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Finance Friday: Equine Retirement Planning

Here’s another in my Finance Friday series. To read the whole series, follow this category tag and enjoy!

BelJoeorFinanceFridays

This week, we’re talking about retirement – of the equine variety.

Guiding Questions

I’ve been thinking a lot about equine retirement lately. Tristan is 23, and while I fervently hope that he has many happy years left, it’s also likely that someday he will need to step down from his level of work. I’m the kind of person who likes to be as prepared as possible for things, and I also want Tristan’s retirement to be a stepping stone to my continuing involvement with horses – not the end.

Horses are expensive, and just because you’re not riding them doesn’t mean they get less expensive. August was arguably my most expensive month of the entire year, and I didn’t sit in the saddle once. Continuing to ride actively with a retired horse means more money – enough for a second horse, or a lease, or frequent lessons.

I want to stress throughout this post that no matter what, Tristan and his needs come first. I will not add on stress to my finances unless I am absolutely certain at the core that he can get whatever he needs, without question. If that means I have a retired horse and catch ride at best, so be it. But I’d like to have another riding horse. That means that as a person with a nonprofit salary and a mortgage, I need to plan this carefully.

To help me think this through financially (emotionally is going to require, like, another two years of therapy at least), I brainstormed all the questions I had, sorted through them, and created a survey to try to see how other people had answered them. Thank you to everyone who took the survey – reading through the responses was a huge help to my thinking process!

So in this post, I’d like to share the results of the survey. This is not meant to be a final “retirement costs X and here’s how you can make it all work!” kind of post. Everyone’s situation is going to be different. What I want to do here is look at the big picture, and think about all the options available.

Survey

I had precisely 100 respondents to the survey, which I conducted through Google Forms. I advertised it here, on my Facebook page, and on the Chronicle of the Horse forums. A lot of you shared it as well, and thank you for that! And now, results.

Retirement1Retirement2Retirement3Retirement4Retirement5

Those answers are, in order:

Retired at my own farm
Retired at a nearby farm belonging to friend or family
Retired in place at the same boarding barn
Retired at nearby farm where I pay board
Retired at further away farm belonging to friend or family
Retired at further away farm where I pay board

The miscellaneous answers include retirement as a companion horse, part-lease to a light work home, and future plans to purchase a farm.

Retirement6Retirement7Retirement8Retirement9

Not a surprise exactly, but 85.3% report that overall costs have stayed stable or gone up, and 85.4% reported that vet bills have remained the same or gone up.

And what about those costs? The graph won’t copy over easily, but here’s the breakdown. Keep in mind, these are averages only:

Retired at my own farm – $101 – $250 per month
Retired at a nearby farm belonging to friend or family – $251 – $500 per month
Retired in place at the same boarding barn – $251 – $500 per month (but a strong second for $500 – $750)
Retired at nearby farm where I pay board – $501 – $750 per month
Retired at further away farm belonging to friend or family – across the board, no clear average in this category! Probably $500 is a good middle number.
Retired at further away farm where I pay board – Two clear categories here: $250 – $500, and $1,000+!

Selected Comments

Is there anything you wish you’d known, financially, about retiring your horse?

Not really; just that emotionally it is hard to accept, some days.

Once you retire them, they seem to live forever!

That his once a year mother of all vet bills would be continuing. It seems to just be who he is.

It wasn’t much cheaper to keep a nonworking; horse still needed about the same amount of grain, though remained on usual supplements/meds and barefoot. Moving horses home made keeping my retiree much more reasonable; otherwise her costs were the same/more than my riding horse as she needed meds and extra feed.

I wish I could have anticipated the lack of ability to travel/move to better areas for work. Due to arthritis issues, it is no longer fair to move the horse around if I want to get a working student position/internship.

Leasing out is not for me. Thought I would get a part leaser but given location there isn’t many people who are looking to just flat around in the area. Had hoped could reduce costs by having a lease or part lease.

Retirement facilities are not always the best or cheapest options.

Is there anything else you think it’s important to now or to take into account from a financial perspective when retiring your horse?

Have some hard and fast rules for under what circumstances horse would be put down.

