Monday, February 3, 2014

Suggested Reading List Now On Amazon

Hello friends!

I wanted to draw your attention to the Amazon Store I've created for the Let's Talk Money, Honey blog.  I've added my *favorite* personal finance books to the store - I've read each of these cover to cover at least 3 times, some as many as 15!  They contain a wealth of great information, and more importantly, are easy to read and digest for those of you who aren't as comfortable with the topic of personal finance.  After all, that's what this blog is all about, right?  Making personal finance easier to understand, so we can gain control over our finances!

I highly recommend picking up at least one, but love all 4 for different reasons.  As a helpful start, I'd suggest the following:

-- Dave Ramsey for EVERYONE

-- Smart Women for EVERYONE (I was 19 the first time I read it, so don't think you have to be further along in life for the information to count!)

-- Smart Couples for the married/engaged folks in the audience (can be redundant to the Smart Women book, just an FYI)

--  The Automatic Millionaire as a secondary inspiration book for those of you who have finished Dave Ramsey and a Smart book (spoiler alert- the first chapter of Automatic Millionaire is maybe my favorite chapter of any book EVER.  So cool.)

I'll be talking about these books often as we dive into the details of our personal finance journey here, and will continue to add and discuss books I find helpful as I discover them.  If you have a personal finance you've read and highly recommend, please use the contact form at right to email me!


*Nobody likes an ugly blog! ;) Please note that all funds generated through affiliate advertising go directly to supporting this site and developing cool personal finance tools in the future. You can find our Disclaimer page here.

Budgeting Basics - Categories are Key

Hi, friends!  Happy February to you!  I hope that you've been more mindful about how you've been spending your money these last few weeks (but if you haven't been, that's ok too).  It may sound a little backwards, but I've intentionally held off on this next budgeting post.  I really wanted to make sure these first finance basics come at a slow, steady pace, so we don't burn ourselves out too quickly with the ambitious start to the new year, and give up altogether.

Before we get started on this next round, I'd like for you to go log into your account, and double-check that your account transactions are being logged correctly.  We're going to go through in detail soon, and modify some of the default settings to make the most of this great tool, but in the meantime it's important that you're building a transaction history in the program.

Ok, then!

Now that you have a better picture of what financial success would mean to you, the next step is to start working on the action plan to get you to where you want to be.

We're going to go through your general spending activity now, and start grouping together categories of where your hard earned money has been going.  In other words, the next step is to start outlining the framework for your actual monthly budget- that glorious income/expenses tracker you always think of when the word "Budget" comes to mind.

There are 3 types of categories that we're going to be building into your action plan:

--  Your typical daily/weekly/monthly/most months transactions - mortgage/rent payments, buying groceries, dinner with friends, getting your hair highlighted every 2 months

-- Categories you know you'll have to pay at some point in the year, but don't occur every month - paying your car insurance premium every 6 months, for example

--  Items you'll eventually need to pay for, you just don't know when you'll have to pay for them** -- replacing the tires on your car or needing some kind of car maintenance like a new hose/belt/gasket/thingamajigger, emergency plumbing services, a new dishwasher, a dental procedure you weren't expecting

**This last category is especially important, because these things may previously have been filed under general Murphy's Law - "Anything that can go wrong, will go wrong".  These are the expenses you weren't expecting to pay, and therefore probably hadn't been planning up for.  I mean really, if I could have predicted that the sewer system in our 50 year old rental house was going to back up and flood half our house with sewage the same weekend that both kids got a stomach bug AND our washing machine broke (true story), I probably would have spaced out these 3 catastrophes out a little bit more, right?  But that's just the way life works sometimes.

The key is to stop looking at these things as unexpected emergencies, and start looking at them as things that need to be budgeted for because they will happen eventually.  If you have a car, it IS going to need new tires eventually.  If you own a house, you WILL eventually need to repair or replace your washing machine or dishwasher.  Even if you can only save $5 in your "Eventual" cost categories for now, that will be $5, $10, maybe $50 to use that you didn't have before, right?  Baby steps here.


This leads us to what categories we're actually going to be including in our monthly budget.  When you start listing out categories of expenses to include in your budget, I want you to think about which categories you're going to eventually need and add them into your budget right now, even if you're not currently spending money on them or just cannot afford to right now.  The important thing is to start including them (even if they're just placeholders for the moment), because hopefully soon you'll be able to save/budget for them all.  By adding them into your budget now, you have a constant visual reminder of existing holes we'll be working to fill.

