When I left off we were talking about mortgages. Doing math is good. Being intentional about how much you spend on housing is good. I love my home, and I love that my husband is meticulous with our spending. But today I want to talk about a more fun category in our fixed expenses list: his and hers money.

Everyone always talks about how the biggest fights couples have are over money. I don’t doubt that. Thankfully Andy and I have managed to avoid that pitfall. I can’t pinpoint exactly how, and I don’t have a cure-all to prescribe. I will suggest, though, that you earmark a little bit of your money every month for each of you to spend however you please. Even when money is tight, it’s super important for your quality of life to have a little bit of fun money. This can be $5 that allows you to buy a soda once a week, or it can be a couple of hundred that allows you to buy an iPad. I don’t think there’s a magical amount that makes this principle work–it’s the concept that counts.

I’ve read on some other personal finance blogs about couples who share their fun money. I can see how that might be necessary if you’re really pinching pennies to make ends meet. I still think having a little bit of wiggle room is better than having none at all–but to me the real beauty of fun money is not talking to your spouse about it and truly being able to spend it on whatever you want with no judgment.

I find I spend a majority of my hers money on food and coffee. I really like lattes, and even though I have a milk frother at home, it’s just not the same. Also, eating lunch out is one of my little pleasures (I know, I know, says the girl who has blogged about bringing her lunch.) Also, I like to shop. I passed a Marshall’s on my way home from work every day for 2 1/2 years, and I stopped there with somewhat embarrassing frequency “just to browse.” I also buy a lot of Kindle books, especially when they hit $1.99.

My husband’s spending tends much more toward the electronics spectrum. We let balances carry over in the his and hers categories, one of the few places we do that, so if we spend under our budgeted amount in a given month the amount we were under gets added to the next month’s amount. It’s possible to end up with a pretty hefty chunk in there, and he’s more likely than I am to spend very little for a few months and then buy a bigger-ticket item.

But the beauty of budgeting fun money is that, as long as you stay within your budgeted amount, everything is fine! You don’t have to feel guilty. I only know what Andy buys because we record our purchases in YNAB, not because we’ve necessarily talked about it. Budgeting for his and hers money allows us each to indulge our own natural spending habits without breaking the bank AND buy ourselves things we enjoy, whatever those things may be.

Willpower is a muscle, and you can also use up your daily reserves of self-control by presenting yourself with too many decisions to make. Having some money in your budget, even a joint budget, that is just for you, to spend however you want, with no conequences, is a relief.

Like I said, I won’t say this is a magic bullet to never fighting about money, but I’d like to suggest that it sure can’t hurt!

This is a guest post by Andy Lindeman.

Laura and I recently bought a condo together, and one of the many decisions we needed to make was the type of mortgage to get. We knew we wanted a fixed rate mortgage, but we needed to choose a term: the most popular options are 15 years and 30 years.

Well, I’m an engineer so I make decisions with numbers! For an example in this post, I’m going to consider a $250,000 home with a 20% downpayment (avoiding the need to calculate PMI) and with current interest rates from bankrate.com as of 2 October 2014. I used Zillow’s mortgage calculator to compute monthly payments.

15 year	3.44%	$1,424/month	$256,320 paid over loan lifetime
30 year	4.27%	$986/month	$354,960 paid over loan lifetime

The differences seem pretty stark: the 15 year mortgage has a higher monthly rate, but is offered at a lower rate that saves nearly $100,000 over the lifetime of the loan.

Except it’s not valid to compare those numbers.

Consider a case where you spot me $10 for lunch because I forgot my wallet. If I pay you back tomorrow, the $10 will have the same purchasing power as it did yesterday. If $10 bought a lunch yesterday, it will buy the same lunch today. But if I wait 10 years or longer to pay you back, it’s very likely that lunch at the same diner will cost closer to $15 or more because of inflation.

