Adjustable Rate Mortgages adjust eventually: time for a new one!

If you’re a long-time reader of the blog, you’ll know that I’m a big fan of my Adjustable Rate Mortgage (ARM). When I bought my condo, I took out a 5/1 ARM with a 3% initial rate. I refinanced six months later to a 5/1 ARM with a 2.5% initial rate.

It’s now over five years later (almost six in the condo!) and I didn’t actually pay off the mortgage like I had planned I would. I/we have paid off just over 60% of the original balance though! Back in early June 2017, we got a letter from our mortgage company explaining how the reset would work, with what the interest rate was then. Then again in early December, we got another letter, which is when they committed to an interest rate and new payment for the year. That letter explained:

  • The new interest rate: 4.125%
  • The new payment: $614.48 (versus the old payment of $1,027.32)
  • How much of the new payment would go to interest versus principal ($395.23 versus the prior $242.80 would go to interest)

This was a huge jump in interest, which we were not happy about. Yes, it was mitigated by the extra principal payments that I had previously made, but it still seemed unnecessary. I had been doing research haphazardly and had found a lender a few years ago that offered low cost refinances, which was really important with the fact that our mortgage balance is now in the low $110,000 range. It’ll take about 3 months to break-even, so we will only save about $500 on interest in 2018, but we’ll save about $2,000 in 2019, especially since our current mortgage would have continued to reset annually (and at today’s rates, it would go to 4.875% at the next reset). We concluded back then though that we should wait until the rate reset to refinance again and that we would probably go with a 10 year amortization.

Research was done, spreadsheets were made, and I eventually won my husband over that we should refinance to another ARM! I was pretty surprised he came on board with the ARM. He attributes it primarily to realizing what the mortgage balance will be in another 5 years on a 10 year amortization – it will sit around $60,000 and by then, we will likely have gotten bored of it finally and paid it off. We did ponder this quite carefully though because it seems once your mortgage balance goes under $110,000, you can’t get as good of rates any more, so that means that this is our last chance to refinance to a more favorable rate. When we first started looking, the 10 year fixed rate mortgage was 3.19% and the 5/1 ARM with 10 year amortization was 3.09%, so the fixed rate seemed like a better choice. By the time we actually applied though, the 10 year fixed rate was up to 3.59% and with a 0.5 percentage point difference, we pulled the trigger on the ARM!

We’ve also discussed our strategies for paying off the rest of the mortgage, after letting it go with “just” the required payments for the last 3 years. (I say just in quotes because they paid the balance down by $28,465 or just about $10,000 per year thanks to all of those extra principal payments I had made in the first 2.5 years.) We’ve tossed around two main ideas:

  1. Paying it off when one of us receives a bonus that is more than the remaining mortgage balance
  2. Paying enough each year to keep it on track to pay it off before the rate resets in 5 years, which works out to about $12,000 per year or $6,000 twice per year

If we let it ride for the remaining 10 years, don’t pay anything extra, and the interest rate resets in the worst way at each adjustment date, then we have $25,415.07 left to pay in interest, which is a huge improvement over the $300,000+ that I started the mortgage with back in mid-2012, so no matter what we decide, it doesn’t have nearly as huge of an impact anymore.

Refinance by Day

It turns out that applying for a mortgage when your annual salary income is more than the mortgage balance is really easy and quick to be approved! It was a relatively calm refinance, compared to my previous one that involved stressing over whether the appraisal would come back high enough to give me 30% equity! They didn’t even ask our condo association for any information beyond the building’s insurance records. I was really worried that they wouldn’t put both of us on the mortgage since I currently have no income, but that wasn’t a problem at all, likely because we are married and our loan is under 20% of the condo’s appraised value.

Day 1: Saturday of a long weekend, we applied for the new mortgage, right after filing our taxes. An exciting date night!

Day 2: Second business day after we applied, both of our credit was pulled and we got a request for my husband’s 2017 W-2, 30 days of paystubs for him, and our photo identification. We uploaded the documentation and signed some documents.

Day 3: The appraiser contacted me to set up a time to come out and measure and photograph our place.

Day 4: The appraiser came out. The loan was approved based off of our income, though still contingent on the appraisal.

Day 14: The appraisal came back and all of the contingencies on the loan have been removed.

Day 28: We received the preliminary closing disclosure, which contained the original numbers from the application.

Day 29: We were contacted by the title company to schedule closing, which we scheduled for the following week.

Day 30: We received the closing disclosure.

Day 36: Closing day! We signed 90+ pages of documents and gave them a check that covered our $295 closing fee, $98 in fees to pay off the previous mortgage loan, interest for all of March and a bit of April to the old loan company AND interest for most of April to the new loan company.

Day 42: Loan disbursement day. The old mortgage was paid off this day and has been marked as paid off on my credit report. It feels a bit anticlimactic to log into the online banking and see the mortgage paid off when a new one is still coming, with a different bank.

Conclusion

We don’t have to make a payment to the new mortgage company until June 1st, so we calculated how much we missed paying in principal since we paid all that interest at closing, but no principal. I’ve already made a $670.85 principal only payment to the new mortgage this month and we will make a similarly sized one in May, plus any interest we get back from the old mortgage, which should hopefully come in the next couple of weeks.

The other side benefit of this is that now both of our names are on the mortgage and the deed of the condo! Now my husband has a better response for when his friends sass him about this being “my” condo and not ours or his. (Yes, this means we settled up the equity in the condo so we both own half of it. It’s really nice to have a decent sized taxable account of my own now!)

I’m really glad I didn’t let myself be scared into a 30 year mortgage when I bought the place six years ago. I went from a 3% 5/1 ARM to a 2.5% 5/1 ARM and now to a 3.09% 5/1 ARM with a 10 year amortization. Thanks to reducing the amortization so much (from 25 years to 10 years), the rate we have now is really not that different from my first rate six years ago and the required payment is even lower than my first payment was ($1,205.79). I’m glad I didn’t take out a 15 year fixed rate mortgage six years ago – that would have left me with a $1,975 required monthly payment, which felt huge on my monthly salary at the time. Instead, I took out a 5/1 ARM with the same interest rate and made extra payments when I could, with my non-salary income.

 

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Married Finances: Budgeting 2018 with YNAB

I talked previously about how something had to give after our expensive 2016 and 2017 years. My husband has never budgeted, but I used to have complicated budgeting spreadsheets. Trying to mesh those two strategies resulted in us not really staying on top of our spending as life changed over the last year, so at the end of December, we set up YNAB.

One of the lessons I’ve learned so far about married finances is that the tools and systems that worked for each of you single are not necessarily the same tools and systems you should use when you are working together as a couple. It’s important to take into account both spouses’ preferences when you’re figuring things out.

