Could it be? We actually HAVE MONEY???

[Mystikal]

So, after years of struggling and strings of bad luck DH and I ended up filing bankruptcy. We reviewed all of our options and thought long and hard about our decision before we went forward with it. We didn't rack up credit card bills on things that we didn't need, anyway, now I got a fabulous new job and DH will be starting a new job in a week. Once he starts we will have quite a bit of extra money left over at the end of every month. The concept of "extra money" is totally foreign to me and we want to be responsible with our money.
What suggestions would you offer for managing money? Any tips?

[craftyT]

Glad to hear things are taking a turn for the better :)

DH and I live comfortably below our means - we budget necessities as well as fun things (within reason). But the best thing we do with our money is automatically save every month. In the past we always had grand plans to take our "extra" money and transfer it to savings at the end of every month... but guess what? Usually by the end of the month, we spent our extra money :o So now we pay ourselves first. We set up a Vanguard account and the Tuesday after every paycheck, a designated amount of money leaves our checking account and goes to savings. It was very easy to setup and now we have a good emergency fund for life's little curve balls.

[emmjay]

I have boring advice for you! :)

First, if you are not used to having any money for yourselves, I would give yourselves a relatively small monthly allowance to spend on whatever you want, say $50 each or something. I really believe it is important to allow yourself some freedom in your budget, otherwise it becomes oppressive and unworkable.

Then I would save at least 3 months of living expenses in a money market or similar account for emergencies. Actually I would save 6 - 12 months (that's what we want to do) but I am pretty conservative financially.

After that I would put as much of the extra money as possible toward retirement, either through a 401(k) at work or else in an IRA. I can't remember off the top of my head what the limits are, but I think it's $15k per year for a 401(k) and $4k for an IRA. I am a firm believer in aggressive saving for retirement - it will be so worth it in the end. Or you could do both things simultaneously - after your allowance save half for retirement and half for your emergency savings.

Anything after that I would probably use half for fun stuff, and save half for a bigger goal (remodeling your home, traveling, etc.).

Good luck with your newfound money! I think it's great that you are asking for advice on how to be responsible beforehand.

[dreamgirly]

Congrats on the new hope of money! :) My best advice would be to live below your means. Be cautious, since you have run into financial troubles in the past. You'll probably want to build up your credit... also, will it be at all possible to scale back and live off of one salary and put the rest towards savings/retirement? That is what we are doing and it works really really well.... took a few months to get the hang of it but just think about how much you could save doing this.

Also take into account the time value of money. $250 for a Coach bag today or $250 into that 401K? In the long run, it's almost always better to save. Don't deprive yourself - buy new work/play clothes and other fun stuff but be aware of what you're spending your money on, track everything in spreadsheet/software like MS Money.

Also, make sure that your new jobs are not causing you to eat out more than is financially comfortable. DH & I ran into this situation recently, and when I looked at the monthly report showing "dining out" expenses, I was really surprised.

So,
1) Spend the $60 to buy MS Money. Track *everything*
2) Save, save, save. (think cash savings/ money market here)
3) Max out the 401-k (employer matching if you have it) and the Roth IRA's for 2005
4) Make sure you have good health/life/car/house/etc insurance
5) Rethink any big purchases (car/house/boat/etc) and look for discounts online/through friends

:D

[Mystikal]

Thanks for all the suggestions, ladies!!
dreamgirly we're actually thinking about trying to live off one salary and see how that works out. I was wondering if we were crazy. Glad to see we're not! :p