{ spending hiatus }

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I posted last week about joining in on Aimee at Mostly Mod's remainder of 2009 spending hiatus and got lots of great comments and emails with more questions about it...so I will attempt to explain my personal motivation and answer some of your questions about it. I can say that my motivation in doing this is really getting a grip on the non-essential spending that happens in our household (and by that I mean by ME). As you ALL know, it is really easy to drop $100 in Target and later try to recall what exactly you bought... We are very fortunate that we own our own businesses and aren't at risk of being laid off during this recession, but we seriously need to be better about not buying STUFF we don't NEED.

So for ME, this spending hiatus is about spending SMART. This isn't about deprivation. This is about plugging my leaks of wasteful spending and using our money for specific purposes, rather than by habit or accident. We are attempting to save money by spending only on things that we really care about and plan to buy for a specific purpose. The bottom line with this spending hiatus for me is to spend less money on things I don't care much about so I can spend on things I do care about (eg. traveling). We want to spend our discretionary money on doing rather than owning. Because in the end, positive life experiences contribute to happiness more than things do.

Ahimsa is a Sanskrit word that means "nonviolence." In ancient yoga texts, it means not violently compelling ourselves or others to change emotionally, physically, or spiritually. Yoga teachers often encourage their students not to strive to achieve a perfect pose but rather to be present and accepting of the current posed, before making any change. With that in mind, I'm trying to pay attention to the moments where I struggle with money and learn and grow from those situations instead of judge harshly from them. So if you want to join in on this spending hiatus, do so, gently and lovingly and gradually.

Specifically some of our financial goals are...

1. Financial Independence. We have some pretty lofty goals of paying off all of our non-mortgage related debt (car loans & school loans) by the end of the year...This can only happen if we continue to increase revenue and decrease spending. I have the debt figures posted by my desk to remind me daily of our goals.
2. Life experiences. We've got some fun travel plans lined up for the next year or so and I want the money for those trips set aside before the trip.
3. Simplicity. I am really trying hard to simplify our lives and get rid of stuff that we no longer use, love or appreciate. Bringing MORE stuff into the house thwarts our decluttering efforts as it just turns into a continuous bad cycle of stuff coming in, stuff going out.
4. Environmental. Likewise, I am trying to only bring stuff into the house that is made in the USA, made with eco-friendly materials, preferably made by local artisans...and of course, not to forget to bring in less overall to stop the endless cycle of over-consumption.
5. Education. Teaching our children that money does not grow on trees and continue to educate myself about the financial realm and how to better manage my families resources. I am hoping to set a better example about saving for my children vs. impulsive consumption.
6. Planning ahead for purchases. For example, my best friend from NY came out to Colorado this weekend for a fun girls weekend...I set aside $ over the past few months {girls weekend $$} -from birthday money and some stuff I sold on ebay - guilt-free cash - to have some guilt-free girl time with Lisa... massages, dinner, etc. I have been planning for the past few months out some garden expenses (soil, compost, seeds, plants, etc.) and bought all of this during Home Depot and a local garden stores Earth Week sales. These purchases did not go on the credit card and I had a budget to stick with.
7. Repurpose. I want to better about repurposing what we have instead of buying a replacement. Waste not, want not.
8. We have enough. More than enough. More than most people around the world. Instead of buying more stuff, I want to be able to travel and help those less fortunate more.

Now, what are my exceptions...besides normal household expenses (mortgage, utilites, car payments, gas, school loans, healthy organic food, baby diapers, formula, Sam's montessori school tuition)... The spending hiatus will apply to the other things (like Target ventures and Anthropologie.com orders). {note: I am going to aim to keep our grocery bills to $125/week as well}.

