Envelope System of Budgeting: Refocusing and Refreshing

Back when I was a new blogger and a newlywed, I posted frequently about our budget. We got married right at the beginning of the 2008 economic downturn, and with a mortgage, car payment and a volatile job market, we got strict about living on a budget. I was laid off 4 months after our wedding from my job in marketing at an internet start-up, and while I luckily found a job again quickly, at the age of 24, B and I became acutely aware of how quickly things can change. We started living on Dave Ramsey’s envelope system of budgeting to sock away a 12 month emergency fund (because we didn’t feel 6 months was enough in the economy at the time), pay off that car loan, and save wherever we could. We did well, loved the cash budget system, and paid off our only debt other than our mortgage (that car) by age 25. Then we had kids – we bought a used family car in cash rather than taking out another loan, continued to be dutiful about saving and living well within our means, and moved forward with our financial goals – eventually for me to stay home with the kids, to buy a bigger home and to long-term provide for our family’s future needs. And in those years that I was blogging frequently about budgeting, it was a hot topic. But have you noticed that it’s kind of gone away? Blogs have turned from “DIY this! Save money!” to “Buy this amazing sofa right now!” And that’s okay, to an extent. The economy is better. But that doesn’t mean that living on a budget should go away! So, I’m bringing it back up – let’s talk about it, even if it’s not cool anymore.

 

We credit the envelope system of budgeting with where we are today. Over the last few years, we decided we didn’t really want to stick to just cash budgeting anymore. Part of it was laziness, part of it was a lack of need to account for every single purchase, part of it was just the feeling of a comfort and a better economy. We’ve usually done one or two “No Spending Months” a year to reel things in and reset when we felt like we were getting a little too spendy. We saved cash for our bathroom remodel, and are now saving cash to purchase a new vehicle (or maybe a slightly used one) to tote our soon to be family of 6 around town (and the country…because 6 plane tickets makes me think we’ll be driving to many of our vacation destinations in the future). We have good budgeting principles and do pretty well with our monthly spending – that doesn’t mean we don’t have months that get a little out of hand and we have to reel ourselves back in, but overall, we live well within our means.

 
So why go back to cash budgeting? First, no matter what situation we’re in, we spend less money when we use the cash budget and saving – no matter how good the economy is – is always a good reason to do something!  There’s that likely car purchase on the horizon (I need to install 4 carseats in my Pilot to see just how imminent that purchase is). And anytime there’s a big purchase in the future, I feel the need to really save to help offset that expense even if it’s one we plan for and can afford. But, mostly, it’s driven by teaching our kids about money. I recently read Dave Ramsey’s “Smart Money, Smart Kids” book. We’re at the age with our oldest two where we need to start teaching them about money – how to make it, how to spend it, how to save it, how to give it. B and I have slightly different philosophical opinions on allowance and kids earning money and I needed to be informed before we entered into that world – I like the idea of giving the kids an allowance because they are active participants in our household and we do things to help around the house, B prefers allowance to be tied to work performed. Dave Ramsey sides with B on that one, and while I don’t agree with everything in his book – I will NOT be paying my kids to make their beds every day, they make their beds because in this house, we make our beds! – I do see a lot of value in teaching them that money is earned, not given. As I was reading the book, I realized that I can’t ask my children to budget if we’re not actively and outwardly living on a budget either. As I thought about the relationship I want my kids to have with money, I realized we needed to model that. Nell LOVES to pay for our groceries. But paying for groceries, these days, involves me handing her our credit card to swipe (we still pay our credit card off in full every month, but she doesn’t see that side of things, she sees a piece of plastic that magically buys food!). I see how it would be so much more powerful to count out the $75 -$100 I spend each grocery store trip with her, and let her hand it over to the cashier.