For instance, I have a line item for Renter's Insurance with a $0 budget right now, because I'm in the process of researching policies and determining how much it's going to cost us each month.  I also have a $0 budget line item for Gifts/Holidays, because I'd like to start saving in advance for birthdays and Christmas but don't yet have the additional money to do so.  They serve as great placeholders until I can actually set some money aside for them in the future.

So, without further ado, here is a list of potential budget categories for you to include in your personal.  Keep in mind that this exercize is about WHAT we'll be spending our money on, and not HOW MUCH we'll be budgeting just yet.  Just start making a list of the budget categories that currently work for you (as well as the ones that you'll add in that you'll eventually need to start budgeting for).  You may have extra line items to include that aren't in the list below, like alimony payments, lottery winnings (lucky you!), or something else I haven't thought of yet.  And if you have a question about how to treat a specific cost you have, just use the e-mail contact form on the side of this blog and I'd be happy to talk through it with you!

Makin' Money
-- Job/career
--  Side jobs, like babysitting money
--  Etsy store
--  Blogging income
--  Selling your stuff at consignment stores, on Instagram, garage sales
--  Monthly inheritance payments

We're going to get into this category in much greater detail later, but want to make sure we have a placeholder for it even if you don't have any leftover money for savings right now
--  Emergency fund (every one of us should have one of these!)
--  Retirement savings
--  College savings for your kids
--  Vacation fund

The Roof Over Your Head
-- Mortgage / Rent
-- Homeowner's/Renter's Insurance
-- Homeowners Association dues (HOA)
-- Home Maintenance

Keeping The Lights On
-- Electricity
-- Gas
-- Water/Sewer
-- Trash
-- Cable/Internet
-- Cell Phones

Keeping Food In The Fridge
-- Groceries
-- Household Goods (anything you wouldn't eat but could buy at the grocery store, such as toilet paper or laundry detergent)
-- Diapers/Formula (we personally track these separately from our household, since it's an expensive category we need to keep tabs on)

Paying For Things You Couldn't Afford 
(harsh title, I know, but if you really could have afforded these things you would have paid for them in cash, right?)
-- Credit Card Debt
-- Car Loans
-- Personal Loans
--  Student Loans (this isn't a bad thing!!!  But it is debt, so it's getting lumped into the debt category)

Gettin' Around Town
-- Gas/Public Transportation Passes
-- Car Maintenance
-- Insurance

Because We Can't Be Naked In Public
--  Clothing for Adults
--  Clothing for Kids (if you've got 'em, or plan to in the near future)
-- Dry Cleaning/Repair

-- Dr. Appointments (co-pay payments if your insurance policy doesn't have 100% coverage)
-- Perscriptions
--  Insurance costs (if your insurance isn't automatically deducted out of your paycheck each month)

Personal Goodies
-- Dining Out/Entertainment (this will be separate from your Food budgets, because eating out is an 'above and beyond the basics' situation)
--  Grooming/Beauty (haircuts, makeup, manicures, etc)
--  Subscriptions (Anything you pay a monthly/quarterly/yearly fee for, such as the gym, junior League, LinkedIn Premium, magazines, alumni/professional associations, etc.)
-- Kids Activities (MyGym, Mother's Day Out, little league soccer, etc.)
-- Hobbies (blogging, sewing, underwater basket weaving)
-- Education (GMAT prep courses, photography classes, schooling for the kids, tutoring, etc.)
-- Gifts/Holidays (Christmas/Hanukkah fund, birthday presents, hostess gifts)
-- Fun Money - think of this as an allowance for yourself to use however you wish.  Even if you're struggling financially and have a long way to go until you're back on track, it's important to give yourself a tiny amount of money to have fun with.  My husband and I each get $20 a month right now- it's obviously not a lot, but it's really nice to allow myself a Starbucks or magazine splurge now and again!

PHEW!  There certainly are a lot of categories that are begging for our money to be spent on, aren't there?!

Good luck with this next big step in the process, and remember to pat yourself on the back for taking one more step in gaining control of your finances (and your life!)

Thursday, January 9, 2014

Budgeting Basics - The Big Picture

Alright friends, let's get down to brass tacks here.  The big B word - Budgets.

