My husband has been on surgery disability for several weeks now and we’ve learned a few surprising things about the process, the first of which is that it’s really not that much of a financial strain. Of course, we earn more than we spend, so it might be more difficult for families that are on the edge.

Total Reduction in Income
My husband’s income, after taxes, is reduced by about 25%. State disability income isn’t taxable, but the 5% bonus we’re receiving through his employer’s private disability plan is. If you’re planning a disability, find out if your benefits are taxable and budget accordingly.

I’m still working, so the total reduction in monthly income is closer to 15%. It’s something, but not so much that we really feel a pinch. I will also be interested to see how this affects our Federal taxes. We planned our withholding around our full incomes. If my husband is out for three months rather than the initial six weeks we estimated, that’s a full quarter of his annual salary, which may bring us into a lower tax bracket. If that’s the case, our total reduced income will be closer to 12%.

Total Reduction in Spending
We figured we’d see some reductions in spending, but we were stunned by the size of the reduction. We’re spending anywhere from 33%-50% less on our credit cards each month. Not only is my husband not eating out at all, or driving, or getting dry-cleaning, but I’ve also been seen some of my expenses go down. I expected our grocery bill to go up a lot, but it’s only gone up $15 a week or so. In addition, we have an FSA this year, so we’re no longer paying for prescriptions or co-pays.

The weather has been relatively mild, which has helped from an energy perspective. We had to use the heat during the day for about a month, but it was only heating the house an additional 3-5 degrees, so it wasn’t a big jump.

Planning for the Reductions by Stockpiling Cash
Once we knew the surgery was coming, we immediately put all major purchases on hold. We had planned to buy furniture, have some work done on the house, and buy me a car. None of that happened. Instead we funneled all our excess income into savings. Combined with our emergency fund, we had more than enough to cover the lost income and the gap between applying for benefits and receiving them. We’d expected that to be four weeks, but it was only three.

Pre-Pay Bills Whenever Possible
Before my husband’s surgery, he scheduled most of our bills for payment through our online banking. That way I didn’t have to worry whether a bill was due while sitting in the hospital. We were very glad he did that when his computer died the day before he went into surgery. Yes, I could access online banking from other computers, but I couldn’t use Quicken or access our budget. Let me tell you, not having access to Quicken or our budget for three weeks was very upsetting for me.

Between the FSA, reduced spending, and reduced income, we’re only falling about $600 a month short of our usual budget. That means we’re saving a little less, but far more than we were expecting. Recovering from surgery is tough, but the financial aspect doesn’t have to be if you plan carefully.

So this week we accidentally paid our mortgage twice. Fortunately, we have a large enough cushion in our checking account right now that we could cover both payments without moving money around. Unfortunately, we have only ourselves to blame for this snafu.

How We Came to Pay the Mortgage Twice
It started like this: we refinanced our mortgage. Our first payment was due on February 1. Because our mortgage had to be sold to a servicer, and then the servicer had to send us payment instructions, there was some concern we wouldn’t get the info in time. To be safe, I used the account number to set up our servicer as payee in our online banking. Then I discovered that it would take seven days for the payment to go through. Seven! This is two major banks that can’t communicate electronically!

But I digress. The new bank’s info did indeed arrive in time, so I set up automatic debit at that account. However, they have a fairly unfriendly interface, so you have to click a few things to determine that it’s been setup properly. I cancelled the other payment.

Then I mentioned to my husband in passing that I’d cancelled the online payment and setup automatic debit. The payment went through fine. We both forgot the conversation.

Fast forward to this week. My husband emails me to tell me that he’s paid all the bills and the mortgage. I immediately called him and said, “You paid the mortgage?” Thus began the odyssey of calling the banks. We called our primary bank to cancel the online payment, because it was only submitted the day before. We couldn’t do that – they mailed a physical check. We called the second bank to cancel the automatic debit, but opted not to in case the check gets lost in processing or something. We’ve been assured that the payment that arrives second will be applied to our April payment, not the principal. I will call in March to cancel the March auto debit. Some day we might pay extra toward the principal, but not this month!

What We Learned from This
We learned one simple lesson from this: don’t have financial discussions on the fly! My husband was with me in the room when we set up automatic debits for our first mortgage. We were both fully aware of the process. I should have done that again with the new mortgage. At the very least, I should have told him that I set up the payment during a financial discussion, not during Daily Show commercials. It was too easy for that information to slip through the cracks, especially since I didn’t delete the servicer as a payee in our online banking account. The funny thing is, I was in the online banking interface a few days earlier and thought “I don’t need this anymore. I should delete it.” And then I didn’t delete it. Why don’t I listen to my intuition?

