Posted on: May 13, 2009 by Matt
Over the past few months my girlfriend and I have been kicking around the idea of setting up a chore and allowance system for the children. Earlier this week as I arrived home for lunch my girlfriend informed me that she had drafted a chore system that morning and offered it to me to review. I was a bit surprised as all of our talks so far had been in theory and now I had a physical document in my hand to look over.
The basics of the system were pretty much as we had discussed and read about from other sources. We also had the additional wrench of having a split household situation where the children are not home 100% of the time. We settled on pretty much a hybrid of several popular theories the quick details are:
- Each child will receive a base rate of $1.00 for each year in age weekly.
- Chores must be done in order to receive payment – each chore is assigned a value.
- In our case each child has 4 chores. They are 10 and 5 years old, hence $0.50 and $0.25 per chore respectively.
- We based the system on a 5 day work week – they may be home a bit less than this over all but chores are to be done prior to leaving for their father’s on days they will not be home.
- We reserved the right to assess bonuses for good behavior as well as penalties for attitude, unwillingness to do chores or not doing what is asked.
- Chores need to be done before bed time - no staying up late to finish your chores.
- 10% of the allowance will be placed in a jar for the child to donate to a charity of their choosing.
- 20% goes to a savings account.
- The rest is for them to spend.
On Monday night we had a family meeting and discussed the new system with the children. Overall it seemed to go fairly well and yesterday was our first day in practice with the new system. As of last night – each child has had one deduction for chores not being done and the 10 year old has had one $0.50 attitude deduction. I was not home last night at bed time due to another commitment but when I did get home I was informed that my girlfriend’s daughter (the 10 year old) was a little weepy about the deduction for not completing a chore. So time will tell but it seems that the kids are both excited about the opportunity to earn money and be part of the community.
For anyone interested in checking it out our plan in detail here are the documents that my girlfriend drafted on Monday morning (with the children’s names removed for privacy):
Posted on: May 11, 2009 by Matt
As I have mentioned in the past – my girlfriend pretty much never ceases to amaze me (in a good way). Most recently she has managed to meet one of her financial goals by opening a savings account this month! Needless to say I am once again impressed and excited that she has met her goal (hence the public congratulations!)
So far this month we have both met goals that we have been hoping to accomplish for a while (as I paid off the balance on my credit card) and it feels pretty good. After all for each one of these individual goals that we accomplish we come one step closer to accomplishing some of our larger long term goals (like buying a house).
Additionally – I truly value the level of openness and communication in our relationship. In the past I have been unwilling to discuss finances with anyone and have largely held the attitude of yours and mine. Considering that two of the most commonly cited issues for the downfall of relationships are sex and money I think that the fact we can openly discuss issues is critical. Naturally we do not always see things the same way and the open dialogue allows us to often reach a point we are both happy with.
Overall – I believe that while in a relationship or marriage that communication and support of each other in all areas of life really sets you up for success. I know I struggle with it but find it invaluable when the two of us discuss our financial lives openly. So far I have discovered that we have (or at least I have) been able to use each other for:
- Setting goals together, both individual and as a couple.
- Assisting with reaching goals: I know she has supported me with reaching goals and hope that I have reciprocated adequately.
- Looking at problems from other angles: Sometimes getting advise from somebody that has not been caught up in a mess is very helpful. I have found on a couple of occasions that I simply did not look at all alternatives (cause I didn’t think of them) or that I had not analyzed something through all that well – talking it out has helped.
Posted on: May 6, 2009 by Matt
On the day that I left for vacation I made another step forward in my financial recovery – I paid off the remaining balance on my credit card. I have posted a couple of times about a new approach that my girlfriend and I have decided to take and I am happy to report that when I left for vacation my credit card had a balance of ZERO!
According to the debt repayment plan we discussed for the credit card we would pay it off as quickly as possible but continue to use it as sparingly as possible. So I did use the card again while on vacation for most purchases but the upside is that my new charges should not accrue any interest until after my next statement.
Right now my new balance after vacation is about $450 which is actually a little bit less than I had anticipated. When planning the short vacation I figured that we would probably spend close to $600 in addition to the room so I am about $150 ahead of where I expected to be. Given my current expenses and income I think I will be able to have the balance paid in full prior to my next statement. In addition – once the balance is paid off again I should also not have to carry a balance on the card any longer.
I should be receiving another statement in a couple weeks here and will plan to give everyone an update on where I stand then but I do believe that I have moved past carrying a balance on my credit card!
