Tag Archives: Budgeting

Review: Your Playbook for Tough Times, by Donna Freedman

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I first came across Donna Freedman’s writing nine years ago, when I stumbled on an article called “Surviving and Thriving on $12,00 a Year.” I was experiencing a personal Upheaval that year, and this brave woman’s proclamation to the world of how she planned to address her own unstable circumstances looked to me like a letter from a supportive friend: “Things may be bad now,” she seemed to say, “but we can make them better if we hang together.” I can’t tell you how many sleepless nights found me re-reading her article, just to know that I wasn’t alone. I’ve read pretty much everything she’s written since then, and played the at-home game of the financial tips and tricks she’s tried in her own life, and do you know what? Things DID get better. Little by little, I managed to pay off all my debt (twice! I’m a slow learner), begin to save, and eventually get to a place of peace regarding my finances. During that time, I met and married my husband and moved halfway across the country where we bought our first house together and figured out a way for him to quit his job and return to school full-time. I even got to meet Donna in person and share a couple of meals and good conversations with her when she came to our new home town of Austin, Texas… Something my scared and overwhelmed Past Self could never have imagined in 2007!

So when her book Your Playbook for Tough Times came out, I couldn’t wait to get my hands on it! Fortunately, I didn’t have to: I was lucky enough to receive a copy to review. 

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One of the things that I have always loved about Donna’s outlook is her firm belief  that frugal living– even when things are at their tightest– doesn’t have to be miserable and that in fact, it can be quite lovely. Her book promises to show you what she’s learned about living on less whether you’re presently in dire straits, anticipating financial difficulties soon to come, or simply trying to squeeze the most out of your current lifestyle.

And she delivers on her promises in spades, with literally hundreds of solution-oriented tips, offering ways to find more budgetary breathing room that hit from all angles, such as how to earn more, how to spend less, and perhaps the most radical idea of all: how to live happily with less altogether.

The Great Recession of 2008 marked the beginning of an exciting time for the personal finance genre. Whereas historically, books on finance have been written by economists and titans of business, Post-Recession financial bloggers and authors are people from all walks of life,  sharing the daily unfoldment of their personal setbacks, life experiments, and successes. Donna Freedman is a shining example of this New Breed of personal finance writer: Just about everything she suggests in her book is something she has personally tried and found worthy of suggesting. Because learning the principles of real estate investing or restructuring corporations may be interesting, but sometimes, you just need someone to tell you how to keep your electricity on or make sure that your kids get dinner.

The book is an easy read, almost like an e-mail from a trusted friend. It’s peppered with personal anecdotes and loaded with concrete resources,  from money-saving websites to resources for healthcare and housing, to suggested scripts for negotiating better prices on purchases. If you need to streamline your financial situation today, this book can help you do it, because Donna has done a tremendous amount of thorough research for you so that all you have to do is get online or pick up the phone to start making your life better.

Overall, I think it’s a terrific resource for anyone looking to wrangle their financial situation into something more manageable. It’s the sort of book you’d want to keep around, so you can implement some of the suggestions and then come back for more once those have been mastered. And it would make a wonderful and sensitive gift for anyone facing some kind of financial upheaval.

The book is available as a paperback or an e-book, and over at Amazon, if you buy the paperback, you can get the Kindle version for $1.99, which makes it nice for sharing.

If you read it, I’d love to hear what you think… please come back and share in the comments!

 

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Can Two Live as Cheaply as One? An Update

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IMG_0720About five months ago, Mr. Vega left his career in sales to become a full-time student. In addition to giving him an escape from burnout and a way to experience  himself and the world in completely different ways, it’s also given us a chance to see if we could really walk our financial talk. We’ve taken great pains over the years to design our life together so that we could manage on one income, but we never had to before.

A full-time position opened up unexpectedly at one of my part-time jobs, so I tossed my hat in the ring for it. I was a little surprised when I was offered the job, which meant taking a 17% cut in my hourly rate, but as with my previous full-time employment, we felt that the stability and benefits outweighed the slightly smaller paychecks.

