Thoughts on Spending Money

C and I have always been pretty good with our money. We’re not the best and I actually even stopped doing our budgeting by using the Force method since I realized that I could get a higher interest rate in our ING Checking account (referral link) with a balance over $50K. A lot of our savings are as liquid as can be since we’re looking to purchase a house soon. I’ve been busy (read: lazy) over the past few months in tracking how we’re doing.

One thing I did see: my company 401K says that it’s up 10% for the past 30 days and only done 30% for the past 12 months. That’s what the website provided analytics stated, but I’m not sure if that’s looking at the actual investments or just the balance. I hope that’s the actual investments since I’ve been contributing a lot to it over the past year.

So back to the point I was trying to get to: I think we are spending more in this economy than we were before. It might be lifestyle inflation, as we’re increasing our incomes. But I think it’s really because of the great deals that are out there. Travel is our major splurge. I’m a big believe in conscious spending (link). We normally pack our lunches and don’t spend a lot going out, compared to our demographic group (young twenties/thirties couple living in an exciting city). Once I get on a traveling project, I’m traveling every week and it’s easy to take a weekend trip somewhere rather than go back home. C takes probably 5-10 business trips a year. So we try to combine a lot of our business trips into weekend vacations. In 2009 alone, we’ve already taken 4 trips that have been somewhat subsidized by one of our companies.

What’s the point of this? When you life a modest lifestyle compared to your income, you can take advantage of deals when everyone else is hunkered down, trying to avoid all discretionary spending.

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Getting Married = New Budget

I've been thinking a lot about how my future husband and I are going to spend our money after we get married. He recently finished school and is still looking for a job. He's in a pretty specialized profession and we want to live in a specific area, so there are only a couple of places where he can work.

I anticipate our combined income to be somewhere between $110K and $150K. I know that's a pretty big range. I know I will be getting a raise and promotion in the first week of September, but I've been told that I won't find out the dollar amount until September, so I am adding my raise into the range.

I'll take the average and assume we will be making $130K. If that is the case, this is how I see our annual budget breakdown:

$30K 401Ks
$13K tithe
$22K taxes (25% on $87K)
$8K Roth IRA
$24K rent (rent should actually be a little bit less, but not much)
$18K misc monthly expenses (inc. utilities, food, gas, student loans etc)
$15K down payment

This brings me to the question - is it more important to max out our retirement savings or save for a downpayment? We already have about $75K saved for a downpayment (remember we live in the Bay Area, so we need quite a bit of $ - we only plan on renting for 1 year since we want to live in SF). I anticipate exiting the workforce, or at least working part-time while raising our kids, so I want to max out my retirement savings while I can. I also plan on living well into my 90's since I had 3 grandparents do that - my grandfather is almost 100!

We will have to figure this out once my fiance actually gets a job and we move into our new place and see what our actual monthly expenses are.

Budgeting

I hate budgeting. I hate keeping track of what I spend. Instead, I just automatically save what I need to (direct deposit to 4 different accounts) and ONLY spend what's left. It seems to work for me. I frequently log into my bank and credit card accounts to make sure I have enough money in my bank account to cover my credit card account. However, with the additional wedding expenses, it's a bit harder to manage. I need to categorize expenses on my credit card into wedding / non wedding related items and make sure I DO NOT transfer more money that what I spent on wedding related items. If there's ever a month when I give my credit card a lot of exercise, I'm usually able to pull back a little in the next month so it all evens out.