My father had taught me when I was young to always keep a minimum of 3 months expenses covered (hereafter I sometimes refer to this as a "Cushion" or a "Bubble"). So over the past 4+ years of being married, my wife and I built up our liquidity and always kept between 10-15k in the bank. That said, as both of our salaries increased, the amount in the bank never did. We both also had a lot of student debt which was being paid down on its standard amortization. I have tracked all of our monthly spending and close to 75% of our "discretionary" spending has been done by her, but we have always lived comfortably and kept that cushion.
Also, the majority of our big expenses have been for her. There were 2-3 times where we had big unforeseen expenses & I was super happy to have that money set aside (she has been in 3 bad accidents, totalling 3 cars in the past decade, 2 of those while we were married). We recently just paid forward our car insurance for the next year & settled on a lawsuit against her from the accident.Two large expenses that cost us the majority of our cushion, such that we have less set aside right now than ever before, but enough that I am not worried about living paycheck to paycheck... yet.
Sadly, my wife is leaving me to go her own way (can read more about this in my intro post in my signature if you'd like)and I feel that one small pro from this horrible situation is that it will allow me to be more aggressive at paying off my debt. I have reduced my student loans from around $40k to $15k in the past 4 years, but I also have a car loan for around $14k. The car loan I intentionally setup with a fast term (3/3) and am paying off $600 a month on it (b/c of how I structured that, I got 0.9% financing through Ford credit for a nice 2012 vehicle in 2014, so the total financing cost over 3 years is only $297). Anyway... I know my wife will has reduced her student loans from $60k to around $40k and we have been paying off the debt on her newest car $500/month.
We have had 1 bank account & 1 credit card since getting married (AmEx Bluecash that we get 5% off on all groceries & gas, and 2% on all other purchases as soon as we hit $10k for the year on it, which happens quickly). We have never once paid interest on the card (just run all our expenses through it and then paying it down). However, the credit card was hers from before we got married and she is planning to take me off the account soon and deactivate my card.
So I was debating whether or not to get a new card for myself. (Maybe finding a card I can apply for to get a lot of points...)
My Plan (ADVISE WELCOMED!):
1) Split up our marital finances. We plan to wait until she moved out to do this (which looks like it will happen in the next month).
2) Get myself a smart phone. (So I can eventually start using apps to budget, also myfitnesspal, etc). I still have a dumb-phone, but it is on my inlaw's plan.
3) Start Budgeting & continue to live cheap. Keep my "small" expenses (discretionary) in check.
3) Reduce my "big"living expenses. Our current apartment, with utilities would cost me close to $1200-1300 a month on my own which would leave me very little to live on, based on my preliminary budgeting, that would leavea little over$600after fixed expenses (rent, car loan, student loan, utilities, internet). That $600 would have to cover groceries, gas, any discretionary costs, etc...
My plan to reduce this is to find a roommate. I have found a roommate and we are in the process of looking for a place to rent together. Based on our original looking, I expect to drop my rent cost by $300-400 a month, as we will be renting a nice house. The downside is that I currently live 2 miles from work and it will add quite a bit to my commute (maybe ~20 miles).
4) Rebuild my personal Bubble (I will probably shoot to keep set aside a minimum of $5-6k). I am a safer driver, much healthier, and all around much more stable of a person than my spouse and so I feel that this amount will be a good starting point.
5) Pay down my debt. I plan to keep my car paying off fast (at $600 a month) so that it will be paid off in 2 years. Any additional money I can build up over my bubble I will use to pay down my student debt. While they are down to $15k, which is good news, they are high interest... 6 - 8.5%. Compared to my car loan which is virtually free money as long as I can keep up the $600/mo payment.
6) DEBT FREE. When my car pays off in 2 years (June 2017), I will apply the extra $600 a monthtowards paying off any remaining debts I have. Following this plan, I expect to be debt free in 2-2.5 years. It will mean tightening my belt, but it is very doable and I have a stable income (been with my company over 4 years) that will allow me to do this. Being debt free will reduce my monthly expenses by over $1k, and save me over $1k a year in interest.
7) ???. At this point I am not sure what my life will look like >2 years from now. I do not know what my goals will be (save for a house? put more into investments for retirement?Spend a little to celebrate my financial freedom?). Will I still by living with my friend? Will my wife and I reconcile, or will she move on. If so, will I be single 2 years from now? Dating? Have moved onto a new relationship?
All I know right now is that I plan for NerdFitness (and my newfound passion for improving my health & life) to be a part of it.
Things I would love to do in the future & will need to budget for (aka)
Financial Bucket List (well, 1-5+ years from now):
1) Upgrade my computer. I spend a LOT of time on it. Gaming with friends, mostly. My computer is only 3-4 years old and I spent close to $2k buying all the parts from newegg & assembling it then, so it is still a decent machine, but prior to 2 years from now I would definately like to upgrade it. Firstly, I want to get a 2nd monitor, but that will also require getting a new desk as my current will not facilitate that (Yay for living close to an IKEA). I alsowant to upgrade my primary harddrive to a much larger SSD (I got a small one when they were new and only have my operating system on it pretty much). FYI, I am not a techie, more of a soft-core gamer. Actually, more of a Jack-of-all-Nerds (little bit of board gaming, card gaming, computer gaming, minimal-but-not-non-existent knowledge of comics & anime, etc).
2) Travel. I have not put a lot of thought into "where" I want to go. The first time I left the United States was to go to Cozumel on my Honeymoon, and I LOVED Mexico. I would happily go back! I also can speak a minimal amount of spanish and that made it way more fun for me too. Since then, I have "left" the country 2 other times (going from Detroit into Canada), however one of those was only traveling through it to get to Boston. The other trip was an extended weekend to Niagra Falls and then Toronto.
3) Save money to buy a house. You know how some guys are super "handy". I am not (I don't even get Tim the Toolman Tailor status... cuz he at least has knowledge). The last time I tried splitting wood with a full-sized axe I lodged it into one of my big toes after it bounce off a knot. Anyway... I doeventually plan tobe a home owner, but I am in no rush to do that.
Sidenote: My poor car.
I bought my car almost exactly a year ago. My commute to work is a 4 mile round-trip. 8 miles if I go home on lunch. So that is minimal yearly driving. In the past year I have put over21,000 miles on my car (mostly recreational) as the result of several long road trips. From 37k miles to 58k.
I drove down to Tennessee twice (the 2nd time that was continued all the way to Lousiana, helping move my sister). I drove to Boston once. I drove to Niagra Falls / Toronto. I drove up to northern Michigan once. I drove to Indianapolis once. I drove to Cleveland once. And I drive ~130-150 milesat least oncea month across the state of michigan to visit my friends & family. 3 of my closest 4 friends live 130 miles away. And my family is ~150 miles away (Mom, Dad, all grand parents, 5/6 aunt & uncles, almost all of my cousins) and we have a tight family.
And now I will be increasing my commute. :-(
