We’ll just be getting our emergency fund fully stocked again at the end of this month, so having to tap it for a new vehicle was not going to be fun, but would be do-able. Then my husband and I talked last night and decided we would try an experiment: only use one car.

We live within easy walking distance of my workplace, and biking distance to his workplace. He said he would commit to biking if I could walk to work. This way, we can park the Saturn in our garage, and leave our newer car (a 2005 Ford Focus purchased in 2010 with cash) at home. Since we work opposite shifts, this could work, and attempting it in December/January will show us whether or not we could stick with it in warmer weather.

The plan is that I would walk to work in the morning, and the car would be at home during the day for him to run errands and go to appointments. Then he would leave for work in the late afternoon, and I would walk home and have the car for evening errands, and to visit my parents on the other end of town, and then he’d be home after I’ve gone to bed. If the weather is really too bad to walk/bike, we can work out other options (dropping each other off, rides from friends, etc.).

We’ll drop back the debt snowball for a few more months to save a bit more, in case we decide that we really do need two vehicles. And I’m going to buy some new mittens.

We got a letter from my spouse’s employer informing us that the organization is increasing salaries by 2% in 2012, which will offset the taxes, so his paychecks will stay the same. My employer is increasing salaries by 1%, so I’ll actually see a decrease come January. We will budget with this in mind, which is all we can do. Better to know this now than after our first paychecks of the year and the budget being short.

I also really appreciate the IRS’s withholding calculator, and Dinkytown’s Section 125 calculator, mainly because I like knowing what my paycheck will be after a raise, and knowing that I’m paying the right amount of federal income taxes helps me sleep at night.

There’s pretty much a calculator for anything, so knowledge of spreadsheets and formulas isn’t necessary to determine all kinds of fun financial stuff.

Debt #1 – $6k, paid off in August 2010
Debt #2 – $9k, pad off in September 2011
Debt #3 – $38k, to be paid off in 2013

It doesn’t seem all that long ago that I wrote that we’d paid off Debt #1, and it really wasn’t. How did we pay off $15k in less than 2 years? And how will we pay off $32k by 2014? By being very lucky with our jobs and living well below our means. We’re fairly average according to Dave Ramsey, with being able to get through the Debt Snowball in three years–$53k in three years doesn’t sound too shabby.

I recently heard that students shouldn’t borrow more than they will make in their first year working. After I thought, “that’s impossible,” I realized that this holds true for both my spouse and I. He made more than $15k his first year after he finished with school, and I made more than $38k. And, with not changing our lifestyles from being students to part of the full-time workforce, quickly paying off the debt and saving over $25k in interest payments has been marvelous.

And then she told me she gets paid every week.

I used to get weekly paychecks when I worked retail, and it was pretty handy, since I could really only spend what I made in the last week. If I had a bigger surplus at the end of the month, I would transfer that to savings. It was easy, even though I wasn’t making much.

I sat down with my trusty Google Docs spreadsheets and figured out the breakdown. First, I had to figure out exactly how much she would make (net/take home) for the entire year. I used one of those handy paycheck calculators to get a close estimate, then rounded down to be safe. Then I took that and divided it by 9 months and then 12 months. The difference is what she needs to save in order to live comfortably the other 3 months she’s not working (she could get a summer contract position, but we’re assuming she won’t, but if she did, then the savings can go toward debt/a replacement vehicle). Then, I figured out her budget. She decided on five very simple categories which she mainly keeps track of mentally:

-rent (includes all utilities)
-debt (student loan payment)
-savings (for breaks/summer)
-mom (who pays for car insurance and cell phone family plan)
-everything else (food/gas/fun stuff)

So I figured out how much she can put toward each of those categories each week, which makes it really easy for her to know if she’s on track. As soon as the deposit hits her account, she can transfer some to savings, some to her student loan, and mentally set aside a bit for rent and mom, and the rest is her grocery, gas, clothes, and eating out budget for the week.

This was actually a pretty interesting exercise, and I hope that it gets her excited about having a real income again (she worked through college) and about paying off debt. She already wants to pay extra on her loans, since I’ve talked up Dave Ramsey so much, and she could save a bundle in interest even paying an extra $20/month toward her loans.

I was pretty proud when she graduated, but I think I’m almost more proud of her for wanting a budget and to pay off debt.

