Life in Transition

Navigating Personal Finances During Life Transitions

Archive for the month “April, 2012”

Transitions and Finances

As you all may know, my wedding is a week away, which means a lot of changes are going to happen and effect my finances.

Transition #1: Housing
My fiance was an Resident Assistant (RA) at a freshmen dorm for two years when he was an undergraduate student. This year, a spot opened up at the student housing complex at the health science campus, and he got the job.   He’s lived in an apartment for the last two years, and I have lived in one for the last three.   It’s definitely a little odd going back to dorm life, but at least housing will be free.  We  won’t have to worry about rent, utilities, Internet, or cable for at least a year.  Rates for a one-bedroom apartment in the area  starts at $500/month, and when we throw in utilities and internet, I’d estimate our housing costs would run $575/month.  So, we’re looking at saving approximately $7000/year.  

Obviously, our one-bedroom dorm suite isn’t truly free.  As an RA, my fiance will have have a set number of on-call hours a week, which means he cannot leave the building during set hours.  He’ll also have countless meetings and training sessions and a mountain of paperwork.  Since he’ll be studying a lot for his classes, the on-call hours shouldn’t be a problem.  Those will become his designated study times. When he was an RA at a freshman dorm, most of his on-call hours were spent mediating conflicts, busting people for drugs or underage drinking, and calling hall meetings because a guy thought drawing obscene pictures on the walls would be funny.  Most of the residents at our new dorm will be Ph.D students and postdocs, so hopefully we won’t run into the same kind of problems.

Transition #2: Transportation
Since we will be living less than a block away from where I currently work and my fiance goes to school, having two cars does not make sense.  We decided to keep his car, since it gets a lot better gas mileage.   We plan on loaning my car to my younger sister, who would be responsible for insurance, maintenance, and registration fee.  We thought about selling one of the cars, but since his Honda has over 300,000 miles on it, we want to have a back-up car.  My sister understands that I’m taking my car back as soon as the Honda  stops working.  Becoming a one car family will at least save us $1000/year when you take into account the maintenance,  registration fee, parking pass, and extra gas.  It will take more time to coordinate errands and who needs the car when, but I think the hassle is worth the money saved.

Transition #3: Two people, One salary
My fiance has been living off of his savings for the last year, and won’t have income for another three years  unless you count free housing as income (I’ll find out soon enough if the IRS does).  It’s pretty much impossible for dental students to find time for a part-time job, so we will be living off of my income for the next few years.  I currently have a modest income, but I still able to save a lot of money when I was just supporting myself.   I’m also planning on going back to school part-time, which means I might not work as many hours as I do now.  I used to feel nervous about supporting two on a small income, so when my fiance got the position a huge burden lifted from shoulders and I felt a lot better about going back to school.  It’ll still be a challenge to adjust to the bigger expenses.  For example, I only spend $50-$70 a month on groceries, but my fiance spends at least $150/month.

Pay It Forward Handmade

I got this idea from Digging Up and Out, and it sounded like fun.

The rules are pretty easy and straight foward:

  1. I will send a surprise gift to the first three commenters on this post. The gift will be handmade by me. It will be sent sometime in the next 365 days. It will be a surprise. We all love getting surprises in the mail, right?
  2. To sign up and receive a gift, you must play along, too. Pay it Forward on your blog, by promising to make a surprise for the first three people who comment on the post.
  3. You must have a blog (that is updated, as I will blog stalk you to find the right gift for you).
  4. After commenting here, you must repost this or something similar to your blog in 48 hours. If not, I will chose the next person who comments…

That’s it.  Just comment below if you want to play along and get a surprise package in the mail (I try to make something cool…if unsuccessful I might cheat and buy something handmade off Etsy).

Spending Update: Mar-Apr 2012

I know most people make a budget from the first of the month, to the last day.  I found it easier to create a budget based on when I get my monthly paychecks, which is on the third Friday of each month.  Since I get paid hourly for both jobs I work, but monthly for one and bi-weekly for the other, my income is always a little unpredictable based on how many hours I work each job, even though I work the same number of hours each week.

