I'm taking over the finances...what do I need to know?

[WatchingThemGrow]

We picked duties when we got married 5.5 years ago, and DH picked bills/budget/etc. I picked all shopping. We FINALLY realized that the person who spends the money needs to know how much there is to spend. :duh:

He used to do Quicken online, but now does the off-line version. Apparently, Mint.com doesn't have the projection tool he really likes. I've never balanced a checkbook aside from doing it in middle school math class, and I'm not a spreadsheet person. I'm using my perfect score on the Math part of the ACT as my one credential for this new job. :jammin:

I completed the Larry Burkett (http://www.amazon.com/Manage-Your-Money-Larry-Burkett/dp/080241477X/ref=pd_sim_b_1) course maybe 15 years ago, but I haven't looked at the Dave Ramsey stuff. I think DR suggests using cash, and I do well to have my debit card in my purse 2/3rds of the time since I'm usually juggling two sweet little boys on every errand. No way cash is happening... Is there anything quick and easy you can recommend for me to read/follow?

We're not in huge debt, very recently racked up a couple thousand on AmEx and a couple thousand on home equity, plus our mortgage. This is all likely related to our new High Deductible Health Plan where we had to pay $3000 oop Oct-Dec, then again starting in Jan. Makes me ill to learn we're paying finance charges. I need to find get my bearings in the "cash flow" part and figure out how to make it all work. The debt needs to go and we need a spending plan, a savings plan, and we need to try out paying $1000/mo. more for a mortgage since a home that would better fit us will be about that much more if we use our equity as downpayment.

Anyway...tell me whatever you can think of that would help.

Sorry if it is disjointed. I'm also trying to watch Black Eyed Peas on the superbowl half-time show ;)

[katydid1971]

I know that a lot of people here are Dave Ramsey and I have heard good things about him. I used Suze Orman 15 years ago when I was in a lot of CC debt. I got out in a couple years and now only have my mortgage as debt. I had an earlier edition of this book and I think its a good starting book. http://www.amazon.com/Steps-Financial-Freedom-Practical-Spiritual/dp/030734584X/ref=sr_1_7?ie=UTF8&qid=1297044438&sr=8-7
First thing you need to sit down and figure out how much you have coming in and going out. You don't need a spread sheet or Mint. I personally prefer a sheet of white paper with a line down the center with what is coming in on one side and what HAS to go out on the other. Find you bills or your check book and figure out how much you need each month for mortgage/rent, heat, water, phone, cable, internet, retirement, daycare, etc. Then you will know how much is flexible spending. Then decide how much you want to pay off your bills. DR says to pay the lowest one first SO says pay the highest interest one first. Make sure that your debt payment isn't going to force you into more debt. I hope that helps some.

[KrisM]

I do a budget in a spreadsheet, but only because I can't lose it that way. It's only a list of categories and money allocated to each for the month. I have a full list of categories and some months, they are $0. I also just got back into sub-accounts and put 1/12 of car insurance away, 1/12 of property taxes away, etc per month, so that when the bill comes, I just move it to the account and pay it.

I just started getting back to really budgetting again. We don't have consumer debt, just a mortgage, but I fell like a lot of money just disappears. I am going to budget and see how much we can save so we can do some house upgrades that we'd like to do.

I also just signed up for the budget plan for electric and will do gas when I can (June). That way, the bill is always the same except when it's fixed once a year.

What I learned too was that it doesn't matter what DH likes and how he wants to do it. If I'm in charge of something, it needs to be done how it makes sense to me. When we got married, I had my way of doing things (sub accounts in my checking account) and he used Microsoft Money. I took over and hated Money and then just stopped tracking/budgetting completely. So, now I'm going back to what works for me.

[Philoscript]

Hi,

I'm not a math whiz either. I took over bill paying from my husband (who is an accountant and was doing an excellent job) in order to understand where our money was going and how we can cut back so I can stay at home with our daughter.

Steps we took:

1. Sit down with your husband and decide on your values about everything in your life. If you can clearly see your values (ie. Education, Money, Family, etc.), you are less likely to spend your money for things that don't reflect your values.