This is not the kind of budget I have, which is why I think it’s more fun and easier to ‘follow’ my plan each month.

My budget follows the money, instead of me following the budget. This won’t work for everyone, but if you have wiggle room each month but don’t want to feel guilty about spending some money on frivolous things, I think this is the way to go. Tracking expenses for a few months helps you see where your money goes, and then you create a budget based on that.

For example, if I see that my husband and I spent $75 on gas last month, and $70 the month before, and $80 the month before that, then I can easily set our gas budget at $80 or $90 and know we aren’t likely to overspend that. I’ve noted similar patterns with our eating out and fun money categories, so I’ve made each month of the budget match our actual spending habits. Then I can see what will really and truly be ‘left over’ and can be used for the debt snowball, savings, etc.

It’s this type of budget that lets me know we can pay off our debt by our goal date or even earlier. This also lets us absorb a car repair or larger medical bill without too much fuss and bother. It’s also easy to see if one category is out of proportion with another, and make me stop an analyze spending habits and change them.

I am a bit annoyed with the Federal Student Loan servicer because they are switching websites sometime in early October (supposedly) and then www.dl.ed.gov will be no more. It will then be www.myedaccount.com, which means all of my payment history will probably be wiped out, just as it was when I switched servicers when consolidating my debt. And, no doubt, Mint.com won’t work with the new site right away, which means tracking the debt snowball with the ‘Goals’ feature will be messed up. I can’t really see a positive to this, other than maybe the new site being easier to use… we shall see.

–

Husband and I have had houses on the brain since seeing a listing for a super cheap-o house in a neighborhood we like. Like, $60K cheap. The major issue that made it so cheap? No appliances. But I just saw that as a potential opportunity to have the freezer-on-the-bottom fridge, the energy efficient dishwasher, the gas range with warming drawer, and the front-loader HE washing machine that I so desire. Someone else snatched up the house within a couple days, but it got us more seriously considering getting pre-approved.

We checked with the loan specialist at my husband’s credit union, and determined our income will most definitely allow us to buy what we want (small, probably older home, in the middle of the city). However, we decided we definitely want to pay off all of the debt before saving for that down payment. And, we’d like to go on that trip to Paris before buying a house, too. Maybe even get that convertible I’d really like. Why? Because we are weird, that’s why.

I actually mentioned my dream to buy a house with 100% cash to a family member at our vacation last month, and got a very “you are really WEIRD” look, but that is absolutely okay with me. So what if we live in an apartment until we’re 35? So what if we insist on a 15 year mortgage that can be paid off before we retire? So what if we care more about being able to save money than have a McMansion? As Dave Ramsey says, normal is broke–don’t be normal.

This is my husband’s remaining student loan debt. There’s $6.89 of interest on this sucker. Thanks to September being a five paycheck month for us with five Fridays, this thing is going to be all gone on September 30.

I have enjoyed making payments every week on this debt instead of just one monthly lump payment. It does help my motivation more to login to Mint.com and see it dropping week by week instead of just month by month. This takes some closer attention to the budgeting, but I think it’s worth it to see this:

Probably the exact same amount of money gets paid toward interest doing it this way, but it feels more like hacking your way through a dense jungle using a machete, each chop of the blade satisfying a need to make it through vs. using a bulldozer and just running everything down with one little crank of an ignition switch. Or maybe that’s just me.

I always tell people to think long and hard and literally do the math before applying to graduate school. For some degrees, it just doesn’t make sense to go into debt for a job you may never get. I was very fortunate to find a job in my field so quickly after graduation, but unless you’re getting a professional or technical graduate degree, it could just be a lot of time and a lot of money with little to show for it.

It’s a really cool way of thinking about what I make. I try not to let my salary define me, but I feel somewhat validated by what I get paid. I know my annual salary, and I think it’s quite generous for my position. I did not expect to get such a wonderful job straight out of graduate school, so I am grateful not only for the job, but that it exceeded my salary expectations significantly. I went into graduate school knowing that I’d have to make a specific dollar amount per hour post graduation to pay off my loans, and I got it and then some.

With all of the benefits listed, my total compensation is actually about $10K more than my annual salary. This is kind of incredible to see on paper, and I really appreciate it. I’m sure someone could determine these numbers for themselves by looking at their benefits packages and pay stubs, but it’s nice to have it all laid out.