Here’s a quick recap in case you’re not already up to date. At the end of July, we moved out of our apartment and in with my parents to start saving money for our first house. We’re planning to close on our house the first or second week of September, so we don’t have much time to save a lot of money.
The other day I wrote about preparing our finances for home ownership because that was the first step to creating this plan. Right now, our only bill is our cell phone (which sucks—thanks T-mobile) and our storage unit, which I forgot to mention the other day.
Our storage unit is paid through August, so we should only have to make a partial payment for September. My point here is that we aren’t paying rent or bills (for the most part) and we need to take advantage of staying with my parents and the delay between closing on our first house and the first mortgage payment (estimated for November 1st).
Temporarily Reducing 401k Contributions
I already mentioned this the other day, I know…but it’s part of the plan. A couple of weeks ago, I decided to reduce our 401k contributions from 8% to 1%. The extra little bit of cash is going to help us save money quicker and be better prepared for the transition to home ownership.
We do not receive any employer match on our 401k contributions at all. If we did, I would only reduce it down to the amount of the employer match to take advantage of free money. Really, who could pass up free money? Not me.
Daily Transfers to CapitalOne360
I will continue our daily transfer to our CapitalOne360 (formerly ING Direct) savings accounts because it’s fairly essential. We have a total of 3 transfers set-up for each business day (Mon-Fri) and the total is $20 per week, so it’s not going to make a huge dent either way.
1) Emergency Fund: $1 daily. This helps us build up our emergency fund little by little and is only a total of $5 per week.
2) Christmas Fund: $1 daily. I was hoping to save up money ahead of time for Christmas this year and figured starting to save $1 was much better than nothing at all. Total of $5 per week.
3) Car Insurance Fund: $2 daily. This is a big one and even if I wanted to, I couldn’t cancel it. We pay our car insurance in full every 6 month to take advantage of the discount. Since we transfer money each day (or Mon-Fri), we don’t have to worry about coming up with the money when it’s due. Total of $10 per week.
Roth IRA Contributions
I also plan to continue our $25 Roth IRA contributions every paycheck. It was hard to finally get into the habit, so there’s no way I’m going back. Plus I already cut back dramatically on our 401k contributions.
Root Income
The last time I actually updated our root income it was $1,100 biweekly and I’ve been using that number ever since. I’m hoping to be able to off the bat save 50% over our root income into our House Fund. I don’t know how this is going to work when I have to pay the partial payment for storage or get another moving truck, but I’ll try my best.
In case you don’t want to go read root incomes and blissful budgeting, I’ll sum it up real quick. Irregular paychecks can suck, so by taking the lowest paycheck amount (ie: $1,100) and pretending that’s what you always get…anything over that amount is extra. So if we got a $1,200 paycheck, 50% above our root income would be $50. It makes it much easier to live below your means and to budget with irregular paychecks.
Pretend Rent & Bills
In preparing our finances for home ownership, I overly estimated our new mortgage and bills amounts to be on the safe side. I also mentioned that part of my plan was to start pretending we’re already paying all this now to help us get used to our new budget. So, I’ll just shove the money into our house fund and get myself into the habit.
After we move into our house, we are going to have to pay for setting up utilities and services and begin paying our bills, but not our mortgage.
So while we won’t be able to save the entire amount from the time we move in to the due date of our first mortgage payment, it’ll still be more than we’re used to saving.
Saving Leftovers
I’m a big fan of living paycheck to paycheck on purpose. I’m not talking about spending every last cent we have, but starting fresh on each payday.
The night before we get paid (bi-weekly), I transfer any money leftover to one of our savings accounts. That way, the next day, our checking account starts at zero and we saved a little bit more.
Some people just keep this money in their account and therefore have more money to spend. Sometimes, if we barely have any money leftover, I’ll just keep it in our checking to help build up a buffer, but I still pretend it’s gone and start the account back at zero.
Dining Out
Normally, we just eat out too often for our budget. So we’re going to try to limit our dining out to only once per month or less.
This is going to be really hard around moving time, and I might have to adjust it since there will need to be pizza for the helpers. Other than that, I think we’ll be fine eating at home more.
Coupons
No, I’m not going back to the whole Extreme Couponing thing, just a nice balance. I’m going to make sure that I check for printable coupons before going to the store…every single time. Then I can just print out the coupons we need and increase our savings a bit more.
•••••••
It sounds like a pretty good plan to me, hopefully things will work out. If not, then I’ll just have to come up with a Plan B.
I should have included paying for things with a rewards credit card to get more rewards later on, when we’ll really need them.
Have your plans to save a lot of money ever worked out?
I think you are doing awesome. I also live “paycheck to paycheck” on purpose. I hide all the extra money from myself =)
Holly@ClubThrifty recently posted..The Value of Taking a Vacation
Thanks Holly. It’s amazing how much the leftovers can add up to over time.
Jen recently posted..Where Did The Dough Go? #65 (Mystery Gas)
Looks like you’re doing really well! Man, this is an exciting time for you. You’ve done a good job preparing and you’re taking the right steps. I definitely wish I was in your place getting ready to move into a house.
Will – Hacking the Bank recently posted..Sunday Personal Finance Reading – August 12, 2012
Thanks Will. It is very exciting, but it’s so stressful too. I’m sure I’ll feel better about it after we’re in our house.
Jen recently posted..Net Worth Update~ August 2012
Is that the official notebook picture up above?