Retired horses still need shots, dental care, hay and may not always be able to be barefoot. While keeping my horses at home makes it easier to keep the retired guy, the only aspect of his care that is “cheaper” lies in the fact that I’m not paying to compete him and so far, he hasn’t needed his hock injections since he’s not working.
Does a more expensive retirement farm = a more reputable, “safe” place for the horse?
All my horses have “trust funds” set up in my will. When I am not around to take care of them, I want to know that they will always be taken care of the same way as I currently do.
You also have to set aside money for end of life arrangements, that can be $1k or more.
A horse coming out of work entirely from an otherwise active career will struggle physically and mentally. You will need to support him with time and money.
if you have time to show/compete your horse, you have money to give them a good retired life. they deserve a good life for all they have done for us.
care costs can be dependent on the barn owner’s philosophy – ie, I boarded at a small, basically retirement facility with exceptional care (as it suited the young, not-healthy horse well) and felt the need to do vet care above and beyond my own comfort level to maintain at the owner’s comfort level
You just need to be prepared for the aggregate cost. My horse has been retired for about 11 years (he’s now 29) and I have spent over $50,000 on him as a retired pasture pony. Scary, but what are you going to do? There are no retirement options close to where I live, so I see him maybe once a month. There’s no way we have the same relationship, but his needs are greater than mine and he’s in a fabulous retirement situation.
There were a number of responses saying that I’d skewed the questions and implied that retirement is expensive, a few slightly less than kind – that responsible people should just know and plan on these things. They’re not wrong; I do assume that retirement will be expensive, but this survey is part of my planning to make absolutely sure I can do the best possible. I don’t know where that leaves me, but I did want to address it.
And that’s the survey!
What do you think? Have you retired a horse? Is there anything that didn’t come up here that you think is important? Anything that surprised you, or that you found particularly helpful?
One last note:
Next month, I plan on addressing human retirement, as in, how to set aside money for myself when I’m paying all these vet bills?! To write that, I’d like to feature a number of short personal statements from horse people about how they’re thinking about and working on their own retirement (or not!). If you’d like to write me ~250 words on the topic, send me an email: beljoeor[at]gmail[dot]com.
finance friday · horse finances · retirement · Uncategorized

Equine Retirement Survey

September’s Finance Friday will be about equine retirement, and I’d like to gather a great deal more information than I have so far.

I’ve created a survey in Google Forms.

If you have ever retired a horse, or ever thought about or planned to retire a horse, could you go fill it out for me?

Could you also share it as widely as possible so I can get tons of responses?

Thanks!

 

Link to Equine Retirement Survey

finance friday · Uncategorized

Finance Friday: Horse Showing Costs

BelJoeorFinanceFridays

It’s that time again! Sorry for skipping July: not my best month. But for August I thought it would be interesting to look at some statistics from the blog hop that’s been going around about horse showing costs.

First, why do we try and calculate horse show costs?

That may seem obvious, but bear with me here. Part of the point of doing this blogging series is to shed sunlight on topics and ideas that we don’t usually talk about because a lot of people are squicked about money talk.

This blog hop involved two things: knowledge and then planning. It required bloggers to be aware of how much money they were spending on showing, and then to ideally take the next step of using that knowledge to plan ahead for a competition season. Putting those two pieces together is a crucial part of budgeting.

Let’s all be honest here: no one on the face of the earth has to horse show. You have to pay your board bills and vet bills. You have to buy some kind of specialized equipment and apparel for riding, however inexpensive or minimalist you might choose to go. Horse showing is one big elective category of finances.

That’s totally fine, by the way! For a lot of equestrians, horse showing is what drives their participation in the sport. For others, it’s a way to measure their own personal progress. For some, it’s just a fun thing to do every now and then. There is no wrong way to approach it, as long as you’re treating your horse and your fellow competitors with decency. There’s room for everyone from “blue ribbon or bust” to “hooray, I didn’t get dumped today!”

I would argue, however, that the fact that it’s elective makes it extra important to budget for. You need to make sure that you have enough additional money, beyond your required regular expenditures, to go and do this thing. It would be really crappy horsemanship if you didn’t plan for board and vet bills but spent a week showing at a big festival with hotel room and tack stall.

What was the method here?

I took all the information provided in the blog hop by all the blogs I found and created a Google form based on the questions. I then put in the answers from the individual blogs to the form to get some statistics back. There was one variable that I didn’t include – location. I think we could have a good argument about how relevant it is to the overall data, but for the purposes of this initial collection, it wasn’t information I had to hand or getting it would be creepy and weird. So I just didn’t.