My spouse and I have similar money values (living below our means, saving for retirement, index funds, high-interest debt is bad, etc.), but we have very different personalities. For us, I am very detail-oriented, worry about money, and check in on it regularly while he is very easy going, likes automatic payments and checks in on things on a less specific pattern. His form of budgeting has always been to carefully consider purchases and then buy things he values and plans to get good use out of. That means that we respect each other’s purchasing choices fairly well, which is good, considering how different our money personalities are!

Our previous systems all involved a bunch of manual reconciling into spreadsheets by me. Mint didn’t work for us because we didn’t want to associate say all of each of our Chase credit cards – we just wanted to partially share credit cards. PC was better in that it let us pick which specific accounts to associate from our Chase logins (as an example), but I didn’t like that you had to wait until transactions posted for them to appear in the app. Neither of these tools were very good with the various special assessments our condo association has been doing or the fact that no month is really normal for us, so I was left with a lot of spreadsheets and manual tracking. Last year, I had a spreadsheet that I used to manually track against our budget for the year, but there was no system for when we eventually started going vastly over the budget, other than every time the checking account balance could no longer pay the credit cards at the end of the month, we put in a few thousand more dollars. The good thing that came out of our method of budgeting last year though was that my husband learned that I’m not going to stop buying groceries just because we used up the grocery “budget”, so he was cool with us trying YNAB. Needless to say, our cash flow needed some improvement.

We have now used it for two full months and it really feels like the best tool we’ve tried so far! It marries all of the features we had liked about the previous systems and (for us) minimizes the cons of each of them.

iPhone app

We both have the app on our phones and iPads, which is a huge improvement of visibility versus my husband not wanting to damage my spreadsheets.

It has manual entry with the phone app, which even has geo-tagging for where you were when you logged the transaction. That means that both of us enter the transactions on the go at the time of purchase now and subsequent times you go back to a place, the entry is usually even easier since it populates the category and account info based on what you used on your last transaction at that merchant. This beats our previous system of me collecting all of the receipts and spending an hour or more manually entering them every weekend. It also beats Mint/PC not knowing about checks we wrote (we write about 25 per year) or getting the wrong amount at the gas station or being full of pending transactions that never post. New con of this: receipts now pile up in my wallet for months since I never check on them.

I like how the app has an “inbox” of tasks you should do, which covers approving scheduled transactions, approving imported transactions that it matched to ones you had manually entered, and categorizing transactions that you did not enter.

The app lets you pin categories to the top of the budget screen. I pinned most of the food categories so that I can easily see them since those are the main categories I spend on while out.

Cash flow

We learned that a lot of our cash flow this year is in the first half of the year. Hopefully with YNAB, we’ll feel less of a cash flow crunch at the beginning of 2019 since we will use our low spending months at the end of the year to set aside for the expensive things at the beginning of the next year. Why is more stuff due at the beginning of the year? Car insurance comes due in January and July, but we hadn’t been setting aside money to pay for the January car insurance, so we had to pay the full amount in January. Property taxes are paid in April and October, but we only started setting aside the money in January. Utilities are more expensive in the winter months. Condo and umbrella insurance is due in July. This year, we only planned on trips in March and July, aka they will be mostly paid for in the first half of the year. Our theater subscription renews in May. Our condo association did a small special assessment that is due in June.

I like that it’s really flexible and forces you to cover your spending you didn’t plan for, before rolling over to the next month. That’s a key piece that was missing from our previous system. It does roll over positive category balances to future months, which is great. It wants you to “roll with the punches” as you overspend, but so far, we have determined we would rather keep a $1,000 buffer in the checking account and then deal with the overspending at the end of the month unless there was something big since that way, we can both sit down together more easily to look at it instead of just one of us dealing with it throughout the month.

YNAB has significantly reduced my stress about where the money is coming from to pay the bills because now I know that we will be ready to pay the county the over $2,000 for property taxes next month and all of the credit card balances are covered by the checking account because it’s all accounted for in YNAB. I do really hope it is a long time before we have a $10,000 credit card payment again like we did two months in 2016 and one month in 2017, but if we do, it’ll be accounted for with far less stress.

To me, a budget is less about being restrictive in how you spend your money and more about managing cash flow. Our end of month checking account balance in 2017 averaged $5,659.12 and now it’s almost $20,000. No wonder I am a lot less stressed about paying the property taxes this year!

Import and automation

Even though YNAB suggests you manually enter your transactions, the online version which we are using automatically imports transactions from the banks you connect to it, which means that it if you forgot to enter a transaction, it brings it in for you. It also means that it automatically clears our manually entered transactions when it finds them through the bank, which is awesome. That used to take me so much time logging into each bank to check on the transactions!

Scheduled transactions, even recurring ones, are awesome. My manual system didn’t have recurring transactions, though it did have scheduled transactions. I also like that YNAB makes you “approve” a scheduled transaction when its day comes, reminding you that you are still paying for this thing. We don’t have a ton of recurring transactions, but it is useful.

Budget categories (and groups!)

We both love that you can name category groups and categories however you want. Mint, for example, doesn’t let you make new category groups, just categories and you can’t make new categories from the app. PC doesn’t have category groups, just categories. I really like to be able to see all housing items together, for example. We each have our own category group for personal spending and then we get to make our own categories in there as we prefer.

I like how for each budget category, you can set a separate goal. This is great because we made a budget category for each specific thing. So for example, in our “Housing” budget category group, we have the mortgage, condo fees, cell phones, and internet with monthly funding goals. The property taxes have a target balance date goal, so right now we are setting aside 1/8 of the bill each month; in May, we will set aside 1/12 of the bill; in November, we will estimate an increase for the 2019 year. For the utilities, we budgeted for the estimated winter bills and then in May, we will start setting aside an average for the year. For the condo insurance, we are setting aside 1/7 of the bill until July and then after that, we will set aside 1/12 each month. This sounds somewhat complicated describing it, but YNAB makes it really simple and I don’t have to do the constant different fidgeting with formulas that I did before. Plus, now I can see all of these things in the app! This all is especially awesome because I find that no month is really “normal”. I also like that all of these balances just build up until we actually need them and don’t require much effort to work towards.

If you have goals set up for your budget categories or scheduled transactions, then when you’re budgeting for the next month, you can select a number of budget categories and use the “Quick budget” functionality to cover those amounts, which makes having many small categories really easy to budget for.

My husband thought I was silly to suggest budgeting for driver’s licenses, trusted traveler programs, passports, etc. until we added up how much we should set aside for those and it added up to about $20/month for both of us combined, which surprised him.

