I have a guest post from Kris. I enjoyed reading his My Financial Mistake series so this is kind of like the summary chapter after his financial mistakes. He will go over with you guys how exactly his family of 3 got control of their household finances.
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Hi, my name is Kris and I write over at Chronicles of a Father with Cents where I chronicle our life experiences and try to provide you with advice on how to reach not only a financial happiness but a lifestyle with some of my interest and hobbies that blend into my financial aspects. I live in the great but expensive city of San Francisco with my wife, Mother with Cents, and 2-year-old son, Baby with Cents.
You can follow me on Twitter, Instagram, and Pinterest.
From Falling Behind to Getting on Track
I remembered when I was falling behind in credit card debt and student loans, I didn’t know how to manage my finances. All that I knew was to have a reactionary outlook when it came to paying my bills.
When the credit card statement came or when I got the student loan email notification, I would look at the minimum amount and see I would have enough to pay it off for the month. Talk about living ‘paycheck to paycheck’, this was being in survival mode.
But as the years gone by I not only eliminated credit card debt and student loan from my financial life but also got a better grip on managing the household finances.
Taking the Reins on Managing our Finances
When Mother with Cent and I got married, I figured that Mother with Cents was not the type of person who liked to pay any bills like electricity, internet, and the cell phone.
I remember there were a few occasions during those first few months after we got married that she didn’t know that electricity was due tomorrow or that we had to pay for our monthly internet bill that day. So noticing that she really didn’t keep track of these due dates, I talked to her and said that I’ll take the responsibility to pay these monthly bills.
I like doing these monotonous tasks because although it seems dull and repetitive to log in and pay them off but I like to know that we won’t be late paying off any bills. Sure I could automate most of them and not worry about it but I like to see how we spend every month to get an idea on ways we can try to lower our spending or basically be status quo and keep spending the same way.
I have an email trigger to know that I will have to log in to pay them off. Since we pay mainly everything by credit card, the credit card companies break down our charges by category so I don’t have to skim through every receipt and separate them by category.
This is basically our way of tracking our expenses every month. The first few months doing this felt like it would take forever getting through it because of calculating everything correctly and making sure that the formulas on the spreadsheet are right. But after a while I started to get the hang of it and now doing our monthly income statement feels like a breeze.
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Opening Other Accounts
Once I started to get a good grip on handling these financial responsibilities, I wanted to dive more into personal finance. So I went ahead and took a personal finance class at a local community college and it led me to get more into it.
And after taking the course, I started to listen to podcasts and blogs and this really helped me learn more about the types of accounts I should open to help generate more of our net worth. Before all this, all we had was a regular saving and checking account. We would also have some 1 year CDs (Certificate of Deposit) but we immediately closed it after it matured.
I started to look into a high yield savings account, opening taxable accounts and buffer up my retirement accounts.
Before getting really serious about our finances, I didn’t make a huge contribution to my 401K and had an IRA that was just sitting there with no contributions and getting charged for annual fees. That IRA account was ‘collecting dust’ for almost ten years.
Secondly, I opened three taxable investment accounts, two of them are robo advisors like Wealthfront. The third one a regular one where I pick stocks, bonds, mutual funds and ETFs.
And lastly, with my retirement accounts, I increased my contributions and kept increasing them until I decided to max it out this year ($18,500). With that IRA, I revived it by rolling it over from my previous bank to Fidelity and maxed out contributions ($5,500).
Using Personal Capital to Keep Track of Our Accounts
Now I have these financial responsibilities by having all these accounts attached to our name. But with these accounts, I couldn’t really be passive about it by not looking at it. And so I joined Personal Capital and started to link all of these investment accounts onto there so I can keep tabs on them
I would log on about once or twice a month and see how my progress was going. With Personal Capital it is so much easier to have all of my accounts on one screen instead of logging into each account and trying to remember the passwords. And with Personal Capital, it would show my net worth of all of my investments. Having a site like this really encourages me to check in frequently and see what is going on with my accounts.
Trying to Lower Our Monthly Rates
I also like to check in with accounts that we have expenses for like the internet, electricity and car insurance to see if we can get a lower rate for them.
When our internet bill was $20/month I used to call customer service every year to re-negotiate with them to have it stay at $20 a month. I’d tell them that I would go to another provider if they wouldn’t keep their price at $20.
For about three years that tactic worked. But when that fourth year approached, they didn’t cave in and were stuck at increasing our monthly rate to $60. We went ahead and left for another provider and now paying $50 a month.
For car insurance, I would change our deductibles to see what is best for us and have the prices at a reasonable rate. Right now we have a pay-per-mile car insurance company called Metromile where we would pay based on how many miles we drive a month. This is great for us since we don’t drive very often and thus our monthly rate is lower than if we go to companies like Geico or Progressive auto insurance.