If you and your spouse both handle the finances, then learn this lesson from us. Always have clear conversations about your money, especially when it comes to huge payments! Although we have enough of a cushion to handle the missing money this month, it could have been a problem if we didn’t have it in place and only discovered the error after one of the payments bounced. We’ve started to slip on our daily financial talks. We need to work on that.

Getting engaged is exciting and frightening, and it’s easy to get carried away in the moment. Hopefully you and your intended have already laid everything on the table before you even considered taking the next step, but if you haven’t, take some time to ask yourself and your intended these five questions before a ring is in the mix.

Do You Want Kids? How Many and When?
So many couples go into marriage with the vague idea that they’ll start a family “eventually.” For some men, that means in five years. For some women, that means the wedding night. To avoid surprises and ensure that you’re financially prepared for a child when it happens, you should discuss when you think the appropriate time to start a family is before you get engaged. Life happens and there may well be a “surprise baby,” but don’t operate on the assumption that “it will happen when it’s meant to.”

What Are Your Career Goals?
At this point, you probably both have jobs, so it’s easy to skip over questions about career goals. Don’t. It’s important to know whether one or both of you expects to attend graduate school, start a business, or quit working in the future. Again, plans and goals can change, but it’s important to agree on what’s best for your family before you start a family.

Do You Have Debt? How Much?
When I was planning my wedding, there was a quick poll on the Knot asking how many couples had discussed their debts. I was startled to see that over 70% of couples had not discussed their debts. If you’re getting married, you NEED to know how much debt your partner has. Even if your partner doesn’t expect you to help pay it off, the fact is that debt may prevent you from working toward joint financial goals, or prevent you from enjoying vacations and other activities. All debts, whether they’re school, credit card, or even family loans, should be discussed and you should agree on the approach to paying them off.

What’s Your Financial Picture Right Now?
If you’re getting married, there shouldn’t be any financial secrets. Bad things happen when couples keep money secrets from each other. Discuss your income, investments, savings, and other holdings.

What Are Your Financial Goals?
Although your goals may change, you should be aware of each other’s current financial goals. If one of you wants to buy a house in five years and the other wants to quit working and circle the globe on a yacht in five years, there could be a problem. Once again, your plans may change, but you have to change them together.

When you have this discussion, you should also include your retirement goals. If one of you wants to retire at 55 and the other plans to keep working until they die, you’re going to have a basic conflict. You don’t have to stick to your targeted retirement date, but you should both have an idea of how you picture the later stages of your marriage.

What’s Your Spending Style?
Want to start your marriage fighting? Don’t ask this question. It’s very important that you both understand and be comfortable with each other’s spending styles. If one of you is a spender and one is a saver, you should agree on who will manage which portions of your finances and how you will manage your spending. Maybe you’ll need separate accounts, or maybe you need a spending limit. Whatever you choose, discuss it before you get engaged.

I can already hear people saying, “Why should we talk about this before we get engaged? Shouldn’t we know we’ll be spending our lives together first?” There are three simple reasons you should talk about these things first:

  1. Once you get engaged, your life becomes a flurry of non-stop activity and stress. It’s hard to slow down and have these important discussions when you’re already too busy and stressed out.
  2. There’s a financial cost to getting engaged and planning a wedding. If you discover you don’t agree on major points, you may lose money on rings, vendor deposits, etc. If you’ve received gifts and then split up over these questions, you’ll have to figure out how to return the gifts.
  3. It’s easier to explain a breakup before you get engaged.

Some of these questions are deeply personal and can make for an uncomfortable conversation, but let’s be honest, if you don’t feel comfortable talking about these things with your partner, you should NOT be getting engaged. Then continue having regular discussions about your finances and goals after you get married.

David at Money Under 30 is getting married. Congrats David! While preparing for their marriage, he and his fiancé wisely discussed their finances and chose to keep their spending accounts, emergency funds, and debt payments separate. While I can certainly understand the reasons behind wanting to keep pre-marriage debts and post-marriage finances separate, I don’t agree with it in practice.

Combining Finances Made It Easier to Agree on Goals
My husband and I both entered this marriage with debt. Some of it was credit cards from grad school, much of it was his student loans, and another portion was my student loans. He also had some medical loan debt from the period when he didn’t have insurance.

