say that cruelly, but, well, congratulations, you're middle-class in America, from the sounds of it, and that means that sometimes (usually when you're already vulnerable, like now) you have to make hard, crappy decisions.

You need to decide what's most important to you. Time with the baby? Saving for retirement? Paying down your debt? Living in a bigger house/safer area? Your career? An ideal daycare situation? You can balance some, but probably not all, of these things.

There are almost certainly daycare options--maybe not amazing ones, but adequate ones--in your current neighborhood. Infants don't need a lot of space; there's no reason to prioritize moving for the sake of the baby right now. Does bigger house/safer area outweigh more money/more time with baby? If time with the baby is the most important thing, consider what your take-home salary less 1200/mo for daycare is--are you willing to give up that much if it means your child has a full-time parent for a year? If paying down debt is the most pressing thing, are you willing to accept less-great daycare so that the extra money can go to that? In this scenario, all of your choices are imperfect.

Having a child is a balancing act, and, in my experience, one in which you are constantly, painfully aware of the ways in which you might fall. You have to decide for yourself where the softest place to land will be. For me, it meant ok-not-great daycare, decent place to live, no savings, almost no retirement, and a short commute so I could spend more time with my kid. You sound like you're starting in a much better place than I was, but the general decisions you have to make are still the same.
posted by MeghanC at 2:25 PM on June 4, 2013 [1 favorite]


The simplest way to keep track of your money is to spend cash. Or at least, virtual cash :-) What I have found works best for me is a percentage-based budget where take-home pay is allocated to several categories as a percentage of your total pay. If you earn more, you'll have more actual dollars in each pot, but the ratio always stays the same so you can ensure you are balancing your spending appropriately. So for example, you might break it down like this:

Housing, 25%
Debt, 15%
Retirement, 10%
Everything Else, 40%
Vacations, Fun Money etc. 10%

I have seen more detailed breakdowns with many other categories but I have found that those tend to be so variable. We spend more on the car because my significant other works far away, but we spend far less on groceries because we are vegetarian. We also like to eat out. So we hAs worked out amounts that work for us.

I suggest that you set yours up as follow:

- 10% to retirement. If your employer contributes a lot, maybe make it a bit less
- 15% to the debt until it is paid off, then redirect that to a college fund for baby
- Then deduct all your fixed expenses (rent, phone, car) from the budget and see what's left
- Portion the remainder out to jars (or virtual ones in a spreadsheet) for groceries, entertainment, emergencies, vacations and baby expenses.

Easy!
posted by JoannaC at 9:03 AM on June 5, 2013


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