Why Don’t We Have Any Money?

This is the question that Mike asks me often.

Let me give y’all a little background. Mike and I have joint finances. But we actually have different checking accounts. I make less money than Mike and we try to use my salary for living and his for my student loan repayment and saving. My paycheck is not very big, but neither is it pitifully small. Since we don’t use any of it to save, I think we should be able to live on it. But sadly, I am ashamed to tell you that this has not been happening the past few months. We finish all the monies in my checking account in a week and use the credit card to pay all expenses in the next week. We don’t carry a balance and pay it off in full, but that money comes from the amount that we would have saved or paid down debt with. Various items in that category include my trainer fees of $550 for 6 months, a heart rate monitor that costs $100, a rock climbing Groupon for Mike and so on.

I have worked out a basic budget for us, after analyzing our spending pattern for the last few months. I will post it soon, after I am finished tweaking it. But the budget allows for miscellaneous spending of $100 every paycheck. Which means we each get $50 every 2 weeks. But that could become a little messed up. For example, my car registration was up for renewal this month and it cost $75. That means we just have $25 for 2 weeks. Which wouldn’t be so bad, but we just filed our taxes and we owe fees to H&R Block (and also owe $7000 to the IRS,a story for another day when I feel less stressed about it). We just can’t tell the good folks at H&R Block to wait till we save enough, can we? I know a lot of PF bloggers save money in a sinking fund to pay for things like these. But I figured that since it would take a while for my sinking fund to build up, I would tackle these expenses from the amount that I plan to save each month.

Our expenses including rent, groceries, car insurance and so on come to about $2500 each month. And we have 2 car loan payments of $350 and $250. Like I wrote before, we have been paying $2000 towards my student loan (but not this month 😦 ). Once we knock this down, we will have a lot more money free up each month. I also owe $10000 to my parents and I need to start saving that up soon. Apart from loan payments, we would like to save for 2 travel funds – one for traveling within the States and the other to go to Europe. And we would also like to save for a sinking emergency fund to pay for yearly maintenance types bills and also for things like small car repairs and so on. We would also like to save $1500 each month in our Savings account.

After all the loan payments, bills and expenses, we find that we have very little fun money to buy things we want to. Mike hates that he is just not able to go to Barnes and Noble and buy himself a book when he wants to without checking if the budget allows for it. And to be honest I hate it too. It’s like being on a diet. I tell myself that I have to do this for the greater good and that my future self will thank me for it.

My question for the wise PF bloggers out there is, does this actually get better with time?

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15 Responses to Why Don’t We Have Any Money?

  1. LBC Teacher says:

    I’m single, so I will say that I think it’s harder to stick to a budget with two people. BUT, I actually have come to like shopping within a budget because I don’t have the guilt or stress of wondering if I can afford it. If it’s in the budget, I’m good to go. And for me, the longer I operate within a budget the less I want to spend a bunch of money on other things. Hang in there! I think it gets easier!

    • Ella says:

      I think it depends on the personality of the individuals. Mike likes to play it by ear and while he is not overly extravagant, he does not like to be told that he should not buy something as it in not in the budget.
      I am ok for most part when it comes to sticking to a budget. But sometimes I get this crazy idea that I need to buy the new Nintendo 3DS right away and I feel deprived when I think that I can’t unless I save for a few months. I hope you are right and I start to actually like shopping on a budget.

  2. It does get better. Although I am single, I have worked with enough couples to confidently tell you that it does get better.

    I follow the Dave Ramsey 7 Baby Steps, so I would advise you to list your debts in smallest to largest and aggressively pay them off in order (including the money owed to the parents). Since life happens the extra payment will very in size each month and this is okay because you have a plan. This give many people the a sense of control over their financial future.

    ACCOUNTS/BUDGET: My recommendation to you is to have a joint account where all the money goes into and start using bill pay to your advantage. Do a budget for the joint account, which includes the $50 each payday that goes to each of your accounts. When budgeting start with your neccesities and work your way down the list. I recommend the Dave Ramsey Cash Flow Plan (http://www.daveramsey.com/tools/budget-forms/).

