We have our first two airplane trips planned for the spring — to visit my parents and to attend a wedding. Baby L will be about 5 and 6 months old for these trips, and we got him his own seat each time.

In order to be less annoyed at buying extra airplane tickets, I signed up for an Alaska Airlines credit card. Alaska has good flights/times/prices on our most frequent routes (San Fran, Las Vegas, Austin) and decent leg room, relative to other airlines. Based on our spending and their promotions, I expect we’ll get 2 tickets a year for $200 out of pocket (one reward ticket, one companion ticket, and we pay an annual fee and taxes).

Using those free/cheap tickets and traveling at off-peak times to visit my parents, we can lower our travel costs with a baby.

We’re planning a trip overseas to see R’s family later in the year, and it’s tougher to shell out close to $1k for a baby’s plane ticket than a few hundred for a domestic flight. We haven’t figured out a plan yet, but one possibility is that my mom will fly with us. We’ll have three adult seats, and we’ll take turns carrying L. I’ll let you know how that goes …

I’ve been gathering travel tips from other moms, and this is one of my favorites: If the baby screams on the airplane, buy drinks for the people nearby. Hopefully we won’t have any screaming, but if we do, I think I’ll buy a round.

My little guy is 11 weeks old, and I’m emerging from the newborn fog (sleep deprivation makes it hard to remember just how hard it is). Eleven short weeks ago, L was born at home, as planned.

So, how much does a home birth cost?

Our insurance covered all of the medical expenses, as they would have with a hospital birth, as well. I’m still getting insurance statements, and I’ll write about the total costs when I get all the statements. So far, the costs of a home birth look much lower than a hospital delivery.

We paid for several things out of pocket, totaling $1495.

• At-home lactation consultation at 10 hours after birth: $150 (treated as out-of-network by our insurance company)
• Tub rental $300 (includes set-up and clean-up, which is priceless)
• Doula $800
• Postpartum doula $245  (7 hours at $35/hour)

Each woman needs to decide for herself and her family where she will feel safest and most comfortable when having a baby.  For our family, a home birth worked. I felt comfortable in my own home, where I could move around and eat as I pleased (turns out I wasn’t too hungry during labor, though I sent my vegan husband to the store for a rotisserie chicken, which I did not eat a single bite of). After the birth, it was lovely to sleep in our own bed and not have to go anywhere for over a week.

The downside to a home birth, though, is that there was not a steady stream of nurses ready to help us with out new little baby. Instead, I had to call lactation consultants eight hours after L’s birth, and fortunately the second person I called was able to come right over. We had already lined up a postpartum doula who helped us with babywearing, soothing, and bathing.

Part of my comfort with a home birth was knowing that we are one mile away from a hospital. Under most circumstances, it would take 5-10 minutes for an ambulance to get to our house and take me/baby to the hospital. Fortunately that wasn’t needed, but the little baby did need resuscitation, and our midwife was within 30 seconds of calling 911 at one point.

Had we gone with a hospital delivery, our out-of-pocket expenses would have been lower – no tub rental, no out-of-network lactation consultant, and probably fewer hours of a postpartum doula. For me and my family, the expense was totally worth it.

MS Money essentially provides an electronic checkbook register. Though Microsoft has stopped releasing new editions of money, the Sunset Edition still works fine. I plan to keep using it until either my banks stop exporting files in a compatible format or the Windows operating system gets too fancy to open the program.

I use the register to plan out our finances for the next several months. Right now, our major transactions are entered through the end of 2011: paychecks, mortgage payment, typical bills and expenses. A few times a year, I plan out our income/expenses for 3-6 months. On a weekly basis, I download all bank transactions, reconcile the accounts, and look ahead at the next few weeks in detail.

Net worth/ goal tracking: Excel

Once a month, I review all of our accounts and update a spreadsheet to track our net worth and goals. The results are aggregated and compared against the past. I print out two summary pages to show R. Sometimes he looks at them; sometimes he asks for a thumbs up/down summary.

Mortgage payments: Excel

While the mortgage is part of my monthly review of our finances, I track it in a separate Excel spreadsheet. This way, I can play with making extra payments to see how the payoff date changes.

Budgeting: Mint.com

For a long time, I did not tracking our spending by category. In part, this was due to laziness, and in part, I didn’t want to know. I don’t need it verified that I spend $150-$200 per month at coffee shops. Seattle is the home of Starbucks, you know.