Credit cards and accounts

I really like how it handles credit cards. It seems to confuse people on the subreddit, but it makes SO MUCH sense to me and is really how I handle them in my head. For much of 2017, I manually paid all of the credit cards on the 1st of every month to help me feel comfortable with the balance in the checking account, which was an annoying time sink. Now, I’m happy to let them go on auto pay again and not worry about it. (Though I did pay one in full recently when we got the statement and the card hadn’t had any activity in most of a month and its under $5 balance was annoying me.) The side effect of this is that our checking account now has a ridiculous amount of money in it (almost $20,000), but it is all accounted for, so I’m happy with that. Basically, they say that if you had $100 allocated for Groceries and you spent $50 on Groceries on a credit card, then they move the $50 allocation from Groceries to that credit card.

I like how easy it is to manually create an account for something, like the gift card balances on each of our Amazon accounts.

I like that YNAB mostly shows you the “working balance” for an account, so for example, your checking account with all of your uncleared checks already subtracted from it. PC wasn’t very good at that, which would bug me when *I* knew I had spent money, but the app I was using didn’t know about it yet!

Savings

The slightly weird thing to me is that they want you to assign jobs to all of your dollars that YNAB knows about, including to any savings accounts. We haven’t had a lot of extra monthly cash flow lately with only one income, but we do have a target category balance goal for our primary savings account to get up to three months expenses in our joint savings account. I also have a budget category for “Vanguard taxable” that we will soon assign some dollars to.

Reports

 

 

I like the online spending reports. They are generally sufficient for my interests. You can see a pie chart or a stacked bar chart of your spending for any date period you specify and if you pick the stacked bar chart, it gives you one for each month. You can also exclude categories from it. (I’ve excluded the mortgage payment, for example.) You can also get a pie chart or stacked bar chart for a category group too. The phone and iPad apps have “Age of Money” and “Net Worth” reports, which I care less about than the spending report, since I really prefer to only check on “Net Worth” on the last day of the month.

Time

The time cost feels way lower than our previous system. 30-60 seconds to enter a transaction at the source, especially with 3D Touch to get into the transaction screen of the app. I spend a couple minutes most mornings checking the “inbox” of transactions to approve and leaving my husband to categorize his. Now that we have things mostly set up, our end of February “budgeting meeting” took about 30 minutes to consider our February over spending and set up a budget for March. I try really hard to not tinker with the system other than that meeting. Every couple weeks or so, I log onto each bank and make sure that the balance on each account is the same as what YNAB knows about (which it usually is) and click “reconcile”.

Misc.

We both like that they are actively working on the software, which is not something that we have the time for with my homegrown software.

As always, this post is not sponsored – this is simply my review of how we’ve been using this system.

My Accidental Sabbatical of 5+ months

When I last talked about what I was doing with my life, I was working on my Master’s degree, right? And I was going to finish soon.

Well. In the fall, I came down with a non-life-threatening health issue that took about four months to root cause.

We broke $10,000 in raw health care spending before insurance kicked in, for the entire plan year. (Of which, we paid about $1,500 out of pocket since we have good health insurance.) I keep track of my raw health care spending and this was by far the most expensive year I’ve seen yet. The previously most expensive year was $6,000, another about $4,000 and the others averaged $1,500.

I start with it took four months to root cause because it still isn’t fully solved. I’m working on that and I assume that will take another several months and some more health care spending, of course in a new plan year.

 

Bridget talked about financial black swans a while back. I would say that mostly until late 2016, I had experienced very few negative black swans. In the last two years, I’ve seen two: losing my job and this health issue. Both of those combined have had a huge impact on my finances – I haven’t seen a paycheck in over a year, a loss of about $200,000 in gross income over this time period. There have also been some positives: my husband got a huge promotion to the point that our household income has hardly missed my income and our net worth has grown tremendously since we married. It has, however, created a financial dependency between the two of us that wasn’t there before we got married and we would be further ahead if we had had my income as well, though we are still in a great financial position now.

How did we protect ourselves against these negative financial black swans?

Thanks to huge positive financial black swans like us both having careers in high-paying fields, my parents funding my college education, and H paying off his student loans quickly after graduation (his student loan balance at graduation was eerily similar to the hypothetical one I calculated in that linked post!), we had a great start in our twenties. Before we got married, we each lived off of about half of our net salary incomes and saved all of our bonus income after taxes. We each maxed out our 401(k)s and Backdoor Roth IRAs. One of us aggressively paid down the mortgage (her) and one of us aggressively invested in a Vanguard taxable account (him). We each had strong cash reserves.

Despite having six figure combined expenses in both 2016 and 2017, we continued to max out all available retirement accounts, take on no credit card debt, and watch our net worth steadily increase, which to both of us, feels like an incredible privilege that we not only survived the Very Expensive Fall of 2016 that saw multiple months with credit card bills over $10,000, but our finances continued to thrive during that time. It is thanks to our high incomes and previously more frugal behavior that we were able to swing such large increases in expenses simply with grumbles, reduced savings each month, and no debt. With those large expenses in our rear view mirror and solid health insurance, we are both on the same page that we hope to not spend six figures in one year again for a long time.

The catch with each of us having similar salaries before when we each lived off of about half of our net salary incomes was that we found ourselves spending all or more than the salary income after maxing out H’s 401(k) coming in for a while. We poured over our spending from 2017 and we tried to find areas in which we could cut, before H finally suggested that we reduce our budgets for personal spending since reducing retirement savings at our tax bracket was a silly idea. So far, it seems to be progressing. We successfully budgeted $5 less than the paychecks in January, $500 more than them in February and we are on track to be under by closer to $1,000 in March. It’s nowhere near his previous 50% savings rate, but any breathing room is a welcome change from 2017, when I used savings to cover my half of the wedding and expenses for the first 2/3 of the year.

We’re okay with running things somewhat close to the wire monthly for several reasons. That wire involves maximizing his 401(k) which is a decent chunk each month. H is at a point in his career where his salary is not the majority of his income and our plan involves saving all of his non-salary income. Withdrawing 4% from our investments would already cover all of our non-mortgage housing, food, transportation, and toiletries expenses, aka most of our needs. We also do still assume that I will return to earning an income when I fully resolve this health issue.

So, yes, this is a setback financially, but we set ourselves up well for it and are grateful that this is simply an opportunity cost financially rather than a financially devastating situation for our household.

Money isn’t the hard part of this.

For those long-time readers, you know how staunchly independent I am. This has been an emotional blow to that, despite my husband being pretty easy going about it all. It is so bizarre to go from earning half the household income, to over the course of several years, earning nothing and the household income still being the same. In a way, this experience has shown me that I could find fulfillment when I choose to step away from my career some day. There are so many things I don’t miss about the rat race.

Months where all I could convince myself to do was read books, watch Netflix, read the Internet, and go to medical appointments were not the best. Thankfully, I’m past that point now, which has substantially improved the situation emotionally. I’m slowly starting to climb back out of the withdrawal corner I had fallen into.