Projected Monthly Income: $2000
Actual Monthly Income: $2018.39*
*I did not include my extra paycheck

Category Budgeted Actual Difference
Housing $325.00 $342.63 -$17.63
Tithe $200.00 $200.00 $0.00
Transportation $195.00 $190.12 $4.88
Health Care $140.00 $129.04 $10.96
Food $110.00 $142.19 -$32.19
Roth IRA $200.00 $200.00 $0.00
Targeted Savings $465.00 $465.00 $0.00
Clothes $35.00 $42.27 -$7.27
Entertainment $30.00 $15.46 $14.54
Miscellaneous $0.00 $5.73 -$5.73
Tax Withholding $300.00 $247.31 $52.69
Total $2,000.00 $1,979.75 $20.25

Last month, I knew I had a lot less money to work with than usual, which meant I was going to have to be extremely disciplined keeping my variable costs low. Overall, I stayed pretty well within budget.  I ended going over budget for housing since my roommates and I had to turn on the heat again; I was anticipating a heat-free month since January and February was abnormally warm.  I guess I should always expect unpredictable weather here and account for it in my budget.  To illustrate the unpredictability, this past month we had a deadly tornado that killed over thirty people one day, three inches of snow the next day (the biggest snow-fall all winter), and an eighty-degree sunny day after that.  I also went over on my food budget.  I’ve been running around town doing errands for my wedding so I haven’t had enough time/too tired and lazy to cook.  I definitely want to cut the number of times I eat out for lunch next month.  Normally I don’t spend about $200 on transportation (insurance and gas), but I knew that I had to make trips to Cincinnati and Peoria, IL so I reduced the amount of money I would normally spend on entertainment.

My usual routine is to have a new budget a week before I get next my paycheck.  However, I’m getting married in two weeks and I have no idea what costs to anticipate next month.  I don’t know how much to budget for food, gas, etc.  Usually I look at my past spending history and make a list of expenses I’m expecting (ex. oil change, dentist appointment, gifts).  I’ve tried getting my fiance to track his spending for the past year but he has been pretty unsuccessful keeping it up, so I can’t use his past spending history as a place to start.  We’ve talked about our overall goals and priorities when it comes to finances, but we haven’t talked about the mechanics of combining our finances or how we are going to create a budget yet.  My fiance is finishing up his first year of dental school and has been studying for finals, so he’s already stressed and finances are the last thing on his mind.

Have any of you made the transition from separate to joint finances.  How did the first month look?

The Tax Withholding Debate

My co-workers and I have been talking about the checks (or lack of in my case) that we will expect during tax season.  Most of them like to have as much taxes withheld as possible.   One guy who started working here as a bachelor had not changed his withholding once, even though since then he has gotten married and now has an two-year-old daughter.  So, between him and his wife, he’s expecting a $6000 refund.  I asked him why he never changed his withholding.  He gave me the following reasons:

  1. It’s a nice psychological boost getting a big fat check from the IRS
  2. It forces him to save money.  To him, it’s equivalent to automating saving, except the government holds on to the money instead of the bank
  3. It forces him to live below his means, since he gets a smaller than normal paycheck each month
  4. A large check gives him and his wife an opportunity to discuss the progress of their annual financial goals and priorities

I, on the other hand, prefer to pay the right amount of taxes throughout the year instead of overpaying, and get a small refund  instead.  Here are my reasons:

  1. I hate seeing so much of my hard-earned cash being taken out of each paycheck
  2. I tend to be OCD about my money, so getting a slightly bigger paycheck  throughout the year makes me feel like I’m have more control over my finances.
  3. I like to make my money work for itself, so to me, giving the government an interest free loan is a bad deal when I can earn 4% interest if I park the money in my rewards checking account
  4. I think I’m disciplined enough to save money on my own throughout the year

In the end, I don’t think one way is better than another.  I think each person should make their decision based on their needs, priorities, and money management style.