Since we’ve done a lot around the house, I flag all home-related purchases in MS Money. We saved up and have money set aside in a savings account for these expenses. That’s ok for tracking one category but tedious for tracking a lot of categories. While Money does have some built-in categorization features, they’re not smart enough to easily categorize my transactions.

I decided to try Mint.com for reviewing spending by category. So far, it’s great and meets my specifications:

• Aggregate credit card and bank info
• Intelligent categorization
• Easy to use, useful reports
• Not a time suck

I keep track of nearly all aspects of our finances – goal tracking, retirement planning, bill paying, day-to-day budgeting. I work out our cash flow several months in advance, so I always know what’s coming.

Financially, things aren’t looking good for the next few months. My income is way down (baby due in late October), and our expenses are way up (baby due in late October). We have enough money to pay for everything, but it’s eating through our day-to-day cash buffer.*

Should I tell R about it? So far, I haven’t.

It’s temporary. Though my income is down, I am doing some freelance work that will replenish our cash buffer (and a little more), but I don’t know when I’ll receive the money.

There’s still money in the bank. We’re not going to overdraw the checking account; we’re not going to have any credit card debt.

I don’t want to worry his pretty little head. I’ve found that if I make an off-hand comment about running out of money, R interprets the situation as much worse than it really is. When I made a comment about spending all of our money on renovations, I meant that we spent all that we had budgeted, while he thought I meant that we spent *all* of our money. I was glad when we resolved that miscommunication!

I’m planning a more important conversation in a few months. Kids are expensive, and they change the family budget. While I have read all about budgets and kids, there’s still a lot of uncertainty with how a kid will affect our budget. My workload is flexible, and I have not decided how much to work, which affects how much we pay in childcare. Within the next few months, we will sit down for a conversation about how the baby is affecting our budget and goals. I care more about that conversation than our current cash flow. I don’t need his input for managing our current cash flow; I need his input as we juggle our goals and budget.

So, should I tell him about our bank account balance?

If R reads this, I guess he’ll find out.

*This cash buffer is separate from our emergency fund.

I’m skeptical about promised raises.

Several months ago my husband came home with information about his possible raises in fall 2011. His manager said he’d most likely be in a certain band, so we had a good idea of what type of raise/bonus he’d get. Should the projections be factored into future financial plans?

I did factor the raise and bonus into our finances, and what do you know … the bonus was cut in half. His manager’s prediction was right on target, but the bonus was reduced because R had only been on the job for half the year. The raise was exactly as predicted. I reread the raise/bonus information sheet, and sure enough, in tiny print at the end there was a statement that compensation increases may be prorated.

While R was a little disappointed by the smaller bonus, I was mostly amused. Once again, predictions of bonuses and raises do not pan out.

As my (financial) life has changed, so will the focus of this blog. A lot more emphasis on family finances because that’s where I’m at now. Over the past year, R and I have sorted out our joint finances, and while I’d like to say we’ve gotten better at talking about money, I’m not sure that’s true. I’ve learned all about home remodeling on a budget, health and car insurance, and how expensive babies are (a little one is due in two weeks).

For me, I would also need to find someone to walk my dog every day. To keep my sanity, I would get a grocery delivery service and a cleaning person. The cleaning costs could vary from $50-$100/ week, depending on how much we needed. I’m estimating at the higher end because in the summer we would have to pay someone to do the weeding and lawn care that I do. If I am honest with myself, I know that I won’t pack a lunch every day, and I’ll end up eating out more frequently.

I spend a non-trivial amount of time making sure that we don’t get ripped off — and it’s resulted in $2-3k of savings this year alone (disputing the purchase of flawed merchandise, holding credit card companies accountable for their advertised rewards, disputing false information on our insurance reports, …). I’ll lump that category into “extra fees” that we avoid by me having the time (and energy) to fight for the money.

To even consider taking full time work, I would need the salary to trump my current annual wages by $23k! Of course, there are some very real benefits of full-time work — employer match to retirement savings and health insurance, to name a few.

What do you think of these expenses — did I leave something out, or do you think this is ridiculous?

I’m earning $X now (where $X could swing +/- 10% in any given year), and I would really only consider working full time for $2X, which would more than cover the extra expenses. But is it worth it?

Over the past year, R got really into saving and saved so much that he couldn’t buy groceries in the days before his next paycheck. He was living paycheck-to-paycheck because of his saving habits. What was he saving so much for? Our wedding, building up a bigger emergency fund, and his current education expenses. While saving is commendable, saving this much made him a debtor to his future self.