2. Determine your income after taxes and the pay schedule in which it arrives. Is it Direct Deposited? What do you make? (this is for you and your husband).

3. What bills do you have? When do they become due? What is the amount due?

4. Go onto DaveRamsey.com or any other budget site and obtain a reference point for creating a budget.

5. Gather your credit card bills and bank statements. Look carefully to see where you are spending your money. Is it on big purchases? Spur of the moment purchases? Emergencies? Groceries? Educational purchases? Tally the figures and put them in the appropriate places in your budget.

6. Create a budget: We currently use MS Money to use as a check register and to enter transactions with defined categories that are important to us (ie. home, auto, groceries, etc.). MS Money is no longer available, but Quicken does the same thing. This helps us to see where the money is going and how to cut back. Also, I established an Excel spreadsheet that was very basic and did the following:

Since we are paid on a biweekly schedule we created a spreadsheet (very basic-no math involved) that details each payment schedule biweekly. I'm trying to attach an example, but it's not letting me. If you want a sample, PM me.

Paycheck (Date)

A line item for each fixed expense- For us these are our insurance policies, some debt, our rent, etc.

A line item for each variable expense- Again, for us, these are our cell phone cell bills, groceries, etc.

A line item for each savings goal-This is then set up for automatic withdrawal two days after the paycheck hits our account and is automatically entered into MS Money via a tool they offer.

On this sheet I name the bill/savings vehicle, amount due and the payment method. This also helps if someone else has to take over in case of illness or other reasons.

In case you compare my budget sheet to an expert's, you'll notice that I do not save for clothing, travel or entertainment. We're focused on purchasing our own home, so the above categories are not important to us right now. However, if our daughter needs any clothing or we need any clothing, we pull the money via the money going to savings. This is not a monthly occurence for us and would typically go into savings if it were not spent.

Also, many of our bills were placed on automatic payment schedules in order to avoid late charges and other fees. Moreover, our credit cards are paid in full every month as well so there are no line items for credit cards.

If you need any more help, let me know. I'm sure someone else on here may have a better method.

Hope this helps.

[WatchingThemGrow]

good tips so far. I'm trying out mint.com since everything is loaded already and I only have to categorize things. The bar graphs already show up. It says I have $8 more for gas for the month. eek. A few trips to the airport, to the consignment sale, the children's museum in the Ody will do that to you, I suppose.

I think I'm going to have to do the legal pad budget thing at least once to get a handle on what goes where ACTIVELY rather than just watching the computer do it. Sadly, it looks like we have a small chunk going out monthly in housecleaning and babysitting. I really rely on that help, though.

[justlearning]

Did you or your DH recently start earning considerably more money than before?

If not, I'm curious how you will be able to set aside $1000/month extra when you had to go into debt to pay your $3000+ in medical bills?

If you are able to set that much aside each month, then start with paying off your debt first. Once that's gone 4 months from now (if you owe $4000 total), then start saving money.

But I would discourage any consideration of upgrading your home at this time. I would wait to do so until you have no debt of any type (incl. no car payments) other than your primary mortgage. And I would wait until you have enough money saved up to pay for your next new vehicles in cash, a good amount of money saved for college/retirement, and a good amount in savings.

Only then would I consider upgrading a home--and only after you have proven to yourself that you are definitely able to make that payment (as you wisely said that you will do by putting that amount aside now) without ever having to touch it for emergencies that come up. If you ever have to touch that money for fixing a car, repairing your home, paying medical bills, etc., then that means that your income isn't sufficient enough to be able to afford that new mortgage without going into debt. And there's no way that I'd feel better living in a bigger home if I knew that we were going into debt as a result.