Several months and a few sleepless nights later, it seems to be going well (except for the normal challenges I seem to experience with full-time work). We’ve reduced our spending and savings rate, averaging about $1300 a month less than we did in the six months prior to my husband leaving his job. We go out less than we used to, and we haven’t been clothes shopping in months, but that’s all right. Like most Americans, we have much more than we need.

Before starting school, Mr. Vega built a raised-bed garden, and screened in our back porch. There are also rain gutters in the garage, waiting to be installed, but whenever he’s been free to start the project, it’s rained! It turns out that being a full-time student is a full-time job, so he hasn’t had the time he hoped he might for projects around the house, but Spring Break just started, so those gutters might finally go up this week… if he’s not too busy partying with his new college friends!

We had a weeklong visit from my husband’s parents over the holidays, and we let them know ahead of time that we wouldn’t be exchanging gifts…. honestly, I think they were relieved! Our holidays were filled with food, laughter, and inexpensive sightseeing around town, so we didn’t miss spending lots of money.

Although we’ve had to reduce our savings rate, we are still managing to contribute 10% of our take-home pay to our emergency fund, which is more important than ever now that we no longer have the luxury of two incomes. Currently, we have enough to go about five months with no income at all, but I’d like to grow that to a year’s worth. We have never had to use our emergency fund, and if that trend holds, when my husband finishes school and returns to work, we would be able to reduce the emergency fund again and have our bathroom professionally remodeled… and maybe take a long weekend away!

So far, it’s all pretty okay. I guess all the work we had done to live beneath our means is paying off… literally!

Have you ever had to– or chosen to– live on a much smaller income than you were accustomed to? How did you handle it?

 

It’s Time: The Grocery Price Book

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I first read about grocery price books over at The Simple Dollar, years ago. Not being into spreadsheets… or math… or shopping, it didn’t seem to me to be a terribly sexy project. The other ways in which I managed to trim my expenses were successful enough that I usually had enough room in my food budget to buy whatever I wanted whenever I wanted without much thought. When Mr. Vega and I began to focus more on whole, real, organic foods, our grocery bills went up, and I just felt happy that we could afford to eat the way we wanted to. After all, we were debt-free, saving for a house, and even had money left over for travel and fun.

Since my husband traded his full-time sales job for life as a full-time student, however, we’ve had to tighten our belts a bit. In January, we managed to wrestle our food expenses down to just over half of what we’re accustomed to spending… mostly by eating out much less than we had been. Also, one of my favorite bloggers, Brandy over at The Prudent Homemaker, is diligent with her food expenses: She keeps a detailed price list of food she buys to feed her family of nine, and her monthly shopping lists are terrific guides to seasonal low grocery prices. Simply following along and stocking up on some things when she does has been tremendously helpful!

But each home is different, and no one solution works for everyone. Our household in Austin, Texas, comprised of two adults with full-time outside commitments, two cats, and a nascent garden, is quite different from hers in Las Vegas with seven children, a work-at-home spouse in addition to a full-time work-outside one, and an abundant home garden that is the result of several years’ worth of effort. And both her home and mine will be different from yours, with your brand-new baby, or giant dogs, or busy travel schedule.

And so the time has come for me to buckle down and invest a bit of time and energy into learning exactly what our most-purchased items usually cost, what a good deal really looks like (because fifty cents off sounds great, but what if it’s normally sixty cents cheaper at the store down the street?), and seeing how much more space we can get in this recently-contracted budget of ours.

I’ve sorted through our shopping lists, and created a spreadsheet on Google Drive listing sixty items we purchase regularly (conventional wisdom suggests starting with a list of 15-20 things, but once I started, I kept thinking of more!), and I’m actually looking forward to learning where the best prices are and seeing how much money we can save. Grocery store sales generally run in 8-12 week cycles, so I reckon it will be Spring by the time I have a good handle on this, but check back and I’ll share how it’s going!

