How My Fiancé And I Split and Manage Our Finances So We Can Save for the Future

And the strategy we're using for paying off a loan this year...
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In the fall of 2018, Jonah and I bought a piece of land together in Portland, Oregon. In addition to it being mind-blowingly exciting (still!), it's also been expensive. I touched upon the finances in this post, but paying a land loan on top of rent every month, while also putting money away for travel, retirement, and our eventual construction loan is no joke—especially considering we're trying to pay off our land loan as quickly as possible. Interest rates for land loans are significantly higher than for a primary home since it's easier to walk away from a plot than it is to walk away from your house. Every time we send a check, about 20% goes to the principal (paying off the loan) and the rest goes to interest, so a $1,000 payment will only pay off $200 of the loan (me: 💀😵). If we pay our loan "on time" (aka, if we take the full 20 years), we'd be spending tens of thousands of additional dollars on our interest alone. In other words, while we've always been careful about saving, we've gone into over-drive in the past year. Here's how our financial priorities have changed significantly in the past year, and our tips for managing finances as a couple:

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Because Jonah and I started dating in college and moved in together as soon as we graduated (largely a financial decision because #NewYorkRent), we started talking openly about money from the get-go. We were both new at navigating finances, bills, and salaries at the same time, so we were each other's sounding boards, which I imagine might be a different story if you begin dating someone further along in your careers. No matter your circumstances, I'd encourage anyone to open up the conversation about money as soon as you feel comfortable doing so. I've found our total transparency about money with each other to be invaluable. Though we've never told the other not to buy something, I always consult Jonah before making a large purchase and appreciate that he does the same. While I'm often the instigator (though it hasn't happened, I could probably talk myself into spending $20 on a jar of peanut butter), Jonah's much better about being the voice of reason, a muscle he's taught me to exercise over our years of making purchases together!

In terms of what we spend on, here are a few tips I've found useful: 

1. Try to always go to the grocery store with a shopping list, and stick to it! Also, do your research. Even though we buy organic produce and ethically raised proteins (which are more expensive), we cross-compare prices at stores to find the best deal. 
2. Wait at least 24 hours before making any big purchase, whatever "big" means for you. 
3. Since creating a capsule wardrobe, I'm much more selective about the clothes I buy. Shopping went from being a major monthly cost to one of my smallest. (I'll post an update on that soon!)

While it can be a bit uncomfortable, we've also had discussions with close friends about salaries and how they approach saving. Every time we do, we come away with a valuable tip. 

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Venmo is your friend. From the moment Jonah and I moved in together, we began using the app for splitting finances. For years, we split rent in proportion to our salaries (when I made 10% more, I paid 10% more in rent, and vice versa). Everything else, we more or less split down the middle. When one of us bought groceries, we'd send the other a 50% Venmo request. That way, we were able to have complete control over our individual finances, while still splitting shared costs. This has changed a bit recently, but I'll share that below...

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A few months ago, Jonah and I decided to get more aggressive about paying off our land loan... our new goal is to pay off the remainder by the end of this year! Inspired by a couple featured in this New York Times article, and the fact that we have some flexibility with our finances now (a.k.a., we're pre-kids and whatever unknowns the future holds), we're putting almost my entire salary towards paying off our loan.

Here's how it breaks down, and what I mean by "almost":

- Jonah pays our rent, groceries, and fixed costs entirely from his paycheck.
- I have an automatic transfer to Betterment (an investment site I use) set up, so that my entire salary, minus the cost of my gym and $100 per paycheck, goes towards our loan. The $100 is my spending cash for physical items (hello, DermStore sale), etc. I try to use as little of it as possible since whatever I don't spend goes towards savings or larger purchases (for example, I bought my apple watch after months of saving for it). 
- We track the money leftover from Jonah's paycheck, after paying fixed costs, using an app we built on this site. It shows us how much spending money we have for that month, say $200, then we each enter expenses that subtract from the goal so we know how much we have left before we're out and have to dip into "my" spending cash. The vast majority of our expenses currently are groceries and entertainment/eating out (plus some tulle for a wedding thing). 

Costs over a two-week period. Clearly Jonah didn't love The Goldfinch... 

Costs over a two-week period. Clearly Jonah didn't love The Goldfinch... 

At the beginning, I'd get extremely stressed out about sticking to our number, but with trip expenses (we just bought tickets to see our best friends get married in Bali later this year!), medical bills, and our own wedding expenses, we've had to pause a few Betterment transfers to be able to pay for larger costs. Still, it makes me much more cognizant about wedding and travel spending. When I was looking for a white dress for our rehearsal dinner, and had trouble finding one I loved under $200, I ended up not buying one and am opting to wear a dress I already own. I know that those $200 will ultimately go towards building a house together, which is more important to me! 

By saving this way, I've found (and, I hope you find too!) that I don't feel stressed about saving, but rather, empowered by it because the finish line looks pretty incredible...

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P.S., Here are my tips for saving, whether in a relationship or not, which is a great place to start!