Reward Points vs Cash

I have a dilemma: When we use our credit cards (or debit cards as credit) we earn reward points through our bank. A lot of banks offer rewards programs. Since I signed us up we have earned a lot of points and are hoping to earn enough to redeem for a gift certificate for a large purchase or travel. This originally was a sound idea; not anymore.

JB (my husband) and I came to an agreement about a budget and a spending plan. Having actually accomplishing this is leaps and bounds from where we have ever been in talking about our finances. One piece of the pie is to use jars, the spin-off of the envelope system. We agree that this will make us more accountable for our transactions instead of just whipping out a card every time we turn around.

The downside of this is obviously that by using cash only we will not earn our reward points. The only things we would earn points on are our gas expenses. We will continue to pay-at-the-pump for our gas because most of the time we have at least one, if not all, of the 3 kids with us. We are also comfortable with what we spend on gas because we normally spend right about the same amount each month, except when we go to visit family; even then sometimes we get a little assistance there.

What do we do? Do we continue with the plan of using the jars or go back to using the card and just keep a VERY close eye on the budget? If we go to cash only, will there be a time we are comfortable enough to go back to debit cards?

January Month-end Progress Report

Since I did not form my 2010 resolutions until the end of January, most of them did not officially start until this month; a few did and here is my progress report:

Get rid of the storage space by March 15 – Pending

I’m waiting for the weather to get just a touch warmer and not be wet/snowy/icy anymore.

Work out 3 days a week – FAIL

Umm, yeah, this didn’t happen. It’s not like I didn’t make it all 3 times, but more that I didn’t go at all. This month will be better.

Get up when my alarm goes off – FAIL

I have a REALLY hard time getting up in the mornings and have lately been oversleeping quite a bit. This morning I did do much better as I only let me alarm go off for 25 minutes instead of 45. You’ve got to start somewhere right?

Don’t sleep in after 10 a.m. both days of the weekend – PASS

The last 2 weekends I have gotten up by 8:30 or 9 a.m. one day of the weekend.

Encourage my husband to socialize more – PASS

It wasn’t directly of my doing but he did go to lunch with a former co-worker today; a couple of weeks ago I told him they should get together and he followed through.

Have a 1 month buffer – Pending

This is not something that is going to happen immediately. Although, I filed our taxes last week and according to the IRS we should be receiving our return by Feb. 9. My husband has some back taxes due but when he called a couple of weeks ago they flagged the account as the money should have been taken out of last year’s return but there was an oversight and it wasn’t. I am praying that we actually get it by the 9^th.

Pay off all credit cards by June 1 – FAIL

I’m saying fail because although this is still 4 months away (wow it’s really not that far off) 2 things happened in the past week: 1) The monthly charge on one card put us over the limit and 2) I had to use my credit card last night for dinner because I had left my debit card at home.

Track spending in YNAB weekly – N/A

YNAB does monthly budgeting and while I could have spent time sorting through all of January’s transactions with only 1 week left in the month, I chose not to. This week I will be setting up February’s budget, so check back next week for this one.

Learn something new – FAIL

Nothing yet…

Make/create a compost bin and garden – ¼ PASS

I haven’t yet made or bought a formal compost bin yet but I do have a container in the garage that is holding the compost-able stuff until I do. I won’t be able to start on the garden until March.

Do a monthly house project – N/A

Again, with only 1 week left in January there really wasn’t much I could do with that little notice and the limited funds.

February’s Goals:

Work out

Get up

Don’t sleep in

Encourage socialization

Put $3,000 towards buffer

Pay down credit cards by at least $100 per card

Track spending

Make or buy a compost bin

Paint the a bathroom
Have 10 no-spend days
Create jars (see tomorrow's post)
Open children's savings accounts
Pay 2 medical bills
Make payment plans for 2 large medical bills ($200 or more)
Bring lunch 10 days

Next week is my week to do a financial update. Stay tuned…

Crunching the numbers

I have noticed that I spend a lot of time crunching numbers and talking about our “budget” but doing very little to actually stick to it.

