QuestForAMillion.net

The About Us page lists the monthly goals we shoot for. But how do we keep expenses down, pay off debt and increase our net worth all at the same time? I’m kinda still figuring that out, but here’s what I’ve got so far:

1) We use Microsoft Money - I’m not a fan of Microsoft in general, but I’ve been using Money too long to change - 12 years now. We use it to track anything and everything financial - bank accounts, cash, investments, even home inventory. Frankly, I don’t see how anyone can get through the day without some kind of personal finance program. Money is the one critical app I must have. Without it, we’re doomed.

2) We follow a modified version of Richard Jenkins’ “60% Solution” budget. Strict budgets don’t work for us, we need to have some wiggle room and the 60% Solution is perfect for us. There are five budget categories we funnel our income to every month: Committed Expenses, Irregular Expenses, Fun, Retirement, Savings & Debt.

• Commited expenses - 65.44% - includes mortgage, credit card payments, preschool, groceries, cable TV, Internet access, phone bills, taxes, etc. Anything we need to pay to live our lifestyle.
• Irregular expenses - 5.38% - includes house repairs, car repairs, clothes, healthcare, etc.
• Fun - 4.3% - includes dining out, movies, golf, entertaining, etc.
• Retirement - 6.98% - consists entirely of my 401(k) contributions and my employer’s match right now.
• Savings & Debt - 17.9% - includes 529 plans, ESPP and money set aside for debt payoff.

3) We setup separate accounts for some of the budget categories:

• Savings & Debt - a savings account held at E*Trade, currently paying 3.45%
• Checking - used for committed expenses and irregular expenses, our primary checking account. This is a Wells Fargo PMA checking account

4) We put everything we can toward retiring debt. Currently, other than the 529 contributions, everything in Savings & Debt is going toward debt payoff. Our goal is to get committed expenses to 60% and the only way to do this without increasing our income is to payoff all debt except for our mortgage. For now, we’re simply unwilling to give up anything else that falls under our committed expense category. If we spend less one month on Committed Expenses, the extra goes to Savings & Debt. If we get extra money, it goes to Savings & Debt.

5) We share in the finances equally. We discuss big purchases and share in financial decisions and paying the bills. Thanks to Money, we both know where every penny is all the time.