When we got married, we decided to merge everything, except student loan accounts which can’t, and shouldn’t, be consolidated together. Then we created a joint budget and set our financial goals together. We probably still would have set joint goals if we’d had separate accounts, but we would have to divide our paychecks into different accounts and debate about who would pay for what.

Working Down Debt Jointly Paid It Off Faster
I’ll be honest, we would not be living in our new house if we hadn’t agreed on a debt repayment plan and thrown ALL of our excess income at it. Rather than paying some of my money to one of my debts and a portion of his money to his debts, we put everything we could toward one debt and paid the minimum on the rest. By doing this, we made larger payments that reduced the principal faster, resulting in less interest accumulation and a faster pay-off. Then we moved on to the next debt. Each paid off debt snowballed into a larger amount for the next one.

I believe it would have taken us much longer to pay off any one debt if we hadn’t been working on it together.

We’re Better Aligned as a Couple
It helps that we’ve become more financially similar during our marriage, but I really do think that merging our finances completely helped us to align our financial goals and plans. If we were each managing money separately, we might not be working towards our goals as a team.

When We Invest, We’ll Be Better Diversified
Money Magazine frequently presents this problem in couples who have separate finances. They choose their investments separately, but often end up choosing similar mutual funds that leave them overinvested in one sector and underinvested in another. By investing jointly, you can make sure that you’re properly diversified.

Some studies show that couples who merge their finances have happier marriages, other studies show that couples with separate finances are happier. I don’t think there’s a right way or a wrong way. Both require good communication. Only you can decide what’s right for you and your spouse.

Where do you stand on the issue? Is your money merged or separate? If you want to merge them, see my complete list of everything you need to combine.

Once again, we’re at the height of wedding season. We’re also at the height of engagement season. This week, I’m focusing on saving money on your wedding. Weddings are expensive, and many brides are looking for ways to cut costs, so I’ll look at the big things where you can save the most, as well as the simple things that add up. Today, we start with the budget. Before you do anything else, you need to set up a wedding budget. Then you need to stick to it. I know, that’s the tricky part.

How to Create a Wedding Budget
It’s definitely not romantic, but it’s practical. When I got married several years ago, I started with a wedding budget tool I found on the Knot.com. It gave me a jumping off point. Then I created this wedding budget worksheet in Excel. It’s yours to download free.

The More Detailed the Better
The Knot budget had some detailed line items, but also several general portions. I broke it out into even greater detail. I didn’t list “clothes.” I listed shoes, undergarments, jewelry, and dress separately. I didn’t list “flowers.” I listed the individual flower categories, like my bouquet, mom’s bouquet, bridesmaids, aisle flowers, etc.

Get Estimates in Advance
The first step is to pre-research. Ask recent brides what they spent to get an idea of what flowers, cakes, etc. cost in your region. This is where wedding message boards are your friend. The other brides will happily share their budgets. You can also review the websites of potential venues for an idea of the cost breakdown.

Determine a Total Wedding Budget First
If you start by entering what you want to spend in each category, you’ll go over budget right away. Instead, start with your total budget, then divide it between your categories. If you run out of money, you’ll have to start cutting. Also allow for about 10% overage, because things will come up and prices may rise between the time you start planning and the time you book.

Four Quick Tips to Reduce the Wedding Budget
There are some areas where you can reduce your wedding budget right out of the gate. Not all of them are simple, but they’re big savers.

First, cut all the crap you’re supposed to buy with your name on it, like cocktail napkins, favor tags, matchbooks, etc. Our venue supplied cocktail napkins. Guests can bring lighters if they smoke. We printed favor tags on our computer. Trust me, not one of your guests cares about these things. Save that money for the things that really matter.

Second, reduce your guest list. This is hard, but it’s key if you want to save money. This is the time to tell your mom that no, you’re not inviting your neighbor’s third cousin who you met once when you were five. Tell your crazy aunt she can’t bring her young escort. You also don’t need to invite every couple whose wedding you attended. Smaller, more intimate weddings definitely save money.

Third, consider alternate dates and times. If your peak wedding season is June through August, consider May or September. You could also consider Friday nights and Sundays. Most venues offer reduced rates for non-Saturdays (except on holiday weekends.) If most of your guests aren’t traveling from out of town, a Friday night wedding is a fun way to kick off the weekend. Follow it up with a Saturday barbecue at your parents’ house to keep out-of-town guests entertained.

Fourth, DIY what you can. I’ll talk about this more as the week progresses, but we did our own flowers, invitations, programs, favors, and wedding album and it saved us a lot of money.