Everyone wants to label your status to quickly understand what you’re up to. At first, I struggled with how to answer when people asked me where I am working these days. Thanks to some advice on Twitter, I’ve concluded that I will tell people I’m on a health-related sabbatical at the moment and no, I don’t know when I’m going back to work yet. That seems to worry my in-laws since they don’t know how much H makes, but my family seem to assume we are fine and just worry about my health.

People tend to assume that I am currently wholly dependent on H in order to eat. It’s somewhat nice to be able to hide behind that offline, though I tire of it. I want to burst out that we’re not fully dependent on his income, that this is a team effort. Yes, he’s the one with the income now, but I did so much before. I bought this condo and paid off over half the mortgage. I own over half of our investment portfolio, the portfolio which helps our frugal hearts be okay with our current spending level compared to H’s monthly net salary income. Without my efforts, we would be in a substantially different place today. In some ways, though, his current income and our efforts with it mean that we are in a vastly different financial situation than we were years ago when I made all of those good decisions while single. We can save more now without me working than I ever could single. I keep quiet though and retort all of that after we’ve left the social situation, to get it out.

Our $23,000 Big Wedding Reception

I thought a lot about how/when to write this post. Mainly, I had a hard time writing it without including any of our lovely photos. Beyond the fact that showing pictures would require attribution to our photographer, we agreed that sharing pictures unless I would Facebook friend a reader would go against our anonymity preferences. On the other hand, when I read wedding recap posts that are mostly pictures, this post is what I actually would have preferred to read! We didn’t have an incredibly frugal wedding reception, however, I feel like people who do have this kind of wedding don’t talk about or acknowledge the costs and to me, the first step in financial awareness is understanding where your money went.

We eloped last fall. While we hadn’t strongly intended to get married, we also planned to have a “big” party (by big, I mean more than parents and a small handful of close friends) when we did get married. Eloping is the perfect option for many people and I really don’t want to rail on that. Our elopement was an incredible, joyous day that we wouldn’t change for the world, despite it not being what our original plan was.

Pretty quickly after we eloped, we started planning our big wedding. We knew that if we didn’t do it this year, we would never do it. Our initial “budget” was that it would be great if we could have a 100 person party in the city with delicious food and drink for $10,000 to $15,000. A generous wedding gift from one set of parents would have paid for a significant portion of that sum. I laugh at that figure now, but it was not a terrible starting point.

A Practical Wedding, the blog, the book, and the planner, were all very helpful in us figuring things out. We built our budget consciously by choosing whether a line item was important to us or not and if not, eliminating it. That really helped us ignore items that we didn’t care about.

On rings: when we got married, we bought plain bands for each of us. My spouse is really happy with his still, but it was quickly clear to us that I wasn’t. I tried on some fancier rings at a jewelry store in person, before we bought an engagement ring and matching wedding ring from a reputable online jewelry store. I absolutely love them and am so glad that we splurged on them. I struggled for a while with how expensive and unnecessary they felt for a time before buying them and then for months after buying them. A year later, I love looking at them many times every day and am really glad we picked this particular set.

We spent just shy of $23,000 on our big wedding reception weekend. The Venue & Catering portion worked out to $140 per person, which is about in line with what you would pay at this level of restaurant for appetizers, soup, salad, dinner, and drinks. If you add in the costs of our elopement, our post-nuptial agreement, my fancy rings, and our 2016 marriage tax penalty less our 2017 marriage tax bonus, we spent between $36,000 and $37,000 in the end on “getting married”. We used wedding gift money to fund our three week European honeymoon. That said, we are both really excited for a more frugal 2018.

We spent a pretty solid month late in the fall touring wedding venues. We looked at three in person before we settled on the one we picked. We picked it for its space, food, and many of the features of their event planning. I would really recommend going the restaurant route if you can find one with a space that works really well for your goals! They only required a $500 deposit and then we were set. We sent out email save the dates soon after that.

Eight months out, we realized we needed to nail down some more details. We picked a photographer after a quick consult with one ($480 deposit or about 30%), went to a local wedding event to look for other vendors (about $35 for both of us), booked two cake tastings ($45-50 each), and went to another cake open house.

Seven months out, we booked our DJ (50% deposit = $1,100), had the two cake tastings, booked the cake (50% deposit of estimate = $490), and I bought my dress! I went to two stores and found this one dress I really liked. A friend directed me at a consignment store, which turned out to have that exact dress in my correct size! I paid $380 for the dress, plus taxes and a sash.

Six months out, I had a consult with someone about doing hair and makeup and we paid a $200 deposit. I don’t typically wear much makeup or do much styling with my hair, so this felt like a splurge. It was really delightful though as we ended up paying for both of our moms, our sister(-in-law)(s), and my MOH to have their hair and makeup done at our apartment with me. The person was really great with the scheduling and even finished ahead of schedule!

Four months out, we ordered paper invites once we had finalized the start time with the venue. We were doing mostly online invites, so we didn’t need very many. We originally search for five, but eventually ended up buying twenty, so we could give some to people as an option. VistaPrint has some great designs. For $57.82, we got several sheets of return address labels (so useful for thank you cards!), 20 invitations, 10 invitation envelopes, 10 RSVP cards and envelopes, and some envelope seals. One lesson we learned was that anyone who gets an invite wants an envelope, so we ended up buying some more envelopes later… oops! Another lesson: send paper invites to anyone 65+. Even if they can send and receive email, they don’t prefer to manage email. Your parents also like paper invites. And sometimes a sibling will too.

Three months out, we bought a cake topper with our initials that we found on Etsy for $37.50. I really struggled at finding one that allowed for the concept of the couple having two last names – we ended up with one with just our initials on it.

Two months out, we paid the final balance for our photographer (a bit over $1,000).

One month out, the charges started piling in. We bought a guestbook for $69 on Etsy. We went back on forth on this a lot. I’m glad we have it in the end, but it could have easily been scrapped. I did a hair & makeup trial for $205 which really helped me to feel comfortable with how things would go on the day. The stylist wasn’t sure this was necessary since we were just doing a reception this year, but I’m so glad I did it! We bought another 10 envelopes for $5.45. We paid $7.53 for coffee while interviewing a potential photographer. I paid for the alterations on my dress which came in at almost the pre-tax cost of the dress itself at $362. We paid the balance of the wedding cake cost which turned out to be $490.

