Dear Friends and Family,
Money. Too much is not a good thing. Not enough is not a good thing. Ideally, like Goldilocks, just right is what I'm after.
I like to think about money in two frames: sources of money and uses of money. Fortunately for us, we have two primary sources of money: Mr. mouse's paycheck and my paycheck. We have a couple of other sources of money (e.g. interest on our checking account) that we essentially ignore because it's rounding error, frankly. And, we have a couple of sources of money (e.g. appreciation on the home, appreciation on our investment account, credit card accounts) that we essentially ignore because we don't utilize any of them as a source of money. That's money that's "not available" to us. Simple, but it works for me.
Onto uses of money. Well, there's the stuff that comes out before we even see the paycheck like taxes, 401k savings, health benefits, etc. Then, there's fixed expenses. Fixed expenses used to be a large slice of our expense pie at one point with student loans and car loans and credit card balances and stuff. Now, it's a smaller slice of a, thankfully, larger pie. We've got the mortgage, real estate taxes, home owner's assessment, home insurance, car insurance and the broadband bill. All of these bills are the exact same amount each month and constitute our "bare necessities."
Then, there's voluntary fixed expenses. What's that?!?! It's how I think of money that we spend each month on our future. Currently, we're fortunate enough (or maybe it's frugal enough) to live off of one income. The other income (my paycheck) is the voluntary fixed expense. Each month it goes towards savings. Early 2008, it was stocks and bonds and retirement funds and stuff. Now, we're focused on paying down the house. Hey, as far as I'm concerned, it's a guaranteed positive return on my dollar which is far better than our portfolio is performing.
Next come variable expenses. Well there's the obvious eating in, eating out, electricity, gas, phone, shopping, and other miscellanea that constitute out consumer-oriented society. This is the stuff that gets spent last. It's what's left after the rest of the money is spent.
It takes awhile to get all of your ducks in a row. And, it takes discipline. But, I'm glad it's something we prioritize. We could have "more" "fun" now, but life is good now with the money we have for variable expenses and I'm not sure life would be "better" if we had more.
Cheers!
mouse
Money. Too much is not a good thing. Not enough is not a good thing. Ideally, like Goldilocks, just right is what I'm after.
I like to think about money in two frames: sources of money and uses of money. Fortunately for us, we have two primary sources of money: Mr. mouse's paycheck and my paycheck. We have a couple of other sources of money (e.g. interest on our checking account) that we essentially ignore because it's rounding error, frankly. And, we have a couple of sources of money (e.g. appreciation on the home, appreciation on our investment account, credit card accounts) that we essentially ignore because we don't utilize any of them as a source of money. That's money that's "not available" to us. Simple, but it works for me.
Onto uses of money. Well, there's the stuff that comes out before we even see the paycheck like taxes, 401k savings, health benefits, etc. Then, there's fixed expenses. Fixed expenses used to be a large slice of our expense pie at one point with student loans and car loans and credit card balances and stuff. Now, it's a smaller slice of a, thankfully, larger pie. We've got the mortgage, real estate taxes, home owner's assessment, home insurance, car insurance and the broadband bill. All of these bills are the exact same amount each month and constitute our "bare necessities."
Then, there's voluntary fixed expenses. What's that?!?! It's how I think of money that we spend each month on our future. Currently, we're fortunate enough (or maybe it's frugal enough) to live off of one income. The other income (my paycheck) is the voluntary fixed expense. Each month it goes towards savings. Early 2008, it was stocks and bonds and retirement funds and stuff. Now, we're focused on paying down the house. Hey, as far as I'm concerned, it's a guaranteed positive return on my dollar which is far better than our portfolio is performing.
Next come variable expenses. Well there's the obvious eating in, eating out, electricity, gas, phone, shopping, and other miscellanea that constitute out consumer-oriented society. This is the stuff that gets spent last. It's what's left after the rest of the money is spent.
It takes awhile to get all of your ducks in a row. And, it takes discipline. But, I'm glad it's something we prioritize. We could have "more" "fun" now, but life is good now with the money we have for variable expenses and I'm not sure life would be "better" if we had more.
Cheers!
mouse
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1 comment:
Great job to you guys! One of the reason's I have been reading your blog for so long was due to your blogs on paying of your debt, your monthly budget, and investing. My husband and I are also working toward similar goals and it's nice knowing we aren't alone. Keep up the momentum - when we had our children things slowed down some. You two are far ahead of where we were when we started our family. Good job!
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