Tags: Budget, Budgeting, Credit Cards, Debt, Debt Reduction, Expenses, Goals, Personal Finance, Planning, Relationships Filed Under: Credit Cards, Debt, Debt Reduction, Goals, Planning, Relationships
Posted on: April 23, 2009 by Matt
Earlier this week I posted on a discussion my girlfriend and I had regarding paying off my credit card debt. Since I posted on Monday a lot has changed and I thought I would provide an update. As of right now the $1900 in credit card debt is now down to $601. This came after applying most of what I had for expenses in my checking account along with some money from my savings. After thinking about interest rates a little bit I opted to move money from my online savings (which currently earns 1.65% APY) and apply it toward my credit card balance (interest rate of 13.40% APR). I figure that not paying the extra in interest every month is well worth not having all the cash in savings. In addition I believe I will have the card paid off between one more transfer from savings and the remainder of my checking account balance before the end of the month. I find this extremely exciting!
Of course we still have normal living expenses and a vacation that I had budgeted for based on my checking account that still need to be paid for this month. We discussed these items last night and came up with a game plan to work on reducing expenses this month and next month by:
- Cutting back on food expenses: Paying better attention at the grocery store and cutting back on dining out. We have been steadily getting better here but there is always room for improvement.
- Cutting back on gas expenses: We like to go places and get out of the house. In our area we drive to a number of different towns to do things. Aside from vacation we can try to stay closer to home and I can start walking or riding my bike to work.
- Let my girlfriend cover more of the vacation: She has space in her budget to pick up some of the vacation. I had planned on covering it and intended to pay out of my checking. However she seems to be committed to fast tracking debt repayment as well and asked that I let her cover more of it. I have a difficult time letting her pay but I suppose a little growth in this area will not hurt.
My credit card will probably get used before the end of the month and new charges will be incurred but I also anticipate being able to pay them off next month as well with our new plan. So having the credit card paid off puts me ahead of the goal of getting the balance paid off by October by about six months! I may not be paying it off in full and never using it again as my original plan had entailed but I am working toward that and by not carrying a balance month to month I will not be paying the interest fees! I should also be able to replenish my savings account fairly quickly (within 2 months) to the level it was at before paying off the credit card so that will be available again as well.
I am already looking forward to my next goal of having my car loan paid off (August if I stick with my current payment schedule) and then I will be down to my student loans. Unfortunately the student loan that needs the most attention is about $20,000 and stuck in collections. I will simply have to keep moving forward with one step at a time.
Tags: Budget, Budgeting, Credit Cards, Debt, Debt Reduction, Expenses, Goals, Planning, Relationships, Savings Filed Under: Budget, Credit Cards, Debt, Debt Reduction, Expenses, Goals, Planning, Relationships, Savings
Posted on: April 20, 2009 by Matt
While driving with my girlfriend yesterday we had a conversation about my credit card that still carries a balance. We started talking about my car loan from an ex-girlfriend and how excited I am to have it paid off in August and I noted that I should be able to pay the balance of the credit card off by the end of October. She asked how much the balance on the credit card is and I told her that I still owe about $1,900 on the card.
She thought for a minute then asked the questions: “Why is it going to take so long? Why haven’t you paid it off already?”
I responded that I just can not afford to pay off the debt and still be able to carry other expenses that we incur. She then argued that I make enough that I should be able to pay off the card in a couple of months at the most and that all the expenses that I claim I need cash for could just as easily be paid for with the credit card. I started to feel a little squeamish. I just do not relish the thought of emptying my bank account and using a credit card for living – especially when I am trying to just pay the balance off.
After further discussion she logically laid out the following thoughts:
- I am paying a high interest rate on the card: Certainly higher than the interest I am getting returned from my bank account. Paying the card down to a lower balance certainly makes sense here.
- I will still have the money available, just in a different place: My argument of not being able to pay for gas, groceries and other expenses makes no sense. I normally use a debit card for all these purchases – if I pay down the credit card balance I can just as easily use my credit card.
- I will probably spend less on the credit card: I argued that I was trying to avoid spending on the credit card because I would probably spend more, not less. Her response: If I am working on paying the balance off and not wanting to increase the amount owed – I will probably think a little harder about impulse purchases. I had not considered that using a credit card would encourage me to spend less before. Her argument is good and plays to my thought patterns pretty well. If I am holding a card that I am hesitant to charge I am really gonna think about how much I really need what I am buying.
- I am just neurotic about money: I knew this already. I freak out when my checking account drops below having a couple hundred dollars in it. There is not a set amount but it triggers me into a bit of a panic mode. I like the security of having money available.
At the end of our conversation I agreed to give her method a shot and see what happens. It should be interesting and I will be sure to keep everyone updated on how it goes. I am hesitant as it seems that most personal finance literature I read expounds the evils of credit cards but she made a good argument (you guys just got the synopsis).
What would you do? Would you prefer to pay down the debt and use the card for expenses or keep using cash and try to pay the debt down slower? I suppose the real question is cash or credit?
Tags: Budget, Credit Cards, Debt, Debt Reduction, Relationships Filed Under: Banking, Budget, Credit Cards, Debt, Debt Reduction, Expenses, Relationships
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