Family 10 months ago by Liz Adams

How We Handle Our Finances

When Dave and I first met finances weren’t my strong suit. I used to be very reckless with money. My parents told me that if I were going to move downtown right after graduating from college then I needed to understand that I could only live the life I could afford. It took me awhile to understand that concept as a 23 year old living in the city! Every month was a fingers crossed situation of whether or not I could pay my rent, I spent wayyyy too much money on my credit cards barely able to afford the lowest monthly payment, paying so much in interest and basically just SURVIVING. When I met Dave I could tell he knew what he was doing and I always felt insecure about my money situation. As we got more serious he would ask more serious questions about my personal checking and savings accounts (which I didn’t have a savings account! how in the hell could I SAVE money?), my credit cards, etc. It was terrifying and I always just tried to dodge his questions. But it was always a reminder that I needed to get my sh*t together!

My blog started to make more money and the corporate job I was working at had me working heavily in Quickbooks. This helped me realize how important it was to set up Quickbooks for my own business and really start tracking, invoicing and SAVING for my business. A year later my business was actually at a really good place (this was 2011!) and I asked my dad if he trusted me to leave my job and focus on my blog full time. He was basically like “what is a blog?” and I told him to trust me. I asked that if I needed it, would he help me pay my rent if times were tough and he said yes but if in 6 months I’ve gotten no where then I knew my job would take me back. Luckily that didn’t have to happen! Learning Quickbooks really helped me refocus the importance of finances and saving for my business which ultimately reflected on my personal accounts. When Dave and I got engaged I was still working to pay off my credit cards, I still wasn’t saving anything personally (everything I made stayed in my business) but I realized I needed to be more honest about my financial past. Dave was so understanding and helpful! I still felt very protective of my business accounts (I still was until we had kids!) but I let Dave help me realize what was the best payroll set up to pay myself, help pay off my credit cards and more. 

I’m going to tell you this funny story (Dave told me not to specify $ but I’m going to because it is part of the story): when Dave and I  got married and went to the bank to combine our accounts they reviewed Dave’s and all of the various accounts he had opened over the years (savings, ROTH IRA’s, savings account in the stock market, personal checking) and I was like first of all, how the hell did you save this money and also hell yeah Dave! Then they looked at me and said “ok and Liz, you’ll be contributing your personal checking account with a total of $26.27?” And I was like YES, YES I will! Haha I remember Dave looking at me and saying “good Lord this is only the beginning.” But it was such a funny way to financially join together as a family!

I’ll let Dave take it from here!

HOW WE HANDLE OUR FINANCES

Dave Adams here! First and foremost, so I don’t go to jail, in no way am I telling you what to do or am I a financial advisor of any kind, this is just my view of best practices.

I think the single most important thing I learned at MSU, Go Green!, was that compounding interest is a beautiful thing. Save early and save often because it’s amazing what a few thousand dollars will be worth in 40 years when you hit retirement. Liz and I have a personal checking account that we keep just enough money in the bank to pay all of our bills, a savings account and 2 personal credit cards. Liz then has a business checking account which does her payroll and gives her a paycheck twice a month plus 2 business credit cards. 

So, how do you start saving for retirement?? 

1: If you’re employed, it’s likely your employer has some sort of retirement plan set up with an employer match. No matter what it takes, max out your contribution. It’s free money! For example, if they match up to 3% of your take home, then make sure 3% of every paycheck is put in to your 401K. Once you set up the withholding with your employer you won’t see the cash and you’ll forget about it for your day to day budgeting. Easy math: if you make $50,000 per year, you would contribute $1,500 that doubles to $3,000 which is paid for by your employer. If you never put another dollar in to that account, 30 years later it will be worth around $30,000. Yes that’s a long time but you don’t have to do a damn thing. Realistically you’ll keep working every year and continue to max out your contribution so there will be another zero or two on that total come retirement. 

2: Take advantage of your ROTH IRA. This is another retirement fund but you put post tax dollars in this account so it gets to grow tax free and you get tax free withdrawals come retirement which is a huge advantage! The IRS only allows you to contribute $6,000 per year so do your best to max this out every year. You actually have till April 15, tax day, to contribute for the previous year so you technically have 16 months to max out your contribution. If you graduate college at 22 and in your first year of employment put that $6,000 in a ROTH IRA. In 40 years it will be worth around $100,000. The power of compounding interest at its finest!

3: Savings accounts! If you’re with a big bank stay with a big bank. They are easy to use and have so many great features, but open up a secondary savings account with an account that pays a higher interest rate. They are becoming more popular but Ally.com is what we use and they offer very high, competitive rates for a savings account. If you had $10,000 in a savings account you’ll make a couple hundred dollars annually in interest vs. pennies, yes pennies, from a big bank. It’s not life changing, but why leave money on the table? We had a lot of questions about savings accounts for our kids and we have two college 529 college savings accounts for our boys and the benefits of it is you can deduct your donation up to $20k per year in total of your kids (it sounds like this varies state to state!). Each state has a specific bank that helps you set this up! Just look up 529 accounts in your state. 