Some brides don’t start with a budget and realize about halfway through the planning that they’ve spent $50,000 and aren’t done yet. If you want to start your marriage on the right foot, create a budget and then prepare to get creative. Consider it practice for your life ahead.

Adam commented on my post about how we save 25% of our income. “I am just in the process of getting married, and learning about the whole process of combining our finances.”

To help Adam, and any other couple, here’s a quick outline of the process. My husband and I agreed that we would set up a joint checking account after we got married. We could have set it up earlier, but we wanted to wait until after we had the piece of paper just to be safe. When combining your finances, there are a few things you must do as soon as possible after the wedding, and a few you can save for later.

Changing Names
In most states, you can change your name on the marriage license. In some situations, you must file a name change petition later. I didn’t change my name, so I didn’t have that hassle. The process is straightforward if the wife switches from First Middle Maiden to First Middle Husband’s-last or First Middle Hyphenated-name. A name change petition may become involved if you want to change to First Maiden Husband’s-last, as many women do.

Marriage Certificate
Whichever route you take, you must wait until you receive your marriage certificate to change your name on most accounts. If you change your name, order at least three extra copies of the certificate at the time you file the license. If you don’t change your name, one or two copies will do.

Driver’s License and Social Security
Your first step should be updating your driver’s license and social security file with your new name. You’ll also need to change your address with the DMV if you move after you marry. This process will take several weeks, so make sure you buy honeymoon tickets in your maiden name.

Joint Bank Accounts
Most banks don’t require you to provide a marriage certificate to set up a joint account. Simply go to the bank and tell them you want to change the names on the account. When we married, we decided to add me to his account and close my account because his account was drawn on a Southern California bank and mine was located in another part of the state.

Credit Cards
Changing the name on your credit cards may require sending them a copy of your marriage certificate, but some will accept a copy of a driver’s license as proof. Ask if you can add your spouse as a co-owner of the account. Most will fax or email you a form to sign and return. I had a better credit history, so we made my husband co-owner of two of my cards and an authorized user on the third, because they only allow one owner. He cancelled many of his own cards.

Health Insurance
If you plan to add your spouse to your plan and have employer-provided insurance, contact your HR department for the proper forms. If you have individual plans, like we did when we married, compare plans to find the new best rate for a joint health insurance account. We added my husband to my plan and chose a new deductible level. They didn’t require a marriage certificate because California recognizes domestic partnerships for all couples. Insurers in other states may have different requirements.

Life Insurance
Once you marry, your spouse is automatically your life insurance beneficiary, as required by law, but you should contact your insurer to file an updated form with current information.

Auto Insurance
We already had auto insurance from the same company, but opted to combine our policies to get the two-car discount. This was the only account that required a copy of our marriage certificate, but the process was simple. They sent us forms that we returned with a copy of the certificate and a week later we received our new cards. If you renew every six months, consider waiting until the policy is about to make the switch easier.

Investment and Retirement Accounts
You can choose to merge your investment accounts, or hold them separately. Retirement accounts remain separate. In both cases, you should file updated forms designating your spouse as the beneficiary. If you don’t, the original party listed on your account will be the beneficiary after your death, regardless of any directions included in your will.

Student Loans
By law, your student loans cannot be merged. This is for your protection because student loan debts die with you, unless there is another name on the account.

Cell Phone
Save money in a flash by switching to a family plan. You will have to go to your carrier’s local store to make the switch, but it’s easy once you get there.

Housing
If one of you owns a home, you may wish to add your new spouse to the title via a Quit Claim Deed or other title conveyance. Contact a real estate lawyer for guidance. Adding a spouse to your mortgage may require refinancing, so contact your bank for advice.

If you rent, you’ll need to add your spouse to the rental agreement. Contact your landlord to complete the process.

Be sure to add your spouse to any homeowner’s or renter’s insurance policies you have.

Miscellaneous Accounts
You can, if you wish, add your spouse to your cable, utility, and telephone accounts, but it’s not absolutely necessary. Most of these companies will speak to a spouse without having him or her on the account as long as the spouse has the account number.

This list of accounts seems like a lot of work, but it’s really not. Set aside an afternoon to make all the necessary calls, and prepare a form letter that you can customize. Some accounts should be updated immediately, but most of the rest can be tackled over the first few months of your marriage.

As I mentioned the other day, we’re saving about 25% of our monthly take-home. We didn’t start out there, but we’ve come a long way since I started this blog. Back then, we spent every dollar we earned either on debt payments or living expenses. Now we save a substantial portion. As part of financial literacy month,  here’s a look at how we made the switch over the course of a year.

