Among the definitions for austerity is the one that I'm thinking about in this blog: "Reduced availability of luxuries and consumer goods."
Some of its connotations are that of severe self-discipline or the WWII idea of limiting non-essentials during a wartime economy.
Over the past few weeks, we've been working on our resolutions and goals for 2013, along with a budget. With the looming fiscal cliff making for some awkward budgeting, we've been cutting expenses wherever possible--our own personal austerity measures.
We also have set some ambitious goals for 2013. More on that in a later blog post.
The end result is that 2013 is going to be a year where we want to continue having a positive quality of life, but also make some pretty radical adjustments on how we're managing money to be able to work towards some pretty significant goals. Our budget is "aggressive", but doable.
But managing money going out is only half of the plan. Many years ago, I caught a snippet of an episode of Oprah where Lady O mentioned that to reduce debt, you had to cut expenses because you couldn't just increase income.
I laughed, and the people I was with thought I was crazy. I pointed out that there's always the ability to increase income, but people don't want to do what is necessary to make that happen.
Thus the second part of our plan--prosperity stimulus. From selling things we don't need anymore (electronics to a buyback program, garage sales, book/CD/DVD trade-in) to finding new sources of income to increasing the amount of income for my current projects, we're looking to bring in more income while reducing our outflow.
The trick to getting ahead is a combination of the two. Austerity measures alone don't work. Prosperity stimulus alone doesn't work. When you combine the two, you can do anything.
Saturday, December 29, 2012
Sunday, December 16, 2012
The Plan, In Progress
Wow...haven't updated this since September. That's probably because we've been crazy busy. Mostly boring life stuff, but a few significant updates.
Around Thanksgiving, we sprung the news to everyone about our plans for moving to Florida in 2015. Needless to say, family will miss having us within a shortish drive, but everyone understands the reasoning behind it.
The core reasons for moving are pretty simple:
1. Schools are bad here--and Lily will need a better option when she gets ready for elementary school.
2. The cost of living is crazy high here. That prevents us from being able to put away the amounts we want to invest.
3. The house we're living in doesn't suit our needs well. For those who haven't seen our house, we live on the "second floor" (which is at ground level). Our first floor is a basement, which is built into the side of a hill, so it has a "ground level" exit on one end. The floor we live on has three bedrooms, two baths, a kitchen, dining room, and living room, plus our sun porch with hot tub. The "lower level" has a bedroom, a bath and a half, another kitchen, another living room, two storage rooms (one finished, one semi-finished), and a family room. All we use that basement for is storage and an occasional party space. It is truly wasted space, but we're paying to keep it heated/cooled, and paying for pest control down there and running the dehumidifier and on and on. It really doesn't work well for us, but if we were to sell it and then buy something else in this area, we couldn't get what we'd want for the outrageous housing prices here. (See #2 about cost of living--that goes for housing prices, too.)
4. The environment is bad here. We all have health issues from the poor air quality, and the weather makes it so that we can't spend as much time outside as we'd like.
5. The taxes are bad here for me, as an independent contractor. To put it in perspective, Maryland taxes are about half again as much as I pay in federal taxes.
6. We enjoy spending time at Disney, either for vacations, cruises (now that we realize how much we like them), and races. That means we're spending a lot of money and time to get down to Florida that we'd like to spend visiting family. (A good example is race weekends, which can cost around $2000 each and take 3-4 days of vacation each. When you don't have a lot of vacation time, those races add up quick.)
7. Our social life is largely tied to the Disney community, so a move to Florida means more time with friends and living around people with shared values.
8. DC-area jobs are high stress. Florida jobs are less stressful. That doesn't do a thing for me, as I'd keep the same employers, but really does a lot for my husband. It also would mean that he'd not have to spend large portions of his day in a commute on I-95.
So, with all that in mind, we went house hunting on our most recent vacation, and found something we really like. There will be a blog post about that in the future--I promise!
Looking at our expenses, if we sold our house today, we'd be able to pay off all our debts, but not have a downpayment available for the new place. On the other hand, if we wait until we have that all squared away, the community we want to buy in will be fully built and housing prices are likely to rise.