Applied to the example above, the monthly payments a homeowner makes today have more purchasing power than the monthly payments the homeowner will make 10, 20, or 30 years down the line. A monthly payment of $986 or $1,424 will likely hit their pocketbook harder today than it will decades from now.

It’s relatively easy to adjust the “loan lifetime” numbers for inflation by calculating them in terms of present value. I used a spreadsheet to apply the formula here to each monthly payment over the lifetime of the loan.

Unfortunately we need to guess at what inflation will look like over the next 30 years, and that’s a subjective decision. I’ve given a range of possibilies in the table below:

</table> Now it's more clear how much inflation affects homeowners with mortgages. At 2% inflation, the 30 year mortgage costs about $46,000 more in today's dollars than the 15 year mortgage. It's valid to compare these numbers directly. $46,000 in 2014 dollars is a chunk of change! If inflation stays as low as 2%, homeowners who choose the 15 year loan and are able to make the higher monthly payments come out ahead of homeowners who chose the 30 year option. But things get interesting toward the other end of the spectrum. At 6%, homeowners who choose the 30 year loan come out marginally ahead of those who choose the 15 year mortgage. How can that be? Well, if inflation creeps up and stays at 6%, having a loan where the rate is lower than inflation is a big win: in some senses, homeowners who have a loan whose interest rate is lower than the inflation rate pocket the difference as time goes on. What will be the reality? It's obviously unclear. For the past few years, [inflation has been very low](http://www.usinflationcalculator.com/inflation/historical-inflation-rates/). But historically there have been periods where it's been much higher, even higher than 6%. It's also worth noting that inflation rates will vary over the course of the loan too rather than staying constant as I assumed for the example above. Whatever the reality ends up being, if inflation stays positive, the gap between a 15 year mortgage and 30 year mortgage over their lifetimes shrinks from the difference between simply adding their monthly payments up. In general, I think it's good to consider this because you might want to use the difference in monthly payments to do other things that enrich your life: invest in a crazy idea, take another vacation, create an emergency fund, etc. If you know that the actual difference (after inflation) is much lower than the pre-inflation numbers, it might be easier to justify in your mind. Laura and I eventually chose a 30 year mortgage, though the reasons go beyond present value. I plan to write another post in this series explaining our rationale that I'll link here after it's posted.

Loan Term	0% Inflation	2% Inflation	4% Inflation	6% Inflation
15 year	$256,320	$221,940	$194,082	$171,309
30 year	$354,960	$267,857	$209,006	$168,111

Today is Saturday, and I’m writing Friday’s blog post.

It’s also October 4th and Andy and I have not made our budget for the month yet.

Sometimes you break your own rules. But as someone in the #Write31Days Facebook group kindly stated, last year she missed a few days of the challenge and no one has come to arrest her yet. Somehow I don’t think anyone will come after me, either.

Normally I am pretty frugal. I’m not sure when exactly it started. I think I knew a few people who did coupons to the max, and mostly I was just jealous of their ability to save crazy precentages of their grocery bills. It started out as a challenge to me, but then it became more of a way of life.

Once you know that you can save money on certain items, it becomes extremely difficult to pay full price for them!

But sometimes you break your own rules.

Money Saving Mom, one of the bloggers I’ve been following for a long time who’s helped me dive into the world of coupons, wrote a post this week about how she recently more than doubled her grocery budget and why. I so appreciated her honesty, and I have a lot of respect for the choice she made! Clinging to a level of frugality just because you always have is not the point.

When we closed on our loft on April, we set aside some of the money we had saved for a down payment that we didn’t end up using to spend on furnishing and decorating our new place. And let’s just say Frugal Laura didn’t exactly do most of the shopping. We decided we were at a stage in our lives where we wanted quality furniture, so we bought some nice stuff. There’s definitely a fair amount of Target and Ikea thrown into the mix, but the major pieces we bought were full-price and brand new. (I will say, we shopped online and used our credit cards strategically, so we did end up with a decent amount of cashback. Even Non-Frugal Laura can’t stand to leave any money on the table!)