Dedication to Paying off Debt
First, we were both committed to getting rid of our credit card debt and at least two high-rate student loans. We still have sizable student loans, but those will take 30 years to pay off. Instead we focused on what was doable. Our primary goal was to reduce our debt-to-income-ratio so we could buy a house. We managed to take our monthly debt payments from about $2100 to around $1100 a month. A large chunk of that was credit card debt and the two student loans. We’ve also seen reductions due to declining interest rates on auto-debited loans.

Increased Income
We’ve been fortunate to see our income grow substantially in the last year, which also helped. My husband made a job change before I started this blog that saw a 40% increase in salary (he was grossly underpaid before.) We’ve both received sizable raises since, which resulted in a total income jump of about 60% in the last two years. We never would have gotten here without that, and we both worked hard to achieve that.

Financial Windfalls
The $28,000 in windfalls we received really put us over the edge. They allowed us to pay off a substantial portion of our debt. Of course, we also had to pay a third of them in taxes, so we had to dedicate ourselves to saving up money for that. As soon as the debt was gone, the need to pay the IRS really kicked us into saving mode.

Reduced Spending
We haven’t just reduced our spending on debt, however. We’ve also reduced our spending in several other areas, including clothing, auto (thanks to falling gas prices), and groceries. In addition, we eat out less and watch movies at home more often. My husband would probably like to go out more, but we have a backlog of 200 movies on our Blockbuster queue and the tyranny of the list, as we call it, keeps us home.

A Clear Savings Goal
We both want to save up an emergency fund and agree on the importance of that. We also need to buy me a new car soon. But the thing that really has us saving is the short-term goal of buying a house by the middle of this year. We have a hefty down payment already, but every extra dollar helps with closing costs, upgrades, and moving expenses. I imagine we’ll have a burst of spending after we close on things like paint, carpets, appliances, and flooring, but then we intend to return to our frugal ways to save up for the car down payment.

Communication
All of this boils down to one very important key to saving money: both spouses have to agree to save money. It won’t work if one saves and the other spends it all. It’s important that you sit down and work out your goals together.  Then neither of you will feel like you’re suffering or wonder why the other is so determined to save.

If you do one thing this month, sit down with your spouse (or a piece of paper if you’re single) and create one financial goal that relies on saving money. If you’re out of work, then the goal is clear – stay afloat until you’re employed again. If you have a job, then the goal might be bulking up the emergency fund, but it could also be saving up the cash to buy something that has benefit to you and your family. Once you have a goal, formulate a strategy for getting there.

Once you start saving, it becomes a habit that rewards you every time you look at your fat bank balance. Trust me, it worked for my husband.

It takes my husband a little longer than me to get around to enjoying the process of working toward our financial goals. He understands why we’re doing it, he just wishes we could “live a little more.” I don’t fault him for wanting to have more of a life, but I would get frustrated that he didn’t understand why I was pushing so hard to save money.

It started when we were paying down debt heavily. At first he doubted we could really do it, but then after a few successes, he realized my plan was completely doable and got excited about it. Then we got into saving-for-taxes mode, which neither of us enjoyed, but it had to be done.

When we had the money for our taxes saved, my husband complained a bit about my resistance to renewed spending. But I had a plan. I wanted to save as much as we could towards our new house. Even though the down payment was a gift from my dad, I knew we’d want some extra. It turns out we also need something called a “reserve,” which is cash on hand beyond the down payment and closing costs.

So, he understood why we were saving so hard, but he didn’t really like it. Then a few weeks ago, out of the blue, he said, “Saving money is fun.” It was a breakthrough! He finally understood it. I think seeing our sizable savings account balance, in addition to the money waiting to be paid to taxes (next weekend), made him realize that we were doing this for a reason, and that the act of saving money itself could be enjoyable.

We’ve reached a point where we’re saving about 25% of our monthly after-tax income. Of course, I will point out that we have a high joint income. That wouldn’t have been doable when we had our current expenses and much lower income.

Now he’s all about the saving money. We’ve come to an agreement on our goals and are prioritizing what we want to do. Since we’ve got a cushion, I’m more comfortable with the occasional splurge, as we did with the Elton John/Billy Joel concert.

It’s also changed our perspective on our desired home price. Instead of buying as much as we can, we’re looking to buy something really cheap that needs updating, but will see a sizable increase in value after we fix it up. Buying cheaper will bring our mortgage pretty close to our current rent, and allow us to put more money towards our other financial goals like boosting our emergency fund and sving for retirement, both of which he’s finally seeing as things we need to be working on.

