Keeping myself on track, as I work through the plan I crafted to create financial stability.
March is here, so I thought I would do a February recap and update on my goals for 2023. If you read my last post, Crafting a Plan for 2023, you know that I set several goals for this year, with the most significant ones being more financial stability and the purchase of a new vehicle (the former will definitely help drive the latter, no pun intended). I also have a lot of smaller goals for my business and home life, which are very important, but my biggest focus during these first months has definitely been the finances. So, here is my journey so far, two months into the year.
Updates to my vision board
To help me reach my goals and stay focused for the year, I created a vision board which I keep in my planner. This is a living document, which can be adjusted as necessary, so this morning I did a check to see if I was staying on track with each area of focus. Overall I am doing well.
Adding new goals
I did add a goal of “5 household projects”, which doesn’t seem like much in a year, but we tend to be lazy when we have no plans on the calendar so this will force me to tackle some things that we keep putting off. Since we both work 40 hours a week, not including the time I spend on my hobby business, Joatmon Creations, it is definitely nice to just sit on the couch binge watching tv, but I hate that Sunday night feeling that the weekend went by without accomplishing anything. Hopefully seeing this on my vision board will push me to get things done.
Another added goal was striving for a better morning routine. Right now, I wake up between 5:45 and 6 am, but I still struggle getting into the office by 8 am (which is less than ten minutes away)! I never had a problem with this before I started working from home during the pandemic, but now that I am back to the office, I forget how to budget my time in the morning. I find myself doing the most random things around the house, or working on a design that needs processing when I get home, and I just don’t want to stop to get ready. There actually once was a time that I woke up at 4:45 in the morning to walk on the treadmill for an hour before work. Those days are long gone, but I’ll be happy with just getting in the shower before 7:45!
Updated goals for my craft business
I had given myself a lofty sales goal for 2023, partly because I knew the three-year renewal for my website was coming up, which is a significant expense, but mostly because I don't usually budget expenses for the business since it is just a hobby. Although I do include the cost of supplies within the final price of a product, I almost always buy supplies in multiples. This is to have backups in case something doesn't work out, or it sometimes is more cost-effective to buy several items based on the shipping rates. So, normally I pay more in total supplies than what I will actually get in revenue, which may result in charging my purchases and that is against my goals for this year. Although the yearly sales goal was on my vision board, I failed to update my financial spreadsheet with the projected monthly revenue needed to reach that goal. Although my sales ebb and flow based on the season, I decided to split that yearly goal evenly into 26 mini goals (my financial spreadsheet is set up biweekly) and if I don't hit the target for that month, I will just roll it over to the next one. This will be daunting during the slower times, but I am fairly confident I can reach the snowballed amount during those peak seasons, especially if I do some in person markets this year. Having that yearly goal on my vision board helped me realize I needed to do some better financial planning for the business so it would be fiscally beneficial to me on top of just something I enjoy doing.
I want to start by stressing that I am not a financial expert. I have only consulted with a financial advisor, for one hour, once in my life and everything I am about to share below is just based on me getting bits and pieces of information off the interwebz or (gasp) TikTok. This is what is working for me, so far, so maybe you can take a few ideas and tailor them to your own needs. However, some of these things may have no basis in fact at all and could end up not helping in the long run, but so far this is what I am doing.
One goal toward my financial stability was to have a minimum of 21 No Spend Days in the month. My definition of a "no spend day" is to not spend money on anything that was not budgeted for in that pay period. This could be take-out, shopping, donations, just anything that I didn't plan for that may be considered a spur of the moment purchase. This does not include business purchases, purchases with gift cards, or take-out paid for by someone else. If my husband has a craving for Chinese food, and he is paying, then I am all for it! Otherwise I am cooking almost every night to make sure I don't spend extra money and what I spend on groceries doesn't go to waste.
After several "No Spend Day" stickers in my January planner it became an obsession to see how many I could add. I ended January with 22 no spend days out of 31. In February I had 21 out of 28. I also started writing down where the money went on the days that I did spend. This made me really justify all of my purchases to see if it was worth the risk of not getting a sticker. Now this did cause an issue when I finally went to Walmart because I definitely binged. However ultimately when I reviewed what I bought, it was mostly stuff that I needed. I was very good about waiting on things I didn't really need in the moment, but I did get things that had ran out or needed to be replaced.
There was a bit of guilt after that shopping trip, so I am trying to figure out how to avoid buyer's remorse in the future. For March, I am starting a wish list for things I want and instead of buying them in the moment, I'll wait five days if possible. Then I'll review the list to see if it is something I still want and if it can wait until I get some extra money saved or if I can use the money allotted for "miscellaneous" in my budget for that pay period.