Month of, was the most expensive month. Once we’d finalized our seating chart, we bought place cards from Minted for $115 because it seemed very worthwhile to not have to write everyone’s names and table numbers on them ourselves. We bought some stickers for the cards for $2 and some pens for the guestbook for $14. We paid the balance of the DJ cost ($1,100). We paid the full price for our new photographer of $3,325 all at once. That stung a bit to do the month of! We spent $66 copying and printing family wedding photos (we displayed parent & grandparent wedding photos, which was a surprisingly time consuming project to do the month of the wedding) and $48 buying six frames for them. We ordered appetizers ($145) for our cash bar pre-wedding drinks with out of town friends at a local bar with a separated area that we could reserve and spent $50 on our drinks that night (other people bought us drinks though). I do not recommend booking your Saturday night rehearsal dinner two weeks before your wedding. Our previous photographer refunded our last payment ($1,100). We paid $128 for one sister, my MOH, and the tips on mine and my mom’s to have all of our nails done the weekend of the wedding. We hosted a family dinner at our house one night which involved some unknown quantity of money out of the grocery budget. We spent $98 on transportation that weekend, which wasn’t the full retail cost as I got some Lyft credits from referring wedding guests. We paid the balance of the hair & makeup cost ($808) and the actual final DJ invoice ($450). My spouse got his hair cut the day of (~$45), but he paid for that out of his personal money. Lastly, we paid the balance cost to the venue of $11,300, which covered all of the food and drinks.

Month after, we bought photo thank you cards from Minted for $124 and printed guest photos for $7. This was again worthwhile because they address the envelopes for you! We successfully mailed them all within 2.5 months of the wedding.

We ordered wedding albums for each set of our parents as Christmas gifts this year and then used some wedding gift money to order one for ourselves. We can’t wait to get the one for ourselves after seeing the first parent album!

 

Some non-money thoughts:

After a lot of thought, we included non-teenage children with all invites. (Part of the logic there was that age 12 and below, it was cheaper to order them food.) It worked out to five children under five in attendance, which was fine. This worked out for our crowd. Had we been having a ceremony or had more potential children on the invite list, this could have gone very differently.

We hired our original photographer based on word of mouth, a quick meet, and enjoying her photos. When we realized it was a bad fit, we then had consultations with three potential candidates. That really helped us to make a better decision the second time around and we are really happy with the photos that we have now! The original one elected to reimburse us for our final payment and so we decided to not write a review at all.

It was really, really awesome to have many of our friends and family in one place at one time. Our siblings all met for the first time. I doubt that we will get that assortment of people together ever again and it was very fun.

We both thought it was atrocious for bridesmaids to endure so much costs, which is part of why we paid for all of the women to have hair and makeup done. We each only had one wedding party type person and we didn’t require them to wear anything in particular.

Married Finances: One Year In

In August, I canceled my monthly auto transfer to the joint checking account and my husband changed his to cover all of our household expenses. Today, that change really kicks in. It’s real.

We set an annual household budget for 2017 back in December. It was actually pretty easy – we took the contents of “Shared Spending 2016” and turned that into a budget with a few tweaks.

We set up auto transfers for each of us to pay for half of it, assigned particular credit cards to be household ones, and paid for those credit cards out of the joint account.

My husband proudly pronounced recently that Mint told him he had spent $0 on groceries, which meant he had been good all year at using the household credit cards to buy groceries. Slowly, we’re figuring out this game.

We forgot a few things like condo insurance, umbrella insurance, toiletries, occasional parking, and the endless stamps we seem to buy, lose, and re-find. The toiletries thing came to a head when I realized that my husband bought Fancy shampoo for him out of the groceries budget, yet I was buying Fancy shampoo for myself out of my personal money. (This may have resulted in some crying, possibly.) That prompted a re-evaluation of what we had each been spending out of personal money that should have been household. We found that I had been buying a lot of needs out of personal money, like moisturizer, cleanser, body wash, shampoo, conditioner, and other hair products, and allergy medicine. I had been proclaiming about how frugal I was by spending only $X on lunches on campus on odd scheduled days. Those plus all the food out my husband had bought because he ate more food than me all turned into household purchases.

The joint account is incredible for the visibility. It means that we can both easily see how much we’re spending in various categories and how much it costs to run our household for a year. We’ve been doing so well with the budget overall that other than for wedding stuff, we haven’t had to transfer in extra money.

We’ve also both been a bit more frugal all year, what with paying for the wedding reception ourselves.

 

We ignored the elephants in the room all year: the question of what my plans were after I completed the coursework portion of my Master’s degree and the fact that my husband is earning 95% of our household income this year.

That all came to a heat when, in the span of a few weeks, my husband received a promotion he’s been working towards for many years, I completed the coursework portion of my Master’s degree, and we realized that if we continued on the path we were on, my savings account would have a zero dollar balance at the end of the year.

Gulp.

 

 

Whoever said you shouldn’t ask your partner for a pre-nuptial agreement because the discussions are hard was silly because talking about money in marriage is such vulnerable conversation and skipping it is a recipe for disaster.

Talking about all of this has brought back memories of how controlling my parents were around distributing money. Since college, I’ve been staunchly financially independent from anyone else (except that whole somewhat needing a job thing). I’ve paid my own rent, bought my own groceries, and bought clothes as I saw fit, not as my parents saw fit. My husband is much more easy going than my parents and it’s vastly different, but these feelings still come up.

 

No matter how expensive these past twelve months have been, we wouldn’t trade them for the world. The engagement couch has been a huge quality of life boost and was a far better decision than selling the condo and moving last year would have been. The elopement, the engagement ring, the fancy wedding band, and this joyful wedding reception we’ve planned have all been incredible, though I’ll have to report back on the wedding reception’s joy level later as right now, it’s in the stressful mad dash to the end.

If we went back in time, we would re-make the same decisions again.

We just can’t contribute to them 50/50 right now financially. Marriage isn’t 50/50 each year and this is one of those years. It’s an ebb and flow as my mom once said.

Or as my husband said, we have too much money for either of us to worry about how we’re buying the food we’re eating that night. <3 Our new spreadsheet titled “Combined net worth” shows that as of May 31st, 2017, 4% of our investments would cover our household budget, less the travel splurges. We have more than ten years of those expenses in cash or liquid investments. We can’t yet maintain our current lifestyle or cover non-employer health insurance with our investments, but we can keep a roof over our heads, feed ourselves, and have a pretty good stable life.

We feel really incredibly fortunate that my husband’s income is sufficient for us to live off of. It’s more than sufficient – more than half of his overall net income for the year would be saved even covering the household expenses entirely out of his paychecks.

 

It took us longer than it should have to realize we would come to this point because I felt like I couldn’t talk to anyone about it other than my husband. I briefly said something to a few people over the last few months and all of their immediate responses were “Why don’t you just live off of your husband’s income and stop worrying about all of this?” If your knee jerk reaction is the exact opposite of what the couple would prefer to do, perhaps you should keep your opinions to yourself rather than being entirely unsupportive. The intricacies of all of this are huge and complicated with all the money mindsets, past experiences, and that we never intended to get married until we did. We’re consciously choosing what to do with our money going forward as it makes sense and feels right to us, rather than our state telling us we had to combine from the date of our marriage forward.