Exceptions to my spending hiatus may include:

1. Birthday, Baby, Wedding & Christmas Gifts - I will purchase birthday presents for family & friends that I do not or cannot make (but will aim to give the gift of my time with these people vs. a gift; make a gift or purchase a handmade gift from etsy). But these gifts will come out of my small pot of misc. cash each month and not be charged to a credit card.
2. ME funds - I will have a designated SMALL amount of money each month (in cash) that I can use for yoga classes, drinks at girls night out, date night, etc. It's essentially my blow money and when it's up, I guess I will be doing my yoga DVD's at home ;-). But I am aiming to use this money solely on experiences and not more STUFF.
3. Kid's misc. funds - Cash for Sam's dance lessons and misc. things that come up (new sneakers because she outgrew hers, new art supplies for a project, etc).
4. Minimal, mindful household purchases of things we are budgeting and planning for (eg. a pond liner for our pond and 3 aspen trees for our yard).

I am going to keep my monthly spending plan on google docs and track all receipts and checks written into that for our normal expenditures and my cash outlay out of my {envelopes}. I am going to use this dave ramsey envelope wallet thing {I recognize that might make ME look like a dork} but everyone I know who does this says it helps and ME and a credit card at Anthropologie don't mix. Once the money is gone, its gone. What a concept. ;-) I'm also going to try to get rid of 10 things a week from our house (either donating them or listing them on ebay or craigslist).

Oh, and this post by Joslyn's experience with her 3 month spending hiatus sums it up for ME.

So, anyone IN with ME?

{ new year, new you - finances }

Here are some ways to kick off the new year with getting your act together financially.

1) Talk about it. Carve out some quiet time with your partner and talk about where you're at financially (have current account statements & information ready) and talk about what your goals are for 2009 and beyond. Get on the SAME PAGE. Will & I listed out 10 financial goals for the new year in addition to our personal and business goals. Some are more important to ME (finally, dear god, pay off my grad school loans) and some are more important to him (beef up emergency fund) but by combining our goals into family financial goals, they all become important to both of us. It's important to take a clear, honest look at where you are today. Not sure where to start? Here are two great financial goals worksheets - one from Savvy Sugar and one from ING.

2) List it out. Now, make a list of your 5-10 financial goals for 2009 & beyond with action steps. Post them in a prominent place (eg. above your desks, on a kitchen bulletin board, etc.) where you can be reminded about them everyday! We wrote out 2009, 1010, 2016, 2019 goals. So 1, 2, 5 & 10 year goals and action steps. Later this week, I'll share some of our financial goals.

3) Look at ways to trim your budget/spending plan. And if you don't have a budget, start using one. We have ours on Quickbooks and on a shared google doc but I know lots of people love Pear Budget and Mint. Make sure you track what you are spending. Make sure you have an emergency fund for those unexpected emergencies and make sure you plan for some fun each month! Here are some great tips on ways to learn to live with less.

4) Get your finances organized. Create a financial organization system either using online tools or a folder system. We use pageonce to have all of our accounts in one place online and Quickbooks for our personal and business finances and then I have a folder system with my goals tacked to the front and individual file folders for school loans; IRA's; real estate investments; bank accounts; general financial information; credit card statements & contact information; etc.


Here are some suggestions from David Bach for a financial file system.

1. Tax Returns-Include 8 folders for the last seven years plus the current year. Place all W2’s, 1099’s, interest statements and returns in this file.
2. Retirement Accounts-Create a folder for each retirement account you have, 401(k)’s, IRA’s, etc and include the statements.
3. Social Security-Include your social security benefits statement.
4. Investment Accounts-Create folders for each brokerage account, mutual funds, or individual stocks and keep the statements here.
5. Savings and Checking Accounts-Add files for each separate account you have.
6. Household Accounts-Here you will keep track of your House title, home improvement receipts, mortgage and utility statements.
7. Credit Card Debt-Add a folder for each card you hold.
8. Other Liabilities-This folder would include student loans, personal loans, car loans, etc.
9. Insurance-This folder contains all insurance policies, home, life, car, health, disability, long-term care.
10. Will or Trust-Keep a copy of your will and living trust here.
11. Children’s Accounts-Include any college savings plans or trusts set up in your child’s name.

