After almost five years of marriage, I’m finally biting the bullet and combining my finances with my husband’s. And, I’m consolidating my own finances. Is this going to reduce our spending and kick our savings into turbo mode? I’m not sure, but I’m feeling optimistic about it. As you read in the last post, I’ve essentially been sticking my head in the sand about 50% of our financial picture! And, as the budgeting ninja of this team, driving 50% blind is no bueno. Plus, once we get everything together in one place, we’ll have a better idea of how much of a stash we’re looking at, and how far we have to go on both spending and savings to ramp waaaay down on our salaried earnings.
What did this chaotic jungle look like before I started my financial spring cleaning?
My friends, it was rough. I had retirement savings in 4 different places — two 401ks, a 457 (like a 401k, but from an old government job), and an IRA. I had about 1 million little savings accounts — one at the bank where I do my checking (earning almost no interest), just in case I needed extra cash to pay a bill FAST, and several at Capital One, because it used to be INGDirect, which got awesome interest rates, but now gets almost nothing. I had the Capital One account broken down into one big account (that I considered my rainy day fund, set at a rather arbitrary amount) and lots of little accounts, into which I had recurring monthly deposits to set aside for expenses I want to have ready at the beginning of the following year. This included my property taxes, life insurance premium, next year’s IRA contribution, and education savings for the kiddos, which I periodically go in and transfer to a 529. PHEW.
And then there are investments. In Betterment, I have two pots of money — one invested more conservatively and one more aggressively. Then, randomly, I have a little bit of money invested in bonds. People, if you know anything about how you’re supposed to allocate this stuff, please, by all means, comment. This is definitely my weakest link, but I’m too cheap and too skeptical to hire a financial advisor, soooo right now, I’m letting Betterment do most of the work for me and hoping that’s not horribly naive.
Moving on, there’s my husband’s stuff. His own retirement accounts, savings accounts, checking, and investments. So where are we now?
Well. I started the process of rolling over my old 401k. And I may do the same with the 457, but it’s actually outperforming everything so I’m inclined to leave it alone. So, partial success on the retirement account front.
I consolidated ALL of my little savings accounts, got myself added to my husband’s savings account, and am transferring alllll of my savings into that one, shared account. There, we’ll keep our rainy day fund. Now. I know this is controversial — it’s a lump of money sitting in account earning very little for us and in fact, not even keeping up with inflation. Then again… I haven’t gotten the cojones yet that some other FIRE-types have to, say, let a home equity line of credit serve as my safety net… I’m just too much of a scaredy cat. But I’m willing to revisit that issue at a later time. For now, we will have (in a few short days when the transfer goes through), ONE savings account with cash moneys on hand for emergencies.
I stopped the nonsense with 4 different monthly automatic deposits to different little savings accounts for the set-asides I want ready at the beginning of 2018, and instead have set up automatic deposits to Betterment. That way, those moneys will be sitting there making me money until they’re ready for their next move in January.
And that leaves our investments and our checking accounts. I admit, the checking is the one that scares me the most, because I envision all my careful plotting getting muddled with my husband’s (very different) approach to paying bills and spending generally. But it’s got to happen — no more willful ignorance. So. By next time, all these little odds and ends should be squared away, and we’ll have a crystal clear, easier-to-monitor picture of where we stand. Voila! I’m feeling that this all is not quite perfect, but it does feel like progress… We’ll see if it pays off.