4: Budgeting. I’ve been with Liz for over 10 years and this is a tough one for the Adams Fam but we are trying to be better in 2020. It’s very important to live within your budget so you can save as much $$ as possible every year. We all have goals to buy a new house, save for our kid’s college, get a new car, etc. and you can’t do this unless you set spending limits and goals of how to achieve it. It sounds simple but it’s not!! Like most people you have a lot of fixed expenses. It’s hard to renegotiate a mortgage, rent, car payments, or get a discount on daycare but we can limit our expenses on our credit card every month. The majority of our expenses involve eating out and groceries. We are making a conscious effort to limit big restaurant bills and plan better for our grocery store runs so we don’t waste any food or money. The easiest way to start budgeting is to pull up your monthly spending statement from your Bank to see what is taking the biggest chunk of your money. Start by making small changes in that category! When Liz meal plans more efficiently we see a big difference in this! We also have an Excel spreadsheet (that Liz never sees but I need to visualize!) of all of the things we HAVE to pay every month – daycare, insurance, gym membership, mortgage, car payment, etc. so we can see what $ is left over for the fun stuff. 

I could dive deeper in to some topics, but I hope this is a good start. I’m happy to answer any questions, [email protected] or call me! 

This is what has worked for us so hopefully this answers some of your questions on how to get started! If you have any specific questions we can do a little Q+A on Instagram! Let me know your thoughts 🙂

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  1. Loved this post! Would love to know if someone is in a similar spot to where old Liz was, how would both of you recommend they start getting more savvy? What would be the first step?

    1. Dave Ramsey has a GREAT class (Financial Peace University) as well as lots of good tips! His steps are:
      1. Starter emergency fund ($500 if you’re single; $1,000 for couples)
      2. Get out of debt (except mortgage) using a debt snowball
      3. Fully funded emergency fund (3-6 months of expenses)
      4. Save 15% of your income toward retirement
      5. Save for kids’ college (optional)
      6. Pay off the house early
      7. Build wealth and be generous

      1. Yes! I love Dave Ramsey! His podcast and YouTube videos are very helpful. I listen to his podcast during my commute to work and it gets me motivated to save more.

  2. How does a financial planner work – do you need to pay for one? Where is your recommendation to start when you believe you are living above your means and need a little help navigating priorities?

    1. Start as soon as you can! Start today! We don’t have a financial planner but go meet with your local bank and they will help you create a road map for success!

  3. I could have written this! I dodged my husband’s questions about my finances for a long time. He was horrified when he learned the truth but is supportive, thank god 🙂 Glad I’m not the only person who brought approximately $30 (and credit card and student loan debt) into a relationship, ha ha.

  4. Love this! As someone who works in finance, I totally agree with all these points. Another way I think is important to save is to put money away for medical expenses. Some employers will put money into your HSA account and I think it’s important for you to put money into it as well, so inevitably when a medical expense comes up you don’t have to dip into your savings account. Thanks for sharing!!

  5. Important tips! Navigating finances as a married couple is certainly eye opening. One caveat to the above that we unfortunately (fortunately) learned recently through our accountant: the income restrictions for contributing to a Roth IRA! (who knew!)

    1. You may know this already, so forgiveness, but you can contribute the full amount to the regular (traditional, after tax IRA) and then roll it into your Roth IRA so that the funds are all in one place. I believe my husband uses the term “conversion” when we do this step. We have a Roth 401K and a Roth IRA, it is a bit of juggling around at a certain time of the year but the $$ stay together.

  6. Such a great post! Dave, would you be willing to post your spreadsheet that you use with dummy data? Y’all are so fun – thanks!

  7. Great post – I love when couples open up about their finances! We use a small local bank (we live in Iowa) and our checking interest rate is 2.25%. It actually used to be higher but the bank was bought out by a slightly larger bank. It’s still mostly unheard of! We also found a local bank who does zero closing costs for refinancing our home, which helped a few years ago when the rates dropped.

    I highly recommend Dave Ramsey’s course Financial Peace University for anyone who is interested. It was the best thing we did for our marriage because I did not learn this stuff growing up (my husband is more like you, Dave) but now I honestly geek out over it!

    We are debt-free minus our mortgage, and our big goal this year to is save up three months’ worth of expenses in our emergency fund. We are 1/5 of the way there and hope to be done by November. We’ve had it fully funded a couple times but my husband made a much-needed career move (totally worth it, but drained our savings). In the past two years we have purchased two vehicles with cash so now we can focus on our savings! No big trips for us this year, but it will be worth it in the end!

    We use You Need a Budget for our budgeting software and love it! It’s so nice to have the app on our phones to log and categorize transactions as they happen.