5) Make saving a habit. Find ways to be more thrifty & frugal this year. Here are some great tips.

6) Learn more. Add some financial blogs to your google reader and check out some financial books from the library to continue your financial education and your motivation towards your financial goals. You can download Suze Orman's new book for FREE for the next few days at Oprah's website.

Some financial blogs I like:
Simple Mom's Money Management Series
Get Rich Slowly
Fabulous Financials
Prime Time Money
Millionaire Mommy Next Door
No Debt Plan
Boston Gal's Open Wallet

7) Figure out how much things down the road will cost and start saving NOW. We really want to be able to retire early...using a variety of online calculators we figured out how much we would need per year (retired) and how much we need in the bank/invested by the time we want to retire to be able to live off the dividends. This was a very MOTIVATING exercise to both of us. We also need to get our groove on for saving to help send the kids to college. By the time our kids will be in colles, 4 years of tuition at a public college will cost $100,000 +! Ouch. I had no clue. So, to get there, we need to save approximately $4,000/year for the next 13-17 years to make this happen.

8) Reward yourself for working hard on your finances! What is it you want to save for? A family trip? A day at the spa? Plan and save for FUN!

What are your financial goals for the New Year?

{ spend smart. live rich. }

I think this statement by Suze Orman really was what got ME started on the path to better money management.

"Money is a teacher. One of the primary ways you learn who you are is through your money: how you make it, spend it, share it, save it, open your hands to it or block its flow."

A lot of you have asked if Dave Ramsey was my financial guru so to speak. He isn't. However, I would definitely recommend you read his book, it will certainly inspire you to become debt free and look at money in a different way. Simple Mom also has a great overview of his 6 step plan to Debt-free Living. I have read a lot of financial books recently - some by Suze Orman, Dave Ramsey and David Bach. The books that I thought fit ME the best and really hit home with ME were:

Your Money or Your Life
Smart Women Finish Rich
Smart Couples Finish Rich
Women & Money

A lot of you asked, why do you care how much money you spend - you seem to have plenty of it? Well...Without disclosing our ENTIRE personal lives on this blog or copies of our tax returns :-), I will say we can do better. We are very lucky to have 2 successful businesses, a beautiful home that has appreciated over what we purchased it for, little debt in the grand scheme of things and money to pay the bills and travel. Having said all of that (and being very grateful for that list), we aren't very good at saving. We are however very good at traveling and Sam at the age of 4 has been to more countries than either Will or I had until we were in our 20's.

We are after 4 things with our enhanced focus on saving more and spending less.

1) Spending less on s%*t we don't need (new home furnishings when the ones we have are great, new mt. bikes when the ones we have work fine, etc) and using that money for other enjoyments and pleasure - mainly travel. Finding that balance between saving for the future & having great LIFE experiences (now, not later) is a goal of ours.

2) Spending less in order to save more for the future. We don't want to work until we are 65. Retiring early doesn't just happen magically and since neither of us have a trust fund to retire on, we need to SAVE for this grand early retirement plan of ours.

3) Spending less in order to have less stuff - Less stuff to deal with, take care of, put away, etc. After spending the last 10 years bringing MORE stuff into our lives (cars, bikes, trailers, books, furniture, kitchen appliances, art, paintings, etc.) we want to spend the next 10 downsizing. We are on a mission to de-clutter and part with anything that isn't useful or wanted in our home.

4) And last, but not least, to teach Sam that $ does not in fact grow on trees. :-)

{ ways to make saving a habit }

Check out these great tips from an article in the Wall Street Journal this past weekend.

A few of my favorites...

Choose your extravagances: Consider what you can and can not do without.
Set goals: Think of the guilt-free trip you can take after saving the necessary cash. Good memories last longer, when not trammeled by large credit-card bills.
Resist your children: Offer options by explaining their choices here and now, but don't give in to their push for more consumer goods.
Post it: Put post-its in your wallet reminding yourself of your goals, whether it's a vacation or paying off debt.