6 Tips for Creating Your First Budget

When it comes to resolving financial issues or achieving specific goals, the solution almost always has to do with budgeting.

Tracking your income and expenses to ensure that you spend less than you earn might seem like a simple concept… yet only one in three American households actually do it. Granted, technology has made it easier than ever to monitor your finances on an informal basis. Still, being able to view your transactions online at any given moment is no substitute for actually creating a budget, setting specific financial goals, and following through with them.

Admittedly, my husband and I have been a little willy-nilly with our budgeting over the past few years. As long as we paid our bills on-time (plus extra towards debt) and still had some money left over at the end of each month, we were generally pretty happy. However, now that we’re trying to squeeze out $2,000+ in student loan payments every month, we need to follow a very strict budget in order to make it happen.

Here are a few things I have learned through this process:

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Why it Pays to Grow Your Own Food

Those of you who know my husband and me reasonably well probably already know that we are avid vegetable gardeners.

For the past several years, we have maintained a 15 ft. x 25 ft. garden containing all sorts of fruits and vegetables: tomatoes, bell peppers, hot peppers, tomatillos, lettuce, spinach, squash, cucumbers, parsley, sage, basil, chives, cilantro, celery, artichokes, broccoli, cabbage, sweet corn, green onions, leeks, carrots, strawberries, watermelons, pumpkins…

You name it, we’ve probably tried growing it at some point.

While most of our friends and family are supportive of this hobby, there are a handful of people who think we’re totally crazy devoting so much time and energy to our garden each year. After all, we have a Wegmans right down the street, farm markets on practically every corner, and an amazing public market just a few miles away. So what’s the point?

Here are a few reasons why we choose to grow our own food every year:

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How Far Would You Go to Save Money?

So I finally caved and watched a few episodes of Extreme Cheapskates on Netflix the other day. It was pretty much exactly what I expected, although I was a bit surprised that some of the things these “extreme cheapskates” did, actually didn’t seem that ridiculous to me. This got me thinking about where I would draw the line between frugality and cheapness – and how that might compare to other people’s opinions.

So here is my list of some things from the show that I might do, and things that I definitely would not do:

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May 2014 Student Loan Update

Four weeks ago, I announced that my husband and I were setting a goal of paying off $40K in student loan debt in 20 months or less. Now that the first month of our super-aggressive repayment plan is complete, here is an update on our progress so far:

Amount Paid Towards Loans: $2,080.39
Loan Balance Remaining: $37,556.42

All in all, I’d say this first month was a success… but there are definitely things that we can do better going forward. Here is a rundown of some of the good and bad things that happened this month:

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Eating Healthy on a Budget

Guest post by Alex Oesterle

For most of us, our 20s are a decade defined by a tight food budget and a general abundance of health. Living within our means by eating three dollar frozen pizzas a few times a week has little visible consequences for the typical 20-something. For most of us, heart health and joint pain are distant worries pushed to the back of our minds by the drive to establish a successful career and build a strong personal balance sheet.

While on the outside, it may feel like you are getting ahead by shunning the pricey organic produce and meat section at the store, the purpose of this article is to prove that you can eat healthy on a budget – and any extra money spent on high-quality food will pay for itself many times over in the long run.

I know what some of you are thinking… “I eat whatever I want, save plenty of money buying cheap food, and I feel just fine.” To those of you who are thinking just that, this post is for you.

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Choosing a Debt Repayment Method

Now that we’ve committed to a super-aggressive student loan repayment plan, I thought it would be worth going into a bit more detail about the types of loans we have and the order in which we plan on paying them.

Here is a full breakdown of the loans (as of May 5th):

Note: All of these interest rates include a 0.25% auto-debit discount. Additionally, the private loan interest rates were recently reduced by 0.5% due to a history of on-time payments.

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Our Plan to Pay Off $40K in Student Loans in Less Than 2 Years

Now that our income situation has stabilized, it’s time to get serious about getting out of debt. And that means tackling my husband’s $40,000 in student loans with full force.

As of today, the balance on these loans is $39,548.31. I would like to have this debt entirely paid off by the time we turn 30. Given that our 30th birthdays will be in January 2016, this gives us about 20 months or just under two years to accomplish this goal.

Can we do it? I honestly don’t know. But dammit, we’re going to try!

As of right now, the minimum monthly payments are just under $500. In order to get rid of this debt by January 2016, we will need to pay at least $2,000 per month. (Note: This is literally my entire take-home income.)

So how exactly do we plan to do this? Here are a few ways we could make room in our monthly budget:

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Avoiding a Student Loan Co-signer Crisis

Yesterday morning, this mid-year report on private student loans from the Consumer Financial Protection Bureau (CFPB) began circulating around the interwebs, warning borrowers of the complications that can arise in the event that their co-signer dies or files bankruptcy. Here is a brief summary:

Many private student loan contracts include an option for lenders to demand the full balance of a loan when a borrower’s co-signer has died or filed for bankruptcy. Complaints from private student loan borrowers suggest that industry participants are automatically placing loans in default – even when a borrower is paying as agreed.

This is a pretty alarming revelation. A lot can happen in the 10-20 years that your private loans are in repayment, and the last thing anyone wants when a parent dies is to have their student loans immediately due in full… or worse, placed into automatic default (wreaking havoc on your credit).

The good news is that most private lenders offer a co-signer release after a certain number of on-time payments have been made. The bad news is that most borrowers aren’t aware this option even exists, as private lenders don’t exactly advertise it. Borrowers who are interested in a co-signer release often have to contact their lenders directly to get any useful information.

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