Personal Finance Interview: Johnny on Revising Your Financial Goals Using Mint.com
Who says your views on personal finances and budgets have to be the same your whole life?
Over the years Johnny and Joanna, the bloggers behind Our Freaking Budget, have paid off $20,000 in debt, moved to one of the most expensive cities in the world and had a baby. On each step of their journey, they've adapted their views on personal finance and learned more about their strengths, weaknesses, spending and saving tendencies, and money management philosophies in general.
"We're still very frugal," Johnny says. "We're not quite as extreme as we were when we were actively getting out of debt, but we still strive to save over 50 percent of our income each month."
And while they used to avoid credit cards like the plague, now the new parents use them like debit cards and cash in on airline rewards to help save money on travel. Saving is still a high priority, but with family fun to be had with 1-year-old Sally, they're trying to find a balance between saving and spending.
"We're not going to wait until retirement to enjoy life," he adds.
Johnny recently checked in with us to his family's story and offer inspiration and ideas for conquering debt, saving money and living the life you want.
Hi, Johnny! Let's start with Our Freaking Budget. When and why did you start your site?
We started Our Freaking Budget about a year and a half ago -- one month before our daughter, Sally, was born. We expected that new phase of life to slap us in the face and throw our well-established budget a curveball, so we wanted a place to document all of our past, present and future personal finance adventures. We also loved having a creative outlet outside of our 9-to-5's where we could collaborate and work together.
Who should be reading it?
Anyone who's serious about making smarter decisions about money, without eating ramen every night for dinner. Since we're 20-somethings, we think we resonate with fellow millennials who are trying to learn the ropes of managing their finances. We really only expected our moms to ever read our stuff, so we're excited when anyone sticks around to see what we have to say.
We love your site's name. What is the biggest cause of you shouting out in despair about your "Freaking Budget"?
You'll normally hear the "freaking budget" complaints in our house around the first of each month. That's when we're adjusting our budget goals for various expense categories and feeling especially suffocated in our ability to spend liberally (which our saving goals are thankful for). It's a very important, very necessary evil.
The biggest culprit for your debt was student loans. If you had to do it over again, how would you handle paying for your college education?
We probably would have tried a little harder our freshmen year and not blown our chances at scholarships so early. But other than that, not much. We both held jobs throughout college, we applied for available grants, and we ate our fair share of Taco Tuesday $0.39 tacos. We feel grateful that our debt was manageable and that we were "forced" to face that music early in our marriage.
You said that David Ramsey's "The Total Money Makeover" helped you see the money management light. What's so great about Ramsey's advice? What tip, takeaway or piece of advice do you find yourself using the most?
Dave Ramsey was just what just we needed when we needed it most. He does a great job of conveying how important it is to not accept a life of debt and instilling a laser-like focus on paying it down. While we feel like we've graduated from some of his advice, we'll forever be grateful for his budgeting philosophy of "giving every dollar a name."
You managed to still chip away at your debt while living in New York -- one of the most expensive cities in the world. How did you do this?
Lots of self-restraint. There's so much to do, so much to eat, so much to spend money on! But for every expensive activity in NYC, there's an inexpensive or free alternative. We visited museums on free admission days, explored Central Park on a regular basis, and ate from the most delicious (and least expensive) food trucks/carts the Big Apple had to offer. We made sure we didn't let the bright lights of New York City distract us from our debt repayment goals.
How has parenthood affected how you budget? Has Sally made you rethink money yet again?
Sally has definitely made us focus a bit more on not just saving, but saving for our future. Our needs now take a back seat to Sally's current and eventual needs. So we're more purposeful about retirement planning and, yes, college planning. Even though she's still in diapers, we're already putting away a small amount each month toward her college fund. On the flip side, we're more inclined to spend money on creating memories with our little family of three, even if those memories include diaper blowouts and tantrums.
What are your favorite go-to methods for saving money?
What's great about personal finance is that it truly is personal. Everyone finds saving method that works for them, and for us, it's keeping an itemized budget.
At the beginning of each year, we make savings goals and then create a monthly budget that will help us reach those goals. As we spend throughout the month, we track each expense using a budgeting app that syncs on both of our phones. This keeps us both aware of and accountable to our spending, which, in turn, keeps us on track with our saving. And we stay motivated by creating benchmarks and having specific items we're saving for.
When we hit our savings goals, we celebrate by blowing all of it on a shopping spree. Just kidding. But it is important to put aside "fun" money each month, even if it's just $10 or $20 so that saving and budgeting don't feel too stifling. It seems odd to say, but having a little "fun" money each month helps us consistently stick to our savings goals.
What's your biggest piece of advice for young college grads who are about to embark on their first career about spending and saving? What should they prioritize? What should they avoid?
The most important priorities for recent college grads should be to pay off debt and start saving for retirement.
It's easy to get googly eyed at the sight of your first real paycheck, especially when you realize what you could potentially buy with that money. But starting off on the right financial foot will set you up for a lifetime of financial peace. And don't for a second think that you're jumping the gun by saving for retirement in your 20s.
Resist the temptation to snooze during your company's 401k meeting! The compound interest earned by starting your retirement savings at, say, 25 rather than 35, is worth hundreds of thousands of dollars. Your 65-year-old self will thank you some day. And then you can thank us by giving a portion of retirement slush fund ... or at least give us a high five.