As much as I could, I compared apples to apples: one show = one day of showing, no matter the discipline. I tried to do some math and break down the costs for people who submitted weekend or week-long shows to get a reasonable comparison.

Results

disciplinemembership costschoolinig showrated show

A couple of obvious takeaways for me:

  • rated shows are obviously more expensive than schooling shows
  • schooling shows are totally across the board – my guess would be that’s because of the wide geographical range of the respondents

And one thing that actually surprised me: membership amounts! For most people, their annual membership dues were more than a single show.

What next?

First, shout out to all the blogs whose answers I used in this survey. Links go directly to where they reported the information I used, because reading through the why and the how is even more interesting than the numbers.

Poor Woman Showing (who originated the blog hop), Hand Gallop, Autonomous DressageDIY Horse OwnershipViva Carlos, A Enter Spooking, Contact

If you’d like to do this blog hop, please link to your post in the comments so everyone can read them!

If you’d like to fill out the survey, whether or not you do the blog hop as a longer exercise, please do so! I think it would be really interesting to continue to gather information.

You can enter your information into the Google form here.

Finally, any goals & challenges updates?

If you’ll remember, back when this Finance Friday series started, people had the option to set goals and name obstacles for themselves for the year. How are you doing on yours? Share your progress (or not) if you want in the comments. If you don’t want to share, then just take a moment to reflect on how you’re going.

My goal was to top off and keep topped off Tristan’s slush fund of $1,500. Well, I topped it back off this month, and then vet visits happened. I’m still waiting on the final bill to see how much it will set me back; I have some money coming in that I’ve earmarked for the bill, but if it ends up more than $500, I’ll be dipping back into this slush fund.

My obstacle was to stop counting things before they’d happened – both expenditures and income. I’m actually doing way better at this. One of the big things that helped me was to take an index card and to write down the date of expected additional income, how much it would be, and what I planned to do with it. Then I crossed off that line when it happened. I also finally took an iron fist to my business cash flow and have come out ahead on that as well.

How about you?

finance friday · Uncategorized

Finance Friday: Recovering from Mistakes

Welcome to Finance Friday 2018! All year long, we’ll talk about personal finances on the first Friday of the month, with the goal to getting us all in better overall financial shape. We know horses are expensive, and we need to be ready as we can for those expenses – both planned and unplanned.

BelJoeorFinanceFridays

Each month, I’ll cover a topic or invite a guest poster to cover a topic. We’ll do an overview that takes into account varying approaches, offer up some additional reading (both from other horse blogs and from the personal finance world), and pose a question for everyone. We’ll also use these monthly posts as check ins for everyone on how they’re doing with the goals and obstacles that they laid out in January.

Previously, we talked about budgeting, resisting temptation, and emergency funds.

This month, we’re going to talk about some strategies for recovering from a financial misstep.

It happens to everyone, sooner or later. An unexpected vet bill. A raise in board price. The truck breaks down. You get a little too excited during a tack sale. You forget your carefully-packed cooler during a horse show and eat fried dough for two days straight.

(okay, yes, all of those are me. #sorrynotsorry)

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What comes next?

First, be clear about the extent of the problem. If you just overindulged at a tack sale, but you’re still within your overall spending limits, then you’re fine. Sure, let yourself feel a bit of a sting from it, but don’t beat yourself up. If it’s an unexpected vet bill but it comes out of your emergency fund, then you’re also still in good shape. Yeah. It sucks, but don’t let yourself mope around about it.

If it’s a bigger problem, then yeah, swear and stomp around a lot. Whatever works for you. Let it all out! But then sit down and be very, very honest with yourself. How much money is gone? Is that all that you’re expecting, or will it come in stages? Get it all laid out and be clear.

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Then, can you reverse or fix any of it? If you went on a spending spree at a tack store, can you return any of it? Yeah, it’s embarrassing and frustrating sometimes to do that, but if it will get you out of the hole you just dug for yourself, then it can also be the smart move. If it’s a bill for fixing something, does it have to be fixed right away? Is there any part of it that’s optional?

If you’ve got the limits of it mapped out and you know that some of it just can’t be avoided, then it’s time for damage control. Here are some things to think about as you move forward.