How do you keep track of grocery prices in your area? What patterns have you noticed?

 

Our January 2016 Budget

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I created my first budget about ten years ago from a template I found in Dave Ramsey‘s book The Total Money Makeover, and after years of practice, it’s become habit for me to make a new budget every month.  I get asked on a regular basis to help people set up their budgets. I’ve been able to sit with a few friends, but time and distance prohibit me from helping individually every person who asks. Every household is different, so every budget needs to be different, too. Also, it’s important for me to say here that I am not a financial planner or adviser, and that everyone needs to be accountable for making informed choices about their own money. That said, since it can sometimes be helpful to get an idea of what other people are spending on and saving for, we have decided to share our budget. I’m showing where our money goes as a percentage of our take-home pay, both to maintain some privacy and also because it’s more practical: Regardless of the dollar amounts, it’s a good idea to try and save some money each month, meet your basic needs, have a little fun if you can afford to, and return something, however small, to the communities and organizations you care about.

Here’s how it breaks down this month for us:

  • Giving 3%. This category is on the small side this month. Not being religious, we don’t tithe, and we only have one gift-giving occasion in January. The balance of this category will go into donation boxes of non-profit institutions we visit this month. We also make an effort to contribute to charitable organizations and relief efforts throughout the year, and volunteer some time to causes we support. 
  • Emergency Fund 10%. Our Emergency Fund is currently big enough for us to survive for about four months with no other income. While that felt comfortable for us when we had one spouse with a full-time job, and one with several part-time and freelance income streams, now that we are down (for the time being) to one partner with one full-time job and a very little bit of part-time work, we are working toward having a year’s worth of expenses set aside for emergencies. By my calculations, at the rate we are able to save, it would take us about six years to reach that number! Because we anticipate returning to our 2+ income status in a couple of years (thereby returning to a smaller Emergency Fund), we’ll probably never hit our temporary goal, but we’re aiming to set aside 10% of everything we bring home in the meantime. 
  • Tax & Insurance Fund 10%. We maintain a separate account where we amortize our annual term life and auto insurance premiums, and set aside money to pay taxes on any 1099 income. 
  • Mortgage 25%. Our only debt is this 30-year fixed-rate loan, and we made a 20% down payment to avoid PMI. If we don’t pay anything extra, the payment (including principle and interest as well as escrow for property tax and insurance) is a quarter of our current take-home pay. We REALLY wanted a 15-year mortgage, but if we had done that, our currently reduced income would be more of a crisis than an inconvenience, so I guess we made the choice that was better for us. Still, we’re planning to get it paid off just as soon as we can.
  • Utilities 3%. This includes electric, water, natural gas, sewer and trash pickup. We are constantly looking for ways to reduce our usage, and hope to continue to see this number go down.
  • Mobile phones 3%. Our mobile phones are recent-release smart phones with high-usage packages. Admittedly an indulgence, we switched providers last year to save about $250/year over what we used to pay, and this expense would be the second cut we made in a financial crisis (the first is coming up below).
  • Home Improvement 2%. The Home Improvement Fund is one of the last budget categories we pay into right now. We are making continuous minor improvements at the Little Hippie House, and hoping to save enough to replace the aging roof, remodel the bathroom & kitchen, tear down a load-bearing wall, and install new floors. That all could take quite a while, but we’ll keep chipping away at it, as our finances allow.
  • Cable/Internet 2%. Cable would be the first thing to go in the event of a financial crisis, and I suppose our internet would have to slow down a lot if things got tight (or maybe not: Google Fiber is slowly making its way into our neighborhood). But it’s another indulgence we’re comfortable with for now.
  • Transportation 1%. Our transportation expenses will be ridiculously low this month, in part to one of us being a stay-at-home spouse, and the other one working just a few miles from home. Having paid-for cars that won’t need servicing, inspections, or registration in January helps a lot, too! (Remember, though, that our car insurance falls into another category… this number would double if we included it here)
  • Food 11%. Food is the big budgetary challenge for us this month, but we’re determined to make it work. When our income is bigger, we normally spend about double what we’ve allotted for January! This month, we’re planning to minimize meals out, work our way through the frozen holiday leftovers, and take advantage of our upcoming small winter garden harvest. In addition to feeding ourselves this month, it’s my hope to use 5-10% of our weekly food budget to build our home food store… I really love going to our little chest freezer for a gallon of milk or to our garage for a jar of peanut butter instead of having to run to the market when things run out!
  • Pet Care 1%. This category this month consists entirely of canned food for our two cats. We have more than enough kitty litter and dry food to get through the month, and their annual veterinary visits aren’t until March. 
  • Clothing 2%. We aren’t planning any clothing purchases this month, but we’re setting a little aside so we can do a Big Shop in the Spring. 
  • Entertainment 3%. Entertainment is the one area where we consistently  underspend! Every month, it’s a challenge to get ourselves out to the movies, a play, or to hear some live music. We’re still working on that, for the sake of balance.
  • Personal Care 9%. Our Personal Care budget should really be called “MY Personal Care budget,” as Mr.Vega gets an inexpensive haircut every other month or so, and is in the process of growing an Epic Beard, so we no longer buy him razors or shaving cream. Because I’m in the process of Changing Looks, hairwise, this month, this category is more than double what it usually is.
  • Education 6%. Even community college costs something, at least for now: there are a lot of political promises being made on the campaign trail to change that. That will be lovely if it happens, but in the meantime about 6% of January’s pay will go for tuition. 
  • Vacation 7%. Last summer, we went to a five-day music & arts festival that we just loved. It’s time to buy tickets for the next one, and because it’s an out-of-town camping trip, we count the tickets as a travel expense, rather than “entertainment” (and this part is a little weird, but because the event is limited-capacity, tickets are sold lottery-style, with each person allowed to request a maximum of two tickets. We each put in for two, and if we get all four, we’ll sell the extra pair at face value and recoup half of our expense. But we’re sending payment for four tickets in January, so that is what we have to budget for).
  • Professional Development 2%. My new job will reimburse me for this training after I complete it this Spring, but registration is first-come-first serve, which is why I’ll be paying for it this month.

