Thursday, August 13, 2009

Thrifty Stylist Boston Talks Money, Not Shopping (Well, OK, a Little Shopping)

We have recently launched ourselves into a whole-hearted effort to take control of our finances, due in large part to Ramit Sethi and the book and blog "I will teach you to be rich." Because it's all fine and good to buy at bargain prices, but when you don't stop yourself it really does add up!

The thing we love most about Ramit is, of course, that he doesn't tell you to stop shopping. On the contrary- he tells the story of a friend who spends about $5,000 on Manolos and such every year. But she budgets it in, friends, and is still saving for her future, because she cuts corners in other places, like sharing an apartment. How many of us can say that we've planned our shopping so carefully?

We thought we'd share some of our recent "conquests" in the money-saving arena and other things we were already doing right, in case you're thinking about a similar path.

1. Contacted the IRS, who is holding our 2008 refund due to us filing for an extension in 2004 and then never actually filing (although we did pay!). This means that -- if the paperwork ever comes-- we can file for the missing year and receive a refund for that year as well as the one that's due for 2008! We aren't a big fan of confrontation or the telephone, so this took a lot of guts for us, but they were surprisingly helpful (us: "lost all of the paperwork in a move." Them: "We'll send you a packet with everything you need to file." !!! Way cool!) This probably saved us about $4000. That we haven't had for ages because we were too scared to call. Don't be scared. They're in the business of public service, lest we forget-- they're really not always the big bad wolf.

2. Got our credit report, which wasn't as bad as we had expected (only one late payment, when we totally didn't get our Target bill, grrrr. They even said when we called "oh yes, it looks like the bill came back to us." Bleh! We stopped using the card since they hiked the interest rate. Not worth it.) Then, we called our bank to see about refinancing our mortgage since according to "popular wisdom," we should have a better rate due to our credit score. Not that they've called back, but it's a step toward saving more. (Hold on, calling again... Woohoo! Finally got a live human and a recommendation about something called "rate modification" which is different from refinancing... We'll see how that goes!) UPDATE: For a $1500 fee, they are willing to "recalculate" or something rather than actually refinancing (saving us re-inspection, closing costs, etc.) and drop us to their prevailing (almost half a percentage lower) rate-- which, if we're doing our math correctly on the mortgage calculator, will save us $69,000 over the life of the loan! Let's see... $1500 now or $69,000 later? SOLD! (Now for that tax refund... cough... Or maybe this is a good time to transfer some $ out of that down payment subaccount!)

3. Canceled cable. What a waste of $60/month! The only things we ever really watch are What Not To Wear on Friday nights and the Simpsons. New Simpsons are on Hulu the day afterwards, and we have our beloved fashion blogs to make up for missing Stacy and Clinton, so really, what was the point?

4. As we mentioned in our "At Home" post, we are making our own cleaning products, using washable napkins and hand towels, and have joined a CSA to cut down on our grocery bill (drastically!). We're also trying to bring breakfast and lunch to work and cook dinner just about every day (er, trying being the operative word here).

5. Started tracking our spending religiously, whether keeping receipts or updating our "expenses/income" spreadsheet at work. After a month or so of this, we'll examine where our money is really going and try to adjust accordingly. We'll set a real BUDGET for clothing purchases that fits into our income stream, rather than saying "ooh! We got paid! Shopping time!"

Thankfully we were already on the right track, though; we have zero credit card debt (never got one- we know ourselves too well!); already had a 401(K) to which we're contributing the percentage allowing us to receive the max match; had opened a Roth IRA in our early 20s (which has lost several thousand dollars since then, oops... we picked stocks we loved and/or thought would do well, instead of investing in a decent "target date fund," which we now have done thanks to Ramit, so maybe it'll stop tanking so hard), and had opened an ING Orange Savings high(ish)-interest account, to which we contribute with a small automatic monthly deduction from checking.

Our fiance was laid off in May and is moving in with us in October, (our housemate moved out this month so we have two months with no help with the bills!) so it's really imperative that we take care of this now.

We still need to get a real credit card to start building more credit, since we've never had a car or anything... and apparently paying a mortgage on time for 12 years doesn't account for much.

How conscious are you of how much you spend? How about saving?

Has anyone else read Ramit's book? Highly recommended! Let us know your thoughts!

Happy saving and conscious spending ;)

10 comments:

  1. I am so proud of you that you are taking control of your finances-awesome!

    This is a constant struggle with me and my hubby. I have a shopping problem, I have read books, (well bought books-more shopping) and watched shows on this. Not sure why I need 'those' shoes, or 'that' blouse, but I do.

    Maybe its because I can. I have no debt and feel secure in both my marriage and finances, but its still no excuse for my excess bargain hunting. I need help ;-)

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  2. i always track my own spending. so i know exact where every penny goes to....

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  3. would you believe i've never balanced my checkbook in all my life? i've never really bounced a check or run out of money completely, either, but i just keep a general idea in my head- i don't actually pay much attention! bad, bad desiree!

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  4. I definately need to start recording every penny I spend... After I go to Europe, give me a kick in the butt to do this!:)

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  5. oh honey, great link, hopefully he'll help me too.

    But, before you run out and get a credit card just for the sole purpose of building credit, check out Dave Ramsey and what he says about 'proving' you're credit worthy without a credit card. I believe the process is called Underwriting, and most mortgage people don't want to bother. It involves proving you've paid 3-6 bills or a certain list of bills, ontime for like a significant period of time. not sure how significant. But, check him out. If you know a credit card might be problematic for you, this may give you the peace to stay the current course.

    MWAH!

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  6. I think it's fantastic that you're getting a hold on your finances! Well done! You've inspired me to check out Ramit's book!

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  7. That is sooo cool, I'm very proud of you!

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  8. mouse i just want a secured one for the time being, and i intend to pay it off each month (with an automatic deduction- forgot to mention i FINALLY signed up for online banking!) and only use it to track spending. don't worry too much :)

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  9. Good for you! I'm so proud of you for calling the "big bad IRS" :)

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  10. wow! way to go! i know how much of a relief some of this is after you've dealt with it. you're definitely on the right track (and way ahead of me).

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