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- In the first years of our marriage, my husband and I accumulated about $30,000 of credit card debt.
- Once we changed our approach to our finances, we paid that off quickly. Then, we focused on building our savings.
- In just a few months, we've saved $28,000 by living only on my husband's income and automating a $1 transfer to our savings every time we make a purchase.
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For the first seven years of our marriage, my husband and I had little to no savings. We lived paycheck to paycheck; I was a stay-at-home mom bringing in a couple hundred dollars a month on editing projects, and we needed every extra penny to pay essential bills. During that time, we accumulated almost $30,000 in credit card debt, partially from irresponsible spending and partially out of necessity.
Once I started carving out a niche in the writing world and making more money, and once my son started kindergarten, which drastically decreased childcare costs, we started getting aggressive with our debt. Now that most of it's been paid off — we paid almost all of it down in four months — we're focused on building a solid financial future for our family through saving.
Since February, my husband and I have saved $28,000. We see our savings as money we don't need to use for our month-to-month budget. Some of that savings was for our federal tax return, and we also used a bit of it for a few small house projects we have been planning since the beginning of the year.
The rest of the money is for our emergency fund, which seems especially important during the pandemic. I like to have at least a $5,000 cushion in our savings account that we won't touch, whenever possible.
Here are the two strategies we've relied on to make sure we have what we need for both rainy days and emergencies.
Living on one of our salaries
My husband and I are fortunate to have two reliable incomes, but we also have a tight enough budget to live off just one.
As a W2 employee at a software company, my husband gets regular, predictable paychecks. I'm a freelance writer, and I make almost as much money as he does (usually) — but my income is a lot harder to predict. I never know how much money I'll make in a given month, and every client has different payment terms. Sometimes I get paid two weeks after submitting an article; other times, it takes up to two months to see the money.
To make financial planning easier, our adviser encouraged us to live on my husband's paychecks and divert my income to a separate account. We plan our monthly budget based on my husband's income and view my income as "extra" — the icing on the cake.
Practically, that means every time I get paid by a client, the money goes into my checking account. Then, I move about 75% of the paycheck to our joint savings account. The remaining 25% of my income gets saved for quarterly tax payments, since my work as a contractor doesn't get automatically taxed.
An automatic transfer every time we swipe our debit card
When we signed up for a new checking account at Wells Fargo a few years ago, we opted for the "Save As You Go" feature. Every time we use our debit card, the bank automatically transfers $1 to our savings account.
While this transfer doesn't make up the bulk of our savings, it definitely adds up quickly. Since February, we've saved $500 with this feature. That's nearly 2% of our total savings.
Beyond just automatically transferring money into our savings account, the Save As You Go Feature has a psychological component. Essentially, there's a $1 tax on every purchase, so it prompts me to think twice about spending, both in the moment and when I see how much it's accumulating in our savings.
The money is just moving between accounts, but mentally, I've noticed myself being more thoughtful about when and how I spend money — which I hope has a positive effect on our overall financial health.
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