So there you have it: our January budget, with every dollar accounted for. There’s plenty of room for improvement, but we’re not unhappy with it. Feel free to share in the comments how different it is from (or similar to) yours… I’m always curious to learn how other people are doing it.

Skinny-Fat Finances

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We’ve all met those people who are model-thin without effort. They eat whatever they want, they rarely exercise, they drink and smoke, they seem to live on a diet consisting mostly of fancy whippy coffee beverages, and still everything they wear looks good on them. Some of them even struggle to keep weight on when life gets stressful. But a deeper look into their medical charts might reveal hidden health problems such as heart disease, liver dysfunction, or diabetes. While many people work hard to maintain their healthy weight and fitness levels,  there is a portion of the population who look healthier than they are: the “skinny-fat.

Financial health is no different than physical health, in that what can be seen from the outside doesn’t always represent what’s happening behind closed doors. And in exactly the same way that Western society places a higher value on being thin than it does on being healthy, we are all also encouraged to look rich, rather than to be financially stable.

 

Both Mr. Vega and I were raised in skinny-fat financial households. Our Baby Boomer parents were the first generation of Americans with access to the easy credit we have all become so accustomed to. “Low monthly payments” must have felt like a godsend to our young parents, who wanted so much for their children to have the best of everything. They would have had no way of predicting that their resulting financial stress would affect us much more deeply than going without some luxuries might have.