Do you prefer a large refund check once a year, or do you prefer getting a little bit more money on your paycheck throughout the year?

It’s Tax Day

In honor of Tax Day, I’ll share my total tax rate for 2011, and a breakdown of my taxes.  Overall, I paid an overall rate of 18% tax on my total income.  My tax bill breaks down to the following:

 

Federal 7.20%
State 4.10%
FICA 4.40%
Local 1.80%
Vehicle 0.30%

My overall tax rate is fairly low, and I think the main reason is that I worked full time for only half of the year, thus a low annual income.  I worked a little bit when I was still in school, but more more than 12 hours a week.

I ended up getting a federal refund for $112, but I owed the state $171, so overall I had to write an extra check to pay my taxes.  I know that owing a net balance of -$59 is not big deal, but psychologically it’s painful to write a check to the government, especially when they already take out money throughout the year.

How much did you pay in taxes in 2011? Did you get a refund, or did you have to write a check to the IRS?

Wedding Trimmings–Part III

During the past two weeks, I’ve discuss ways to save money the wedding dress, venue, reception, invitations, etc.  Today, I’ll discuss ways to save money on photography, cake, and officiant.

Photography
For me, this was one of the most difficult areas to save money.  A good photographer was definitely a priority for the wedding, but a good photographer doesn’t come cheap.  I understand why.  Taking wedding pictures is physically demanding, and the hours are long.  Not to mention, the equipment, editing software, and travel expenses add up and the cost is carried over to the clients.  So, I think a skilled photographer has every right to charge as much as they do (I know some people will disagree with that statement).  The average well-established photographer in this area ranges between  $2000-$2500, which  is too much for my budget.  

I was able to find a less expensive photographer through friends and facebook.  I go to a church with a lot of up-and-coming artists, so I found a candidate there who was only going to charge me $800.   The second candidate photographed my former roommate’s wedding quoted me for $1400, and the third candidate I found on Facebook, and his basic package costed $1700.  

The first photographer was an acquaintance, and he had just started his photography business.  When was looking for a photographer, he had only taken pictures of two weddings.  While his pictures weren’t bad, stylistically, it was not what I was looking for.  Plus, he was the least inexperienced out of the three, and his price point reflected that.  In the end, I decided not to use him because of his lack of experience.  Now that he’s had a full year to practice, he’s improved greatly.  Sometimes I wonder if I should have picked the first photographer, since he charged significantly less than the others.  

I ended up hiring the second photographer.  She had a year of experience and she consistently took high quality pictures.  When my former roommate got married, she only charged $950.  She became popular very quickly, and increased her prices. The third photographer also took excellent pictures, but he was less affordable.  Though she charged $700 more than  the first photographer, I  chose her since I knew I would definitely get good pictures on my wedding day.   This is an area that I did not want to skimp on quality.  Photographs are one of the few tangible things that I can look at after the wedding is over.  

Tips to trim photography costs: I would start with recommendations from friends, since it’s hard to find photographers under the radar with a Google search.  If you live near a university with an art or photojournalism department, look for students seeking to build a portfolio.  Searching Facebook for wedding photographers is also a good place to start.  Many new photographers who just started will have a Facebook page but no website.

Wedding Cake
Wedding cakes are expensive, for the same reasons photography is expensive.  My former roommate’s sister-in-law is making my wedding cake.  She bakes cakes out of her home as a hobby and will slowly build it into a small business as her daughters get older.  I told her what my budget was upfront and we talked about designs that would fit my budget.  I chose a standard  cake flavor, plain vanilla, and standard icing–nothing fancy.  Overall, I think I saved over $300 by not using a professional bakery.  

