Managing Finances for a Family – Q&A with Mama Meredith, Part I

By Jessica Searcy Kmetty

It’s always interesting to hear how other people approach life and finances, especially when they have a strong philosophy to share. A Midwest gal living and raising a family in NYC? Debt avoidance? No-spending months? Children who earn livings by modeling? Sounds like an interesting story to me!

Our guest Meredith is a self-described community creator, home curator, minimalist, hipster mama who is raising 3 “wonderful wilds” in NYC.

When I sat down to introduce you readers to Meredith and share some of her stories and philosophies about money and life, many ideas came to mind. But in the end, I decided she told her story better than anyone and there wasn’t much you needed to hear from me. So, enjoy this peek into our conversation:

Can you tell me about yourself and your family?

I grew up in Kansas City and moved to Manhattan to dance with the Alvin Ailey American Dance Theater and then decided to attend Sarah Lawrence College.

My husband and I were set up by friends and after dating for a while, we became engaged WHILE IN DIFFERENT COUNTRIES! I was in Costa Rica and he was in the Bronx but we were happy to start our life together, no matter how far apart.

We now have three children: Alice, 8, Ethan, 5 ½, and Dahlia, 2 ½ and live just outside of Manhattan.

When in your relationship did you start discussing money related topics?

We started these discussions pretty early into our relationship.

We quickly realized we grew up in families that had very different approaches to money. In my family, I would see my parents earn a paycheck every month and saw it as a renewable resource. There were never worries about money and the mentality was that as long as you work hard and earn a living, there would be enough to get you through.

My husband saw his parents work extremely hard and take care of every dollar they earned. Although they weren’t against having some fun, they were strict about living within their means, knowing how much they had and working within that budget.

Do you think having those discussions early was beneficial?

I do, and I would encourage people to have these discussions, but it doesn’t always click until you’re really faced with the life experience.

For instance, there were some growing pains early in our marriage when I was providing the income while my husband finished college and I realize I didn’t always make the best choices with my money. I wasn’t always planning ahead or keeping close track of how much we had, and I learned fast that there wasn’t always money available to do everything we wanted to do or have everything we wanted to have. Sometimes things just click when you’re in the trenches.

What approach do you take now for managing money?

Finding the strategy that’s right for you isn’t something you always get right the first time.

When my husband first started working, we had a joint account for a while but it caused stress within the relationship. We weren’t comfortable watching what the other was spending. So for the next three years, we decided to get separate accounts and put each of our respective paychecks into our own accounts. This approach forced us to sit down each month and talk about the cost of the items we were spending on individually and our family expenses.

We maintained separate accounts up until and through the birth of our first child.

So, did having children force you to change your management style?

There was a specific reason we decided to alter our style. Around the time our second child was born, we starting discussing me staying home because I was basically earning the amount it took to have them both in daycare. At this time, my husband was working his way up the corporate ladder, so we decided to save my paycheck (or what was left after childcare payments) for one year leading up to the date I would quit to stay home.

Now that our lifestyle is different and I’m not currently working, we do have a bank account for our home to manage those expenses. We really scaled back our spending at that time both intentionally and by default. I was able to cut back on gas/travel, wardrobe and personal care by not working, and we cut cable, cut back on entertainment and I started to be more strategic about meal planning and maximizing our groceries.

What is your philosophy on debt?

The only hard rule we have is to live within our means and save. Saving is very important because if something happens to one of us or to our home, etc. we have an emergency fund in place to take care of the issue.

We do not have debt.

We’re not the type to carry our credit cards around and we’ve found that the “envelope system” strategy works for us, except we have different debit cards allocated for different needs rather than carrying around envelopes of money. We have a debit card/account for groceries, gas, mortgage, life insurance, households items, etc. We also set aside $30/month for each child’s expenditures. My husband has a separate account for his transportation and train tickets, and a small amount for small items.

If the money isn’t in the account for that month, it’s just NOT available to spend.

We also pay ourselves first, so we set up direct deposit for our savings accounts, retirement, etc. so we don’t have to move the money around to these different areas once the paycheck arrives.

How do you handle the need for bigger ticket items, such as buying a house or car?

We plan ahead.

To buy our house, we borrowed from ourselves. We took a loan from my pension plan and a loan from my husband’s retirement plan and we were comfortable knowing exactly how long it would take to pay those back. Toward the end of the loan from my pension plan, we decided to pay a lump sum (paying off 3 months at one time) and channel those payments back into our savings.

We both used to have car payments but after my last car was paid off, we realize how nice it was to not have a recurring car payment. After our third child arrived, we knew we need a bigger car and the one we wanted for the price and mileage we demanded was not available in New York. My dad, who lives in Florida, found the exact vehicle we wanted down there so we found $89 flights to Florida, purchased the car and road tripped home.

Sometimes we have to go the extra mile to make our financial desires a reality.

How does your spending philosophy match your values/goals?

One thing that is important to us as a family is reducing our waste, reducing packaging and not creating more waste than is necessary. We don’t use paper towels in our home, we compost and we use cloth diaper. I try to keep this value in mind when shopping so I’m not buying things just because I like them at the time. I make purchases that are intentional, are low on waste when possible, and I prefer to buy second hand.

However, it’s hard to REMEMBER this when you’re faced with so many cute things for sale!

What advice would you give people who are trying to define their money management strategy?

1. Make a budget – This allows you to know what “living within your means” means for your family.
2. Plan for your reality – If you’re living the life you “wish” you had, you can get in trouble quickly.
3. If you’re not perfectly comfortable with the lifestyle expectations being set by your community, find a new community! Don’t strive to keep up with the Joneses.

Stay tuned for Part 2, 3 and 4 where we’ll discuss how Meredith’s kids are earning money, her family’s no-spend months, and how she’s building a safe community for women to discuss finances.

Please remember that different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, or product made reference to directly or indirectly in this content, will be profitable, equal any corresponding indicated historical performance level(s), or be suitable for you or your portfolio. Due to various factors, including changing market conditions, the content may no longer be reflective of current opinions or positions. Moreover, you should not assume that any discussion or information contained in this newsletter (article) serves as the receipt of, or as a substitute for, personalized investment advice from Searcy Financial Services, Inc.

The content of this letter does not constitute a tax or legal opinion. Always consult with a competent professional service provider for advice on tax or legal matters specific to your situation. To the extent that a reader has any questions regarding the applicability of any specific issue discussed in this content, he/she is encouraged to consult with the professional advisor of his/her choosing.  

Published for the blog on September 18, 2018 by Searcy Financial Services, your Overland Park, Kansas Fee-Only Financial Planner and Investment Manager.