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This post is by staff writer Honey Smith.

In May, Jake and I bought a house and moved in. We’ve been loving it so far! People who have always lived in a place with decent structural integrity may not appreciate it, but considering the many problems with our previous rental, it feels like we live in a palace now.

At the time of my last post on homeownership, we had about $10,000 in liquid savings. Beefing up our emergency fund even more was on our list of priorities. I was hoping to start saving for that in earnest in 2015. However, a situation arose this weekend that will cause us to reprioritize our financial goals.

Air conditioner repair

On Saturday afternoon, I noticed it seemed a bit warm in the house. When I looked at the thermostat, it said 82. Since it was set at 77, something was obviously wrong. I went outside and looked at the drip spout that comes off of the roof, and there was no water dripping. I assumed this meant that our air conditioner had frozen.

Jake concurred that was a possibility. You’re supposed to change the air filter every 3 months and we hadn’t done it since moving in, so we were slightly past the date. In ordinary climates that’s probably not that big a deal, but it was 108 that day. We turned the A/C to “off,” turned the fan on, and left the house to grocery shop and run errands so we didn’t have to be home while we waited for the unit to defrost. Unfortunately, when we got home and turned everything on again, it wouldn’t start up at all! So we called in a repair company to check it out.

The repair person got us up and running again sometime around 11 p.m., but we ended up paying about $1,000. However, it wasn’t due to our lack of routine maintenance. The repair person recommended that, based on the unit’s age, we should think about saving up for a replacement. The ballpark estimate, which was based purely on his look at our existing unit and the square footage of our home, was $7,000. Wowza! This was something that was already on our radar after our home inspection. Now “on our radar” has morphed into “our most important priority.”

The hope is to get the new unit during the winter, before next year’s A/C season cranks up again. We are also hoping that a new unit will drive our electricity costs down in the future. We have double-paned windows and a brand new roof, but I can only imagine how inefficient our HVAC unit is at its age. And while a new air conditioner may not be one of the 10 easy ways to lower your electric bill, the part of me that loves spreadsheets can’t wait to start crunching numbers after we get our new unit. In the short-term, however, this means that I will be cutting back on my aggressive student loan payments for the next few months as we set aside money for our new goal.

Other house projects

Now that we’ve lived in our house for awhile, we’re starting to get a sense of other projects that need to be completed and how to prioritize all our goals. We can’t afford to do everything at once! Here is a prioritized list for tasks that we either can’t or don’t want to DIY.

  1. Replacing the A/C. First priority, anticipated timeline six months. Amount: $7,000 (just in case our midnight estimate was a little off).

  2. Demolishing the shed. Second priority, anticipated timeline six months. There’s a corroded metal shed in the backyard that isn’t safe to use or really even be near, and we don’t need it because everything fits in our garage. Amount: unknown, but this shouldn’t be too expensive.

  3. Resurfacing the back deck. Third priority, anticipated timeline between six months and one year. Amount: $3,500.

  4. Installing solar panels. Fourth priority, anticipated timeline 18 months to two years. Amount: $10,000 out of pocket, according to other folks we know who’ve had this done.

There are also some rooms that won’t be fully furnished for awhile, but we’re in no hurry for a few reasons. First, it takes time to get a sense of what we really like and what will actually fit in the space. We also want to save up and buy nice things that we love. I think new furniture will probably end up between “resurfacing the back deck” and “installing solar panels” in terms of our prioritized list above.

Coming to terms with adjusting my goals

In the early part of the year, I was making extra payments of $300 per month toward my student loans. It was important to me to make extra payments, but I also wanted to save up to buy our house. Since moving into our new house, I’ve been making extra student loan payments of $500 per month. Additionally, I’ve also been making the regular payments. In all, I’ve been paying close to $1,000 a month!

I’m on a graduated repayment plan where the amount of the regular monthly payment goes up every two years. However, apparently the resets are not based on calendar years, but on payment years. What does this mean? Let’s say the regular payment on the smaller balance is $100. (It’s actually more; this is an example.) Two years’ worth of payments at that rate is $2,400, so my rate would reset after two years or after paying $2,400, whichever comes first.

So not only have I been making larger extra payments recently, the amount of my regular payments has gone up as well. Additionally, more of my regular payments goes toward the balance as opposed to accumulated interest. So even though I plan to cut back on the extra payments for the time being, I’ll still be making progress. And the sooner I reach my larger house-related goals, the sooner I can start making those satisfying big payments again.

One of the most challenging adjustments in all of this is allocating savings toward something I’m not all that excited about. I mean, by the time we got the A/C working again, I was pretty darn excited to start cooling our 97-degree house down. And of course having a crane putting things on our roof is just plain cool! But outside of that, it just seems like a lot of money.

