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The First Step – Solving our Cashflow Problem

~ Molly ~ Leave a comment

Just proving that this blog is as entry level as you can get, here’s the first problem I’m looking to solve:

We SUCK at cashflow. We spend less than we make, but we spend it at the wrong times. Therefore, while on paper our monthly budget looks great and makes sense, I’m constantly having to move money out of savings to prevent potential overdraft. It’s a mess. Part of the problem is that I really struggle with budgeting by the month — matching up the overall spending for food, for example, with the checking account balance is difficult for me. I’ve tried more flexible systems, but then found that it was too easy for me to just move money around to cover overspending. I love the rigidity of the monthly budget for discipline purposes, but we’ve been riding the lightning on overdrafts way too many times recently.

After doing some reading, it appears that the answer to the cashflow problem, if not the budget issue, is a checking account cushion. If you’re a follower of You Need a Budget, they call this the “buffer.” The buffer is essentially one month of expenses saved ahead, so that you aren’t spending money as it comes in, but rather spending dollars you earned last month, and holding on to this month’s dollars to pay for next month.

While we are still pursuing debt freedom, and that’s the primary goal, I don’t want to keep having to shuffle money around to cover my disorganization. Therefore, while my goal is not currently to put a full month into our buffer, I would like to have one bi-monthly paycheck’s worth put away.

Therefore, GOAL ANNOUNCEMENT. In the efforts of better cashflow management, I will be putting away approximately $3000 as a checking account buffer, to keep myself from stupidly overdrafting.

Hi, I’m Molly.

~ Molly ~ Leave a comment

Welcome to Breathing FI. I’m Molly, and I want to be financially independent, but I’m terrible with money.

Don’t get me wrong, I read a LOT about money. Books, blogs, podcasts, I am FASCINATED by the pursuit of debt freedom and financial independence. I close my eyes and imagine what it would be like not to worry about money, or about the economy, or about whether I can keep my job until I drop dead. But no matter how much I read, somehow I haven’t magically become financially independent. Amazing how that works, right?

A little bit about me — I’m a lawyer, married to another lawyer. We graduated from law school seven years ago into the recession economy. I got a job, he didn’t. Then I got another job, and he still didn’t. Then I lost that job, then got another job, then he got a job, then another job. Then I got a new job. Keeping up? The upshot is that we are about one year into making the kind of money we expected to make seven years ago.

In the meantime, we did a lot of stupid, desperate things with money. We had one very sick kid, then a healthy kid. We bought a house that we could baaaaarely make the payments on. We spent a LOT on credit cards. Paying my husband’s student loans was certainly not on the agenda. I was too tired and too freaked out to manage our money well, and my husband was too stressed out to even think about diving in to what I was up to. All told, we ended up with $225K in non-house debt. It felt endless and unconquerable.

And all this time, I kept wondering why I couldn’t get it together.

One year later, thanks to a refinance and a much better income, we are down to $80k of non-house debt. But I wouldn’t say we’ve gotten more organized, or moved forward with a ton of direction. We just have more money to mess around with. We’ve done some smart things (saving, debt repayment), but also a whole lot of dumb things (eating out, accidental overdrafts). I’ve been reading more and listening to more about financial independence, and what sounds the most amazing is how on top of it the FIRE folks are.

Now, full disclosure, I have ADHD. Diagnosed as an adult, but man, getting that diagnosis explained the heck out of why I’ve always struggled with money. It shouldn’t be so hard to remember to pay bills, or remember that I’ve already written a check to X so we don’t have the money for Y, but that’s where I’ve always fallen down.

Regardless, the reason I wanted to start this blog is to hold myself accountable and document our journey towards financial independence, but also to serve as a spot for the Misfit Toys of the FIRE world. Maybe, like me, you’ve always struggled with getting in control. Maybe, like me, you aren’t naturally frugal and the idea of making your own yogurt sounds like Little House on the Prairie cosplay. I’m going to figure this out, and you can too!