A big impulse purchase in February that has caused some guilt was a subscription to the streaming service HBO Max. We had been wanting to watch the series "The Last of Us", so I made the quick decision to subscribe, and instead of going on $14.99/month plan, I paid $149.99 for the year which would be cheaper in the long run. The downside is that I didn't account for this $149.99 in neither my personal nor our joint budget for this week. I ended up splitting it between both accounts and I haven't stopped thinking of what a rash decision it was, even if we do enjoy the show. Maybe I should have just subscribed month-to-month, but I think the savings is something like $30 for the year, and there seem to be a lot of good shows on this service, so I do see us keeping it for a while. So much for guilt-free tv.-
Credit Card Consolidation
My primary focus for February and the next several months will be knocking down my credit card debt. I have always been one to buy whatever I wanted in the moment and credit cards were ideal for that. I know it is a terrible habit and I've been down this road many times before, but I never seem to learn. At my age, I should be much more fiscally responsible than I am. Two years ago, I got everything paid down, but then I increased the balances again with the purchase of the new laser engraver for my business and some big car repairs that were unexpected, and everything escalated from there. Currently I have three major credit cards which are all reward cards. I have one that earns Marriott reward points, so we use that one for our vacation expenses. I am thinking about rewarding ourselves with an overnight stay somewhere to use those reward points, but I need to come up with a good milestone to celebrate.
The second reward card I have is for Costco, which gives us a reward certificate once a year that can be used at the warehouse. This works out well since we have a lot of summer parties, so that certificate will be used as soon as we shop for the first one.
My third, and primary card, is an Amazon Visa. Purchases on this card earn points that can be redeemed on Amazon, but only if you have selected the Amazon Visa as the backup payment method for purchases exceeding the reward points applied. As a part of my financial stability plan, I am only purchasing from Amazon using my debit or gift cards, so I was happy to find out that any rewards I currently have can be redeemed for cash back, so they won't go to waste if I am not charging to that card anymore.
In addition to the three major cards, I also have a few store cards that I use infrequently, such as Kohls, Old Navy and Best Buy. I don't usually put a lot on these, and when I do have a balance, I try to pay them off completely within one or two months. Store cards seem to have significantly higher interest rates, in my experience, and with a smaller balance they are easier to pay off in full.
The Best Buy card was opened when I got my son a significant electronics gift and they were offering 0% interest for 12 or 18 months. I paid more than the minimum balance each month and I was paid off within the promotional period before the interest rate kicked in. I have had other store cards in the past, but I typically stopped using them for a long enough period that the store closed them on me. I do not like to close accounts myself because that has a negative effect on your credit score. In the future I need to stop falling for the promotions they offer to get a new card and just stick with the ones I have.
Going into February I only had balances on my three major reward cards, so the plan was to pay off the Marriot and Costco cards completely since they had lower balances and higher interest rates than the Amazon card. My first step was to transfer the Costco balance to the Amazon card because, although I would incur a 3% fee for doing it, the transferred balance would have 0% interest going forward for the next 12 months. I couldn't transfer the Marriott card because it was held by the same bank as the Amazon card and they won't let you consolidate those together.
Next, I sold some stock I purchased through my company's employee stock purchase program. I realize this is not something everyone participates in, but it is definitely something I use when I want to pay off a high balance like this. The way the ESPP works, is every paycheck I have a small percentage taken out before taxes and put into the ESPP account without me even seeing it. Then every 3 months, the company uses the balance in that account to buy company stock for me at a discounted price. There are rules around when I can sell shares, so I typically wait until I have enough eligible shares to make a significant dent in my debt. Sometimes the sale is considered a loss because I am selling it at a lower price than what it was purchased at, but since I literally never have possession of this money, it doesn't feel like I've lost anything. Making this sale at the beginning of February allowed me to pay the balance of the Marriott card and apply the rest to Amazon. Now I only have one balance that I am carrying.
My financial spreadsheet/budget is set up biweekly since this is how I am paid. Every two weeks shows the bills that need to be paid from that check, gifts that I need to buy, pre-planned nights out and anything else that know is coming up in that period. In addition, I include $60 for gas, $15 for my Dunkin Donuts app auto-replenish, and $100 for miscellaneous. Since I don't drive too far for work, gas doesn't typically cost me that much, so whatever I don't use will be rolled into Miscellaneous. Same thing if I don't end up needing to replenish the Dunks app. At the end of the two weeks, if there is anything left in miscellaneous, I put another payment on the credit card. For March, I have everything budgeted out so I will be able to make two significant payments 15 days before, and then within the week of the statement closing.
Closing out February
I'm very pleased how February played out. By planning really well and sticking to the spreadsheet and the no spend days, I was able to be comfortable and not touch my savings or use my credit card except for the trip to Walmart (and that was only because my debit card expired, and I didn't have the new one with me). If you have stuck through this whole post, I really appreciate it. Writing about my journey is actually helping me stay accountable, especially knowing there may be people out there that are following along and perhaps getting some ideas of their own. If you have any tips to share with me that will make me more successful, I'd love to hear them. Now that all this visioning, goal setting, and money talk is done, it is time to get back to my designing!