Dad and I have mixed feelings about Christmas.  He was raised Jewish, I was raised Catholic, but we’re not really either.  I put a menorah in the window during Hannukah and cajole Dad into making latkes – because I really like them, and I put up a tree and lights – because I like the lights.  We’re relatively bah humbug about the rest of the holiday though (except the days off work part).

We don’t spend a lot of money for the holiday.  I do a lot of baking for people – because I like to bake and people always appreciate my baked goods, so I spend a bit more on groceries between November and January, but we don’t really spend a lot on presents.  I budget about $25/mth throughout the year for presents (all year long, not just Christmas presents), and that’s about the max we spend.  We bought several toys last spring for Daughter Person when they were on sale, and those have been divi-ed up between Christmas and her birthday in late January.  I bought Dad’s present around October, early November, and I’m pretty sure Dad has gotten something for me.  I bought a $50 gift card for Grammy to a store she loves to spend money in, and we’ll be out another $50 for the “family” gift exchange ($25 each).  We’ve spent about $400 throughout the year on presents.

I don’t particularly like receiving “things” as gifts – if I really wanted it (and I could afford it), I’d just buy it myself.  Problem is, if I can’t afford it, neither can Dad, and neither can the rest of the family. I’d rather get experiences – theater tickets, a weekend away, etc.  Dad knows this, and is generally very accommodating about it – the rest of the family, not so much.  My mom almost always buys me a new shirt or two, which is useful, and we have the same tastes in shirts, so it works out well.  But I almost always come home with more stuff than I need (or want) and then have to either take the time to return it (if possible) or otherwise dispose of it.

How do you handle buying gifts for people or asking them to not buy you gifts?

I didn’t really set any 2013 goals other than one million in assets and half of a million in net worth.

We’ve got a net worth of just under $540k, which meets that goal, and our assets are just over $992k, so we’re close to the million point, but not quite there yet.  We might make it with the end of year paychecks (our gross is higher than 8k), but I’m waiting for our contractor to cash his 7k check, so we’re really dependent on the markets going up that much or our house value going up that much.  Our house value estimate has pretty much stayed the same all year long, so I’m not expecting it from there.  We might get lucky and the markets might increase enough to make up the difference.  Either way, we’re really close to it.

We did OK sticking to our budget, although I would like to do better.  I almost feel like we’re a bit too lax sometimes, and willing to take from other categories to cover things more than we should.  The overages haven’t been consistently in any one category, so I don’t think we should increase anything yet.  We’ve been much better about not going out to eat as often, or when we do, going to a place we have a coupon for or that’s inexpensive anyway.  Many times, I overestimate in some categories (usually our electric bill), or our car taxes aren’t as high as I was expecting (I base it off of the previous year’s amount, and cars do usually decline…), so that money can get “repurposed”.

For 2014, I’m definitely setting a few goals, financially and otherwise, which I can work towards during the year.

I’ve been using You Need a Budget (YNAB) for almost 2 years now, and I think it is the *best* budgeting tool available.  I’ve used Quicken and iBank (and MS Money ages ago), but none of them helped us start the process of getting out of debt.  YNAB is not just a piece of software, but a methodology of four rules – the software just helps implement those four rules.

The specific order of the rules has changed over time, but the current rules are:

1. Give Every Dollar a Job
2. Save for a Rainy Day
3. Roll with the Punches
4. Live on Last Month’s Income

By following these rules, I feel a lot less stressed about our finances.  I think the biggest one that helped me was Rule 4 – which was Rule 1 when I started, it’s also apparently the hardest to implement – which is why YNAB moved it to rule 4.  It basically requires you to have at least a one month’s “emergency fund” – aka a buffer in YNAB parlance.  We already did this for our biggest payment – our mortgage, so it was pretty easy to just not pay on debt for a month and be a month ahead.  It might not be as easy for others living paycheck to paycheck.

Rule 1 is basic zero-based budgeting, and Rule 2 is saving for those known expenses that aren’t monthly (like insurance payments every 6mths).  Finally, Rule 3 basically gives you the flexibility to change your budget if you need to.

I like that I don’t have to have the same budget every month – some months I could focus on debt repayment, others I could focus on building up my emergency fund – doesn’t matter, whatever you want.  We have a relatively steady income with random “windfalls” like bonuses or birthdays, etc, but it could be *very* useful for folks who have a variable income (like consultants, bloggers, etc), since you already know what you made last month, you know what money you have to work with this month, no guessing what your income might be and timing bills to paychecks.

What do you use for budgeting and why do you like it?

YNAB didn’t pay me to write this – I just really like it.

I make no secret about the fact that I’m basically an adrenaline junkie.  If given the opportunity, I’d travel around the world to ride every roller coaster there is.  As it is, twice a year, Dad and I travel to the roller coaster capital of the world: Cedar Point.  We drive 8 hours for the privilege of waiting in line, being tossed around and getting an adrenaline high (at least for me – Dad is just along for the ride).  This past weekend was our last trip this year, and we go with good friends, which makes the experience even better – we have people to talk to in line 🙂

I love the ups and downs (and sideways) experiences that roller coasters give over and over again.  But, I don’t really like my accounts to look like that.

October’s portfolio balances

My checking account tends to look like that over time as money comes into and goes out of the account to pay for day to day things, and I accept that. But I don’t really like seeing the high hills and valleys in my retirement accounts.  In technical terms, it’s called volatility – usually measured as a standard deviation from a mean.  Thanks to the government shutdown and uncertainty, this is the view of our portfolio balances.

While it’s a roller coaster that I’d love to ride (that double dip there would really give some airtime), it’s not my favorite view of my balances.

Of course, daily viewing of your portfolio balances is discouraged for this very reason.  I have enough mental constitution to not emotionally sell when things are down, but many people do not.  If you’ve got a solid investment plan – whatever it is – stick with it, through the ups and downs.  Only sell when your plan says to, not based on the market for that particular day.

Are you able to look at your balances daily (or even weekly) and stay the course with your strategy or do you sell when things look down?