We don’t remember what we got for Christmas or our birthdays every year, but we remember clearly the bills that came in pink envelopes. We remember the way our parents tried to ignore the telephone’s incessant dinnertime ringing, and the occasional times we had to bathe in cold water or to get ready for school in the dark because the utilities had been shut off for lack of payment. I, for one, will never forget coming home from school one day  in my teens to an IRS lien notice stuck to my front door, and spending the afternoon at a friend’s house, because I felt certain I would go to jail if I went into my house (everything got sorted out, and we got to keep our house, but that was a terrifying day for me).

As we approach the gift-giving holidays, we are bombarded with TV commercials showing children’s faces lighting up as they open their”perfect” presents on Christmas morning. Images abound of delighted spouses peeking into tiny jewelry boxes, or leaping around brand-new beribboned vehicles in the driveways of their lovely suburban homes. Who wouldn’t want to inspire that sort of joy in the people we love?

What those commercials don’t show is those same parents fighting over money in January (and February, and March…) when the bills arrive. We aren’t seeing those same children being told to “Tell them I’m not here” when the debt collection agencies start calling. The visions of happy families road-tripping to visit Grandma never reveal the expired insurance policies hidden in the glove box.

Here’s the thing: if you can afford a house with a yard for your kids, and a nice Compact Utility Vehicle to drive them around in, good for you. If designer clothes, annual vacations, and weekly mani-pedis are within your means, then party on. Nice things are… well, nice! We want to have them, and we want you to have them.

BUT (there’s always a “but):

If you are buying holiday gifts on a credit card that you will not be able to pay in full when the bill comes, you might be suffering from skinny-fat finances.

If you are considering a large purchase and your main concern is the amount of the monthly payment, rather than the total cost of the item, you might be suffering from skinny-fat finances.

If you bought and strung a million twinkly lights outside your house last weekend, but couldn’t make your rent or mortgage payment Tuesday, you might be suffering from skinny-fat finances.

We are here to tell you from personal experience that a little less stuff, a little less sparkle, a little less bling isn’t going to hurt anyone, but that getting it when you really can’t afford it could actually cause lasting harm. Living in a smaller home, driving an old-but-paid-for car, opening fewer gifts on holidays… none of that is so bad if you get to eat your holiday meal with loved ones who aren’t fighting, if your heart doesn’t pound every time the phone rings, if you aren’t afraid of the mailbox.

Anyone who has been there can tell you that being healthy is so much better than simply being skinny. And financial stability– freedom from debt, carrying enough insurance, and having enough money on hand to weather emergencies– feels so much better than looking wealthy, but worrying constantly about when it’s all going to fall apart.

If your finances are skinny-fat, just like with your body, you can’t heal them overnight. But you can begin to shift how you navigate life. You can refuse to put even one more non-essential purchase on a credit card. You can begin to record your expenses and get a clearer idea of where your money is going. You can begin to cultivate contentment and seek happiness in experiences instead of things.

And if you keep at it, before you know it, you will find that you have everything you need, and maybe more of the things you want. Before you know it, you’ll be looking back and thinking about how much better you feel than when you were over-extended and stressed about money all the time. Who knows? You may even be able to afford that shiny new thing you’ve always wanted… with cash!

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On Insurance

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The apartment complex that we lived in for our first year in Austin experienced a fire the other day, and lost a whole building. 24 units. Thankfully, no one was hurt, but about sixty people lost everything they owned, and thirty of them are still displaced, just in time for the holidays. Not everyone lost their homes in the fire: the rest of them had everything they owned destroyed by smoke, sprinklers, and firefighting efforts. We only moved out of there five months ago, so we know that complex requires tenants to carry $100K rental insurance policies, but that wasn’t a hard sell for us: we are big believers in maintaining insurance.

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Our renter’s insurance policy, when we had one, cost us $363 annually, or a little more than $30 per month. We have come to view insurance as an inextricable cost of whatever we’re insuring: If we can’t afford to insure a car, for example, then we believe we can’t afford the car at all. Around here, health insurance comes before restaurant meals and entertainment, life insurance takes priority over gifts or travel for family visits, and homeowners insurance gets paid before we buy things for the house. Because before we get anything new, we want to make sure that an accident or illness wouldn’t cause us to lose what we’ve already worked so hard to achieve.