You have to know yourself–I am not particularly crafty or handy, so buying a piece off of Craigslist that needs some love is not my speed. It would never please me because I would never get it to look how I wanted.

We are extremely fortunate that at this point my level of frugality is more of a lifestyle choice than a necessity. So by choosing to break my own rules and throw frugal to the wind, we’ve furnished our home with pieces we love and that will hopefully be around for a long, long time to come!

This is the second post in my #Write31Days series, “31 Days Inside the Vault.” Get the intro and read the rest of the posts here!

We break our budget down into several overarching categories, and then into more granular categories within those. The large categories are:

• Fixed Monthly
• Rebudgeted Monthly
• Charity
• Short-Term Goals
• Budget Busters
• Automotive
• Healthcare
• Longer-Term Savings
• Work (Reimbursable)
• Other (Reimbursable)
• Business

(I told you we were really specific!)

Let’s get the boring fixed monthly out of the way. Fixed monthly is pretty much what it sounds like: expenditures that are the same every month. Our HOA fees are in there, insurance, internet, and phone. We also include money for a housecleaner to come once a month (a recent splurge), as well as “His” and “Hers” buckets. (More on those later–they’re a lifesaver!)

The biggest, regular, lump-sum expense for us is housing, which is as it should be. Canonical wisdom has it that housing, including any interest, taxes, and insurance, should eat up roughly a third of your gross monthly income. Ours comes in far lower than that. We could have afforded much more house than we bought, but that was not worth it for us. If we had a large family, or specific needs, I could see buying a bigger home and tying up more of your income. But for us with no kids and only a reasonable amount of stuff, location was much more of an important consideration when we went to buy a home. We chose to take out a 30-year mortgage to get a lower monthly payment, and pay extra toward the principal every month. So, our actual housing expenses are greater than they necessarily have to be, but they’re setting us up to pay off our mortgage early! Plus, it’s nice to know that if anything ever happens to one of our incomes we can drop back down to paying the normal monthly payment with no penalty. You pay a bit of premium in choosing the longer-term loan, but not much, and the peace of mind was worth it to us. Keep an eye out for a guest post from my husband on exactly how we calculated that break-even point!

The choice to buy a home was not one we took lightly, although when it actually came down to it we moved pretty quickly. Before moving to Atlanta, we lived in Huntsville, Alabama, a much smaller city with a lower cost of living. We were both fortunate enough to come into our marriage with no debt, and since we both had jobs right away, we were able to begin saving very early in our lives. My husband even encouraged me to open a Roth IRA one summer during college when I had a job as a day camp counselor! He has an extremely good head on his shoulders for financial matters. We’d been in Huntsville about a year and were starting to think about perhaps buying a house when the Andy was offered the job in Atlanta that he ultimately accepted.

Moving to Atlanta was a bit of a shock to the system. We obviously weren’t going to buy right off the bat, not knowing anything about where we might want to live, and we found an nice apartment in an area we really liked. It was ~300 square feet smaller than our place in Huntsville had been, a bedroom and a bathroom short, and didn’t include an in-unit washer or dryer–and cost close to $300 more per month!!

We kept dilligently saving any extra income each month toward a house downpayment, but it didn’t feel like as much of a rite of passage as it had in Huntsville. So many more people in Atlanta live in apartments, and there was a lot to be said for having maintenance and such included. Owning a home is about much more than just the mortgage payment and we didn’t feel any rush to take that responsibility on. But as our rent went up every year with the growing popularity of the neighborhood where we lived, it started to seem more and more appealing to have a lower monthly payment.

My dad recently sent me this calculator that the New York Times put together to help you figure out if you should continue to rent or if you should buy.