How do you prioritize when you have several larger financial goals that take time to save for?

This article is about Budgeting, House and Home

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This reader story comes from Paul. Some reader stories contain general advice; others are examples of how a GRS reader achieved financial success or failure. These stories feature folks with all levels of financial maturity and income. Want to submit your own reader story? Here’s how.

I’ve always had what I term a “fluid budget”; that is, I always make sure I have more money coming in than going out and I don’t track every penny (though I have a good idea where everything is going). I’ve never made more than $40,000 a year in my lifetime (I’m 34), but I have always worked from the time I was twelve years old. I can also honestly say I’ve never spent more than I’ve earned, thanks to a father who viewed debt as a kind of slavery. Looking back, I’m grateful for this somewhat extreme worldview, as it forced me to be resourceful.

Saving is a priority for me because I was raised to believe that money gives you options and not having money means not having options. This could be the option to choose a different job if needed, take a vacation, buy in bulk when it is cost-effective, and allow my wife and I not to have to fight about every expense or stress about purchases. I don’t know about you, but I like having options.

I was grateful that, when my wife and I got married four years ago, she was willing to adopt a more financially mindful lifestyle. (She was a bit of a spender.) I, in turn, have learned to loosen the reins over time to allow for some more relaxed spending. I think we’ve found a healthy balance and thankfully we don’t fight about money too much (which is worth its weight in gold). We don’t feel deprived or that we are extreme cheapskates, though some things might seem extreme (a matter of perspective if you ask me).

Here are some examples of how we try to cut expenses and live within our means:

  • We use rags instead of paper towels in the kitchen.
  • We use a bidet attachment (pretty standard in Europe and Asia, though we are American and it’s basically unheard of here), which saves money on toilet paper and is more hygienic. (We still have toilet paper for guests.)
  • I bought a $20 clipper set and started cutting my own hair and my children’s hair recently. It’s easier than I thought, saves me the hassle of going to the barbershop, and doesn’t look bad either!
  • We hang our laundry out to dry and make our own laundry soap. Takes five minutes for each.
  • Even though we live in a townhouse, we have a small garden that produces fresh produce for the summer (tomatoes, eggplant, peppers, cucumbers, zucchini, strawberries, lettuce, and herbs). Gardening is a relaxing hobby for me, not work.
  • We get books and DVDs from the library. We don’t have cable (though we do have a Netflix subscription that is $8 a month)
  • We don’t eat a lot of meat. Instead, we make lots of dried beans/legumes and lentils, rice, pasta, grains, frozen veggies. I bake bread. I feel that we eat well and balanced.
  • I try to shop for clothes infrequently and, when I do, it’s often at Goodwill. Generous friends have given us lots of hand-me-downs for the kids.
  • I get snacks at the Dollar Store.
  • I try to bike to work a few days a week to save on gas and wear and tear on the car, and get some exercise and free endorphins. It is 35 miles round trip, but I have an electric assist which keeps me from arriving all sweaty or too tired.
  • We bought our cars used on Craigslist and paid cash. They are ten years old but are reliable (Toyota and Subaru) with low miles when we bought them, and are good on gas.
  • We don’t tithe 10 percent of our earnings, per se, but we do contribute financially to our church and to those in need.

A lot of these money-saving tactics have been added gradually over time, not all at once. Sites like GetRichSlowly have been great for learning the tricks of the trade from people with similar financial goals.

As for expenses, here is a breakdown of what is going out each month for our family of four:

  • Mortgage/taxes/insurance: $1,130
  • Daycare: $1,560
  • Water/Sewer: $36
  • Cell/DSL/home phone: $180
  • Car insurance (2 cars): $128
  • Car maintenance/registration (average): $30
  • Gas: $200
  • Charitable Giving: $200
  • Groceries: $400
  • Utilities: $110 (average)
  • Diapers: $90
  • Health Insurance (through our jobs): $290
  • Dog food/vet: $35
  • Misc: $400

Based on our income, I have calculated our savings rate to be about 40 percent after expenses.

A couple notes:

  • We pay off our credit cards in full every month.
  • We do not have student loans. My parents paid for college (though I graduated in 3 1/2 years from a state school and also received scholarships). I worked my way through grad school, taking one course a semester and paying as I went. My wife earned her BSN at a state school which her parents paid for.
  • We have been prepaying our mortgage for the past few years pretty aggressively. We are set to pay it off by the end of the year on my wife’s 40th birthday. We live in a modest townhouse in an urban area. Our interest rate at present is 5 percent.
  • Living in a 1,100 square foot house means our utilities are relatively low, we have no lawn maintenance, and housing repairs at this point are minimal and manageable. We have no homeowners association fees.
  • We have no other debts.
  • Our jobs are relatively secure.
  • I contribute $300 per month to my employee pension plan and also max out my Roth IRA. My wife contributes about $500 a month to her retirement plan through work.
  • We have a healthy emergency fund and are looking toward learning more about investing once the house is paid off.
  • Daycare expenses will phase out in a couple years. Schooling for our children is the big issue at this point, or at least it will be in a couple years. The public schools in our area are not an option, and private schools are somewhat pricey. We are leaning toward homeschooling, which is why we are saving so aggressively and planning to pay off the house this year, so that my wife might be able to cut back to part-time work. I would love to hear from anyone who has gone this route, and if it has been a worthwhile endeavor.