Is this a path towards more combining? Is it bad if it is or isn’t? I’m confident that we will continue to consciously make the decisions and course correct as it makes sense for us going forward, however that ends up.

 

Here’s to an incredible first year of marriage and I’m so glad I’ve had you by my side through all the chaos of the last year!

2017 Half-Year Update

Income

This year so far has been a relatively boring year for income, which has been surprisingly not that noticeable, probably thanks to my front loading my retirement accounts last year.

  • ($384) My portion of the extra income taxes due (marriage tax penalty)
  • $2,513 My portion of the value of the credit card points redeemed or rebates from cash back sites
  • $68 Last paycheck from my fall part-time gig for a professor in my program
  • ~1 month’s salary gross: deferred compensation from my former employer, from which they withheld way more taxes than they needed to with my low income this year, so I should receive all ~$3,000 of the unnecessary taxes withheld back in early 2018
  • Generous four figure sum: We received and deposited the generous wedding present from my parents this year. It went straight into the “Wedding Gifts” savings account where I’ve been putting any wedding presents until we use them for something specific, at which point I transfer the money into our checking account.

Net Worth and Cash Flow

Personal

As of June 30th, my net worth is up 1.1% for the year. I was originally projecting a 1.4% decrease for the year, but the stock market has had a mind of its own,
so I’m currently forecasting to be up 0.7% for the year, assuming no further income. That’s not too bad for taking a year off from full-time employment, during which I’m paying grad school tuition and for my portion of a wedding reception.

My June reconciling left $17,247 in my personal savings account, which should last me through the end of February at my current spending rate. I have a separate savings account from which I pay my grad school tuition, which is on track, ~$20,000 in Series I Savings Bonds, and ~$25,000 in my Vanguard money market fund. After covering my part of the wedding, all of those non-tuition cash accounts combined would last me for two years, through sometime in July 2019. Once I start a job again, I’ll experiment with how low I’m willing to let my cash reserves go, whether I’m comfortable going down to $10,000 and investing the rest. The most I can realistically see leaving in a savings account is $20,000.

Family

Our combined net worth, on the other hand, is up 13% since we got married, which is just incredible. The condo equity represents about a third of our combined net worth, which is a pretty reasonable figure.

On the household accounts side, we have a primary checking account which is used for cash flow, budgeting, and paying the credit card balances at the end of the month, a “Wedding Gifts” savings account, and a general savings account. We keep a one month ($3,000) buffer in the checking account and we have a second one month buffer in the general savings account. We also have a joint Schwab checking account that we use for international ATM withdrawals. (I closed my personal one when we made the joint one.) Lastly, our Donor Advised Fund doesn’t count in our net worth as it’s not legally ours anymore since it’s already been donated to Schwab Charitable.

Investments

My husband has started the process of buying into the condo. I used these funds to make my full 2017 Roth IRA contribution back in January and then in June, I transferred the entire amount that he gave me into my Vanguard taxable account. I added $10,000 into my international stock index holding, rebalanced between international and US stocks in my Roth IRA, and left the remainder in the money market fund. I set up a $500 automatic exchange from the money market fund into the international stock index for each of the remaining months in 2017 (one has already happened!) and left the rest alone.

Why didn’t I invest the entire amount? I wanted to wait until we have a firmer picture of how much the wedding reception will cost and until I’ve started a job before investing the entire amount. I left a generous eight months of expenses in the money market fund for now. I’m sleeping great at night, so this seems like a reasonable approach for now.

Why did I send all of the money to Vanguard if I wasn’t going to invest it all? I wanted to be really prudent with this money as it was previously locked up as condo equity and not spendable. Putting it all in Vanguard helped to see it as transferring the money from condo equity to more liquid investments, rather than as money available for spending. The Vanguard money market funds have pretty comparable returns to my Alliant Credit Union savings account, so they seemed like a reasonable parking spot for now.

As of June 30th, my investments are up an absurd $25,605 for the year so far solely on market returns. The last few years were not great for international stock returns and they seem to be making up for that this year, which with my staunch 50/50 US/International split has done wonders for my portfolio returns this year. My 401(k), which is relatively heavy in international stocks at the moment, is up $13,075 with the markets this year, which is about 70% of what one is allowed to contribute to such a plan each year.

In May, I tried an experiment of not checking my investment balances all month until it was time to update my net worth. I managed to make it with only peeking once, which I’m calling a success based on my behavior in the previous months of the year. I ran the experiment again in June and I barely peeked when I made my Vanguard contributions. It seems this habit has successfully mostly stuck for now!

Not paying the mortgage in 2017 has seen some months starting to get very visually closer to the passive income (credit card rewards and selling stuff) + 4% of investments line. It’s incredible and really motivating! It makes me want to find more money to add to my investments to get those lines closer together.

And then here’s a similar view with the percentage of expenses covered by 4% SWR + Passive Income, but dating back to January 2010:

4/6 of the months so far in 2017 have been over 50%, which is incredible to see! I’m forecasting that I’ll surpass 100% one month this year, which I’m really excited to see!

Spending

As the year has gone on, we’ve been continually discussing what should be personal or household spending. It’s been evolving over time and we’ve reimbursed each other from the joint account back dating to January 1st for anything we spent this year. The main changes are:

  • Any bags of coffee bought count as “Groceries” and are thus household, but takeout coffee is personal spending
  • If we’re out at a restaurant together, the entire meal is household, even if one of us drinks or eats more than the other (my husband used to pick up the entire tab if he spent much more or we would pay based on what we ate)
  • If I grab takeout for lunch because there isn’t food to eat for lunch in the house, that counts as household spending. (Realistically: all food except for food where one spouse is out without the other spouse counts as household spending.)
  • Any medical related expenses are household
  • At home exercise equipment is household, even if only one of us uses it (but outside of the house fitness is personal spending)
  • Most toiletries are now household (shampoo, conditioner, other hair products, deodorant, allergy medicine, dermatologist products, body wash, moisturizer, feminine hygiene products, etc.). If a product was bought at the grocery store or at Costco, it was previously considered household, but if it was bought somewhere else, it ended up being personal spending, which we’ve corrected. Eyebrow waxes and make-up are still considered personal spending.
  • My husband’s Amazon account should probably be double checked every month or so since he’s bad at remembering to use the right credit card and usually just lets the default payment method take care of things.

I’ve been marking these items, as well as anything else we forget to budget for (condo and umbrella insurance, ahem) out of the “Miscellaneous” category from our budget and then next year, we’ll add the items to the budget more accurately.

