February // Focus on Finances

Recently I stumbled upon the blog Fun Cheap or Free, which happens to be run by a friend of a friend, so I decided to check it out. Once I got started looking around, I couldn't stop. I found this article called "The 7 Bank Accounts Your Family Should Have" and thought i would skim through, but I was hooked! It was such a genius idea. I have read many articles about managing finances and this was the first one that not only captured my attention but seemed EASY!

The thing I loved about the site right off the bat was that she wasn't trying to tell me not to buy the things I want. She actually encouraged me to do so (just in a different way)! I am a major shopaholic, but we also do not use credit cards and the only debt we have besides our mortgage is one small student loan.So I always feel that since my bills are paid, I can shop! But when it comes to savings, we have a decent savings account, but no rhyme or reason as to what and when we put money into that account. This article really inspired me to come up with a plan.

Now, my husband is used to me getting really excited about new blogs and wanting him to join in on a bunch of new "adventures" aka lifestyle changes. And while he will do a workout video with me or eat all the new recipes I try, when it comes to major things like finances, I really have to corner him at the right time. We went out to dinner and we have a "no phone rule" when we're at restaurants, so he was totally cornered! I presented him with the article, the reasoning and my ideas and he was so receptive that we grabbed a napkin and got to calculating! Here is our new financial plan for the next few months (and hopefully forever), based upon that wonderful article on Fun Cheap or Free!

Current Situation:

• We currently have one checking account and one savings account and we share 100% of our money. No his and hers, 100% trust. But I understand this doesn't work for all couples, so just bear with me.
• I have a low-limit credit card I keep only $10 balance on just to build my credit (this has helped me tremendously- I high suggest getting a prepaid card. I gave the bank $300, they gave me a $300 limit. Should I choose to close the account, I get my $300 back, but I was advised by lots of research not to ever close that account or it will drop my credit score back down. My score built so much by charging small amounts each month and paying it *almost* all the way off each month. I digress).
• That's it! My husband has a credit card for emergencies, but after this new plan, we will no longer need it.

New Plan:

• I opened two new savings accounts with our bank so that I can see everything in one place. (If you are someone who is tempted to touch savings, I recommend an ING Direct Orange savings account. It's only online, and there is a wait period once you request to transfer money back into your regular account, so it gives you time to decide if you REALLY need that purse. It was a great account for me when I wasn't able to control my own expenses- out of sight, out of mind).
• New savings account #1 named: Emergency Savings
• Fun Cheap or Free (FCOF) recommends that you always have enough money in this account to live off of for 6-12 months. This includes food, mortgage and other necessary expenses should you happen to lose your job. For us, $2500 a month is what we need to live. So our goal for this account is $15,000. It sounds crazy, but it is doable.
• 20% of each of our paychecks goes into this account every single month. 
• The rules for touching this account: If you are literally going to lose your house tomorrow, touch this account. Otherwise, DO NOT TOUCH. Simple enough right?
• Savings account we already had is now renamed: Family Savings
• FCOF recommends you always have enough in this account to live off of for 3 months. So for us, that is $7500. 
• 10% of each paycheck, after depositing 20% into Emergency Savings) goes into this account.
• The rules for touching this account: If we need a downpayment on a car, a new mattress, or a surgery, something along those lines, we can pull from this account. We like to call it  our "Spendable Savings" but only plan to use it for major purchases.
• Checking account and spending money
• Checking account is where all bills should be on auto-payment to pull from. For us, auto-payments go through throughout the month, so I really have to calculate what our leftover amount is going to be.
• After all percentages of each paycheck have been deposited into savings and all bills have been paid, we decided to give each other $600 a month for spending money to start out. It sounds like a lot, but I know it's going to be really tough for me not to blow through that quickly! That's partially why we are going to use only cash for that spending money. Should we choose to order something online with our debit card, that amount will need to be subtracted from our cash and put away in an envelope, like a payment.
• After all of that is done and withdrawn from checking, we will still have money leftover. So what do we do with that money? 
• New savings account #2: The Slosh Account!
• This is my favorite account so far. Whatever money is left at the end of the money gets pushed into the Slosh Account, like pool water splashing over the edge. This money should only be used for trips, overnights, concerts, etc. Fun, right?
• The only catch: you cannot start putting money into this account until your Family Savings has reached your 3-month goal. So since we started from scratch and put all of our previous savings into our new Emergency Savings, we have only this months percentage in our Family Savings. But you better believe as soon as we hit that $7500 mark, I'm planning the next trip!

I know this was crazy long-winded but I hope you found it helpful! I challenge you to try to do the same thing! Happy February!