Shifts in perspective have been helpful for recognizing the richness of our life (even though we are not, by any means, rich in the normal sense of the word) — that is, focusing on what we have, not what we don’t have. We have hot water on demand whenever we want it, our roof doesn’t leak, and both of our children have their own bedrooms. We have never gone hungry. We have personal vehicles to take us wherever we want to go, whenever we want. We are in good health and have family nearby. We are both gainfully employed. We enjoy things like walks in the park and ice cream cones and time together as a family. We are able to give to those in need.

The other thing that has been helpful whenever the temptation toward spending our hard-earned money presents itself is to remind ourselves that doing so is borrowing from our future selves. It takes time and practice to develop good financial habits; but the thought that doing so is benefiting our future selves keeps us going, one dollar at a time.

Reminder: This is a story from one of your fellow readers. Please be nice. It can be scary to put your story out in public for the first time. Remember that this guest author isn’t a paid or professional writer and is just learning about money like you are. Unduly nasty comments on readers stories will be removed.


This article is by editor Linda Vergon.

This week, Phoenix, Arizona, had extreme flooding and, before that, Napa, California, experienced a 6.0-magnitude earthquake. Landslides, earthquakes, extreme heat, floods, hurricanes, severe weather, space weather, thunderstorms and lightning, tornadoes, tsunamis, volcanoes, and wildfires are just some of the natural disasters that can plague us in a given year. Yet “nearly 70 percent of Americans have not participated in a preparedness drill or exercise outside of fire drills at their place of work, school or home in the last two years,” according to Gwen Camp, director of FEMA’s Individual and Community Preparedness Division.

September is National Preparedness Month, and the theme this year is “Be Disaster Aware: Take Action to Prepare.” Throughout the month, FEMA will be helping individuals and communities understand the risks and gather the tools they need to be more resilient in the face of natural disasters and other emergencies. They are sharing information and resources to community leaders, schools, houses of worship, and businesses that want to organize preparedness training events twice a year in April and September – and you can get involved too. Each week they will help people take some sort of action to prepare themselves for an emergency because, as we all know, many of these events come as a complete surprise.

Most all of this activity will culminate on September 30 in America’s PrepareAthon, when a lot of communities across the nation will hold some kind of event designed to provide information or even train people on what to do when disaster strikes. Some events may occur in later weeks. It all depends on a community’s overall calendar of events, but FEMA’s website, Ready.gov, shows when and where these events will be occurring: America’s PrepareAthon Event Map.

If you can’t participate in an event, FEMA’s site is a great resource to help you plan for all kinds of emergencies from pandemics to winter storms too. Their Natural Disasters web page is an excellent resource to understand about each of the disasters listed above, as well as how to make a plan, build an emergency kit, and help your kids deal with disasters too. For those that are interested, Red Cross has a number of natural disaster applications for your smartphone too. Teach your kids and elderly family members how to use them!

FEMA wants you to learn about your local hazards and take action by practicing plans and participating in a PrepareAthon event. And I think this is an important part of emergency preparedness that is often overlooked. Participating in such an event is a good way to get involved with your community programs, houses of worship, schools, and workplaces. When you make yourself known to people in the emergency preparedness community, they will recognize you as someone that has training and is reliable to offer assistance to others in need. So often when disasters strike, people are offended when a law enforcement officer, firefighter, or other individual doesn’t accept their help. But honestly, if they do not know you, they can’t in good conscience enlist your support in any way. And without proper training, you can be a potential hazard to them in their effort. Make yourself known to the emergency preparedness workers in your community, so at a minimum they are aware of your ability to help and your intentions.

Do you know which disasters could happen in your community and what to do to be safe and mitigate damage? Will you participate in your community’s disaster planning efforts?


This article is by staff writer Kristin Wong.

(This is Part III in a series about challenging traditional measures of financial success. Part I was The “Ivory Tower”: Reconsidering the college investment. Part II was Challenging traditional measures of financial success: Homeownership.)

It was the first semester of my first year of college. My friend and I were driving around our small town, looking for something to eat. But we didn’t have much money, so our options were limited. Chili’s sounded good, but neither of us could really afford it.