I looked at our overall picture of our checking account last year and discovered that from our main checking account we spent $215 more than we deposited in 2009. Granted there was likely a positive balance going into 2009 but I am still disappointed that it was in the negative.

I’ve taken a closer look as to what our overall budget should actually look like on a monthly basis based on our income last year (hopefully, it goes up this year). Here’s what I’ve come up with:

$4,369 base expenses

$1,588 remaining monthly for gas, groceries, clothing, etc.

To many people our base expenses probably seem like a lot but we have a) a mortgage payment, b) two car payments, 3) three children in daycare or after-school care and 4) a housekeeper that comes every other week because there is no way it would get done with the schedules we have. Under no circumstances would I give up the housekeeper, so long as I am working outside of the house and maybe not even if I was at home.

Also, the $1,588 remaining may seem like enough but we have to take into account that we 1) each drive 40+ miles to/from work each day, 2) 2 children are still in Pull-ups, and 3) I have Celiac (gluten intolerance) which means we do a lot of fresh cooking because most pre-packaged items have wheat in them (rye and barley also contain gluten). Cooking fresh can get very expensive but frozen vegetables are my friends!

According to Dave Ramsey (although we do not follow his plan) you should spend 5%-15% of your income on food, including eating out and any indulgences you might have (ahem, Starbucks) and 5%-10% of your income on personal items (toiletries, pet supplies, hair care, school supplies, life insurance, gifts, etc.). He says that child care should be included in the personal items category but because of the ages of our kids, this is not possible.

So going with that (again based off of our income last year):

5% $297          10% $595        15% $893

Ideally, I would like to do 10% on food ($595) and 5% on toiletries ($297) for a total of 15% = $893.

Thinking about this logically, when I make our budget I don’t break up the groceries and toiletries into separate categories since I get it all in one trip; but this year I would like to change that.

When we get to a point of spending what we made last month (the YNAB way) I think it would be easiest to make one trip to Sam’s (aka Costco to some of you) at the beginning of the month to purchase our personal care items and another trip to the grocery store to get all the shelf-stable/frozen items for the month. Doing these major shopping trips once a month would also require me to make a monthly menu that we actually stick to.

Hopefully we will get our tax return soon and can get 1 month ahead on our expenses and start working this plan instead of just talking about it.

Financial Update #1

I will start making a report every two weeks. I will say that I stole this idea from another blogger.

	Measure	2 Weeks	Life To Date
Checking	$467	N/A	N/A
Savings	$5	N/A	N/A
Investments	$32,000	N/A	N/A
Assets	$32,472	N/A	N/A
Mortgage	$115,526	N/A	N/A
Student Loan	$36,000	N/A	N/A
Car 1	$16,952	N/A	N/A
Car 2	$13,499	N/A	N/A
IRS 1	$4,638	N/A	N/A
IRS 2	$2,158	N/A	N/A
State Taxes	$1,700	N/A	N/A
Credit Card 1	$700	N/A	N/A
Credit Card 2	$167	N/A	N/A
Credit Card 3	$217	N/A	N/A
Credit Card 4	$155	N/A	N/A
Liabilities	$191,712	N/A	N/A
Total	-$159,240	N/A	N/A

With our mortgage included, it is a really large amount of debt. That is not to say that without the mortgage is a small amount of debt either:

	Measure	2 Weeks	Life To Date
Checking	$467	N/A	N/A
Savings	$5	N/A	N/A
Investments	$32,000	N/A	N/A
Assets	$32,472	N/A	N/A
Student Loan	$36,000	N/A	N/A
Car 1	$16,952	N/A	N/A
Car 2	$13,499	N/A	N/A
IRS 1	$4,638	N/A	N/A
IRS 2	$2,158	N/A	N/A
State Taxes	$1,700	N/A	N/A
Credit Card 1	$700	N/A	N/A
Credit Card 2	$167	N/A	N/A
Credit Card 3	$217	N/A	N/A
Credit Card 4	$155	N/A	N/A
Liabilities	$76,186	N/A	N/A
Total	-$43,714	N/A	N/A

Checking Balance: This is the reason I have the resolution to have $1,500 in our checking account for more than 6 months in a row. I hope to start moving towards the YNAB budget of month-to-month.