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Don’t let it blow up the rest of your budget. It’s an understandable feeling: I had to spend money on X, and now none of it matters, because I’m so far out of shape now that I might as well spend some extra money to make myself feel better, or just, to hell with it. Nothing matters anymore. I’ve been there. I’ve felt those feels. It’s hard to wrestle your self-control back from the brink when you’re also emotional and maybe angry with yourself (or the universe at large). But now is exactly when you need to be clear-headed and make good decisions. If you can intercede with your emotional self in this moment, then you are in great shape.

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Think about sunk costs – but don’t let them run the table. “Sunk costs” are money you’ve already spent on something. It’s money that’s gone – it’s “sunk” into whatever you’ve spent it on. It can be really tempting to say “I’ve spent so much money on this already, I can’t give up now!” This is particularly dangerous fallacy in vehicles and vet bills. More than once I’ve had the vet out and said or thought “hey, while you’re here…” Or, “I just spent a lot of money on this truck, it has to be worth it, so I’ll do this repair.” Resist that urge! The money you’ve already spent is gone. It should not be a factor in your current decision-making. Don’t throw more money at an already expensive problem if you have no reasonable expectation of improvement.

That may mean saying “let’s give it another month before another ultrasound.” Or, “it’s time to move on from this vehicle.” Or it can sometimes mean letting go of something – a saddle that just doesn’t fit, a barn that’s no longer a good home for you. Letting go is really hard, but if the alternative is being sucked into a financial quagmire, then it can be the right call.

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Think about where the mistake came from in the first place. Some financial shocks are truly unexpected. Some are more predictable. Both can be eased with some advance planning. For things that are genuinely unexpected, you need an emergency fund. Don’t be afraid to use it – that’s what it’s there for.

For expenses that are a bit more regular but still sting out of the ordinary budget, you may need to adjust your savings rate, or at least your savings destinations. I fall into this trap from time to time with car repairs – even somewhat routine maintenance can trip me up because my budget is generally so close to the bone.

If it’s a screw-up, like you hit “checkout” on a huge cart of horse stuff that you don’t really need, think about why you did it. Are you frustrated with something else in your life? Will this really make you feel better beyond the unboxing? Are they things right on the line between need/want – and should you give yourself permission to buy them at appropriately spaced out, planned-for times in the future to alleviate that itch? Did you have a little too much to drink? Be honest with yourself and try to spot these moments ahead of time, next time.

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Okay, that’s it for this week. Do you have any tips for fixing or recovering from a financial mishap?

How about your goals and challenges? Are you further along on your goals, or have you made progress in your challenges?

finance friday · Uncategorized

Finance Friday: Emergency Funds

Welcome to Finance Friday 2018! All year long, we’ll talk about personal finances on the first Friday of the month, with the goal to getting us all in better overall financial shape. We know horses are expensive, and we need to be ready as we can for those expenses – both planned and unplanned.

BelJoeorFinanceFridays

Starting in January, we all set financial goals. In February, we talked about setting budgets, and then in March, we talked about staying within those budgets.

This month, I’m thrilled to share a guest post by Carla of The Frugal Foxhunter about emergency funds.

