Our Financial Fitness Plan

A while back, I shared our budgeting spreadsheet and ideas. I had just created it back in late May/early June, but only managed to complete it for one month due to our chaotic hell of a move that occupied pretty much all of July. Well, now that things have calmed down considerably, we're back on top of the budgeting and we're hitting it harder than ever.

So far, we are still technically debt free. By technically, I mean we are not indebted to any institution, just to ourselves and to my mother. My mom paid off my college loan in full to spare me from having to pay the interest rates, so now I am paying her back every month into an IRA account that she set up for my daughter. It's kind of funny how my college loan is actually funding my daughter's college fund.

The other "debt" we have is with our car. We purchased a used 2007 Honda Fit in April - we had enough money to write them a check from an accident settlement, but by doing so we completely depleted our emergency fund/savings. It was previously agreed that the settlement money was going to be invested instead of spent, but the car purchase was a necessity and I am definately not a fan of getting a loan when you don't have to, so now we are paying ourselves back each month so we can invest that money again.

I was extremely worried that all the expenses of moving was going to our debt-free position, but thankfully it did not. We are still sticking to using one credit card - this does not work for everyone, but for us it's a godsend. With this credit card, we get cashback, and if I wait until I have enough to request a $200, they will send me $250 instead. Or, if I want my money sooner, I can request $50 checks. The credit card also helps me keep track of our expenses to input into my budget worksheet. Yes, it's easy to overspend when you're not dealing with cash, but we've worked very hard at our self-control, and can now reap the rewards of free cash!

To become financially fit, however, we have to accomplish the following:

1. Maintaining our monthly budget
2. Establishing funds/accounts correctly
3. Determining how many goal-getter funds we need
   
4. Starting a ROTH IRA for college savings and funding retirement plans

So far, we're doing very well on point number 1. I know the month is not half over yet, but so far we are doing extremely well in keeping under our budget (knock on wood).

My next priority is properly establishing our funds/accounts. Right now, all of our unspent money is sent into one online (ING) savings account. I'm not really keeping track of what the money is in there for. That has got to change. So this week, my main focus will be making another spreadsheet that will track the purpose with which the money is going into the account. I certainly do not want to get caught up in how much is in there and forget what it's for. I don't want to say "OooO! Look honey! We have $5000 in there now! Let's go and get that HD TV!" because that $5000 could be mainly comprised of college fund, car payment, and emergency money and only $50 is actual goal-getting money.

Speaking of goal-getter money, we need to determine exactly how many goal-getter funds we need. So far, this is what we have:

1. Washer & Dryer: $532 (due December 2008)
   
2. 40" HD LCD TV: ~$900 (due November 2008)
   

We have already spent the $532 - right now it is on a credit card with no-interest no-payment for 6 months. We have the money right now, but I like to hang onto my money if it's of no negative consequence, and by paying it later rather than sooner we will have a better handle and organization of our finances. I am not a fan of spending money before we have it, but our washer and dryer was broken in the move and it's impossible to survive without a washer and dryer with a 3 month old baby.

Our TV was broken in the move, so it's a perfect chance for an upgrade...It was a 21" traditional tube set, and we want to upgrade to a 40" HD LCD TV. The average price for this is $900. I'm looking to save the $900 in time for Thanksgiving sales - we should be getting about $200 back from the moving company for the old TV, so that leaves us with $700 in 3 months. It's going to be tough with our many financial obligations right now, but we can make it work.

The last thing on my to-do list to make our family financial fit is to set up a ROTH IRA for Hailey's college fund and start our retirement plans. This is not high on the priority list - the baby's only 3 months old, and we're both only 21 years old - we're not retiring anytime soon. Also, we're only going to be in the area for another 4 months, so I do not want to find a bank/agent that I like and have to switch over to someone else. But I do want to start researching into what types of mutual funds work for us.

And that is what our financial fitness plan is for the rest of this year. We are not in trouble financially, but with our extremely limited income it is very easy to get into trouble, so we just have to be that much more vigilant about our money.