“It’s weird to think one day we won’t have to worry about this,” my friend said. “In a few years, we’ll graduate, and we’ll have jobs that pay us like, $30,000 a year and we can go to Chili’s whenever we want.”

This was 2001, so it wasn’t just a crazy dream.

I imagined working 9 to 5, in an office, where I had a desk and salary with benefits, and at the end of the day, I went home and did whatever the hell I wanted with my life. At 19, that seemed almost too good to be true. I was really attached to the idea that, someday, I would earn tens of thousands of dollars a year and be able to more or less spend money the way I wanted.

My point is that was the idea back then: Go to college and get a steady, 9-to-5 job.

Years later, I’m starting to question this paradigm — and I’m not alone. We already talked about the way college is changing, but the workforce has been changing a lot too.

Questioning the stats

We read that jobs are being created and unemployment rates are decreasing. For example, the Labor Department recently released data showing that 209,000 jobs have been created in the past six months. But while the unemployment rate has increased slightly from 6.1 percent to 6.2 percent, overall, it’s been on a steady decline.

The GDP has been significantly and steadily growing since the recession, but unemployment remains a lingering problem. You’ve probably heard the argument before – Huffington Post contributor Mark Gongloff explains it well:

“Technically speaking, unemployment is the percentage of people in the ‘labor force’ who don’t have a job. To be counted in the labor force, you have to be looking for a job. One reason unemployment has fallen so quickly in recent years, from a peak of 10 percent back in 2009, is that a lot of people stopped looking for work. They took themselves out of the labor force. Once they stopped looking for work, they stopped being counted as ‘unemployed.’ Voila, the unemployment rate goes down.”

Gongloff argues that the small increase in unemployment is actually a good thing — it might indicate that more people are returning to the workforce but they’re just not immediately finding work. But the good news is, they are returning. Even if you argue that his assertion is questionable, it is still possible.

It will take time to truly see how employment has changed. But for now, it seems we’re a country in transition.

The rise of self-employment

When I was laid off last year, I considered going back to a full-time, 9-to-5job. But after being a freelancer for so long, and especially after losing one big client, I liked the idea of having multiple baskets in which to put my eggs. That was my biggest concern — if I accepted a full-time job, could I still freelance? I wanted to make sure I had a backup plan.

This way of thinking, explains Forbes’ Kate Taylor, might be the norm for people my age. She writes:

“Millennials entered the job market in the wake of the recession … Millennials are conditioned to expect economic disruption, and have thus become risk adverse … job turn over and exploration of more flexible labor sources reveal Millennials’ fear of putting all their (career) eggs in one basket.”

Not only that, but I couldn’t even find a 9-to-5 job. Most jobs I interviewed for were part-time freelance gigs. And, sure, that probably comes with my industry — writing gigs are easier to get than writing jobs. But on the whole, freelance/self-employment seems to be increasingly popular lately.

A few years after the recession, the rate of self-employed workers significantly increased. According to Economic Modeling Specialists International, the number of self-employed workers increased from 1.3 million since 2001 to 10.6 million in 2012.

Yes, those numbers have since dropped. But experts say it might be less that people are returning to the traditional 9-to-5 job and more that they’re working part-time jobs and then supplementing income on the side. So they’re not exactly self-employed, but they’re not working full-time either. Maybe it’s not as easy as it seems to gauge the way people are changing how they work.

The “grey economy”

And then there’s the “grey economy,” the idea that unemployment rates are dropping because many people simply work under the table and off the books. Nik Theodore, an urban planning professor at the University of Illinois, recently told the Los Angeles Times:

“This segment of the labor market is a barometer for the economy as a whole. As employment insecurity spreads across the economy, more and more workers are being forced to turn to the street, to odd jobs, to becoming on-call workers. The question is whether this is a cyclical change, a blip or a signal of something much more fundamental.”

Technology is another important factor to consider. We’ve been talking about this for years, technology replacing jobs. But it may become a more pressing concern in the near future. At a recent speech at the American Enterprise Institute in Washington, Bill Gates said:

“Twenty years from now, labor demand for lots of skill sets will be substantially lower. I don’t think people have that in their mental model.”

Between the economy, the post-recession mind-set and the role of technology, the traditional 9-to-5 model of earning a living is being challenged. In short, we’re adapting. But where will we go from here?

When I started writing this series of posts on challenging traditional models of financial well-being, it started off as one post. I just wanted to write about how we’re in transition — how college and homeownership and the workforce are changing.

But there was a lot of information and points of discussion in each of those areas — and so much of it is debatable. Unemployment is a complex issue; and while I feel like self-employment is the way of the future, not everyone agrees with this. Some think unemployment is on the mend and people will return to the paradigm.

What do you think: Will we return to the traditional model of earning income from one steady source or will we adapt to the point that full-time jobs are no longer the norm?


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