It’s not easy to watch our hard-earned money vanish into the ether every time we make an insurance payment. We’d much rather get a newer car, or at least get the ones we have detailed, than pay for insurance we hope we’ll never use. The amount of the annual checks we send for our term life insurance policies could pay for a weeklong tropical vacation every single year (The longer you wait to buy it, the more it costs. And you’ll never be any younger than you are today). And we would each be sporting pretty stylish wardrobes if we chose not to spring for our own “affordable”health care coverage each month.

But here’s the thing: If we were to drive without car insurance, say, we would be subjecting ourselves to hefty fines (in the neighborhood of a year’s worth of full coverage) just for failing to produce evidence of insurance at any routine traffic stop. An accident that totalled one of our cars would leave us without the transportation that is an integral part of our ability to earn money and be self-supporting. And in the event that we found ourselves damaging someone else’s vehicle or causing them bodily injury, we could be sued for damages, and lose everything we have. Similar or worse scenarios play out when one considers forgoing health insurance, renters or homeowners insurance, and life insurance. One moment of distraction, once suspicious lump, or in the case of the apartment fire, one cigarette on someone else’s balcony that isn’t fully extinguished, and any one of us, without insurance, is looking at total financial ruin. So, we’re willing to shell out some money to protect ourselves from those potential outcomes, even when it means giving up on some of the other things we want.

Insurance isn’t sexy or fun. But if something bad happens and you’re uninsured, it could be years, even decades before you (or your survivors) are in a position to do anything sexy or fun at all. So before you leave your uninsured home to put your uninsured body into your uninsured car and drive to the mall to spend the $830 that the average American will spend on Christmas this year, consider spending some of that cash on covering your assets. Because however little you think you have, it is guaranteed to cost a lot more than you imagine if you were to lose it all.

 

 

Can Two Live as Cheaply as One? We’re About to Find Out.

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For several months, Mr. Vega has been in slow burnout mode at work. Telecom sales is a constant, high-pressure environment that has been fitting less and less with the person he is becoming. About a month ago, we spent five days camping off-grid, enjoying good food, the company of friends, and time spent in nature. His first day back at work, I got a text from him: I’m sitting here at my desk thinking that I’m wasting my time and my life here… This weekend really did me good.

We spent a week and a half talking about what he wants to do, how we want to live, and how to make that happen. We ran the numbers, and we ran them again. And a few more times, just to be sure.

Ten days later, he resigned.

The plan is for him to start school full-time in January, spending a couple of years training for a career in which he doesn’t have to sell anything, buy anything, or process anything. Or sell anything bought or processed, or buy anything sold or processed, or process anything sold, bought, or processed, or repair anything sold, bought, or processed, you know, as a career. *

For the next couple of months, he will be a full-time homemaker, quite literally: there are garden beds to be built, a porch to screen in, rain gutters to install, and a host of other home-improvement projects to tackle in our Little Hippie House. There is a lot that we’ve been wanting to do, but we haven’t had much time for it.

Building Raised Beds

We’ve spent the past few years ensuring that we could handle a shift like this: We are debt-free except for the house, and we made sure to buy a house that we could afford on one income, if it ever came to that. After we paid off all our consumer debt (and before we started saving for a down payment), we built an Emergency Fund that would allow us to continue our lifestyle unchanged for four months with zero income, or for much longer if we reduce our expenses and maintain some kind of income. Since purchasing the house, we have resumed our Emergency Fund contributions, with a long-term goal of saving a full year’s worth of expenses.

We believe that with the right cuts, we can live modestly on my freelance income, without tapping into our Emergency Fund, and maybe even continuing to grow it, little by little. Mr. Vega has committed to getting at least a part-time job if we find ourselves unable to manage, although we would both prefer that he didn’t have to.