Tasks like these make me feel more in tune how we are doing with our finances by constantly checking in like this.
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Mother with Cents Role
With doing all these financial responsibilities that I am handling, it seems like Mother with Cents has a minimal role in all this but that is not the case at all.
She keeps me aware of any sales that are going on with anything that relates to groceries and clothes/accessories for Baby with Cents, and even rates for CDs and savings accounts. We would also text me about a local bank increasing their CD rate and maybe opening an account with them to take advantage of the increasing rate. She even informed me about a high yield savings account rate for American Express.
Mother with Cents has a pretty active role in our finances and was the driving force in helping me get to save money. Persuading me to drop expenses like cable TV, going to the barber to get a haircut, and cutting down on shopping for clothes really helped saved us a lot. Also, add to the fact that she was barely in debt throughout her life really made me look at money in a different manner.
Although I’m currently responsible for managing most of our finances, she was the one that got this thing going.
Communicating about our Finances
We are pretty much open to our finances and let each other know any big purchases we want to make and if it’s a smart idea to buy it. We do not really sweat the small purchases like if I want to go out to eat for lunch during work or getting a snack at the market.
It’s the major ones, more specifically anything over $50 that we discuss if we need to make a purchase on it.
After doing our monthly expenses, I would inform her about how much we spend on a certain category especially groceries. And we would go over them and see if we need to make any adjustments to it the following month. I remember one month that we spend close to $300 and she really wanted to cut down to under $250 or even better close to $200. And so we cut down to random purchases at Costco and Trader Joe’s and we ended spending just over $200. So communicating like this really helps the both of us know what we need to do to cut down and save.
Whenever I want to open account whether it’s savings, CD or an investment I always inform my wife that I want to open one and put a certain amount onto theirs. That’s when she looks around for rates and see which bank or credit union we should open with. With the investment accounts we have, she would let me handle everything regarding setting it up and the types of investments it should have.
Being aware of your finances and communicating about it with your significant other really keep everyone involved in what is going on with it. It also helps that having a someone who knows what their role is key to managing the household finances in an efficient manner.
How do you manage your household finances and your role in it? How often do you communicate with your partner about your finances?
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Glad you found a partner where you compliment each other and are on the same page financially. That will be the key to your future success.
Each one bringing something to the relationship (her looking for sales, etc) compliments the others weaknesses and makes you both stronger.
I realized that communicating with my wife regarding finances is very important to know what our roles are so we are able to be on the same page. It cuts down on any conflict and know that we can discuss our finances at any time with no ‘elephant in the room’ scenario.
20 dollar Internet bill. Mine has always been around 70 bucks but I do that too negotiate. But companies seem to be less loyal today. I tried it with Clark Pest Control from 50 to 60. Been with them for five years, wouldnt budge so I cancelled my service. Great post
Thanks Mark!! It was a good thing I kept at $20/month for that long or else it would have increase to $40 after that first year then $50 or more the year after that if I didn’t talk to them. Following up on these tasks really helps to trying to keep these type of costs down.
Yeahhhh Kris on Frugal Gene! Thanks for sharing your story. I like to call and negotiate the internet bill too- speaking of which I have to do this before the end of this month. It’s the small things that really add up over time.
No problem GYM!! Yeah get on your internet company and talk your way into keeping your rate the same or maybe even lower. It really helped me to keep it low @ $20/month for a while.
TJ @Half Life Theory says
This awesome! Thanks for sharing Kris and Lily…. as the years go on, the hope is that we all grow and evolve to becoming more responsible about our financial situations. It’s so cool to see other families growing like we have, and having that clear dynamic that even though each spouse brings different strengths… we still move as one unit in improving our financial situations.
More growth and success to you and your family Kris! Cheers!
I think that is the key for any type of situation especially with finances. Always talking about what role is best for each person and we go ahead and perform them. Once you get the hang of it, it becomes a habit and a good one at that. For me, whenever it’s the beginning of the month, it’s automatic in my head that I have to do our monthly income statement and I look forward to doing it. The same with my wife, Mother with Cents. She really likes looking sales and what’s best for all of us.
Ms. Frugal Asian Finance says
Great to see you here, Kris! Sounds like you have a good grip on household finances from all the little things like paying and negotiating bills to maxing our your 401k. I waited for a year before finally negotiating our interest bill from $60 to $50. I should have done that earlier!
Yeah I know Ms. FAF!! Great to have Lily let me post on here!
One of the keys on managing our finances is to be as proactive as you can. If you know that you can bring down that internet rate, you should jump on it and get a hold of them. Same with other finances like car insurance. If you think that you’ll paying too much on it, see if you can bring it down or look at other companies for a lower rate. I saw one of the recent posts about your car insurance, good job on Mr FAF’s part on bringing it down to around $700 a year.