Becoming a debtor to your future self is not using money to live, and it can be similar psychologically to paying off actual debt. Saving so much could push a person to abandon saving altogether, much the way adopting too many frugal tactics at once can push someone to stop being frugal at all. There’s a balance between saving for the future and spending today.

Before this, I mainly thought of the differences between saving and paying debts. Having readily available cash skirts the issue of needing to borrow money and take on debt. Most of the time, saving is the better deal — eliminating interest charges and sometimes garnering an additional discount. A different way to look at it, though, is that saving money shifts the cost of a purchase from the future to the past of the object’s purchase/use. While you may get a discount by paying cash (or at least avoid interest charges), you are getting less use out of the purchase by delaying its use into the future.

As we are combining finances, we’re evaluating our savings plan so it won’t leave us feeling broke. As the wedding is over and none of it was financed, that’s one less thing to save for/ pay for. Because R was aggressively building up our emergency fund, we can now reduce our monthly contributions. While we still need to save a little more for his education expenses, we have six months until his final tuition payment is due. When all of these goals are met, we’re going to focus on pre-paying the mortgage. While it seems like there is always more that we could be saving for, at least we’re debtors to ourselves and not to someone else.

Since moving into R’s house and merging our lives (belongings, finances, etc.), I have been repeatedly surprised by how much work it is. We aim for simplicity. While we are definitely on the path to a simple and low-maintenance lifestyle, it is a long path, and the going is slow.

Combining Insurance

We got quotes for combining our insurance policies, and sure enough, we could save money by merging our policies to one account. This seems like a simple plan, and over the long-term it does yield greater simplicity. In the short-term? A huge and not very simple headache. It took more than one month from getting quotes to receiving the final paperwork for all of our accounts. I sent/received 41 emails with my agent, sent in several checks, and received two refund checks (they sent out duplicate bills to us and the bank; despite several conversations on the details of these transactions, they didn’t send out the proper bills). After we are married, we are changing the names on a few of our accounts (adding each other to car titles, etc.), which will mean another round of emails and paperwork with the insurance agent, which should lead to more reductions in our premiums.

Removing a hot tub

The previous owners of our house had a hot tub. R had it winterized a few years ago and never opened it up again. We thought a lot about whether or not to keep the hot tub, and, ultimately, we decided to get rid of it because the annual costs (and time for maintenance) exceed the enjoyment we would get from using it. Getting rid of a hot tub is not the easiest thing to do. R posted it on Craigslist for free, and four people came to look at it. All said they would come back to get it, but no one did. This went on for several months, with no serious takers. We recently replaced our deck, and time ran out for the hot tub. To remove the hot tub before starting on the deck, we had to pay someone to haul it away. The simple hot-tub-free lifestyle cost over $300. We are glad to have the hot tub gone, and we (mostly/ sort of, but that’s for another post) like the deck that stands in its place.

As we make changes, I try to remember that we’re working toward a simple lifestyle. With the hot tub gone, we have reduced the maintenance for the house. By combining insurance, we’ve reduced our total number of bills and the amount we pay in bills. It took many hours to take care of these, but they are now done. While we will check insurance rates every few years, at least all of our coverage is consolidated.

I think the biggest downside to uncluttering/organizing/simplifying is simply the time and mental energy needed to pare down my life. There are big dividends, which make it worth the effort. What I consider the biggest benefit is that it reduces future the need for time and energy in the future. All of those conversations about the hot tub? Yes, while we had many, many conversations, they’re over now. We don’t have to talk about the hot tub ever again.

The laundry thing — my primary motivation for putting my clothes away is so that

1. I will not be annoyed at stumbling over my basket as I head to the bathroom in the middle of the night, and
2. I will know exactly where my black tank top is — on the shelf with my other tank tops.

I don’t like the process of putting my clothes away, and I go ahead and do it (instead of, say, living out of a clean laundry basket), so that my future self will have life a little easier. It turns out this thought process may be a part of why I prefer to save money instead of spend it!

Some recent studies show a connection between how much a person identifies with his future self and his financial assets.

“People who saw their current and future self as more alike had real-world financial assets that were worth more—even when the researchers accounted for factors such as age and education.” Scientific American

When I see my future self, it is very much me, and I want the future me to have freedom and flexibility. I don’t want my future self to be late because she couldn’t find an article of clothing, and I certainly don’t want my future self to stub a toe. I don’t want future me to be burdened by debt because future me might want to travel or take a chance on a new career that won’t earn much money for a few months.