Why I Don’t Own a Horse Yet

For my entire life, my dream has been to own a horse. I have enough to buy a horse in my savings. Horse upkeep fits in my monthly budget, so long as I don’t choose one of the fancier DQ barns to board. So why not just DO IT?!
It’s infinitely tempting but I will not buy a horse until I have enough money saved to buy him outright–and an emergency fund for him on top of that. In fact, all of my pets have an emergency fund since my stupid cat Beckett taught me the hard way how useful it is to have one.
Why You Need an Animal Emergency Fund
I was fresh out of college, in an entry-level editorial job, and my boyfriend and I had inherited this spastic little Bengal kitten from a family member.
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Little Beckett was running short on lives. Just two weeks before he came to us, he had fallen out of a 9-story condo balcony–just walked right out between the slats. A leafy tree broke his fall, and the vet said he had no physical damage. (After living with him for 5 years I can now say he CERTAINLY has mental damage.)
For the first few weeks with Beckett, we enjoyed our weird little critter to play with and take endless photos of. Then he stopped eating. For days, he couldn’t keep down any food, but was still the frenetic little kitty we were used to. Then he took a turn for the worse–not drinking all day, acting listless and weak. We worried he had eaten a piece of string from a woven blanket, and may have had an impaction. We rushed him to the emergency vet. We had no idea what it would cost. Tearfully, we agreed that if it cost more than we had in savings (not much), we would have to put down our new kitten.
After inconclusive X-rays we decided just to treat his likely dehydration from a week of not eating. Cha-ching! $600 bill and our savings were crushed. Luckily, the fluids did the trick and Beckett perked right up to continue his reign of terror on our household. Even luckier, my aging Ford Focus decided to hang on for another two years–not needing major repairs until I had much more in my ‘piggy bank’.
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It’s morbid, but in my opinion, all pet owners should have at least enough put away to euthanize their animal if there is a veterinary or financial emergency. Ideally, you can save more than that so unexpected veterinary bills are not a strain on your monthly budget, and do not disrupt your other financial goals. A pet emergency fund also gives you a frame of reference of whether a treatment is “worth it.” You know how much you have in your account. Let your reserves tell you what you can afford, not a vet who doesn’t pay your bills. (Can you tell I’ve had some bad experiences with overzealous vets?)
Horse veterinary bills can be a LOT bigger than cat and dog veterinary bills. We all know how accident prone horses are, so we know emergencies will happen, even if we have no idea when. Having a horse emergency fund will provide so much peace of mind knowing you can afford an unexpected emergency without debt.
How to save for an emergency fund (of any kind)
 
Whether it’s for you or your pet, saving for an emergency is not complicated. It’s not easy, but it is simple. Spend less than you earn, and save the excess.
Figure out your core monthly expenses (non-negotiables like mortgage payment, food, utilities, etc.) and discretionary expenses (optional expenses). Is there room to save at all on your discretionary expenses? Perhaps you have subscriptions you rarely use, or other items you can cut back on. Once you figure out how much you can save each month, your first priority should be adding to your own emergency fund.* I know you love your animals, but think of what they tell you on an airplane. Put on your own oxygen mask first. If you are broke and you’ve maxed out your credit cards because you have no savings, how do you think you’re going to pay board?
Whether you’re saving for yourself or your pets, pay yourself first. Everyone says this because it’s true. If you automatically transfer money to savings when you get paid, the money is out of sight, out of mind, and away from temptation. On the other hand, if you wait to see how much is left over to save at the end of the month, you’re likely to fall short of your goal. It’s just too easy to use the money if it’s there and available to spend.
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How do you figure out how much to save in a horse emergency fund? This is not a typical personal finance question covered in Kiplinger or CNBC! It is up to you, but I think 3-6 months of horse upkeep costs would be reasonable. If your income is very stable (ha ha pun not intended) and you have plenty of flex in your monthly budget, you could lean more towards 3 months, and if not, I would lean more toward a bigger fund because it allows you to have less stress in times of lower income. Horse insurance is also an option for really pricey potential surgeries.
As I said, I would love to have a horse and could probably squeak by if nothing were to go wrong. But after 5 years of leasing, I know things do go wrong, and I don’t have a horse emergency fund yet. Heck, right now I’m just working on saving to upgrade from a pancake-flat Crosby saddle! For now, a half-lease on a fabulous hunt horse works for me. It’s a fixed monthly cost, with no need to pay unpredictable veterinary bills or make the tough decisions and tradeoffs that come with having horses on a budget (particularly where I live in a pricey metropolitan area). I can still enjoy the sport I love with an animal whom I grow closer to every year. I’ve got a good thing going, so I’m taking my time to approach my eventual goal of horse ownership in a way that doesn’t threaten my financial security now.
*There are a number of other financial goals you may need to address before creating an emergency fund for your animals–but covering them is way beyond the scope of a horse blog.
Good seat
 
Carla LaFleur is an avid foxhunter who half-leases a disgruntled OTTB named Lefty. She blogs at The Frugal Foxhunter and sells framed bits on Etsy. She is not a financial advisor, and this article represents her personal opinion, so don’t get your breeches in a twist about it!
(If you have an idea that would fit with the Finance Friday theme, and you’d like to write a guest post, email me to talk about it!)
Well, let’s hear it. Do you have an emergency fund? Not yet? Is an emergency fund important to your financial goals, or has it helped you out in some way in the past?
And how about the overall financial goals you set for yourself at the beginning of the year? How are those going?
finance friday · Uncategorized

Finance Friday: How to Resist Temptation

BelJoeorFinanceFridays

Welcome to Finance Friday 2018! All year long, we’ll talk about personal finances on the first Friday of the month, with the goal to getting us all in better overall financial shape. We know horses are expensive, and we need to be ready as we can for those expenses – both planned and unplanned.