The moral of this story: it can take a while, but if one spouse keeps plugging away at the goals, the other spouse will get there. If your spouse needs better motivation, figure out a joint goal and then demonstrate how much faster you’ll get there if you commit to saving.

It certainly worked for me.

Every January, I make a list of about ten goals and write them in the little notebook I carry everywhere. Looking at 2008, I achieved three of the financial goals and almost none of the others. Oops. Hopefully I’ll do better in 2009. To be fair, some of them are outside my control, but I make them goals anyway. I should rethink that – I’m just setting myself up for failure. Here are the goals I can control:

Buy a House: We have half the down-payment (a gift from my parents) and will receive the other half in a couple of months. We’ve created our list of dealbreakers and potential neighborhoods. In January, we’ll visit open houses in each neighborhood and get a sense of the mortgage we qualify for. Then in February or March, we’ll hire a real estate agent and start looking for real.

Pay Off that Little Debt: We still owe around $4,000 on an unconsolidated student loan. The interest and monthly payment are low, but it’s a bill we don’t need.

Boost Our Emergency Fund: We currently have a sizable cash cushion, but it’s all going toward taxes. I’d like to save at least $10,000 by mid-year.

Increase Our Retirement Savings to 10%: We need to make a big push for retirement. We currently save 3%, plus whatever my husband receives as a defined contribution. I’d like to save 10% of our total income next year, which isn’t an insubstantial figure.

Buy a New Car: After we buy a house, I’m getting a new car. My Toyota is 12 years old and has 130,000 miles on it. It’s holding up, but it’s also showing its age. It’s time to upgrade to something with remote door locks and an MP3 jack.

Save for Our Next Big Vacation: My husband hadn’t been on vacation in three and half years, and it had been two and a half for me. We need to go on trips more often. We have a local excursion planned for next year, but we also want to start saving for Australia – the next big destination on our list.

As always, the year will hold financial surprises that will either cancel or delay some of these goals, but at least three of them will happen for sure: house, car, and retirement savings. If we only succeed at those, I’ll consider the year a success. What are your goals for 2009? Share them in the comments or link back from your own blog.

This year has had some serious ups, and some serious lows. We elected a historic President. That’s a good thing. And of course, the market fell out of just about everything. That was bad and getting worse.

Financial Goals in Review
I also had a personal year of ups and downs. Fortunately, they were mostly ups. Before I set new financial goals for 2009, here’s one last look at my financial progress in 2008.

Goal 1: Track my spending for one month. Completed January 31, 2008.

Goal 2: Pay off $40,000 in debt. Completed September 22, 2008.

Goal 3: Boost retirement savings by 3%. Never completed – but is definitely on track for 2009.

Goal 4: Boost our emergency fund. Happened by accident. After we paid off the debt, our cash cushion ballooned. Most of it will be used for taxes and closing costs, but I also have my eye on building a solid cushion in the new year.

Goal 5: Buy a house. Forwarded to 2009. This was not the year to buy, but we definitely have to in early 2009. Not only do I actively loathe my apartment, but we’re getting the dual income, no kids, no mortgage penalty on our taxes.

Personal Finances in Review
Fortunately, we both still have jobs and we both received decent raises this year, although we’re not seeing much of that money due to taxes. Not straight taxes, taxes on the $28,000 in windfalls we received this year. $25,000 of that was used to pay off the debt.

We still have a lot of student debt that won’t be paid off for decades – focusing on it would mean waiting years to buy a house, invest in retirement, or do anything else with our lives. We do still have one student loan at around $4,000 that we’d like to pay off in the next few months. It’s only $78 a month and the interest is low, but it’s annoying.

In addition to the $600 a month we’re saving on debt payments, we tried to cut back in other places. We trimmed the food bill a tad, but not too much because we prefer to spend more for pastured beef and farmer’s market veggies. My food allergies also pad the bill by at least 25%.

We even had enough money to take a relaxing vacation in a foreign country. We went over our trip budget by $300, which isn’t bad. And really, it was only $100, because my husband entered it into our budget at $200 less than my initial estimate of what it would cost. The total trip cost about $3,000 spread across several months. It was money well-spent on our marriage and mental health.

I know 2008 was rough for many people, but it treated us very well and 2009 is looking to be even better. Friday I’ll share my financial goals for the new year. In the meantime, Happy New Year!

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