The below chart counts all household spending as being half mine and also includes my personal spending. Without the mortgage payment, only 17% of my spending for the first half of 2017 was on housing! My half of the household spending plus my personal spending came to $20,157.28 or an average of $3,359.55 per month. Considering that last year, I spent $3,868.10/month on average in the first half of the year which included a $1,027.32/month mortgage payment, I’ve spent about $518.77/month on average more in 2017 than I did in 2016, which is probably mostly explained by the frontloaded travel spending this year and that we didn’t buy any Christmas flights in 2016. I expect my H2 spending to come in about $1,000/month under my 2016 H2 spending, even accounting for the difference in mortgage payment and paying for the wedding.

Household spending

Note that all of the numbers below are the full household numbers, meaning that my portion is half of those numbers.

Category Budget Actual Avg. Monthly Description
Travel $5,000.00 $10,854.17 $1,809.03 All travel pre-booked for the year. This covers our Christmas flights and lodging, a trip for a friend’s milestone birthday, a weekend getaway, and airfare and lodging for our Italy honeymoon coming up in the fall. We went over-budget on all of the trips, but we skipped one, so we’re technically under the travel budget for the year by $1,277.
Housing $8,897.23 $8,235.96 $1,372.66 Very little condo maintenance so far this year ($285), which is why we’re under budget. Otherwise, we’ve been paying monthly HOA dues and paid this year’s special assessment, paid half of the year’s property taxes, paid for the winter electricity, paid Comcast every month, and our mostly-biweekly house cleaners. My husband is paying the mortgage out of his personal cash flow.
Food $4,490.00 $4,373.91 $727.44 This is mostly groceries ($3,188) and Costco ($420), with the rest being convenience food. We’ve been averaging about 20% above our grocery budget for the year ($450/month), but a lot of toiletries end up in here too as well as cards.
Wedding ~ $3,628.80 $604.80 This includes the last bills for the postnuptial agreement ($650), my wedding dress (under $400), some cake tasting fees, our cake deposit, and a cake topper ($622.50), DJ deposit ($1,100), hair and makeup deposit ($200), paper invitations, RSVP cards and address labels ($57.82), and photographer deposit ($500). I’ll write a post about this all more specifically once I have final numbers.
Entertainment $756.06 $2,013.01 $335.50 This budget is a bit fuzzy because the “Restaurants” budget is included in the “Food” budget, but “Date night” spending ($1,188) went here, same with meals with friends ($121). This also includes our annual theatre tickets ($510), Pandora and Spotify music subscriptions ($125), and Netflix ($66).
Shopping ~ $1,551.84 $258.64 The last piece of our new living room furniture ($637), a popcorn popper ($21), replenishing measuring cups ($36), picture hangers ($26), a blanket and five tablecloths ($160), Lightroom ($66), replacing our seven year old mattress cover ($33), replacing some old towels ($173), repairing our camera lens ($264), a sun alarm clock ($119), replacing a five year old soap dispenser ($15), some vacuum sealing clothing bags ($20), some pieces to attach some of the new furniture ($30), and annual Prime membership ($109).
Personal care ~ $447.59 $74.60 Shampoo, conditioner, moisturizer, cleanser, shower cap, allergy medicine, etc.
Gifts and Donations $440.00 $407.24 $67.87 This covers one wedding gift and three baby gifts, some cards, and some stamps because we keep losing them and we’ve mailed paper invitations to anyone who has asked for one. We used our Donor Advised Fund for another wedding gift, so that isn’t accounted for here.
Transportation $430.02 $376.16 $62.69 We are way under budget on gas (averaging $20 per month instead of $30) because we’ve bought most of it at Costco this year, which is unusual. Also included is a new battery for the car and jumper cables ($150), some Lyft rides ($83), and one time of parking ($0.58).
Life ~ $18.84 $3.14 Updated insurance on my ring set – most of the premium was paid in December.
Recreation ~ $11.76 $1.96 One, two and three pound weights
Medical bills ~ $6.00 $0.50 A resistance band for physical therapy. Not included here are the insurance premiums that are taken out of my husband’s paychecks pre-tax every month. We’ll reconcile that into being household spending come tax time. So far, we’ve paid nothing out of pocket for medical stuff this year.
Total $19,152.11 $31,925.28 $5,319.34 Only $2,013.60 over budget if you take out the wedding and honeymoon, which weren’t budgeted for, that isn’t too bad considering that we frontloaded much of our travel spending for the year.

We’ve decided to use my parents’ wedding gift for our honeymoon. We bought the flights with Chase Ultimate Rewards points from our Sapphire Reserve card and I transferred the amount we’ve prepaid so far for lodging from the “Wedding Gifts” savings account into the household checking account.

We are both really looking forward to hosting our wedding reception this fall! The numbers are still reasonably variable since we’re still waiting on most of the RSVPs, which is why I haven’t talked that much about the budget. The wedding costs have been covered so far by calculating how much off-budget expenses happened in a month, dividing that in half, and each of us transferring that into the household checking account. Now that we’re getting into the home stretch, we actually know the amounts that are due before we pay them (versus picking a vendor and then immediately needing to pay a deposit), so we transferred the anticipated amounts at the beginning of July for the costs that month and we’ll repeat that in August and September.

Other than Groceries and missing a ton of line items (oops), we have been doing reasonably okay with our first attempt at a budget! I’ve been pleased with how it’s going.

Personal spending

I’m really proud of how I’ve done with my personal spending this year. I’ve been significantly more conscious about it this year and reduced my personal spending (within the same scope) by more than half from what I spent last year, which is a huge part of how I’m covering my part of the wedding reception costs without spending down my savings too quickly.

I mentioned this in earlier posts, but the way I’m budgeting this year is that I took my savings account balance on 12/31/2016 and have added in all income I’ve brought in this year. That figure is now up to $37,500. On the first of every month, I transfer $1,500 to the household checking account to cover my part of the household budget. I add up how much I need to replenish my checking account for the prior month’s spending that and transfer that money. Once all that’s done, if I’ve spent less than N/12ths of the total annual budget (where N is the current month), I transfer the excess to my personal “Wedding” savings account. My husband just takes money out of somewhere when a bill needs to be paid, but I prefer doing it this way so it doesn’t feel like it’s withdrawn all at once from my savings account.

