2017 Financial Priorities


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2017 Financial Priorities

It’s 2017! And even crazier, we’re already a week and a half into January. It’s that time of year for new goals, new plans, new beginnings, and yup — new budgets. There’s no better time to prioritize (or reprioritize) your finances than now. Johnny and I have a few things we’d like to reprioritize this year, the first of which is OFB. We’re just as passionate and nerdy over personal finance as ever, but we haven’t had the time to write about it very much these past few months. 2016 was our first full year of self-employment, and running a small business was a round-the-clock job. Truth be told, it’s still a round-the-clock job. But we’re trying to put processes in place so that 2017 is a year of working smarter, not harder, so we can spend more time on some of our other passion projects, like OFB. But before we dive headfirst into our 2017 editorial calendar, here are the deets on a few of our 2017 New Year’s financial resolutions:

Stop renting, start buying: We’re hoping 2017 will be the year we become homeowners (fingers crossed!). We’ve been waiting a long time to pull the trigger on home buying, but since we’ve set up shop with our business in SLC, we feel like we can finally put down roots somewhere. We understand that house hunting is a process, and we’re in no rush to make a decision. If we can’t find a house that fits our needs, we’re planning to rent another year. Part of me wants to just keep renting because the idea of buying stresses me out!

Grow our business: We’re hoping 2017 will be another year of growth for our business. Growth means spending more money upfront, but we’re hoping it will also mean we’re able to save more money down the road. In a lot of ways, being self-employed is more stressful, and it’s definitely 100x more complicated. But there’s also more opportunity for growth. We have goals and plans, and only time will tell how it all pans out.

Invest: Johnny is hoping to spend more time this year making sure our money is invested appropriately. He geeks out over that stuff, so I just let him run with it. He spent hours one day over Christmas break switching my old 403b to an IRA. He’s also been trying to consolidate some of our banking accounts so we can track our spending as easily as possible. Having a business has really complicated our finances, so we’re doing whatever we can to keep our personal finances as simple and separate from our business as possible.

Save, save, save: As always, we’re hoping to save as much as possible. It’s harder to project our savings since our income isn’t as cut-and-dry anymore, but we’re hoping to spend as little as possible (aside from maybe buying a house!), save as much as possible, and focus on growing our business.

What are some of your financial resolutions for 2017, and how are you planning to make them happen? And what would you like to see on OFB this year?

Goldilocks and Replacements: Preventive vs. Corrective


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Goldilocks

The other day I got home from work and noticed a small puddle in my garage. It had been raining all day, so my first reaction was to look for water coming in from the outside. There were no obvious signs of it coming from under the garage doors or leaking in from the ceiling. I noticed there was as small trail from the puddle that lead right to the baseboard at the base of the closet where our water heater is housed. Super. Actually, I consider myself pretty lucky that it was only a small trickle into the garage and not throughout the house. Things could’ve been a lot worse.

I’ll spare you from all the minutiae I’ve learned about water heaters in the past couple of days. However this experience has caused me to reflect on the debate of preventive vs. corrective maintenance and figuring out what is “juuuuuust right” for you and your budget.

When we bought our house a few years ago the inspector noted that our water heater and A/C units were a little long in the tooth. He recommended having them replaced before too long (preventive). The problem is these are expensive!! Being so costly makes us naturally want to eek out every last bit of value and letting them die before cutting that next, big check (corrective).

Not everyone has a house and has to worry about water heaters and A/C units, but there are certainly other items almost all of us have where have to make these preventive/corrective decisions that can greatly affect our budgets. Are you going to use something until it breaks? Or are you going to pay a little more and replace it early?