Another way to keep costs low is to buy a cake at a local grocery store with a bakery.  Usually, their cakes will be cheaper than a bakery that exclusive makes wedding cakes.  If you choose to bake your own, make several one tier cakes with varying designs.  There’s less of a chance to mess up than trying to make your own  multi-tiered cakes.

Tips to trim cake costs: The most important thing is to keep it simple.  The more exotic the flavors and the more intricate the design, the more your cake will cost.  If possible, find a family member or friend who can bake a wedding cake.  If not, try a grocery store with a bakery such as Kroger.

Officiant
Depending on whether or not you have a religious ceremony, this may or may not be an area where you can save money.  My fiance and I are pretty involved with a church here in Louisville.  The church has been like a family for us, since we both live far from home.  So, it was important to us that one of the pastors officiates the wedding.  Each church has its policy about compensation for the ministers to do weddings.   Since my fiance and I have gotten to know one of the pastors at my church pretty well from our involvement with the college ministry, he waived the fee as his wedding gift.  

If you opt against a religious ceremony, you have more freedom with who you choose to officiate.  The best way to save money is to have a friend  perform the ceremony.   One of my friends asked her uncle to officiate her wedding.  There’s a few  ways to get certified.  There are some denominations, such as the Universal Life Church and First Nation Ministry, that open ordination to anyone and allow you to get certified online.  If you choose to go this route, make sure you check the legal requirements of your state.

Tips to trim officiant costs: If you or a family member is close to minister, pastor, or judge, ask to see if they are willing give you a discount or officiate for free.  If not, ask a family member or friend to get the proper certification to officiate.

What are some ways you have trimmed costs on your wedding?

Week-in-Review

It’s been a busy week.  One of my co-workers took a sick leave so I took over a lot of her responsibilities.  I was glad to help her out, but I pretty much had no clue what I was doing, so I don’t know how much I actually helped.  My wedding is just around the corner and started freaking out about the giant wedding to-do list.  Luckily, a few of my friends are helping me out.  I also started my application for graduate school for a Masters in counseling.

Here are some posts I liked this week:

Extra Paycheck!

I currenly work two jobs, but for the same boss.  My boss is a professor at a university here in Louisville, and she’s also started a small bio-tech company.  The two share the same space, so it’s easy to go back and forth between working for the company and the university.

The pay schedule for the two are different.  The company pays monthly, and I get a paycheck the third Friday every month.  On the other hand, the university pays bi-weekly. Typically, for every monthly paycheck I get, I receive two bi-weekly paychecks, and I create my budget base on those premises.  Well, this month I got an unexpected surprise, an extra paycheck!

Now I don’t create monthly budgets based on the calender month.  Instead I begin a new budget on the day I receive my monthly paycheck.  So, my current “fiscal” month began on March 16 since that was when I received my paycheck from the company.  It’ll end on April 19th, the day before my next one.  So far, during this month, I have already received two bi-weekly paycheck, one on March 16 and one on March 30.  Yesterday, I just realized that I will get an extra paycheck before the fiscal month closes.

Since I didn’t budget for the extra paycheck, I’m debating on how I should best use it.  It won’t be much; it’ll be about $325.  Still, I want to use that money wisely.  Should I save it in one of my targeted savings accounts, put in in my Roth IRA, or use the money to buy a more professional looking wardrobe (Note: I’ve slowly realized that I dress too much like a high schooler, since I bought most of the clothes I wear in high school.  I definitely think it’s a good time to re-evalutate my closet and some professional attire more fitting to my age)?  What would you all do with an “extra” paycheck?

 

Wedding Trimmings Part II

Last week, I talked about how to cut costs on the wedding dress, venue, and reception.  Today I will talk about invitations, flowers, and music.

