post off: how are your finances?

moneygami

Okay, you can feel free to go anonymous for this one — keeping in mind that your comment might not be approved until later in the day. The past few years have seen major upheaval in my personal finances just like the rest of the US. We moved to a city where our cost of living tripled, we bought a house at a price (which was cheap for the area) that a year earlier I would have considered insanely high, and after a year first I was laid off, and then my husband! I’m delighted to tell you that I am once again fully employed (at a job I love), my husband is doing well with his own work, and we weathered our jobless year just fine. But now that we’re beyond the panic of “Can we pay the mortgage this month?” I’m thinking more about our 401(K)s, the level of our savings, and our long-term financial situation. What about you, if you are interested in sharing? Were you affected by the fallout of the housing market? If so, how? Was your job a casualty of the economy? Have you bounced back? Are you still struggling? How are you planning for your financial future? — Mary T.

Photos of “moneygami” by Hasegawa Yousuke originally appeared on Whorange.

From our partners

We’re actually doing really well. We moved to North Carolina, which had a much lower cost of living. And while finding jobs was a little hard at first, both my husband and I eventually found one even though at the time I was only working part time hours. A year after that, we got a very nice house, I work full time and have a 401(k) and health benefits and my husband is doing more freelance for extra cash. We’re not wealthy, but we are comfortable: ) I know that if we stay in New York or moved to Arizona (where i’m from) that we most likely would be telling a very different story.

I sadly have no idea what to do. I know nothing about IRAs, have no retirement set up, and a savings account that rises and falls due to my needs (car, family, etc).

I’m a semi-recent college grad and was laid off for about a year and a half. And while, luckily, my unemployment benefit was enough to cover the rent in my crappy Bushwick loft plus some beers and a falafel I did blow through my savings.

I suppose I’m on the lucky side in that I’m relatively young and don’t have a huge debt burden.

My plan is 20/30/50. Every dollar that comes my way is split: 20% into a savings account at ING Direct that is linked to my primary checking (because it takes 2 business days to transfer the money, I tend to keep my hands off) which I’m going to continue to do until I’ve reached a savings goal of 50% of what I NEED for 6 months; then 50% goes into my primary savings account which I draw on monthly for my must-haves like food, rent, cable and phone bills, gas, electric, etc.; finally, because I’m not a stoic, I get 30% of play money, my no-questions-asked, do whatever I want with money.

Once I get 6 months worth of my must-haves budget put into my ING account I’m going to start investing in index funds at about $1,000 per investment. This, mind you, isn’t gonna happen until I’ve saved up my 6 month emergency fund.

So long as I stick to 20/30/50 I’m good and I’m also putting another 3% of before-tax income into an investment account from my employer. After a few more months on this job they’ll contribute a very generous 7% more. That means 10% automatically into a retirement account (all of which is pre-tax, 3% of which is my money), 20% of my after-tax income goes into a savings account that’ll eventually be invested so that in a few years I’ll have enough for a down payment on a house, or a car or if I want to take some time off before I settle down for kids and a husband, etc.

So yeah, I hope that helps you. I’d really, really, really recommend picking up “All Your Worth.” It’s an AMAZING book written by a very smart author who’s a Harvard professor and works with Barack Obama (she’s also been on the Daily Show a number of times and is a major advocate for credit card and consumer finance reform).

Hope that helps all of you!

Megan B.

First off, Erik, thanks for sharing your plan! It’s inspiring!

I feel like I’m a “financial work in progress”. I started off poorly with money in college and have had credit troubles ever since — though I’ve slowly but surely built it back up enough to qualify for loans and such. We bought a house almost 2 years ago, and have been making our mortgage & bills every month, but I always feel like we are “just scooching by”. Not much savings (except for our work 401k’s) , and quite a bit of debt.

Add to that the fact that my husband just finished year one of his masters program, and you can understand why I’ve picked up TWO extra jobs recently. I want to be able to face his massive student loan debt without a huge pile of pre-existing crap to pay down. It’s a waste of $$, anyway. So the goal of my crazy work life is to get rid of that old debt and start saving. We’ll see how it goes….

Sarah

We are still not where we were before all the big mess, but can’t complain, especially when you look at the people in the Gulf who went through the economic upheaval from Katrina, then the crash and now BP. Or the entire state of Michigan that seems to have been on a perpetual slide since I don’t know when.

We were able to keep up savings, retirement and 529s. Did some small house projects ourselves that normally we would have hired someone to do. Some projects, like the kitchen, we just pushed out indefinitely and are not even thinking about now. I think in some ways the last two years have given me a better appreciation of the functional vs. what would be nice or good for resale.

ellobie

The 20-30-50 plan is the heart of the book All Your Worth by Elizabeth Warren & Amelia Warren Tyagi. It’s a relatively quick and painless read, but the ladies really lay things out in a way that absolutely makes sense. I read it several years ago and while I’m not going to retire at 40 or anything, it’s definitely made an impact on my spending. Mostly my “needs” spending. Getting everything in the “needs” category at/under 50% of my income was the key part for me. But the fact of the matter is that until an individual is ready to say and MEAN, “This is important to me,” they’ll always come up with an excuse for why they “can’t” do it.

Lauren

After my husband was laid off last October (and the fact that he was earning about 66% of our household income) I freaked out! But then, I took a deep breath and re-evaluated. I realized that with his unemployment and my job, we’d be ok. It was rough and our celebrations (Christmas, both birthdays, etc) were much more subdued this past year. We’d been living within our means in order to pay off debt, so we were able to switch our extra ‘pay down debt’ budget to our everyday living expenses. We were very thankful that we hadn’t just tried to buy a new house, had a baby, or planned a big trip (all things we thought about doing in 2009)! Thankfully, he got a new better job and started last month, so I finally feel like we’re able to breathe again!

We use budget software called “You Need a Budget” that accounts for every dollar in spending categories. You gradually build up a buffer in your checking account so that you live off the money you earned the month before and build up the buffer with the money you earn in the current month. It is easy to customize and doesn’t take too long to enter the information each week. It’s nice to see where our money is going and where we WANT it to go (categories for vacation, new house, etc, roll over from month to month). In the future, I hope to be able to ignore the bank account balance knowing that all our expenses can be covered by our buffer if the need arises. It’s not a fast process, but it’s fun to watch the ‘buffer’ account grow!