Good luck with the move and all the hassles that come with it – be sure to keep us updated on the house things!
PK recently posted..Get Over Your Irrational Fear of Risk
It sure is PK, my sloppy handwriting up there for the world to see.
Jen recently posted..Happy 2nd Blogiversary 2 Me & A Giveaway 4 You
That sounds like a very attainable plan. I love the idea of saving a dollar. or five, a day for certain long term items. I’ve always thought of doing it weekly, but daily makes my brain see it as even easier to do, even if the amount ends up the same at the end. Thanks for sharing that tip!
Amiyrah recently posted..My 30 Seconds with Ree
I started out doing in once a week and worked my way up from there. It’s actually how I got started.
Jen recently posted..July 2012 Goals—Review
I don’t think I’d actually want daily transfers coming out of my account like that. I think it would just clutter things too much when I do need to check anything on that account. I do like the idea of clearing the account before each payday though. Once I take care of a couple things with my finances I might try doing that.
Modest Money recently posted..Advanced Keyword Strategy For Your Blog
It does clutter up the accounts, but I don’t mind it.
Jen recently posted..August 2012 Goals
I will have to try the zeroing out at the end of the month. I think you have to buy pizza for the movers, and you can usually find a large for $5.99, so that keeps everyone happy!
Kim@Eyesonthedollar recently posted..Does Credit Card Debt Have You Stuck?
I’m pretty sure there will be a riot if there isn’t pizza and beer nearby. 😉 I’m not even sure if Woodland has a pizza place—gonna have to check into that soon.
Jen recently posted..Where Did The Dough Go? #66
You’re very organised!
I transfer any money that’s leftover before payday too – I prefer to start at zero every month.
Thanks Laura, I try to be…but it doesn’t always work out.
Jen recently posted..Sublime Saturday Assemblage #33
Sounds like you’ve got a great plan! I’ve saved up a ton of money before. I got there by putting away a certain amount of my pay every month (used to be a dual income household) and living cheaply. Tax returns don’t hurt one little bit, either.
femmefrugality recently posted..Things I Haven’t Done to Make Money
That is a great way to save, especially if there are two incomes. Hopefully my husband will let me put our tax refund into the Europe fund—otherwise I might never get there after buying a house.
Jen recently posted..Sell An Old Cell Phone & Get Some Cash
Congratulations on preparing to move! Wow, you certainly have an elaborate plan for saving money little by little. But if it works out for you, that more power to you! I like how you’ve pretty much evaluated all your options and are simply just going with the best choice you feel you have – I bet a lot of people would get petrified with fear of making the wrong choice and probably not act at all. Nice work!
My Money Design recently posted..More Blogging Tips and Celebrating My One-Year Anniversary
I’ve always believed that it all adds up. Also with so many different angles, I’m sure to save something even if one fails.
Jen recently posted..Preparing Our Finances 4 Home Ownership
I love the concept of daily transfers! Keep us posted as you execute it. I’m curious if it will help you save more money or just cause you more stress keeping track of all of those transactions!
Stephanie @ Empowered Dollar recently posted..How to Qualify for Student Loans, Even If You’re a Parent with Bad Credit
Oh, I’ve been doing the daily transfers for over 4 years. I just lump the total together and ignore the individual transactions. Easy peasy.
Jen recently posted..My Plan to Save a LOT of Money
You are doing great! I love the short term option to live with the folks in order to save some cash. Our daughter is living with us right now, while she’s in grad school, it’s a win win. And we lived with my parents last summer before we relocated across country.
Barbara Friedberg recently posted..SAVE MONEY & TIME WITH SMALL YARD
I feel so blessed that we even had the option, so many people don’t. It’s going to help us so much to prepare for owning our first house.
Jen recently posted..Preparing Our Finances 4 Home Ownership
How in the world do you keep track of all the money transfers? Are they taking place in real accounts or are you just doing it on paper and making actual transfers at the end of the month? or is it just cash moving around from one envelope to another?
Sorry, I’ve got many questions!
Veronica @ Pelican on Money recently posted..5 Health Tips That Are all About Saving Money
Oh, they’re really happening this way. I just lump them together in my register. Example for bi-weekly paychecks:
Xmas $1.00 x 5 days week = $5 x 2 weeks = $10
Emergency $1.00 x 5 days week = $5 x 2 weeks = $10
Car Insur. $2.00 x 5 days week = $10 x 2 weeks = $20
So I list it in my register as:
ING Daily Transfers $40
That way the entire pay period is covered on only one line.
Jen recently posted..My Plan to Save a LOT of Money
That’s quite a detailed plan and I think I’m going to follow your lead here! I really need to start under estimating my income, over estimating my mortgage and beefing up my 401k (taxes are terrible)! Great read!
Listen Money Matters recently posted..Get Organized Already
It really makes things easier to over/under estimate in the right areas. Even though the plan was designed for not paying rent, it can still be applied in various ways.
Jen Perkins recently posted..Double Awesome Way To Save On Your Taxes
How is your plan coming along? It been a few month now and I wanted to see if you were able to stick with the plan. I use to spend a lot on eating out as well. Just changing that put a lot of money back in our accounts.
Your Daily Finance recently posted..Stats Update, Side Hustles, and Post Schedule
Sounds like a good plan and you’re doing really good so far. These are good plans and it’s nice that you have something to look forward to, like saving and moving into a new house.