    Can’t wait to be done paying for daycare next year! The end is in sight 😊

  8. How do you go about finding a financial planner you can trust? My husband and I are looking to have one as we want to start seriously saving for a house and need some guidance.

    1. We asked on our community Facebook page for recommendations and interviewed potential candidates. You’ll get a good guy feel for the right one.

  9. As a small business freelancer I would love to know more about what you use for Liz’s payroll. I haven’t figured that out for myself yet. Thanks for the tips!

  10. Really enjoyed your tips on handling finances! Would love to hear about how you and Liz tackle debt (credit cards, student loans). Thanks!

  11. Thanks for this post!! Would also love to hear how you use your spreadsheet when budgeting (do you enter in variable expenses right when you spend money, have an app to track expenses or just have a general idea of how much you can spend each month?). Also how has having kids changed the way you spend/save (like who knew daycare for two kids would be so expensive 😅). Would love an instagram Q&A on this!

  12. Liz, it’s refreshing to know I’m not the only one who struggles with money! My husband handles our budget, but I need to be better about also taking accountability for our finances.

    Thanks for the tips, Dave! They were just simple enough for me to understand and also kept my attention (normally my eyes gloss over at any talk of finances 🤣). Never thought I’d say this, but I would love to read follow-on posts from Dave on this topic!!

  13. Really really enjoyed this post! Aaaand I’ve never related to you more, Liz. 😂 I debated whether to share this or not, but I feel like I should because it was such a game changer! A few months ago, my husband and I participated in a free personal finance class that’s held by the Church of Jesus Christ of Latter-day Saints. I was so worried to take it because I didn’t want to have the difficult conversations I knew would come up, but I cannot believe how amazing it was for us. And not just for our finances. While our finances are the best they’ve ever been in our 4 years of marriage, one of the greatest benefits was that it strengthened our relationship by helping us get on the same page (life changing since our biggest arguments revolved around finances). It was HARD, but 100% worth it and helped us get closer to where we need to be. Highly highly recommend!

  14. The most important lesson I learned about money is, once you can afford to buy things you want without it affecting your life (whatever it is.. $1,000 shoes.. Chanel bag) – the need/want to “being able to buy it” disappears. I have found this desire to “having the ability to buy XYZ” is actually what people long for, not really the item itself.

  15. My husband and I are currently in the beginning stages of looking for a home and these financial tips are so great! Thanks, Adams fam!

  16. Yes! I love this and think personal finance is a great topic. I’m a big follower of Dave Ramsey. He has his steps laid out which makes it easy for people to follow. I think it’s amazing that you kept with Liz, Dave. Not all spouses do this. Obviously money is a HUGE thing to be on the same page on in a marriage.

    So many people are in your boat Liz. Being insecure about their finances. I learned to love to budget, and I even participate in No Spend Months where I literally do nothing but free activities and I don’t eat out at all. It’s fun to challenge yourself. I’m single so it’s a little easier for me having no kids, but still a fun challenge!

  17. Omg. I laughed out loud about when you went in to combine accounts. That was me and my husband, too! I used to be so happy when I had money “leftover” in my checking account after month end! Hah.

  18. Great write up Dave! I’m 25 and i don’t think people my age think enough about saving and especially IRAs. Will definitely be sharing this with my friends.

  19. Thank you both for taking the time to write this post! I loved it. I learned something new in regards to the Roth IRA and savings account with ally.com. I would love to see more of this in the future. It’s a good reminder to stay on track financially and that you’re (ME) not the only one out there attempting to do so. Appreciate you guys!!

  20. Also not a financial advisor, but I consider myself financially savvy and Dave makes excellent points RE: saving. Folks (especially women) need to be more open about financial talk and gone are the days that talking about money is “taboo.” Let’s help each other experience financial freedom and success.

    A tip I give folks that struggle with budgeting is to make bi-weekly payments for your fixed monthly expenses: student loans, rent/mortgage, car payment, credit cards, etc. (as long as the lender allows it). While savings accounts have compounding interest that works in your favor, so too does your debt and loans, which works in the opposite favor. Since most people are paid bi-weekly, divide your monthly expenses in half and pay half of those fixed expenses during each pay period. Also, if you pay fixed expenses and debt each pay period, you will end up making 2 extra payments throughout the year shortening the term and paying less interest. I paid off $50,000 in student loans in 7 years using this method. Lastly, if you get a nice bonus or commission, take 1/2 of the post-tax amount and put it toward a debt of your choosing in the form of a principal-only payment. I did this 1-2 times a year, and it makes a BIG impact.

  21. I love this post! I’m soon to married and finances are the most terrifying marriage factor for me. Hopefully you guys can do an insta q&a because I have questions!

  22. I love this post! It had me laughing and then thinking of what I should do. Thanks for the ideas! Hope to see more financial stories!