Savings: Hopefully, we'll be able to start adding to this very soon.

Investments: This is my husband's 401(k). We have no other investments at this time. This figure is estimated as I cannot recall the exact amount.

IRS: One is from past due and one is my screw up on our taxes last year. Somehow I managed not to include my income, at all.

Credit Cards: CC1 has been closed by the company, because they felt like it, and we will be paying that off as soon as possible. The other 3 are in good standing and we plan to keep these but lower the debt on them in order to help rebuild our credit.

Keep in mind that this does not include any outstanding bills that we have (medical, school, personal). At this time I don't have a full picture of where we are on those items. I will be working on this and hope to have a full picture by March 1.

Looking at this in black and white is actually pretty depressing. I have no clue as to if we will accomplish resolution #5; although, I would consider it okay if we were debt free of everything except the mortgage and the student loans.

Resolutions and Goals

I have been feeling very disappointed with myself lately. I have mixed feelings about the choices I have made in the last 10 years (if you know me, I know, but let’s not go there…). A part of me would really like to go back and change things: finishing high school; going to class in college; finishing college; going on to law school (yes, that was my original plan); being able to play numerous piano works; and being completely self sufficient.

On the other hand I have had wonderful things happen in my life as a result of the decisions I made, however juvenile, inappropriate and/or unwise. I have 3 beautiful, and I mean beautiful, (not that I’m biased or anything of the sort), a loving husband, a fantastic extended family, many supportive friends and a good job that I actually enjoy.

As I reflect on these things and the ideas I had 5-10 years ago about where I would be, what I would be doing and what I would have accomplished, I can’t help but feel a smidgen of disappointment in myself.

Since this is the beginning of a brand new year and the count-down to being the big 3-0 (Didn’t you hear? 30 is the new 20!), I have made the “30 Before 30” list; I know, how very cliché of me. I have opted to focus on this rather than my very short list of 2010 resolutions, of which I will also divulge for your entertainment.

2010 Resolutions:

1. Work out 3 days per week.
2. Get up when my alarm goes off.
3. Don’t sleep in until 10 a.m. or 11 a.m. both days of the weekend.
4. Encourage my husband to socialize more.
5. Save a 1-month buffer ($4,500 minimum)
6. Pay off all credit cards by June 1.
7. Track spending in YNAB weekly.
8. Learn something new.
9. Make/create a compost bin and garden.
10. Do a monthly house project.

I started out with a much smaller list, but have since added a few things. I think that all of these are do-able in the next 12 months or by their respective deadlines. Only a small percentage of people stick to their New Year’s resolutions past March, if they even make it that long, mainly because they make them to difficult to accomplish. I know that I won’t succeed at each of these all the time and I’m okay with that. But, I also know that I have something to strive for and that’s better than not trying at all.

Now for “The List.” I will review a few of the goals every few days. So here goes:

Pay off all debt: I know a lot of people want to pay off all of their debt, but I really think that we can actually accomplish this in the next 5 years. It will take some hard work and perseverance but I truly think that it can be done.

Get a degree: Most people would think that getting a bachelor’s degree in 5 years is reasonable; well, not if you have young children and a full time job. I can barely, and by “barely” I mean almost never, get the laundry done in a timely manner, not to mention the 10,000 other things that we’re supposed to do on a daily basis. I can’t fathom trying to be a full-time student as well. I know people do it, but I cannot voluntarily subject myself to that much stress.

Go camping: I have never actually been camping. I’ve done it halfway, where you stay in the pop-up trailer/tent thing and have facilities to use. I want to really “do it” but I don’t know if I could handle not having a bathroom. I’ll gladly sleep in a tent though! We never did things like this when I was a kid and sometimes I think I might have missed out; on the other hand, maybe I’ll hate it and thank my parents for not subjecting me to such horrors. We’ll see.