Last month, we talked about budgeting. This month, it’s all about staying in that budget. I asked a lot of different people their advice avoiding temptation – both horsey and non – and got some really terrific ideas.

The problem with horses is that you can’t not spend money. “No spending” months just don’t fly when you’re an equestrian. You’re always writing huge checks for something – expected or not. So it’s a fine line to walk between spending responsibly and doing too much. It can also be really easy to just keep writing checks to try to fix things, and I don’t know about you, but once I’ve started spending on horse things it escalates really quickly.

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Before we go into that, though, I want to emphasize that like everything else in regards to finances,  finding the right fit for you is a highly personal process and it takes repetition, experimentation, and failure before you find something that really works. Everyone’s budget will work differently, and everyone’s techniques for staying on that budget will work differently because they’re tailored to your own psyche, emotions, and way of seeing the world.

So, here’s your advice for staying on budget and avoiding temptation.

  • I just look at my bank account and that’s a pretty good deterrent.
  • Surround yourself with people of a similar budget. There are some rich old women in this sport that will act as though you are abusing old Alpo if you haven’t invested in a $5k custom saddle. Then there are people that know how to duct tape together tall boots and make them look acceptable for competition. Hang with the latter.
  • I don’t walk into tack shops anymore. Anything I need I buy online…seeing my total before checkout helps to curb those impulse buys (and I don’t really NEED 5000 saddle pads).

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  • I don’t go looking at things, lol! Seriously, I assess what I have and what I actually *need* – I used to be a tack hoarder, now I try to get by with as little as possible in horses and life in general. Simplify!
  • Most of my horse stuff is a business deduction at the end of the year, so I think, “Would this make the IRS suspicious?” If yes, do I actually NEED it or not? The business account dictates my budget, and since I’m constantly tracking that, it’s a lot easier to stay on target.
  • I don’t have a budget per sey, I buy the things my horses need like hay, grain, bedding, supplements. I try to replace used equipment when it really needs it, not just because I want a new looking thing. If I do visit a tack store my first stop is in the clearance area, sales racks, etc, because IF I do an impulse buy, it’s going to be a mega deal.

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  • I think another aspect is learning to care for your tack in a way that extends its life. You aren’t using that martingale for now? Condition the leather well and put it in a climate-controlled area. Winter is over? Store those blankets somewhere mice won’t eat them (RIP my favorite cooler). Hang up your whips when not in use, don’t draw pictures in the dirt with them when you are bored. Clean your every-day boots (hell, my most frugal instructor had me get rubber covers for my first good paddock boots, that I took off only to ride, to extend the life).
  • Make smart choices about tack and equipment purchases. Read reviews. Don’t buy the $15 item that’s liable to need to be replaced in a short time. Buy the $25 item that’s going to last.  Buy used. Look at off brands. I swear my $80 Horze bridle is on par with my PS of Sweden. I do clean it often. Also: unfollow any pages like “saddle pads anonymous.” Spoiler alert: Eskadron pads aren’t superior in any way other than price.
  • I keep my horse’s vet folders right beside my tack storage, so anytime I might be tempted to splurge on something I don’t need I have those big ol’ bills staring me in the face. It’s a good reminder to save my money for the expenses that aren’t frivolous. But I do give myself permission to buy (cheap) new halters every spring, because my horses are a mess and washing halters just doesn’t satisfy me the way bright shiny new ones do.

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  • If I find myself in need of something, I see if I can borrow it first, or buy it off someone at the barn. At one barn, we had a veritable stock exchange of buckets, given how horses came and went. And sometimes you don’t long-term need something. Just make sure you give it back ffs- don’t be that asshole!!! Also, I am a big fan of consignment shops.
  • Valleyvet.com sells a kit for a year’s worth of rotational worming for $35. Compare to the vet who charges the same amount per worming.
  • Give yourself permission to spend some money – set an amount per month, or plan  out specific purchases. No one likes to feel deprived, and it can backfire badly and lead to more spending. Take that amount out in cash, or track it in a specific part of your budget that’s just for fun.

