Sunday, November 28, 2021

Money After Moving

I've been on a temporary hiatus for about the past month or so.  I've still been coaching clients, but my
writing has been paused while my partner and I have been in the process of moving.  Why did moving seem so much easier in my younger years? When I was in my 20's, it involved pizza, beer, and one really long day.  Now, we even hired movers, but somehow it all seems so much more involved...  Funny how life shifts... 

During the chaos associated with moving, learning a new commute, officially exiting the NYC rental we'd been in for seven years, we've managed to keep one foot in front of the other getting the basics done.  That being said, there is a lot to reorganize, and I don't just mean possessions and decor in the new home.

Revisiting the Budget

The first thing that needs to be done is to revisit the budget.  We anticipated what this would look like before the move, but it needs to be updated with real numbers, as the data rolls in.  I like the 50/30/20 budgeting system, popularized by Elizabeth Warren because it's pretty easy to use in order to evaluate the different areas of life and whether or not your spending is in balance.  It suggests that 50% of your after-tax income goes to fixed expenses, 30% to flexible (or lifestyle), and 20% to goals.  Most months, the fixed expenses and goals category remain the same as the month prior because our plan hasn't changed much.  This leaves most of the closer monitoring to be in the flexible (or lifestyle) category.  In my household, this involves, keeping the grocery budget on track, accounting for events that come up, entertainment, etc.  In all honestly, we've been spending in precisely the same way for so many years, that we haven't had to do much with our budget in a very long time.  But now, we need to revisit it.  We need to make certain that we've accounted for all of our fixed expenses and calculate the percentage of our income that is being absorbed by it.  Prior to the move, we knew it would still be under 50%.  That was a part of evaluating the affordability of the new home prior to purchase; however, we still need to update and fine-tune those numbers on our official budget...and when I say "official budget," know that I'm literally making a chart in excel or word.  You are welcome to use whatever software feels good to you; just use what works for you, and try to be consistent.  Anyhow, the fixed portion of the budget oftentimes feels to me like the baseline.  Those expenses aren't going away any time soon and don't change very easily.   So, being clear about what that is and keeping it to a manageable percentage of income is key.  We will also need to re-evaluate the goals category.  We had been saving quite a lot between retirement and downpayment accounts, and now it's time to decide how to refocus our attention in that category.  Is there a new goal that wasn't being addressed before?  A new car?  Pay down the mortgage or another debt?  Beef up retirement savings?  Increase liquid savings?  Once this has been addressed, we will look at the flexible spending section and see if there are any subcategories that have changed due to the change in living circumstances.  

Revisiting the Emergency Fund

It probably goes without saying that if our monthly expenses change, the amount we need for emergencies might as well.  Experts vary on their recommendations for what constitutes a fully-funded emergency savings.  While some suggest 3-6 months of expenses, others prefer a solid 12 months.  Honestly, I feel the most powerful when I'm holding more liquid savings rather than less, and prefer to be closer to that year mark.  That being said, I also look at it as a bare-bones budget rather than my regular one.  If things really went sideways, I'd absolutely switch into "conserve funds mode."  Regardless of which target we're aiming for, once we've revisit our budget we will also recalculate our desired Emergency  Fund dollar amount.  If we feel the need to beef it up, that will become the most immediate item for the goals category; otherwise, we'll set that amount to the side and move on.

Insurance Review

A property purchase is a big change.  If there are people dependent on you; they need to have access to capital if something should happen to you.  While you might already have a term life insurance policy; it might be worth reviewing it again.  Do you need more?  Also, make sure you have homeowners insurance and that your coverage levels are appropriate.


Much like checking up on your insurance, how are you holding title to things like your home?  Do you have a will in place?  While you're at it, do you have the correct beneficiaries on your various accounts?  These are all things that need to be checked upon when a major event happens (like a home purchase).  We worked with our real estate lawyer to ensure that we were holding title in a manner that made the other person the default owner in the event that one of us was to pass.  I only bring this up because for those of you that are unmarried, you may not want to accidentally own property with someone's mother.  On the other fronts, we are all updated on beneficiaries but need to do will updates.

Moving is so much more than shlepping boxes, it's marks a number of financial shifts as well.  In addition to changing your address with a zillion places, it also requires that we revisit a number of our core financial documents.

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