    SINKING FUNDS: This is a great idea, but tricky to start. When I work with people to start sinking funds, I advise them to use the extra money to get their sinking funds where they need to be. For example, lets say your car insurance is $600 and will become due in 3 months. I would have you put $300 in savings instead of towards your debt this month, then you would contribute $100 per month going forward. In 3 months you can pay your insurance in full and keep putting back $100 for the next payment. Sometimes the amout per month will be low (i.e. I save $6 per month to pay my annual ID Theft payment). This idea can also be applied to your vacation fund, but start with one vacation and work your way up to others.

    INCOME TAXES: I am not sure why you are paying taxes, but you may consider checking your W4 withholdings. (http://www.irs.gov/individuals/article/0,,id=96196,00.html)

    Sometimes it is more about how you manage the money than how much you have. If you divide each paycheck over needs and all wants, you may never get any of your wants. Focusing on specific goals will help move faster.

    • Ella says:

      Thanks for typing out such a detailed reply! I really appreciate it.

      My student loans are actually the largest of the loans. But somehow I want to get rid of that first. I just want to get rid of it soon.

      We use bill pay, but I find it preferable to have 2 accounts, because that way I make sure that we never use Mike’s salary for living expenses. That is an awesome idea about diverting $50 to another account and use that for miscellaneous expenses.

      Yeah I find sinking funds very tricky too. And I think I am going to borrow from the amount I save to pay these once a year bills and for summer travel.

      Our taxes are really messed up this year. Our withholdings were wrong and we jumped up a tax bracket too. We have adjusted our numbers this year and hopefully next year will be better.

      Thanks again for your comment.

  3. I feel for you. I’m going through the same thing. I hate that by being in debt I’m paying for things I already have (or don’t even have anymore) and I also owe money to the IRS, which sucks. I’m always looking for ways to be able to treat myself – one thing I do is try to take surveys online to win Borders Bucks through e-rewards so I can buy books for myself or as a gift. It’s so satisfying buying books in the store, but I rarely do it anymore because the prices are cheaper online. I wish I had more answers, but just mainly popped in to say you’re not alone!

    • Ella says:

      Welcome to my blog!

      It’s nice to know I am not the only one missing shopping. Yes I love to buy books at the store too, but it is always cheaper online. I try to do swagbucks for amazon gift cards. I did a spring clean of my closet today and I discovered a lot of short sleeved tees and tops that I had forgotten about. So I think that will curb my clothes shopping for awhile

  4. Rubee says:

    It does get better with time. 🙂 It won’t be easy though as there will definitely be times when you do miss being able to splurge on things without having to worry if you have room in your budget that month (as you have already noticed).

    We set aside $200 cash a month each for fun expenditures like that. It might seem like a lot but it is inclusive of any miscellanous spending that is too small to put on credit, like lunches and taxis etc. We found that over time, we started treating the money more as petty cash than fun money but it is always good to know that we are able to buy things on a whim if we so desire.

    • Ella says:

      Welcome to my blog.

      Glad to hear that it will get better 🙂 Yeah we want to do $200 a month for splurges, but I think our treat fund will go the way of yours too. My husband would sure appreciate having some fun money. He hates words like “budget” 🙂

  5. TeacHer says:

    Ummm, I suppose it gets easier. There are certain budget categories I totally have under control, but others I still struggle with. For example, I have a really hard time sticking to my discretionary spending budget every month, even though I think it’s pretty generous. My weakness is definitely clothes 🙂 But when I get frustrated with budgeting, I always think: what’s the alternative? Not budgeting and getting back into debt? No, no, no!

  6. SS4BC says:

    Yes, it gets better. I’ve gone through so many budget iterations that it makes my head spin. For me, it isn’t about changing every little thing at once. It is about finding the one or two things that will make the largest difference and doing that. Then once you have that under control moving to the next thing. Eventually, if you spin your wheels long enough you get out of the mud flying!

    As for the going to B&N, what helped me with purchases like that was Swagbucks (lemme know if you want a referral code). I would trade in my points for Amazon gift cards and use those for DVDs and books. All of the pleasure of the purchase, none of the guilt.