Category H1 Avg. Monthly Description
Clothing $2,044.90 $340.82 $837.56 of this was on replacing my underwear and my annual bras stock-up. This year, I splurged and bought six bras instead of my usual five, so that I don’t have to wash them quite as often.
Transportation $783.62 $130.60 $252 of this is bus passes that I’m required to pay for through grad school and are really useful. $522 was the six months of car insurance that I paid for in January and $10 was a Lyft home one time.
Recreation $378.77 $63.13 A pair of running shoes ($161) and two months of unlimited barre classes ($109 each) – yay for student rates!
Personal care $351.08 $58.51 Four eyebrow waxes ($80), mascara and eyeshadow replacement ($43), returning a product that didn’t work out ($3), and two facials ($223). I’ve since eliminated the facials from my budget as the eyebrow waxes provide just as much joy.
Entertainment $246.31 $41.05 I accidentally bought two books thinking I had some e-book credit left ($23). “The Power of the Past: Understanding Cross-Class Marriages” has been fascinating. I also renewed my personal domain ($9) and enjoyed several social outings with friends ($215).
Gifts and Donations $200.78 $33.46 My husband’s birthday present. I used some points to pay for part of it, but those count in income and the full amount of the present here.
Housing $159.33 $26.56 Monthly cell phone bill with Cricket Wireless. The plan gives me 1 GB of data and unlimited minutes and texts, which seems to be mostly working great.
Travel $27.50 $4.58 $7.50 was when my husband and I each bought the same snack while traveling and we paid for it separately and $20 was transferring some airline miles to my husband to keep both of our accounts active.
Medical bills $23.30 $3.88 Coinsurance from some 2016 medical usage.
Shopping ($20.95) ($3.49) My husband used some of a credit I had at a store and reimbursed me, hence the spending credit. I also replaced my sunglasses case that I seem to have misplaced.
Total $4,194.64 $699.11

If you take out the car insurance which is a household expense starting in July, I spent $612.14/month on average covering all of these categories for all of the items it covered.

I started a new spreadsheet this year which tracks my clothing spending. For each item purchased, I note the date (including month & quarter), category (necessities or wants), and subcategory (underwear, winter clothes, outerwear, athletic wear, bras, summer clothes, or shoes), price, and a description. I’m finding it really helpful to separate the necessities (underwear, bras, socks, sports bras, and having workout crops that fit so I actually go work out) from the wants.

I’ve been so consistent at working out this year that I sized my workout crops down yet again, of which I picked up two pairs in Q2. I like wearing the now-huge workout tops as it reminds me of how much my body has shifted in the last year. Last July, I hit my peak weight. A year later, I’m down 5-6 percentage points of body fat (it fluctuates a bit day to day) and I’ve lost about 8% of what I weighed last July. Those numbers matter way less than how incredible my body feels, how much stronger I’ve become, and how much more positive I am with the increased level of exercise. In June, I finally surpassed an average of 10,000 steps per day for the first time this year, which felt great. I had been increasing my monthly step goal a little bit each month until I finally got there. It’s a lot of work getting that many steps per day AND making it to as many barre classes as I have, which is part of how blogging has fallen by the way side. All around, I’ve just been feeling really great this year!

Readers, how is your 2017 going so far?

Managing my clothing spending with a whitelist

I’ll leave this tidbit for a more financial update: I own 68% of the condo, my husband 9%, and the bank 23%, or in another way: I own 59%, we own 18%, and the bank owns 23%. This is a huge change from December where I owned 76% and the bank 24%. I’m not ready to write a 5 year homeownership update (!!) as I prefer to write about things after they have settled and we haven’t yet figured out how to get approval to make the condo board less broke.

Over the years, I’ve spent the most time managing my clothing spending. I have tried many ways to reign it in, to limit myself, to plan for spending, to budget, etc. and nothing seems to work for very long until now. I’ve struggled with my clothing spending for a variety of reasons over the years. Primarily, I value having a wardrobe with pieces that I love and fit and suit me well. Yet I have donated and purged so much of my closet over the years and worn a really small portion of it.

I feel so, so guilty buying clothes. I feel guilty putting them in my cart. I feel guilty putting them on my credit card. I feel guilty taking them out of the bag they come in. I feel guilty seeing the pile of online shopping bags by our mailbox. I even feel guilty wearing new clothes, sometimes so I leave the tags on them without wearing them! I feel guilty spending down investments or cash savings or using my husband’s condo buy-in money to buy clothes or asking for clothes for my birthday.

I used to over-buy clothes in categories that were easier to buy (tops) and under-buy in categories that were harder (everything else). In May, I went into a store looking for a pair of shorts that fit, a pair of white pants that fit, and a cropped cardigan. What did I walk out with? A pair of shorts, a pair of yellow pants (I decided they were so awesome they were worth foregoing the white pants), a dress that fit splendidly (but was terrible quality and I later returned for a damaged material credit after one wear), and two non-cropped cardigans that were the same colors as cardigans I already had at home. I had reached decision fatigue and bought whatever cardigan I could find instead of the cropped style I was specifically looking for. On the one hand, my color selection at least proves I know my style and color preferences but I when got home with the cardigans, I realized my silliness pretty quickly and took them back to the store later.

Despite all this guilt, when I was filling in my mindful budgeting planner, my best purchases recently were: bras, underwear, workout crops, and a summer dress I bought recently. That tells me that underneath all the guilt, having more than one pair of workout crops encourages me to go to the gym more often, which in turn brings me joy. It also tells me that summer clothes bring me far more joy than winter ones do.

To reduce my guilt and to not stress as much about the necessary clothing spending, I’ve been keeping a “Clothing whitelist” and setting one of my monthly goals as “Clothing whitelist only” and it’s been working. (I use these soft cover daily planners – not an affiliate link. I love them because they are small and fit in my purse or backpack easily!) When I start contemplating a particular item of clothing, I add it to this list. Sometimes the items stay on the list for a few months and other times, I add things to the list and immediately buy them. As I review my spending throughout the month, I check in – is a piece of clothing I bought on the whitelist? If it isn’t, I either need to add it or return the item.)

A recurring theme on the list this year is “X that fits” which falls into the “one in one out” philosophy for wardrobe management: spring jacket that fits, hiking shorts that fit, 2 pairs of workout crops that fit, bras that fit, underwear that fits, shorts that fit, summer pants that fit. Other items have included: N* winter sweaters, N* pairs of underwear (finally swapped down to just black and beige colors which is life changing), a cropped cardigan, winter over-pants for walking to the gym, N* days of summer clothes, shoes for my wedding reception. With my huge exercise push this year, I’ve lost some of the weight I gained in my last couple years of jobs I hated and felt stuck in. It’s been huge for my general happiness levels and has given me the opportunity to shop the parts of my closet I didn’t purge from what fit back in 2014/2015, plus some pieces of last year’s closet.

Similarly, I picked which bra styles and colors to buy in what number by listing out the possibilities, along with which items I would wear with them in my wardrobe. I hate having a bra wardrobe that doesn’t match to my actual closet! (What you get when you take a CS nerd and get them to shop: spreadsheets, tables, and charts.)

So far, this method seems to be working really well this year, better even than assigning a dollar number to the clothing budget. If I gave myself a dollar figure budget, I probably would have kept those cardigans I didn’t need.

Readers, what is your trickiest category to budget for? How do you handle it?

N* is variable, depending on the category.