cha-ching

I wrote an entry a couple weeks ago about staying home with Joseph and I feel like there are about a million things I left out of it, but I was hurrying to get it posted. It was like college all over again and I was turning in a rough draft instead of the final. Not a good feeling. One of the things I did manage to mention was the money issue, and this entry is going to be dedicated to that: Moolah. Dinero. Pénz.

I remember during my Literature and Film class back at BYU when we talked about how money itself wasn't the root of all evil, it was the love of money that caused so much havoc. Or maybe I talked about it in my paper on The Treasure of the Sierra Madre and it wasn't a class discussion at all...and come to think of it, maybe that was my Bible in Film and Literature class. (I really liked the film classes the English dept offered. Good stuff.) Anyway, wherever it came from, I digress.  

Love of money=bad. Having money=not so bad. It seems to be a slippery slope. We've all heard that scripture about the rich man and the eye of the needle, and I can certainly see how it's related, but it also seems like there are a lot of wealthy people in our church. Good people, who give away a lot of their money (at least 10%, we might assume) and genuinely care for others and are good at saving and all those things. So maybe that's why they're so wealthy...they have good discipline and good control over their spending. But what about those people who aren't rich but who seem to always have the newest technology gadgets, who have really nice cars, who wear lots of brand name clothes, live in a massive house, and on and on? It turns out they may just have the appearance of wealth but not the actual thing itself. I just always assumed that if they spent that much, they must be able to afford it. And they must be saving an appropriate amount on the side. I know, naïve of me to assume adults were acting responsibly. But then I got this book from the library that I read a review of on Amazon and it turns out that most people who really are wealthy, meaning actual millionaires, never act like it. That's how they get to be that way. They drive Chevys and Fords and live in three-bedroom houses in middle-class neighborhoods. And those who act like they've got lots of money are doing just that, acting, because they spend almost everything they make. So a person who makes $700,000 a year but spends $690,000 of it is, obviously, not going to accumulate much in the way of real wealth. I wish everyone I know would read this book, it was that wonderful to read. The Millionaire Next Door by Thomas J. Stanley and William D. Danko. They wrote a second one too, and I just love the title: Stop Acting Rich...and start living like a real millionaire. I haven't read it yet, but I'll bet it's full of fascinating examples and trends, just like the first one.

So all of that felt like a really long introduction to what I really want to write about, which are the ways that Brian and I are saving money. I'm quite proud of our efforts. I'm mostly proud because I've never been that great at saving so this feels like a real accomplishment. When I got my first paycheck from teaching, I set up an automatic transfer of 10% into a savings account and called it good. That happened every month, but sometimes I had to take a little out of my savings for trips or things, and one way or another, the balance went up very slowly. When Brian and I found out we were pregnant, we knew that I would stay at home and we would lose one income (and with it our carefree spending, which in no way was extravagant, but we didn't really have to track anything. Or I should say that I didn't. Brian has a head for numbers and always knew exactly where everything was going.) So we started adjusting our bills and our spending. Here are the main things we did:

1. We looked at utilities to see where we could reduce costs. Brian had already canceled the satellite before we got married when he realized how much he was paying every month to watch one hour a week. We got rid of the landline to our house since we both have cell phones. (There went $40.) We set the thermostat lower during the winter. (60 degrees! Completely off at night! We wear sweatshirts and slippers! Saves us more than $100/year.) Nothing we could do about the water, but it wasn't very much to start with. We also don't have garbage pickup, or recycling (we take it in ourselves, which is free).
2. We bargained for cheaper contracts of the things we kept. Our internet is a “special,” which we have to renew every six months or so. They keep trying to raise the price, but we call them and tell them we're leaving and they say, “Oh, we have this great deal going on that you could take advantage of if you stay!” Brian's cell phone is through his work, yay for no costs there, and we also took advantage of a deal offered through his work to reduce my phone plan to less than $40/month. No added texting or internet costs for either.
3. We switched Brian's car insurance to my company. Better rates. Best in the world! (Thank you, Dad, for making it possible for us to use USAA.)
4. We started tracking every single purchase—how much we spent, what we spent it on, which category it fell into, what the total was for the month. The first month, we did it on a piece of paper taped to the kitchen cupboard, but then Brian made us a snazzy spreadsheet on the computer that totals for us and tells us how much we have left. You think a lot harder about every purchase when you know it's going on the expense sheet. Now, it's second nature.
5. We set a savings goal. It feels awesome to reach that, and then exceed it.
6. Brian started investing in the stock market. He researches stocks online and this has become his hobby/obsession. We have learned SO MUCH. (I can say we because he tells me everything he learns about dividends and wash sales and commodities. Do you know what the company is that is the biggest (according to market capitalization, i.e. worth the most) in the world? I never did...but now I can tell you the top three. See below!)
7. We started planning menus and using lists for grocery shopping. We set a limit on food expenses for the month that included groceries and eating out, so we had to fall under it. We use coupons and a rewards card in the store and stock up on sales. We even comparison-shopped one week with Brian at Wal-mart and me at Fred Meyer and compared prices over the phone; that was a huge pain but let us know that it wasn't much cheaper to buy all our groceries at Wal-mart so we could keep going to our favorite Freddy's. (FYI: going to BOTH stores would have saved us $10. Going to just Wal-mart would have been $7 cheaper than the same groceries at the store a block from our house. No question about our final decision.)
8. We stopped eating out so much, and when we did, we tried to go to less expensive places. We have lots of dinners out for about $20 (Sizzler, anyone?) and save the big splurges for birthdays, anniversary, and Valentine's.
9. We use credit cards that have rewards and then use those rewards for everyday things we'd buy anyway.
10. We shopped around for the best CD rate and put all our savings in there. Everything we accumulate in the meantime goes into stocks.
11. We had one student loan forgiven. This involved looking up my school, writing to the government, and then, poof! No more little loan. But the big one is still there. :(
12. I invested in a short-term disability insurance when we got married because it was applicable for giving birth. They took out a bit from my paycheck each month for about two years (pre-taxes!) and then when Joseph was born, we got a nice check from them. Woohoo!
13. I took maternity leave instead of resigning. I was paid for all of my accumulated sick time and was covered through FMLA for health insurance for 60 working days.
14. We had double coverage of health insurance for me and Joseph at his birth. End result, we didn't pay a dime of those bills. Our out-of-pocket expenses had all been met.
15. On the subject of health care, we called about every bill we got that we had questions about. You wouldn't believe the mistakes that came up that would have cost us money, or how often they would send us a bill without going through the secondary insurance.
16. We donate lots of things to Goodwill and keep a detailed list so we can make an accurate deduction at tax time. We have qualified  for the itemized deduction every year, so it was worth it, rather than taking the standard deduction.

Joseph has even gotten into the game because he wears cloth diapers all day and even actually likes the homemade baby food I've made him! When I started making this list, I had no idea that it was so many. I conferred with Brian and he reminded me of some that I'd forgotten about. The wonderful thing is, it hasn't felt like a huge sacrifice. We still have fun, enjoy the world, relax, and do things with friends and family. We don't live on just Ramen and oatmeal, and we have never said, "We can't afford that." We say instead, "We choose not to spend our money on that." Because really, it comes down to what are needs and what are wants. Do I want a matching set of furniture in the living room? YES. Fully aware that the red couch does not match the teal and pink one. But do I NEED a matching set? No. Don't need more than the seven pairs of pants I regularly wear. Don't need that Slurpee. Don't need an iPhone. The wants are endless...the needs, less so.

There are so many other things that are enabling us to meet our goals. We have the blessing of a low rent. I already had a car with good gas mileage. Brian drives a work truck. We have no car payments because Brian paid his off years ago and mine was a gift. We have lots of generosity bestowed on us by family at all times of the year. We use the library for movies and books. We don't have cable or satellite at home, no internet on our phones. Our two “luxuries” (because they're not technically essential) are Netflix and the internet at home. I did the whole internet-at-the-library thing for a year and a half, and that was way longer than I would have liked.

The entire reason for this in the beginning was mostly two-fold: a down payment on a house and to bulk up the retirement fund. We wanted to have a nice down payment but now we're thinking of doing a 15-year mortgage or even paying cash, depending on how long we are happy staying in this house and when I go back to work. And retirement looks a long ways away but won't be if we can continue to live frugally and invest wisely.

The greatest benefit from all of this is, for me personally, the discipline I've learned. It's changed my habits on a day-to-day basis. I never have to worry that something huge will wipe us out financially. And I love that I'm not saving so that someday I can spend like crazy; I'm saving because that's what I want to do. I don't think we'll ever spend like crazy. Even if we end up like the titular people in the aforementioned book. Hey, we can always dream. :)

Now, yay to you if you read all the way to the end! Here's your prize: 1: Exxon 2. PetroChina (China's gov't oil company) and 3. Apple. (Based on 2010's fourth quarter earnings. Exxon is worth around 350 billion dollars. That number boggles my mind.)

So, if you're still here, I'm assuming you care about money. What is something you've done in your household that helped your finances?