There will be sacrifices, mostly involving entertainment and travel, but we’re excited to have the opportunity to walk our talk to live meaningfully, and happily. We’ll continue to work toward making our home as self-sustaining as possible, and welcome all the friends and family who have the means to visit us in Austin. And we’re grateful to be cultivating friendships here with folks who share our values, and who are just as happy as we are to spend a weekend camping or an afternoon playing board games, instead of doing spendier things.

At the end of his training, Mr. Vega will be eminently employable, with a starting income that will at the minimum match what he was earning at his high-stress job, and with the potential to double in a few years’ time. To our farway friends and family, you can expect a visit from us beginning in 2017, but in the meantime, y’all are welcome to come on down any time you like!

*with gratitude to Cameron Crowe, Say Anything (1989)

Full-Time Work “Fail,” Personal Finance Win!

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Last Tuesday was my final day of work at the full-time job I started seven and a half months ago. I did everything I could to make a go of it, but nine-hour days and the lack of autonomy inherent in a full-time position just isn’t for me, it seems.

Fortunately, we have our financial life arranged so that the hardest part of my decision has been saying goodbye to the co-workers I’ve come to love (and even that isn’t entirely true, as I’ll continue working there on an hourly basis). The money part isn’t so scary. Here’s why:

We have a fully funded emergency fund. Although we won’t have to use it, it’s comforting to know that we could maintain our lifestyle exactly as it is for a few months with zero income. Which, of course, we won’t have to. It took us nearly all of 2012 to get that money in the bank, but the peace of mind it brings is worth every hour of hard work we did to get it. We also maintain our hidden emergency funds, which go a long way when times get tight.

I had been unable to bring myself to actually quit any of my part-time gigs, so it’s going to be relatively easy to simply increase my work there, as well as in the freelance world. Doing occasional work for other employers has kept my options open, so although I am leaving a job, I am not unemployed. And although it would be uncomfortable, we have designed our lifestyle so that we could, if need be, live entirely on half of our income (I’m phrasing it this way on purpose: this was also something I did as a single person. Having a partner is lovely, but not a requirement for living beneath one’s means!).

We bought a house a couple of months ago, which could seem scary, except that we made sure to buy something we could afford, even if times got tight. Buying a small fixer-upper means that our house payment and utility bills aren’t much more than they were when we were in an apartment.

I know that we are fortunate to still have health benefits provided through Mr. Vega’s employer. Not everyone has that. But we have paid for our own insurance before, and have maintained a budget that could be arranged to do it again, if the need arose. It would mean giving up some luxuries, but first things always come first around here.

None of this has been easy: we like a night out as much as the next folks, and we’ve never had a “real vacation.” We’re happy that all of our relatives happen to live in vacation-worthy locales, but we haven’t visited as much as we would like to, because of our commitment to living debt-free and with a prudent reserve. There is so much more we’d like to do, and see, and have. But there is nothing we want enough to stay in jobs and situations that aren’t right for us… For that reason alone, the hard work and sacrifice has all been worth it.

Now, if you’ll excuse me, I’m off to start cooking the beans for tonight’s dinner…

The Contingency Fund

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One of the things we’ve learned from watching home improvement shows on television is that in any project, things will go wrong. Things will break. A simple appliance installation will balloon into the need to open a wall and re-wire part of the house. Your intention to do everything yourself will transform into needing a professional on-site ASAP.

When we found the house we wanted, we were annoyed by the clause in our apartment’s lease that required a 60-day notice to vacate. As it turns out, we will be moving into our new home on Day 59 of that period, because we’ve encountered a few unexpected problems.

Mr. Vega decided he wanted to scrape off the ugly acoustic ceiling before we moved in. Our internet search for “how to scrape a popcorn ceiling” yielded the suggestion to test for asbestos before doing that kind of work on houses built before 1980. We found a local lab that could rush the results for $75. We found out we were indeed the proud owners of a toxic ceiling that would cost $2500 to have professionally and safely removed. Ouch.