Cars

  • Oil/Fluids – If you wait until it is too late on these, you are likely in for some big repair bills. Then again, if you change oil more often than is required, you are theoretically throwing Jacksons to the wind. Don’t just follow whatever the the quick change dude put on that window sticker the last time you were there. Check your owners manual and follow the manufacturer’s recommendations. Your car’s other fluids don’t get changed nearly as often, but their levels should be checked regularly.
  • Tires – This is one I struggle with because tires are not cheap! Generally speaking the minimum, legal tread depth you can drive passenger cars with is 2/32 of an inch. However, as tread depth decreases the distance required to stop a car in wet conditions increases. Legally you can ride them all the way down to 2/32, but from a safety perspective do you want to? Again, if you replace them before the limit you are paying out more but are potentially protecting your car (the largest asset for many), not to mention yourself and others from potential bodily harm.
  • Buying New/Newer – People often cycle through cars as soon as their warranty runs out because they don’t want to pay for repairs or don’t have the time to deal with them–quintessentially preventive. Please, understand the cost that goes with this buying behavior (depreciation for one). If you are ok with it and your budget can handle it, then good on ya!

Health

  • Yes, we should all be eating more fruits and veggies, exercising more, and cutting out all those butterfingers from our diets. But did you know most health insurance plans allow you an annual checkup with your doctor for free?! Some will even pay you to go (usually in the form of a gift card or credit). Don’t wait; it is free, and it is your body. You can’t just go out and buy a new one like my water heater.

Electronics

  • How often are you cycling through phones and other electronics? Are you getting as much value out of them as you could/should?

Here are some (broad) things to consider when deciding whether to replace something before it is absolutely necessary:

Replace Early (Preventive) Wait ‘till it dies! (Corrective)
You can schedule a replacement when it is most convenient to you. Timing Not on your side; it needs to get fixed/replaced ASAP!
You’ve got time to do your own research and can wait for promotions. Researching/Deals You have to take what is available right then and there.
You’re going to pay a little (sometimes a lot) more for convenience. Maximizing Value You’re eking out every last penny!
You get to experience the latest and greatest. Perhaps paying more upfront for lower operating costs/energy savings. Technological Advancements Sticking with tried and true. “If it ain’t broke…”
Take advantage of latest innovations. Safety As long as it is still legal, you’re good.
You are keeping up with the Joneses, or maybe you are the Joneses?! Appearances Maybe a little threadbare, but that is what gives you character, right?!
Likely few to none. Additional, Costly Side-Effects? Water heater floods your house. Your car broke and it is hard to get to work. You don’t go to the doctor until that ingrown toenail requires full on surgery. Ew!
Not very. Eco-Friendly Mother Nature thanks you.

I’ve deliberately not given specific advice on when you should pay up and replace early or let it ride because it is different for everyone. We tend to let things ride in our household, but I’m not sure that will always be the case. Part of that is due to my (over?)confidence in my DIY skills, and a lot of it has to do with us accepting the financial risks that go with it.

When our downstairs A/C unit failed, my wife was VERY pregnant, and it was summer in Texas. Getting a replacement installed took multiple days; you can imagine our house was a little grumpy (understandably so!) during those days. Though our water heater leaked only a little into our garage, it could have been much, much worse if it had gone into other parts of our house and done some real damage.

In the end you need to be like Goldilocks and find what is just right for you and your budget: too soon and you’re wasting money; too late and it might cost you more in the end. It won’t be the same for every item.

Too often people ignore these things and only deal with them when they break. In the end I hope that people realize that deciding to ignore is a decision itself with potentially big financial implications. Instead, I hope others will take the time to understand the pros and cons and make an educated decision. That still might be to go till something breaks, but hopefully you will be a little more financially prepared when it does. What do you replace early? What do you let ride?

Ashley’s Getting-Out-of-Debt Story


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Ashley's Getting-Out-of-Debt Story

When TJ and I met, I could tell right away we came from different financial backgrounds. He had worked hard every summer doing sales in California to pay for his tuition and living expenses, he had thrifty parents who had been able to help him along the way, and he…

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Does Your Budget Have a Bike Lane?


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Budgets help direct our spending, but by nature they constrain us. While that doesn’t sound very fun, these restrictions are for a good cause. By voluntarily limiting short-term spending, we can stay out of financial trouble and work toward achieving longer-term financial goals. Though it sounds contradictory, we achieve financial…

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