For us the biggest question was whether we would stay put in Atlanta long enough for buying to be worth our while. I place a high value on putting down roots, whereas my husband has a bit more of an itch to mix things up, so that was a long conversation for us. But we ultimately decided that, at least for the forseeable future, Atlanta had a lot to offer for both of us. Once we made that decision, we took the leap and started looking! I wrote a little bit about the process here, so I won’t harp on it. Plus, to be honest, my husband handled the vast majority of all the nitty-gritty.

We didn’t have the rent or buy calculator when we made our decision, but from playing with it recently, it’s readily apparent that we made the right choice. For the things that we value–location, walkability, proximity to public transportation–it gets really expensive to rent! We went ever so slightly outside of our ideal location, to a more up-and-coming neighborhood, and were able to purchase more space than we could have rented. We also chose to make a slightly higher percentage than normal down payment, to reduce the amount of our mortgage loan. We’ve loved exploring our new area, and I love coming home. And money aside, that’s what it’s really all about.

Welcome to 31 Days Inside the Vault! My goal with this series is to take a deep dive into how my husband and I spend our money. Personal finance is pretty important to us, and we’re extremely thoughtful about how we budget our dollars. I’m engaged in the “frugal mom” blogosphere (yeah, I know, I’m not a mom…), so I know a lot of other people are, too! I feel like there’s an unnecessary shroud of mystery around people’s household budgets, though. I won’t be telling you our salaries, or how much we spend in every single category, but I think there’s something to be said for some transparency. I always wonder if the amount of money I spend on, say, groceries in a month is “normal,” and maybe this series will help shed some light! We make choices with our money that reflect our personal philosophies and our priorities, and I’d like to share those with you.

Scroll down to read Day 1, or click to read the other days. (I’ll be adding a link once each post goes live!)

Day 2: The Biggest Expense
Day 3: Sometimes You Break Your Own Rules
Day 4: 15 vs. 30 Year Mortgage: The Surprising Better Deal (Guest post by Andy Lindeman)
Day 13: His and Hers: The Best Fixed Expense

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The first full disclosure that may make some of you gasp is that I pretty much completely disagree with Dave Ramsey when it comes to the usage of credit cards. I won’t re-invent the wheel because I wrote about my thoughts extensively here. But knowing that we use credit cards, pay them off every month, and strategically earn cashback on our purchases is an important part of taking a peek inside our vault. (Okay…we don’t literally have a vault…but I needed a word to substitute in for “budget.”)

We use a budgeting tool called YNAB. I’ll quote here from this post where I explained how it works:

Andy and I keep very close tabs on our finances. We use a program called YNAB (an acronym of You Need a Budget) to keep track of our budget, our savings, our goals, and our spending categories. YNAB is a sort of grassroots budgeting software that grew out of one man’s budget spreadsheet that he built for him and his wife. As it kept getting more and more complex, he realized how useful a tool this software could be. It’s not the simplest program around, but it has a lot of features that we’ve found to be very useful. Plus, I like its backstory!

…we like to worry about where [our money] goes. Worrying about where our money goes is what allowed Andy the freedom to quit his job in Huntsville without knowing he had one to take its place. We were able to precisely track our expenditures for the previous 6 months and extrapolate precisely what we needed to live on for the next 6. We also were able to pinpoint areas of spending that could be cut if necessary. If we only knew vague spending categories, we would not have felt nearly as comfortable taking that leap as we did.

We’ve been married for 4 1/2 years, and over those years we’ve refined our system pretty well. The first month we were married, we did nothing but track our spending. Having never combined finances (and me having never lived on my own!), we had nary a clue how our spending would break down. So, we tracked. And then from there we began setting up budget categories that worked for us.

Today we have a wide array of categories that are really specific to our spending habits. That’s why something like Mint.com wouldn’t be ideal for us–we don’t want our numbers lumped into broader categories. Throughout the month of October, I’ll be examining some of our categories, talking about why each matters to us, explaining how we determine an amount to spend, and exploring ways to save on every line item. Read on!