In Which We Have Pecuniary Difficulties

7

August 17, 2010 by Leah

Aaron and I got married in April.  By the time we got engaged, we already knew each other’s opinions on lifestyle choices that can really impact a relationship including: family involvement, eventual children, and money.  When we wed, we determined that our primary financial goals would be creating an emergency fund that would cover a year’s expenses and paying off our student loans (we have about $63,000 combined) before I become dried up and barren.

Fast forward four months.  We moved 3400 miles away from my hometown of Anchorage, AK to Long Beach, CA; from a state that pays residents for breathing to a state that taxes the heck out of them (9.5% on most purchases plus a hefty income tax).  I earned my masters’ degree and got a nice vacation payout when I quit my job to move, but I’ve been unemployed for over three months.  We’ve gone on five trips.   We’ve had unending occasions for gift-giving (weddings, birthdays, new babies), which we both love to do.   Our move took us from a one-bedroom apartment into a three-bedroom house, which required some extra furnishing.  We adopted a dog, whom we love, but who has horrible allergies and thus requires some extra maintenance.

All these life changes made me think the time was ripe to look at our spending habits and decide how best to achieve our stated financials goals.  We already pay more than the minimums on all eleven of our loans; we have no credit card debt; and we have a little savings – probably enough for a three-month emergency fund.  We are really conscious about reusing, recycling, and reducing, which should mean we aren’t throwing money away on disposable products.  We both tend to buy generic and/or on-sale items in grocery stores, and we try to do most of our food shopping at the local farmer’s market, saving money by skipping the middle-man and buying fresh, seasonal produce.   (Of course, it also means we willing pay a bajillion dollars for sustainably caught, fresh seafood and grass-fed meat.)  We eat out pretty rarely.  We belong to a budget gym and Netflix most of our movies.  We don’t have cable (although we have to pay through the nose for mobile internet because of where we live), and our rent is really reasonable for this area and the amenities our house offers.

With all this in mind, I sat down to do an analysis of our July spending.  I figured our expenditures would probably be just about in line with our income, and expected that implementing a few of those adjustments that one reads about in magazines (giving up fancy coffees and such) would allow us to start keeping our living expenses at about 90% of our income so as to achieve financial freedom faster.

Boy was I wrong.  In July of 2010, Leah and Aaron spent 177% of their income.  ONE HUNDRED AND SEVENTY SEVEN PERCENT.  Oh.  Holy.  Jesus.  And the worst part?  We don’t even drink fancy coffees.

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7 thoughts on “In Which We Have Pecuniary Difficulties

  1. Maia says:

    This is why I let Seth handle the finances. Good for you for grabbing the bull by the horns. You might enjoy I Pick Up Pennies — another frugal blog by another Alaskan living abroad. Looking forward to reading…

  2. Leigh Anne says:

    I think it is fantastic that you analyzed your budget so early in your marriage. I think it will save you guys a lot of headache to tackle this now. It sounds like you guys are doing everything right, you just live in a costly area with large student loans. I look forward to reading your blog.

  3. Ronale says:

    So glad you’ve gone back to blogging. I always enjoy keeping up with what the young folks are up to. My idea of budgeting has always been pay the bills and spend until there isn’t any left.

  4. Marla says:

    a way i heard about to handle multiple loans, is to pay them off in order of size, paying off the smallest one first and then applying that money to the next largest. any extra should go to the one being paid off. i remembered that just this morning and was thinking i should be doing this. our smallest loan is over $6k for left over student loans from our eldest child.

  5. Kathy Anderson says:

    Leah – good for you for analyzing it so early!! You are one of the top financial geniuses in my sphere, you’ll figure it out…

  6. Audra says:

    I love that you’re blogging about this! We have also had significant life changes in the last year–all of them by choice. However, it resulted in a $20,000 pay cut for me, the primary income-earner in our house. We are a very frugal household–my mother-in-law recently gave me a compliment when she said, “You guys can stretch a penny farther than anyone I know!”. Thanks Mom.
    However, there are some serious issues in the structure of our culture/economy when professional, educated folks under 35 can’t earn a wage that allows them to pay off their inevitable debt, stay current on bills, and still save at a decent rate.
    I’m excited to learn about any epiphanies you have as you’re tackling this far-too-common problem! Cheers!

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