Fortunately, we had prepared in advance to expect the unexpected: in addition to our down payment and closing costs, we made sure we had about 5% of the purchase price set aside to make the place feel more like home. We also maintain an Emergency Fund, but as the asbestos only poses a health risk during removal, we agreed that Ugly Ceilings are not an actual emergency. Still, we’d feel better having the job done before we move our furniture, our pets, and our own lungs into the place, so we went ahead and had the work done.

Then when the gas company came out to connect the gas and inspect the appliances, they discovered that the stove that came with the house was leaking gas, which meant they weren’t allowed to connect it. The appliance repair men said it would be an expensive fix, and as it wasn’t a good stove to begin with, we had it hauled away, along with the old, moldy fridge that was in the house. We were lucky enough to find an inexpensive, well-reviewed fridge with a freezer on the bottom and in the smaller “apartment size” that we prefer, but we decided to splurge on a professional-quality gas range, to the tune of about $1800 (which is a great deal for the kind of stove we’re getting, but it’s not pocket change!).

We’ve got some other issues, like non-existent insulation in our central Texas attic, a colony of ants that have chosen that attic as the place to build their home, and a central air condenser unit inexplicably– and quite dangerously– perched on the roof that is not designed to hold that kind of weight. While some of these issues could become emergencies, they aren’t yet, and we’re grateful for our Contingency Fund. It will be completely drained before we even move in, so we’ll have to postpone our plans of replacing the old drafty windows with double-paned ones or installing a rainwater collection system, but we’ll still have our Emergency Fund, and we won’t have gone into debt to fix the problems.

We Did it…

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… We bought a house! Our first house. And we’re pretty excited.

Four years of hard work, paying off debt, saving money and one cross-country move later, and we have a house! Right now, I’m going to say that it has all been worth it. We made a 20% down payment and bought the house for exactly market value, which is kind of a bargain in the real estate frenzy that is Austin. So we’ve already got a good amount of equity, and our net worth hasn’t changed. Which is strange and wonderful, considering we just handed over almost all of our savings except for our Emergency Fund.

It’s small. As in 800 square feet, 2-bedroom/1-bath, single-car garage small. Buying a smaller, older house allowed us to stay within our budget, which was several thousand dollars less than the current median home price in Austin, but still stay close to downtown and some of our favorite South Austin neighborhoods. Having a smaller house also means, of course, that it will be less expensive to cool and heat as well as being easier to clean. We want to replace both the roof and the flooring at some point, and those things will also be cheaper because of the house’s smaller footprint.

The lot is a relatively large 1/4 acre, which gives us plenty of room for gardening and entertaining. And there is plenty of room for the house to grow, if we ever decide that a third bedroom or a second bathroom is a necessity. We’re planning to build a compost bin ASAP, planting a mini-orchard of fruit trees, and even considering getting a few chickens.

Built in 1968 and used as a rental property for the past decade, it’s going to need a fair amount of work. We see that as a benefit, though because it was another thing that kept the asking price low, and also because we can do most of the improvements ourselves, to get things exactly how we want them. Some of the first things on our list are high-efficiency appliances, double-paned windows, and a rainwater collection system.

There are train tracks just behind our back fence, but it’s in a “quiet zone,” which means the trains are not allowed to blow their horns except in emergencies. Houses that abut train tracks are generally considered less desirable, which helped with the affordability factor, and honestly, I find the sight and sound of freight trains nostalgic!

The neighborhood is funky and eclectic… No cookie-cutter houses, and most importantly to us, no HOA. Homes in our new neighborhood have interesting creative decor and landscaping: some of them even have their vegetable gardens in the front. We were also pleased to spot a few harbingers of creativity and a laid-back vibe in the area: free-range children!

This is the thing we’ve worked so hard to do, and we’ve been able to do it on our own terms, so we’re very happy. We’re looking forward to what lies ahead, as we continue our journey toward self-sufficiency and financial independence.