  7. Makky's Mom says:

    The key is to commit to spending much less for a period of time (3 months? 6 months? Whatever you both think you can handle). During that time, begin an “extra expenses fund” kind of like your “sinking fund”. Don’t just start it without giving it lots of thought though. Run through a typical year and jot down all the extra expenses that aren’t covered by your day-to-day budget – things like car repair, car registration fee… things like that. When you have a final tally, divide it by 12 and you’ll know how much money you need to set aside each month to cover those costs without mucking up your budget. If you can’t afford to put away the full amount, aim for 50% till you’ve run through your first year. It will help keep you on track.

    As for the desire to spend freely while running a tight budget, I think it gets better because your expectations drop drastically over time. Take for example a budget I found recently of when my hubby and I were newly married without kids – our entertainment budget per month = $600. Today, 12 year later, with a family of 5 our entertainment budget = $100 per month. You adjust, and it does get easier!

    Take it one day at a time, or one month at a time if possible. Keep your eye on the goals and make sure they are both your goals. That’s how you’ll stay focused! We currently have a common goal to save $30,000 over 5 years to buy ourselves a sports car. We are 3 years into our plan and have just over $15,000 saved. We still have this common goal and the closer our end date comes, the more focused and motivated we become! Good luck!

    • Ella says:

      This is a neat idea Makky’s Mom! We should really try to rein for a fixed period of time like 6 months and see how much extra we can save. This will motivate us to stay focussed in our financial goals. And we should get started on our sinking fund, since these things derail our budget often.

      $600 sounds like something we would spend too! lol! Especially with summer round the corner, we have so many mini trips planned. We went crazy last summer and flew to lot of places. This year we are limiting our travel to places which are within 5 hours of driving distance.

      Wow, halfway done! That’s awesome. We want to save for a trip to Europe, but we haven’t even started saving for it. You guys are all so super, I have so much to learn and implement!

  8. Jason says:

    I can’t get past the tax situation. It appears that you guys don’t bring in large salaries, so in order to have a $7000 tax bill you must not have had much at all coming out of your check, which means you probably paid an underpayment penalty. Is one of you self employed? I can’t see paying H&R Block to do your taxes ($59?) when you can easily do them online (your blog is looks great, so I’m confident you have the computer skillz to do it) at Taxact.com or one pf the other sites.

    This is just an example of what looks like a tendency to not “see the forest” for you guys (is there a Half Priced Books in town?). As for your posed question, it does ease over time, but it’s in the Marathon not a Sprint fashion. Over time your income should grow as your debts drop. Also, have you consolidated your student loans? What APR do you have? This is deductible interest on your income taxes.

    Looks like you definitely have the willingness and motivation, just keep paying your bills and rein in spending while learning about PF. Believe me, I made more financial mistakes than most, but luckily was able to claw out before it got really bad.

    • Ella says:

      Thanks for your response Jason. Our tax situation spiralled out of control this year! We both mentioned we are married in our W4s, so we double dipped into the deduction. Also when our income combined, we jumped into a higher tax slab. Mike’s work gives out a bonus every quarter as sort of profit sharing. They admitted that they made a mistake and deducted lesser tax than they should have. All of this snowballed into the $7000 mess! Because of our income I could deduct only $600 of my student loan interest. I used turbotax and taxact to calculate my taxes and when it gave me a high number, I freaked out and thought HR Block would help us reduce what we owe. Unfortunately they said the same thing and we owed more in tax preparation than with the websites.

      My student loans are consolidated at 4% APR.

      But you are right about not seeing the forest for the trees! We go out and spend with abandon, thinking a $25 here and a $50 there do not matter. But it does in the long run, we are just impatient. Our situation is not particularly bad, but it can go either way. I want to pay down debt and save at the same time.

      Thanks for your detailed comment. I really appreciate it. I like it when people question what we are doing, so I can check if I am doing things right. I have no-one to talk about this in real life, since money is so taboo in social situations

      • Jason says:

        You should really try to make the time to post more, you have a great blog (I linked you) with a very readable style. As for H&R (or any of the store fronts for that matter), I believe they’re fine for 1040 EZ filers who want their refund so bad they’re willing to get pasted for an ‘anticipation loan’ but not for people engaged in their financial situation. My 20’s were absolutely atrocious financially speaking, but it’s amazing what simply plugging along..paying bills and staying dilligent..will get you in a decade. As the kitty in the poster says, “Hang In There!”

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