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  • I use variations on the rule of three. In three days, will I still be happy I bought this? In three months? In three years? Horse stuff can be measured in years, a lot of the time, and that’s a long tail for regret. Obviously you need to buy some consumables, but don’t sink all your money into things that are just dumb fads, or things you think you need right now when you could just as well get by without and next week you’ve forgotten you ever wanted it.
  • I once taped a piece of paper tightly around my credit card and wrote my horse’s name on it. I got the idea from someone who did that with a picture of their kid’s. It gives you both a barrier to spending (however temporary) and a constant reminder of why you’re trying to be good.
  • Delete all your credit card information from websites you shop at, so you have to re-enter it and think about it when you do so. It gives you extra time to make sure you really, really need whatever you’re

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There you have it. Anyone have anything to add? Some tip, trick, technique, or strategy that keeps you from spending?

Also: this is your opportunity to check in, publicly or privately. How are you doing with the financial goals you set for yourself at the beginning of the year?

finance friday · horse finances · Uncategorized

Finance Friday: Let’s Talk About Budgeting

Welcome to Finance Friday 2018! All year long, we’ll talk about personal finances on the first Friday of the month, with the goal to getting us all in better overall financial shape. We know horses are expensive, and we need to be ready as we can for those expenses – both planned and unplanned.

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Each month, I’ll cover a topic or invite a guest poster to cover a topic. We’ll do an overview that takes into account varying approaches, offer up some additional reading (both from other horse blogs and from the personal finance world), and pose a question for everyone. We’ll also use these monthly posts as check ins for everyone on how they’re doing with the goals and obstacles that they laid out in January.

We’ll be relieving the stress of talking about money with gifs of cute foals.

This month, we’re starting at square one: budgeting.

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What is a budget?

Let’s start realllllly simple. It’s not that I think anyone is dumb! It’s that I want to start at square one so that we can explore some of the philosophy and utility behind budgeting.

Put simply, a budget is a tallying of finances. It accounts for money coming in (revenue) and money going out (expenses). Budgets can be project-based (say, a budget that’s written just for your show season) or they can be all-encompassing (every penny you make and earn in a given period). Most people use some combination of both. I see a lot of horse people with different levels of budgets – maybe one for just the show season, then a second for horse expenses, and then maybe a third for their overall finances. Like nesting budgets, each with different purposes and each at a different level of detail.

You can look at a budget from the point of view of expenses or revenue. An expenses budget would look at everything it costs to do something – say, have a summer of showing – and then tallies that money up to a total number that you either have to allocate or raise. A lot of project-based budgets work best in that way. A revenue budget, on the other hand, would look at money coming in and then allocate that money to different purposes – rent, food, gasoline, board, new tack, etc.

Budgets can have different levels of specificity. You can plan out your show season down to the smallest detail: gas to and from, food purchased at the show, hotel room, entry fees, trainer fees, a percentage off the top for shopping at the fair or contingency, etc. to infinity. Or you can make an educated guess: I know that an average entry fee is X, an average tank of gas is Y, and I usually spend Z on food.

The good news? There’s really no wrong way to do it. Go with what works for you. If granular detail makes you crazy, go bigger picture. If you feel more in control and less harried if you’ve planned everything out, then by all means sit down with a glass of wine and start making alllllll the lists.

The most important thing is that you budget.

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How do I create a budget?

There are two schools of thought on creating a budget.

The first says to take a period of time and to track your expenses over that period of time. Sit down with a highlighter, pen and paper, and start just putting things into categories. What are you spending money on, and where is it going? When you have finished, you have a clear idea of where you have spent money in the past, and so a realistic idea of what some of your necessities costs and what you’ve been spending on more discretionary things. You can then tweak your spending up or down in certain areas.

The other school of thought is more top-down, and it starts with your revenue. How much money do you make in a month? Start with that number at the top. Now start parceling it up. You do need some basic information to do this – how much you spend on major things – but the idea is more that you are looking at bigger categories and writing it a bit more aspirationally.

A subset of these two types is the two ways that you can account for things in your budget. You can either allocate every single penny – or you can allocate for the major ongoing expenses and categories of expense, and then let the rest be leftover – for fun money, or savings, or whatever you want.