Because the house is in a short-term rental area, if we bought a property there today, we'd be able to rent it out as a vacation home until such time as we're ready to move. That being said, we'd need to figure out how to get a deposit down.
With all that in mind, we've decided to take a very aggressive budget for the next year--one that both allows paying down debts and gathering money for a down payment on the new place.
We've also run some other scenarios about what to do with our current house to make sure we are debt free asap, even if that means selling the house before we are ready to move, and taking on apartment life for up to a year or so. (The benefit on that would be that when the Florida job comes through, we wouldn't have to then try to sell the house.)
And, to top it all off, the two adults have some health goals we want to meet. Going to be aggressive on that as well.
So, yeah, busy bit of thinking going on, but very realistic if we set our minds to it. Updates will be forthcoming to see if we're just crazy for thinking this way, or if this is just so crazy that it will work!
Around Thanksgiving, we sprung the news to everyone about our plans for moving to Florida in 2015. Needless to say, family will miss having us within a shortish drive, but everyone understands the reasoning behind it.
The core reasons for moving are pretty simple:
1. Schools are bad here--and Lily will need a better option when she gets ready for elementary school.
2. The cost of living is crazy high here. That prevents us from being able to put away the amounts we want to invest.
3. The house we're living in doesn't suit our needs well. For those who haven't seen our house, we live on the "second floor" (which is at ground level). Our first floor is a basement, which is built into the side of a hill, so it has a "ground level" exit on one end. The floor we live on has three bedrooms, two baths, a kitchen, dining room, and living room, plus our sun porch with hot tub. The "lower level" has a bedroom, a bath and a half, another kitchen, another living room, two storage rooms (one finished, one semi-finished), and a family room. All we use that basement for is storage and an occasional party space. It is truly wasted space, but we're paying to keep it heated/cooled, and paying for pest control down there and running the dehumidifier and on and on. It really doesn't work well for us, but if we were to sell it and then buy something else in this area, we couldn't get what we'd want for the outrageous housing prices here. (See #2 about cost of living--that goes for housing prices, too.)
4. The environment is bad here. We all have health issues from the poor air quality, and the weather makes it so that we can't spend as much time outside as we'd like.
5. The taxes are bad here for me, as an independent contractor. To put it in perspective, Maryland taxes are about half again as much as I pay in federal taxes.
6. We enjoy spending time at Disney, either for vacations, cruises (now that we realize how much we like them), and races. That means we're spending a lot of money and time to get down to Florida that we'd like to spend visiting family. (A good example is race weekends, which can cost around $2000 each and take 3-4 days of vacation each. When you don't have a lot of vacation time, those races add up quick.)
7. Our social life is largely tied to the Disney community, so a move to Florida means more time with friends and living around people with shared values.
8. DC-area jobs are high stress. Florida jobs are less stressful. That doesn't do a thing for me, as I'd keep the same employers, but really does a lot for my husband. It also would mean that he'd not have to spend large portions of his day in a commute on I-95.
So, with all that in mind, we went house hunting on our most recent vacation, and found something we really like. There will be a blog post about that in the future--I promise!
Looking at our expenses, if we sold our house today, we'd be able to pay off all our debts, but not have a downpayment available for the new place. On the other hand, if we wait until we have that all squared away, the community we want to buy in will be fully built and housing prices are likely to rise.
Because the house is in a short-term rental area, if we bought a property there today, we'd be able to rent it out as a vacation home until such time as we're ready to move. That being said, we'd need to figure out how to get a deposit down.
With all that in mind, we've decided to take a very aggressive budget for the next year--one that both allows paying down debts and gathering money for a down payment on the new place.
We've also run some other scenarios about what to do with our current house to make sure we are debt free asap, even if that means selling the house before we are ready to move, and taking on apartment life for up to a year or so. (The benefit on that would be that when the Florida job comes through, we wouldn't have to then try to sell the house.)
And, to top it all off, the two adults have some health goals we want to meet. Going to be aggressive on that as well.
So, yeah, busy bit of thinking going on, but very realistic if we set our minds to it. Updates will be forthcoming to see if we're just crazy for thinking this way, or if this is just so crazy that it will work!
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