Answer me this - why is it that you want to create a budget, anyway?  I mean, besides the fact that "everyone says" you need to budget, why do YOU think you need one??

-- Are you working paycheck to paycheck right now, stressing at the end of each pay period because there are more days left on the calendar than dollars in the bank to cover them?

--  Do you feel like you just don't have a good handle on where your money is going each month, and feel like you want to be come more responsible about where you're spending?

--  Are you planning for a wedding, and trying to figure out how you'll merge your finances after you're married?

-- Are you freaked out about the fact that you really haven't started saving for retirement, or the kids' college accounts, or a huge dream vacation, and are not sure how to come up with the extra cash to do so?

-- Are you still in college, and are getting really overwhelmed about the thought of being out in the real world soon, having to fully manage a "big kid job" and finances like a real adult?

Now that you've thought a little bit about why you want to set up a budget, let's take it a half step further- when it comes to budgeting, what is your end goal here?

It's totally ok if you have more than one financial end goal.  I have like 7, including paying off debt, saving for college for my 2 babies, and saving for retirement (we're going to be covering these topics in a lot more detail, but I'm just going to generalize here for the moment).

Take a minute to really think about why you want to create a budget- what those financial end goals are- and jot that down on a piece of paper.  Let's keep what you wrote down on the front of your mind while I dive into this next section.


I'm going to take this topic in a bit of a different direction now, so bare with me.  Let's talk about cooking for a minute.  I love all things food-related, so am all about a good food analogy.  Let's go there right now.

Bottom of the barrel basics here-

What is a recipe?

A recipe is a game plan to make a certain meal, right?  So there are 3 parts to a recipe:

-- The list of ingredients
-- The list of actions you need to perform in order to transform those ingredients (aka the actual cooking)
-- the completed dish you just cooked

So let's rephrase that in a different way- a recipe is a list of items we need (the ingredients) and a list of actions we need to take (the cooking) in order to get to a desired end result (the completed dish).

Do you know what else is a list of items we need and a list of actions we need to take in order to get a desired end result?

* ding ding ding*

Your Budget.

Are you feeling a little surprised by what I'm saying?  Are you thinking to yourself  "Wait a minute- I thought a budget was just a spreadsheet that matched my income up against categories of expenses I have for each month, and told me how much I could spend in each category?"  Yes, you're not crazy - the traditional definition of a budget is exactly that.  Take your expenses, bucket them into categories and assign them dollar amounts, then try your hardest not to overspend on them each month.

But I want you to think outside of the traditional definition of budget here.  I want you to stop thinking of a budget as just this income/expense spreadsheet you need to put together and follow to the letter, and start thinking of your budget as your financial recipe.  Let me expand on this-

When I was a really little kid, I used to spend Saturday mornings raiding the fridge while my parents were still in bed.  I'd crack some eggs into a Tupperware and add anything that was within my little reach - black pepper, olives, chocolate sauce, Italian seasoning, ketchup, you name it.  I'd whisk it all together, microwave it for about 5 minutes until it was a nice little souffle, and then take it to my parents room and beg them to eat it for breakfast (lucky them).  When my mom would ask me to try some myself, I'd basically give her the 6 year old equivalent of "H(eck) NO!".  The end result was something you couldn't pay me to eat- I was just experimenting with ingredients and seeing what happened.

Fast forward to today- any time I'm making something in the kitchen now, I'm cooking with a purpose.  Unlike my microwave "a pinch of this, a handful of that" souffle days, I'm focusing on what it is that I'd like to eat, and then working backwards and collecting the ingredients necessary to make that dish happen.

Let's talk about your financial recipe now-

We're going to take our definition of a cooking recipe - a list of items we need (the ingredients) and a list of actions we need to take (the cooking) in order to get to a desired end result (the completed dish)- and change it into the definition of a financial recipe:

a list of items we need (your expenses and income) and a list of actions we need to take (how we manage our money day to day) in order to get to a desired end result (our financial end goal)

The biggest thing I want to drive home for the next step in our journey is that I want you to stop putting your full focus on merely creating a budget list to follow, and start focusing on your financial end goal.  Putting your full focus on your budget list/spreadsheet (the ingredients), without any thought as to what the end goal is you're actually trying to achieve (the completed dish), is just like how my focusing on ingredients only when I was little resulted in a poorly thought out microwave souffle.  My heart was in the right place, but the end result was just a big, hot mess.