 

And then there’s the fact that I’m a planner. I tend to be a bit of a worst case scenario-ist when it comes to the economy, but I’m not convinced that the current economy is here to stay. I personally believe (and have done very little research to back this up, so this is strictly my personal opinion) that low interest rates have driven home prices up and allowed people to buy more house than they can really afford. So, I’m not convinced that the strong housing market in Colorado is here to stay. There’s retirement, which we contribute to pre-tax but I think we could always pump more into. Not to mention the fact that we’ll have 4 teenagers (three of them boys) to feed one day – I told my neighbor (with two boys) a couple months ago when she was lamenting the cost of groceries and how much her boys eat, “You know it’s not going to get better, right?” She looked at me like I was crazy, and then she told me the next day, “When you said that I really had to think! You’re totally right – I will just continue to spend more on groceries. It was alarming, but a good perspective change for me.” Sports and activities are absolutely choices, but are things that we feel are healthy and important parts of kids’ childhoods, and they cost more and more the older and more competitive they get. We would love to give our kids the gift of a fully paid for (in-state) college education. B and I were both given the huge gift of graduating from college without debt. We’d love to give our kids that same gift – there will be expectations for performance and behavior attached to those gifts, but it’s something we really want to be able to do for them. We will have 16 years of college educations to pay for in the not really all that distant future – and those 16 years will be paid over 10 years due to our 2 year apart kid spacing. I googled “Colorado in-state tuition and room and board cost predictions for 2028″ the other day. Don’t do it. Or do. But, those 529s are gonna need a little more attention than we’ve currently been giving them.

 

So, we’re getting serious about the budget again. I’ve simplified the categories a bunch from when we first started this in 2009. Rather than having a category for absolutely everything, I’ve roped our spending into 6 categories: Food (groceries, eating out, any beer or wine that is purchased, etc), Household expenses (anything not food that you might buy at Costco or Target, including diapers, plus fun stuff like home decor), Pets, Gifts, Clothing for the entire family, and spending money. We will continue to pay all of our bills online via our credit card and pay that off monthly, and we pay gas via our credit cards, too. Another thing I’ve changed up is to pay ourselves first. In the past, I’ve had our budget, and whatever we had leftover was our savings. Instead, I’ve setup automatic transfers from our checking account to our savings account for a specific percentage of our income every single paycheck – and I’ve done the same with our charitable donations (church & a few non-profits we support). I think those two small changes – paying our savings first, and then paying our tithe and other donations before allotting money to spending, have me feeling the most energized. I might need to read a Dave Ramsey or other budgeting book every three months to keep me energized, but for now, I’m feeling good about getting back to our budgeting roots – so that we can raise our children to do the same!

{All the old blog posts on our budgeting adventures can be found here.}

Resolutions Check-in and January Goals

So here we are in February. I laugh thinking about me this time last year – 8 months pregnant, so uncomfortable, and having regular contractions. For over a month. I remember being grumpy when people would try to plan things in the last two weeks of my pregnancy because I was obviously going to have a newborn and wouldn’t be able to be there. Ha! Sorry about last February anyone who knows me, I was not myself.

 

January was successful as far as goals go. My resolution to “Be Present” in 2015 has been mostly successful so far. There have been times where I’ve caught myself on my phone and needed to tell myself, “Put the phone down, do you want the kids to remember you as a mom who played games with them, or was constantly checking her phone?”, but I’m recognizing those moments and doing pretty well with keeping my phone in it’s designated spot while the kids are awake. So part two: disconnecting after they go to bed. This is hard when B travels – I find myself laying on the couch with TV on in the background and scrolling through blogs or Pinterest or Instagram on my phone. What’s the point??

No Spending January was great. As I’ve said before, this mostly comes into play – for me at least – with shopping. Groceries, I just buy what’s on the list that’s needed for meals that week. I fill the car up when it’s empty, but I don’t do an excessive amount of recreational driving – to and from preschool, activities (which are few at this stage in the game – but I know will be a big contributor to gas spending in our future) and to the grandparents on occasion. But shopping – throwing one extra thing in my cart at Target or Costco, or stopping into HomeGoods “just to look” are budget killers.  There were plenty of times when I filled my cart online and then had to physically remove myself from the office to remember that I didn’t NEED to buy those t-shirts for Tom this month. Or that, wouldn’t I prefer to buy those jeans after I finished my Whole30 and P90x3 and things fit differently? And honestly, this was a really good thing. I went through all of the kids clothes. Nell has so many (great and my style) hand-me-downs that all I need to buy her for summer are swimsuits and sandals. And if I’d just filled my cart, we’d have too much. The boys are a different story – Tom needs all new clothes for spring and summer, and Peter can wear a lot of Thomas’s hand-me-downs, but that three month difference in sizes makes a little bit of a difference, so he needs a couple things. I spent January assessing our closets and organizing what we had instead of buying more…and it was great! I have a couple house projects I want to put some money into (mostly paint purchases) in February, but otherwise I’m keeping shopping to a minimum again, preparing for spring wardrobe shopping for everyone (and a first birthday party! wahoo!) in March.