Either way works for people. If this is the first time you’ve ever created a budget, then you have to do some of the work in the first way, just to get a clear-eyed picture of where they money is actually going. It can be a good idea to revisit it after major life changes to see if you need to tweak it.

I tend to hold with the second: I look at what my monthly income is, and write a budget from there. I also dedicate every single penny of my income to some purpose – which means I have four different budget categories for savings accounts, with according monthly transfers. I find that method a bit easier for those of us who might not make a whole ton of money (yay nonprofits!). It’s not like I have enough money and am just spending it in slightly unwise ways. There’s never enough, and I need to give every single penny a job to do, and keep it in marching order.

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Budgets only work if…

1.) You track your expenses. There are a lot of ways to do this. You can use online services like Mint or You Need a Budget, and some banks also provide budgeting tools online. You can use a simple Excel spreadsheet held in a place that you can get to easily – say in Google Docs or Dropbox. You can use good old-fashioned pen and paper. The only right way to do it is the way that works best for you, that holds you accountable and gets you to track every penny you spend. Yes, all of it. Make it an ironclad habit.

2.) You’re honest with yourself. Actually, none of this personal finance stuff works if you’re lying to yourself. That includes “yes, I will totally only spend $20 this month on going out with friends!” and “it’s fine, I know my budget line says this but I can totally make that up by doing less later in the month!” No one on earth is so perfect that they don’t feel the temptation to lie to themselves about this stuff. We all justify, prevaricate, and squirm when we’re faced with these internal narratives. We’re human, and that’s okay! The best way to deal with it is to understand and be kind to ourselves, but also be clear-eyed and honest as much as possible.

3) You hold yourself accountable. That means two things: first, it means picking a regular time (weekly, monthly, whatever) to check in and ask questions. Did I track everything this week? Do I have to fill in gaps? Did I go overboard on one thing? What’s my realistic plan for getting to the end of this period and still meeting my goals? What do I still have left that needs to get done, and do I have enough in the budget to do that? What should I say yes or no to based on the answers to those questions? Second, it also means also asking big questions of your budget each month. Does it need to be adjusted more generally? Were you too hard on yourself when you set a certain goal? Not hard enough? Did you have a major or minor life change that means you need to rethink some of your planning?

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In Conclusion

Budgets are tools. Think of them like crops: they can be horrible or they can be useful, entirely depending on how they’re applied. They not in themselves inherently bad. I think a lot of times when we say “on a budget” or “not in my budget” we’re thinking in terms of a negative. We feel like budgets don’t let us do the things we really want.

If you think that way, reframe it. Budgets are a way for you to do the things that you really want. They are a neutral tool that you can pick up and use in your life to achieve great things. That doesn’t mean they’re easy, quick, or even simple. But it doe mean that if you work with them instead of against them, you’ll get a lot further.

Additional Reading

The Dangers of Heroic Budgeting from The Simple Dollar (and my response) – why going overboard can set you back
Changing the Ways I Save for Horse Shows from Cob Jockey – a good example of project-based budgeting
2017 Equine Expenditures from Hand Gallop – and here’s an overall horse budget
Our Budget from The Horse Rescue – this is a really detailed projected budget for what it would take to rescue a certain number of horses, and it can easily be adapted to your situation too
Doing the Math from Bel Joeor – an accounting I did of every penny I spent on one specific veterinary issue
These 4 Easy Steps Will Teach You How To Budget (Finally) from Money Under 30 – yes, it’s a clickbaity title, but it breaks down a lot of the steps in creating a budget and fleshes out the psychology behind them
The 50/20/30 Rule for Minimalist Budgeting from Mint Life – too may steps? here’s a really simple approach
Horses are Expensive from Not So Speedy Dressage – a phenomenal example of tracking expenses, actually a series of posts over the course of a year

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Feedback & Check In

So, do you have a budget, whether project-specific or overall? What works for you, and what doesn’t? Is there anything that you’ve learned the hard way?

And: let’s check in! How are you doing on that goal you set for yourself? Give yourself a good old-fashioned letter grade, and think a little bit on what you can change for next month if it didn’t go great. If it did go well, think about what really worked for you. Similarly, how are you doing at that obstacle you named?

Feel free to answer in the comments, in your own head, or on your own blog.