Here are the numbers for the month ending April 30th:

• The key number on that chart has been our monthly living expenses

  We have been unable to get our living expenses below our critical $4000 threshold since February. We have been over budget by about $2000/month in 3 out of 4 months thus far this year.

  Each month this has been due to a large “one time expense” such as car repairs, airline tickets or hospital bills.

  Unless we can get our spending under control, it will be very difficult for our family to get ahead until I am completely finished with my training.

• I have been delaying my IRA/403b contributions for 2008 until I begin my fellowship

  Although my salary will essentially the same, my benifit plans will change when I change training institutions. Although I do not anticipate being eligible for a match this will at least ensure that all my savings for the year will go to the same mutual fund company.

• We are not doing anything really well and we are not doing anything really poorly.

  We are just living and enjoying the experience of being new parents. Because we made sure we have adequate insurance coverage and a sufficient emergency fund, we are comfortable living a little above our budget for the next 14 months.

Our savings contributions continue to be feast or famine. With both my wife and I collecting a paycheck in January, we were able to contribute a nice lump sum to savings in February.

Reality came back quickly in March and we were unable to save any of our income. The rest of 2008 is beginning to look pretty bleak as well with our big move in July and the related moving expenses.

Here are the results:

The Numbers:

Our Living expenses dropped to the $4,000/month level in March
As a young family living in a large expensive city we struggle to keep our expenses in check. We have been able to trim most of our excess fixed costs each month. There is no gym membership, no landline, minimal magazine subscriptions, etc……

The $4000/month level for our living expenses is important b/c it represents the approximate level that we can live off of with our current income level. To reach this level we need to be very conscious with our variable expenses.

My wife continues to work part time.
We have been able to avoid child care costs by having her work on the days that I am post call and able to watch our daughter.

Her supplement to my income will end in May as we prepare for our big move. Unless we are able to trim our expenses in our future locale, we will have to consider having her work part time again when we get settled.

It will be the 4th Quarter before we have a chance to turn things around.
Managing our personal finances can be frustrating because changes seem to move at a glacial pace and it is rare to be able to make large changes to our net worth very quickly. I remain optimistic that if we keep focused on the fundamentals we will be successful in the end.

In fact we were able to move 102% of our EARNED INCOME for the month of February to savings/retirement.

Before you look at those numbers and blow them off, let me provide some details.

Like most households our monthly household expenses are cyclical. Some months we have more expenses than paychecks, etc.. To smooth out our financial reports I don’t include the balances of our checking accounts in our list of assets each month.

I do this for a couple of reasons:

First, we are normally very efficient at not letting our excess cash sit around. Anything over our normal monthly expenses we quickly transfer to our online savings account. A couple of clicks of a mouse and our money working for us as soon as possible.

Second, our bills are due throughout the month. To make our updates as simple as possible, I make our monthly updates as if all of our bills are paid. To be able to pay off our bills the week I make the summaries, I don’t report the slush I keep in checking.

Here are the results: (earnings are pre-tax)

The first two months of 2008 have been quite a transition for us. With so many changes at the beginning of this year: New baby, wife pulling back to part time, etc… We wanted to be sure we had the cash flow to cover our expenses without having to dip into savings.

To do this, we cut back our savings in January and early February until we were sure that we could pay our bills. The excess we then sent to savings at the end of the month.

We may continue to have this see-saw patten for the first part of the year with some months being more cash intensive than others.

The important number is the year to date(YTD) savings percentage.

With January being the last month that my wife was able to collect a full time pay check for 2008, I expect our savings percentage to slow decline over the course of the year.

On one and a half incomes, our day to day living expenses will consume up a greater proportion of our earned income each month.

Although this will be a challenge for us, I believe that it will help us in the long run as we learn to become more thrifty and manage our expenses wisely.

Hope you enjoy the journey as much as we do.

As someone who is currently trying to climb out of debt, saving a larger and larger portion of our income has proved to be the most difficult part of trying to get ahead.

Since how much we can save is such an important part of our family’s financial health I thought I should do a better job of following this information each month.

So, new for 2008 is our Earned Income Savings Percentage!

As you can see, we are not off to a great start in January:

I chose to base the calculation on my Earned Income for a couple reasons:

• First, the majority of Americans only have earned income to contribute to savings
• Second, my alternative income is not very stable or accessible for placing in accounts

For a comparison, I included our finances from the month of December. Here is some insight to those numbers:

December was an abnormal month for us financially.

• Our Salary Income was relatively stable for the month, with a slight bump in our Alternative Income
• Our Monthly Expenses we much higher than normal due to my Private School Loan repayment
• We were able to contribute such a large sum of money to savings due to a 0% balance transfer

In January we saw an increase in our day to day living expense due to increased insurance costs and some travel plans for the spring. This increase in living expenses and my desire to make contributions in lump sums kept us from contributing anything for the month of January

In the past two months we have gone from saving 96% of our income to saving 0% our our income. When it averages out a realistic goal for 2008 will be for us to be saving about 10% of our gross income.

As I progress up the food chain and become fully salaried I hope to push this number to 50% or more but only time will tell. I may be a bit optimistic with those numbers but aiming high never hurt.