All in all not a terrible month. We managed a gain in our net worth and paid off a significant amount of credit card debt — this came from savings as we were participating in some credit card arbitrage. Unfortunately it looks like most of our gains came in our retirement accounts which means that we’re still spending more than our net income monthly. While I have put together a budget for “core” expenses (mortgage, food, gas, utilities), we’re still spending more than is getting put into taxable savings. This is definitely highlights the spending problem that I’m working to beat.

While my wife and I are definitely putting a good share of our money into retirement accounts, we still buy a little too impulsively with our net income. We’ve put some measures in place to help us out, but it seems we’re still letting our spending get ahead of us. We’ve agreed to only go out for meals two times a week, and both of us try to bring lunch to work at least 4 days a week. This has definitely helped us keep our monthly credit card bills a little trimmer, but we often let seasonal spending get out of control.

For example, since it’s springtime we’ve starting working on projects outside the house and it seems that we keep needing new garden tools, plants, soil, etc, etc to get our yard into shape. Since the beginning of April we’ve already spent over $863 on yard and garden expenses at Sears, Home Depot, Lowe’s and our local garden stores. I’m really not sure how we could trim that number back while still accomplishing all we want to in our yard this year. We did buy most of the vegetables for our garden during an annual sale at one of our local garden shops, and the new lawn mower we got this year from Sears was purchased during their early season sale, but even those discounts are a fraction of what we’ve spent. In the end I’d hope that we’ll end up saving some money through the summer on food based on what we’ll harvest from the garden, but it’s difficult to quantify how much that’ll be.

It would seem that the best plan would be to have a plan. Probably we need to sit down and think about how much we intend to spend each spring on garden-related purchases, and look to put extra money into savings through the year to meet that goal. Things like the new lawn mower ought to be a purchase that’ll last a while, but it’d probably be better to earmark some money for that specifically in our savings so the large credit card bill at the end of the month isn’t such a surprise. It’s not rocket science, for sure, but all those $75, $100 and $200 purchases sure can add up quickly.

I’d love to hear suggestions from others for how they deal with season spikes in spending. Spring is definitely the time of year that seems to hit us hardest annually, even more than Christmas.

I’m a Colorado native and I currently live in Denver. There was a brief period in my early 20s when I moved to the northwest, but my love of the Rockies (the mountains more than the baseball team) and a business opportunity brought me back. The business opportunity proved to be a bust, but my financial situation really started to spin out of control during the same period and some of it has stayed with me for years.

photo by ishrona

Like many people my age I got my first credit card almost 12 years ago when I turned 18 and started college. At the time I didn’t have much income, but credit was so easy to use I quickly started running up my balances. I was generally able to keep up with my minimum payments and not surprisingly my creditors were more than happy to increase my available credit and keep me spending. By the age of around 25, I had accumulate over $25,000 in consumer debt with little to show for it (I’ve always been into computers and it can be a costly hobby). I had also managed to acquire my first mortgage payment at the age of 22 by purchasing condo (recently sold, as previously mentioned). All told this left me with a grand total of over $155,000 of debt between my mortgage and credit cards. In an attempt to get ahead of my debts I refinanced by credit card debt into a home equity loan against my condo and promptly started running up even more credit card debt (thus the cycle continues).

About 6 months later I managed to get both of my loans refinanced into a single mortgage at a much more favorable rate. This move finally helped me stabilize my situation; I wasn’t making much of a dent in the debt I had, but at least I wasn’t adding more debt on top of the old. This became the status quo. I got a couple of fortunate breaks with my career, met the woman I married and we eventually bought a house together. Since the housing market wasn’t terribly strong in the Denver-area in late 2004 (for condos, at least), I decided to hold onto the condo and rent it out. That worked out fairly well — I was taking a hit on against my expenses for the place at around $200/month, but I was able to recover a lot of those loses on my taxes. Just before my wedding last year, I got a surprise offer on the condo and was able to sell for a modest gain, all just before the bottom fell out of the housing market.

Through so much of those early years (we’ll say from the time I turned 18 until around when we bought our current house) I was pretty carefree with money. While I did finally manage to get a better handling on my finances in my mid-20’s, I’d say that much of that was thanks to beneficial rates (thanks Mr. Greenspan) and a growing income. I do feel comfortable saying that these days I’m less impulsive in my purchases, but I feel I’ve clearly still have work to do. I still find myself justifying purchases of new computer gear that I may or may not need. And with the house now and the work we’re trying to do on it to improve it, I find myself buying more and more equipment and materials for project without ever thinking about the total cost.

And given that my wife and I are both employed and have more income than ever before I find we easily blow through the money that’s itemized in our budget as “discretionary funds” — we’ve each got our own hobbies and projects that are important to us, and while looking over credit card bills it’s obvious to me how all these little $5, $10 and $30 purchases that seem so small and innocuous can quickly add up. Hence this blog (which, I’ll note, cost me $80 to start)… a place to document my progress and frustrations as I try to get a handle my personal spending habit.

