Tuesday, February 23, 2010

How We Chose to Budget in the Fun Stuff

As my last post explained, we do make it a priority to have fun now while saving for our future.  My husband and I actually went back and forth on this for a couple of years since I felt we should save everything we possibly could, but he thought we should be able to live a little too. 

He was right, but we had to find a way that could make us both happy.  He asked me what I was worried about, and I realized that I just wanted all our bases covered.  I wasn't pissed that we spent money, I was worried we weren't saving enough.

We started a plan that would make us both happy.

We sat down one Saturday evening and wrote out our big life goals.  We then broke those into financial goals that could be achieved with our combined $78,000 income before taxes.  We set target amounts for each goal.  That sheet looked something like this in a couple of hours:


  • Mortgage - Continue overpaying $160 a month.
  • Tax and Insurance Account - $400 a month since we don't escrow and this would cover taxes, homeowner's insurance, and our CPA.
  • 401k - Continue contributing 6% of my salary (maximum that is matched).
  • Roth IRA - Continue funding $5000 a year ($300 monthly and the other $1400 whenever the market looks good).
  • Emergency Fund - $30,000 (full year) starting with the $10,000 we had plus an additonal $500 a month.
  • Home Maintenance and Auto Account - $200 a month (my last car payment) plus our $3000 seed money.
  • Scottrade Account - $2500 a year whenever the market looks best.
  • Vacation Account - $250 a month so we can take one or two of our normal vacations.

By covering those targets, I felt secure and we figured out what to do with our remaining money.  Check back tomorrow for our full spending breakdown.

What would make you feel secure?  If you have a partner, have you planned long-term with them?  Has a financial realization ever smacked you upside the head?

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