Invitations/Stationary
As I looked through wedding websites and Etsy.com, I fell in love over and over again with fancy, pretty invitation designs.  Yes, I am a sucker for all things pretty.  Unfortunately, pretty also meant pricey, and with invitations, most people who get them would eventually throw them away.  So, to me it did not make sense to spend a ton of money in this area.  For my own wedding stationery, I designed  everything on photoshop, and uploaded the design to an online printing service such as PrintRunner and PsPrint.  Right now, if I order 100 invitations to be printed and shipped to Louisville, KY using PrintRunner, each invitation would only be $0.38 (I would have to buy the envelopes separately).  That is much cheaper than  buying pre-designed invitations, or printing out your own designs (ink is expensive).  Another option is using Staples or Kinko’s copy and print services.

I know not everyone has photoshop or a similar program on their computer.  Check and see if a friend or family member has it, or check to see if it is available at the library.  If you do plan on buying  invitations the typical way, make sure that the invitation is the regular 5×7-in size.  Bulking invitations and non-traditional shapes (like a 6×6-in square invitations) require extra postage.

Tips to trim stationery costs: Use an online printing service or a copy-and-print center, save on postage by opting for a more traditional size.

Flowers
Flowers are expensive, so it’s best to use them sparingly.  For the bouquets, I used fake flowers, since you really can’t tell the difference between the real or fake in pictures.  I didn’t feel comfortable with a DIY attempt, so I found an online florist who specializes in silk flower bouquets . Etsy is also a good place to look, but there are vendors who charge as much as a florists using real flowers would charge.  Silk flowers arrangements are still expensive, so making your own will save you even more money.  For decorations, I stuck with one bloom, the peony (yes, I have expensive taste but luckily they are in season during my wedding), and I bought them in bulk through a wholesaler.  I plan on buying vases and making a few simple flower arrangements.

Tips to trim floral costs: Use silk flowers for bouquets, and buy live flowers in bulk. Overall, use flowers sparingly and rely more on candles for decorating.

Music
Music is an area where we enlisted our friends for help.  My roommate is a talented harpist, so she will play for my wedding as a gift.  One of my fiance’s good friends will sing during the ceremony.  For the reception, we are making a playlist on Spotify, and getting a free one month trial of Spotify Premium to eliminate commercials.  So, essentially, we’re not spending any money in this category.

Tips to trim music costs: Mobilize the help of your musically inclined friends and family, if you don’t have any, hook up an ipod or laptop to speakers and make a playlist using iTunes and Spotify.

Next up: Photography, Cake, Jewelery, and Officiant

Peer-to-Peer Renting

I read an article a couple of days ago on peer-to-peer renting.  Basically, it allows people to rent out their possessions for a fee.  Websites (Rentalic, SnapGoods, GetAround, ZaarlyToolSpinner) have popped up trying to connect borrowers and lenders, where lenders can create a listing and set a fee.  Most of the borrowing and lending is done on a local level.

Is it safe?

Based on the article, all of the peer renting sites are serious about safety.  I understand why, since one bad incident can derail a ompany’s business.  Some of the companies will insure any damage or loss.  Others have established a rating system for each user.  All assert that because the transactions are done at a local level, the process is inherently safer, since “no one wants to treat their neighbors badly.”

The Pros and Cons
Peer-to-peer rentals promotes sustainability. It is a lot cheaper to rent something that you don’t use very often than buying new. For, lenders, it’s a great way to make some extra cash. For all parties involved, it offers a sense of community that is loss in today’s society.
On the downside for lenders, there is always that risk of getting your expensive, valuable goods damaged, lost, or stolen. How great is that risk? No one can ever be sure.

I haven’t tried out any of the peer-to-peer renting sites yet. Will I try renting idems in the future? Definitely. I think it’ll be a great way to save money, and prevent me from accumulating things that would sit in storage for most of the year. Will I lend? I’m not sure. It would be great to make extra money, but like I said earlier, there is always a risk. If I do, I’ll definitely thrououghly research each peer renting company to see which offers the most protections.

Has anyone tried peer-to-peer renting? If so, how was the experience? If not, would you ever it?

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