[WatchingThemGrow]

philoscript, I'd love to see it, so thanks for offering! I'll pm you.
justlearning, no new big salary changes, just the new high deductible health plan that another poster said almost bankrupted them. I SAH now (missing my nearly $50K teaching salary) and we've added 3 kids since 2006, one who has needed ECGs, asthma meds, etc. I think that's a lot to absorb, and we've done it all without me even really looking at finances very much. DH is good with $, and I've just been blissfully unaware... We do have all that other stuff in savings, no car payments or other debt, but we're not currently adding to college, long-term, emerg. savings (6 mos worth saved) because of the recent increase in OOP medical expenses). The "big picture" is fine, it's just that in the haste of having 3 kids in 3 years, we've forgotten that the right hand needs to see what the left hand is doing. I think once I have everything laid out with a spending plan/goals we'll be able to knock it out without too much pain. The new house payment shouldn't be a pain, we've just been undisciplined until now for the most part. It's things like... maybe we should only stay on Disney property one night when we pass through, and maybe I should only keep 1 or 2 of the HA dresses from Costco, not all 3, etc. GREAT advice and reminders!!! thank you!

[KrisM]

If not, I'm curious how you will be able to set aside $1000/month extra when you had to go into debt to pay your $3000+ in medical bills?



IMO, having the person who spends the money be more of all the money will greatly help in this. If you have no idea what's really going on, it's super easy to just spend the money. If you take the time to budget, think about the money before it's spent, etc, you can make changes in spending and save a lot more on the same income. I used to be an excellent saver, but 3 kids in 4 years and all the things that go with it, moved my focus. I've recently redid a budget and it's amazing how much I save now that I'm paying more attention.

[secchick]

If your issue is the medical expenses and the high deductible plans, I would do an HSA and put some of that extra $ in there. It would reduce your taxes and keep you from having to pay finance charges on that amount.

We are fortunate that my employer puts money into the HSA that, including the difference in premiums vs the traditional plan, exactly covers the deductible. The premuims with HDHPs are much lower, but the downside is possibly having to cover a large amount, as you know.

[justlearning]

philoscript, I'd love to see it, so thanks for offering! I'll pm you.
justlearning, no new big salary changes, just the new high deductible health plan that another poster said almost bankrupted them. I SAH now (missing my nearly $50K teaching salary) and we've added 3 kids since 2006, one who has needed ECGs, asthma meds, etc. I think that's a lot to absorb, and we've done it all without me even really looking at finances very much. DH is good with $, and I've just been blissfully unaware... We do have all that other stuff in savings, no car payments or other debt, but we're not currently adding to college, long-term, emerg. savings (6 mos worth saved) because of the recent increase in OOP medical expenses). The "big picture" is fine, it's just that in the haste of having 3 kids in 3 years, we've forgotten that the right hand needs to see what the left hand is doing. I think once I have everything laid out with a spending plan/goals we'll be able to knock it out without too much pain. The new house payment shouldn't be a pain, we've just been undisciplined until now for the most part. It's things like... maybe we should only stay on Disney property one night when we pass through, and maybe I should only keep 1 or 2 of the HA dresses from Costco, not all 3, etc. GREAT advice and reminders!!! thank you!

That's great that you don't have car debt--it sounds like you're doing a lot of things right. My post was just from my very frugal, never-want-to-have-financial-pressure perspective. Our health insurance has a $4000 OOP deductible per person and after that we still have to pay 10%. So for the last 4 years (when DS2 was diagnosed with cancer and DS1 has needed other services) we have had to pay over 8,000/year (usually closer to 10K) in medical expenses in addition to lots of money spent on medication that isn't covered at all by our insurance. So I understand that medical bills can be a big chunk of money. I share that to say that your bills could be even higher in the future so it's always good to not have your living expenses come so close to your income that any changes in your expenses cause major stress.

I agree that it'll be good for you to take over the finances. I wish you the best!

[justlearning]

If your issue is the medical expenses and the high deductible plans, I would do an HSA and put some of that extra $ in there. It would reduce your taxes and keep you from having to pay finance charges on that amount.

Agreed--we max out my DH's HSA every year so at least some of our medical expenses are on pre-tax dollars.

[WatchingThemGrow]

Oh, goodness! After hearing of you HDHP, I commend you for having $$ left for food! That's outrageous! It makes me thankful for ours!

I think we've both been the frugal types before marrying, then we've just been trying to keep our heads above water with the DC lately, taking time to talk about life (while walking at the gym) but not taking time to sit down and talk about $$. No fault, just our own busyness.

We do have an HSA and we've been using that. In fact, it just got drained last night with a bill and will be filled back up on Thurs. :) I think the main thing is that I just need to stop buying stuff.