If you don't know where you're trying to get to financially, just throwing a strict list of expenses together and trying to stay within its boundaries isn't going to work well for about 90% of us.

So my challenge for you is this- start thinking about what "success" would look like to you at the end of this financial journey, because that vision is different for each and every one of us.  Once we have the end in mind, then we can really get cookin' (lame pun totally intended, sorry) on putting a game plan in order to get you on the financial path to success.

"If you don't know where you're going, then you probably won't end up there."
-Forrest Gump                                 

Wednesday, January 1, 2014

E-mail Subscription Now Available

Getting caught up with this blog just got easier - you can now get new posts sent straight to your inbox!  Just enter your e-mail address in the box over to your right.  If you're reading this post from your mobile device, you'll need to scroll down to the bottom of the webpage and click "view mobile version" in order to see the e-mail subscription feature.

Or, if you're into using aggregators, click here to follow my blog with Bloglovin!

As always, I so appreciate you taking the time to read Let's Talk Money, Honey.  You're the best.


Happy New Year!

Happy 2014, friends!  I hope you're having a wonderful (and relatively hangover-free) start to the new year!  I have to say, I think New Year's Day is my favorite holiday of the entire year.  There is just something about fresh starts, clean slates, and the hope of new changes, isn't there?

I'm thinking that many of you have some sort of personal finance-related resolution this year, am I right?  I have a few ideas swimming in my head as well, but haven't committed to anything yet.

I'm sure some of you are answering in your heads "Yes, absolutely!  This year I'll finally get on a budget and stick to it!  So get to the posts about budgeting already, lady! Clock is ticking!"  After all, that's the deal with New Year's Day, right?  Take your laundry list of new goals for the year, and start executing all of them once the clock strikes midnight January 1st, right?

When it comes to your finance-related goals this year, my friend, I'm going to give you this answer in return:




Here's the thing- do you remember the list of New Years goals you had last year, or the year before that?  You know, the ones about budgeting or losing weight or quitting smoking or saving money.  The ones you started fastidiously executing at midnight January 1st?  Let's be honest here- how did that end up going for you?

If your resolutions turned out like 99.8% of the ones I've made over the last 10 years, I'm guessing you kicked butt at them for 1-2 weeks, then maybe had a liiiiittle slip up or 2 somewhere along week 2-4, and then  left them completely in the dust come March 1st.  Can I get an honest Amen about this?

Remember how I said that managing money is all about psychology and emotion?  One of the greatest lessons I've learned about myself over the last couple of years is that I have a HUGE tenancy to get hyped up about something, dive in head first 1,000% percent, and then get overwhelmed or burn out as quickly as the obsession began.

Full (embarassing) disclosure, since we're all friends here: I'll fess up and admit my guilty offenders include budgeting (I've easily spent 100 hours creating intricate Excel spreadsheets that never get touched), starting a new business (I've created 3, and signed up with 2 home-based businesses), learning French (gifted Rosetta Stone tutorials still in the box 18 months later), cooking Indian food (?!?), and even running a marathon.  You guys- I've actually signed up (and paid for) 2 different marathons in the last 6 years.  Number of training runs logged? Zero.

Knowing this about myself, and hoping that at least a few of you can secretly admit to the same general behaviors,  we're going to approach your personal finance goals and actions a little differently.

What we're not going to do right now is make an aggressive list of challenging goals that will choke you, trip you up, and cause you to ultimately stumble right off the wagon.  That's not going to do us any favors.

What we are going to do is take this ride very slowly at first, get the hang of things in baby steps while we educate ourselves and - more importantly- start to understand our psychology and emotion behind why we behave the way we do with money.  I know that sounds kooky and totes touchy feel-y -- I promise you we won't get too Kumbaya up in here.  But it's important, so you'll continue to see that theme here.

Here's a little homework for you- if you've gotten to the end of this post and are still chomping at the bit to get this show on the road, I hear you.  Make sure you've read this post, and then take it a step further by playing around in Mint a little bit. I promise you that's a HUGE step.

If you want to go bananas, now is the time to start listing out all of your general expense categories (rent, each different utility, food, car insurance, etc.)  We'll go over that in detail soon, but feel free to get the ball rolling there if you'd like (or just stay in your pajamas all day, bake brownies, and be too lazy to wash your face like I am).

Happy 2014!