Okay… these posts can get lengthy quickly, so I’ll end here and work towards being more concise in the future.

I don’t know why this should seem like a difficult task, but it is. Due to some fortunate circumstances last year with my job and a real estate transaction last year we’re basically debt free, aside from the mortgage on our house. But we’ve got several large expenses in the works, too, and we haven’t really planned or saved for them as much as we maybe should have.

My wife and I got married last year and due to constraints related to her job (she’s a teacher), we didn’t take a big honeymoon after the wedding… we just went on a short (and inexpensive) trip to a bed and breakfast nearby for 5 days. It was a fantastic getaway, but it didn’t feel quite like a honeymoon — more like a break from the stress leading up to the wedding. Because of this we’ve been planning to take a longer trip this summer around our anniversary as a honeymoon. The plans for this trip have changed overtime, but we’ve finally settled on a nearly 3 week jaunt to Italy, which will be amazing if a bit expensive thanks to the falling value of the dollar. This trip is expense number one. I haven’t really worked out how much we’re looking at spending on this trip yet. Luckily we have been able to save some money up front on the trip — both of our flights were purchased with frequent flier miles, and one week of our stay in Italy will be with friends while another is being paid for by hotel rewards. This leaves us with 5 nights in Venice at a hotel, plus meals, travel in Italy, other shopping and tourism, and a house and dog sitter that we’ll need to pay for out of pocket. It doesn’t sound terrible and we ought to be able to get a handle on the upfront costs of hotels and travel, but how do I budget for meals in Italy? I have no idea how much to expect to pay for a light lunch at a bistro in Naples, or a dinner in Venice. To give me a number to work with for now I’m going to guess $150/day for the 19 days we’ll be there. That’d be $2,850, but I’ll round it up to $3,000 and hope that we’ll have plenty leftover.

The next major expense we have on the horizon is a new garage for our house. I plan to dedicate a more detailed post to this soon, but for the current discussion it is important to know that we’re looking at knocking down our old tiny garage (built in the early 1900s — a Model T garage) and replacing it with something that is larger and more usable. I’ve gone through several bids and it looks like we’re going to spend right around $32,000 on this project altogether. That number makes my head spin a little bit, but with we’ve spent a lot of time planning and looking at what we want to do and while it is large, it should contribute a good portion of the cost directly to the equity in our house.

The final “expense”, which isn’t an expense at all, is my wife’s summer employment. As I mentioned earlier she is a teacher, but she has been on a short term contract for the current school year. This means that we’re going to have roughly two and a half months this summer when she won’t have a regular paycheck. Since I usually work with this in terms of net pay, I know that it means that we’ll have about $5,000 less to use over those months, but it also means we won’t be putting anything into a retirement account for that period as well.

So if we add up those numbers it’s around $40,000 of expenses over the next 3 to 6 months. Now we do have around $50,000 in liquid accounts right now, but if we spend all of that we won’t be left with anything as an emergency fund. To make this more reasonable we can easily treat the garage as a long term expense and push it to the bottom of this list. This makes sense to me not only because it’s something we’ll get use out of for years, but it will also add to the overall value of our home. That still leaves around an $8,000 gap for the next several months. Given that the final “expense” is really lost income, the best solution would be to trim down our expenses for those months. With our current budget we have around $700 of “disposable” income without my wife’s salary during the summer months, so really we’re going to have to pretty tight to cover the gap. I should note that we’ve already been planning for this so we have put some extra money into savings, but currently we don’t have that much set aside.

Ugh. Right now getting this is all written down and thinking about the numbers is making my head spin and feeling a little overwhelming. I’m not sure what my goal should be… right now I feel like I’ll just be happy if we can make it through August without a major hit to our savings. More thought is definitely required and any feedback is appreciated. Thanks.

What does this mean? I’m constantly struggling to keep myself from purchase various gadgets and doohickeys that I don’t need. That is what this struggle comes down to; a battle of wants versus needs. So I’m starting a blog.

How does this help? I’m not sure it will. My hope is that by blogging about myself, my spending and my financial goals will keep me honest.

About me? I should point out that my financial goals aren’t solely mine. I’m recently married (last year) and plan to live a long happy life with my wife. At 30 (earlier this year) I’ve still got a lot of time ahead of me. For obvious for personal reasons I plan to be somewhat circumspect about my life, but I do plan to share a lot without going into all details. My wife and I own a house that we bought a little over 3 years and we have 2 dogs that can be somewhat expensive, both because of their destructive tendencies and their mild chronic illnesses.

So this is it, the beginning. We’ll see how this goes.