How Do I Afford It?

After my post about my European vacation plans yesterday, I’ve had some people ask how in the world I can afford to go. It’s been a while since I did a post on budgeting, so I thought it might be time to do another one. As always, my own experiences don’t necessarily translate to everyone. Take or leave what works for me, however it works for you.

To start with, Denisa and I are both good with money. That’s a huge plus right there. If half of a couple is good with money and the other half isn’t, then I’ve found it doesn’t really matter how good the one half is–the other half more than makes up for it. We don’t have that problem, and I’ve never dealt with it, so I have no idea what I would do if Denisa weren’t good with money. (Sorry. No advice there. I guess this one’s easier if you’re not married. Then it’s just you you have to deal with.)

What do I mean by “good with money”? I mean that we both know how to live within a budget, and we’re both not afraid to cut out big purchases in the name of saving money. I don’t mean to say we’re the best at it–I have a few friends who are much, much better. We still have a home loan, and we haven’t been paying it off early, while some friends have already paid theirs off years ago, or are getting close to having it done already.

But we’ve cut out other expenses. Satellite television or cable, for one thing. Yes, that’s just $600/year or so, but it’s indicative of the spirit we have when entering budgeting: we’re not afraid to give up some things we enjoy for the sake of saving money. Our kids don’t do sports or dance. We try to stick to a pretty slim budget when it comes to birthdays and Christmas. (Well, birthdays at least.) We just aim to live simply for the most part. We’ve refinanced the house twice, getting the interest rate down to 3.75%, and the house payment is much lower than it would have to be in many areas of the country. All of that helps, and it all adds up.

It also helps that we both managed to get through school with no student loans. Three masters degrees, zero debt. We had scholarships, we stayed with family, and we worked to keep costs down. We also went to BYU for 2 of those degrees, and it’s dirt cheap to go there. ($5000/year for undergraduate, just a bit more for graduate. Dirt. Cheap.) No student loans meant that the money we made after we graduated could go to us, and not to the loans.

We also have eliminated almost all our other debts. We’ve never had credit card debt. We’ve got two cars, but we’ve paid both off. Other than our mortgage, we have no outstanding debts. That helps a ton.

But the biggest trick I’ve found that helps is that we set up our budget (using mint) on the assumption that I only work 1 job, and Denisa doesn’t work at all. All of our monthly expenses are constrained by what I make at the library. Not just that, but when I’ve gotten raises the last few years, we haven’t let those budgets get any bigger. (Well, where we could. Insurance and property taxes have gone up. We have no choice over those.) Even within that library budget, we’ve set things up so that if that’s all we were making, we’d still be able to come out ahead each month. This includes a car payment. Since we paid the cars off, I’ve still been putting aside car payment money each month, saving it up for inevitable day when we’ll have to buy another car.

Next, we’ve spent the last while getting an emergency fund set up. Enough for us to live for about a year with no income, if we have to. I treat that money as if it doesn’t exist. It’s socked away into CDs, and I don’t touch them. But if something bad were to happen, then we’d have the money to fall back on. That safety net makes me much more comfortable spending money on other things, like European vacations.

So we treat our lives as if we only have one income. But then we work to have as many different incomes as possible. In addition to my library job, I teach classes at the university, and I write books. Occasionally I even sell books. All of that money is extra money. Denisa bakes bread, she rates essays for ETS online, and she teaches classes at the university too. (Those advanced degrees pay off. Go figure.) Again, all of that money is gravy. If we had debts other than our mortgage, we would pay them off ASAP. If we didn’t have debts but had no emergency fund, we would create one. All of that has to come first.

We keep track of all the extra money month to month, adding any surplus we took in and subtracting any extra expenses that popped up. Extra expenses include doctor visits, purchases for the house, gardening supplies–you name it. Anything non-essential that isn’t in the monthly budget. (It also helps that I have very, very good insurance and benefits through my library job.) This all means that at any given time, I know exactly how much money we have kicking around to do other things with. I make sure to always keep a nice buffer of money in place–again, for emergencies.

In other words, 13+ years of living frugally as a married couple have really made it so we can afford to do these sort of things now. Our furnace is on its last legs, and I just bought a new one for $4000, but I’d been planning on this happening, and we have enough socked away to pay for it. That cuts down on stress so much.

That said, I realize there are definitely people who live frugally and aren’t able to make ends meet. I wish I knew advice to solve that. I don’t. All I know is how I’ve budgeted, always making decisions that would hopefully save me money in the long run. Will we be able to keep this up? I don’t know. I don’t know how much our expenses will change once the kids get bigger and start eating more or needing clothes faster. We haven’t been saving too much money for their college funds–my expectation is that they’ll work to help with that when they’re old enough and while they’re in college. Then again, I’m hoping they go to BYU, which would really help with how expensive college is.

We’re not perfect. We’ve made mistakes with budgets in the past, and that leads me to believe we’re making mistakes now. But we try to learn from those mistakes, and we spend money where we think we need it. If Denisa wasn’t from Slovakia, I don’t think there’s any way we’d be taking trips over there every three years. It wouldn’t be in our nature to do that. But she is, and we both think it’s important to keep those ties alive. We want our kids to know their Slovak heritage well.

Anyway. It feels like this post came off as a “look at me! I’m so great!” sort of post. That wasn’t what it was intended as. Maybe it wasn’t such a hot idea to write about this in the first place. But I have now, and I don’t have time for a different post today, so you’re all stuck with it. If anyone has any specific budgeting questions, I’m happy to answer them as best I can, with the disclaimer that I’m just a librarian, not a financial genius.