 

My Whole30 was meh this time around. This was my 3rd attempt and I didn’t finish. I knew from the start I wasn’t going to finish, and I was perfect for 21 days. But after my one allotted night of not perfect, I gave myself a lot of leeway. A few things: I weighed myself the morning of our party (B and I turn 30 within a month and a half of each other, and instead of having two parties, we decided to combine it and do it once) and had only lost a pound and a half. And I was discouraged. I KNOW this is why they tell you not to weigh yourself during your Whole30. Self sabotage. I’m back on track – eating Paleo with the occasional treat. There isn’t a good 30 day period for me to redo a full Whole30 until April, and I’m ok with that. I’ll consider it then, but for now, I think I need a break. I’m a big believer in moderation with diets, which is why I like Paleo and the Whole30 – you fill your body up with good, wholesome foods. Nothing processed, no chemicals. And I know that’s healthy,

But my workouts are going great! I am loving P90x3. I need a daily schedule and varied workouts to keep myself motivated. The workouts are challenging, and there are days I dread them, but I also feel like I’m getting back into my daily workout groove and it feels so good. P90x3 is BIG on strength – I am seeing muscles that have LONG been hidden. I feel strong and slim and healthy and over the first 30 days, I lost 2 inches in my waist and hips. I do think the strength and muscle building focus has a bit to do with my only losing 1.5 pounds over 21 days of perfect clean eating. I’ve talked to my BeachBody coach, and we think I need a more cardio based program going forward (T25 or Insanity Max are top contenders for April). I have a little less than two months left of P90x3 and I intend to finish it, but I will be adding running in soon (I’m a fair weather runner – March – June, and then evenings or early mornings July – August, and again September-October) to get my heart-rate up more.

So that’s my recap. How were your Januaries?

New Year, New (Personal) Decade, New Resolutions

Well, it’s 2015. I turned 30 on January 1st – a milestone I was happy to welcome. A friend asked me at Christmas Eve Mass how I felt about turning 30, and I told him honestly, “Well, I’ve been acting 30-something for the last five years, so might as well embrace it and make it official.” And truly, it felt a little anti-climactic. Quite honestly, the majority of our friends have about 7 years on us. We have a good group of friends that are our age, but they’re not in the same place in life as us – kids, houses, etc. It just seems that most of the people we meet in daily life – living in the suburbs with kids about our kids’ ages – are about 7 years older than us. So 30 wasn’t scary to me – I’ve had a healthy year after having my 3rd baby, and so I am entering my 30s feeling good about myself, my kids, my marriage and our circumstances in life. But there’s always room for improvement, and I’ve never been one to shy away from a New Year’s and Birthday resolution or two or three. I have a couple resolutions for the whole year, and a few things just for January.

 

January 2015 Goals

Whole30 – I’m embracing my 3rd Whole30 (read about my first one here) – I started the day after my birthday, on January 2nd.  I almost didn’t – B and I are having a joint 30th birthday party mid-month, and I am going to have a glass of wine or two that night, which I know means that this won’t be a real Whole30, so I considered just not doing it.  However, I knew if I didn’t commit to it, then I wouldn’t follow it – so one night of not perfect is going to have to do, because with travel and weddings and lots of 30th birthdays coming up, the next available month would be April, and I didn’t want to wait that long.

No Spending January - You can read all about our first No Spending January here and here. And then my No Shopping October here. Nothing new, we’re following the same plan we did last year, and looking forward to putting a little extra money into savings after Christmas.

Establish a Workout Routine - After Peter’s weight gain issues this summer, I dropped working out. And I tried to get back into it a couple times, and never succeeded. So, with spring clothes and summer swim suits approaching, I’m jumping back into it. I’m borrowing P90x3 from a friend to see how I like it, but while the Whole30 is going to handle any Christmas cookies I indulged in over the last month and help me feel great, I still would like to do a little more toning up.

 

2015 Resolutions

Be Present - This is specifically about me and technology. I do a lot of mindless phone scrolling throughout the day, and I don’t like it. I would rather play with my kids. So I’ve established a place in our home for my phone – I can go get it if I need it, but then I need to put it back.  I will still take pictures and occasionally post to Instagram, but I want to get away from constantly monitoring my phone.

Run Two Races. I was going to make this goal 4 – one a quarter – but the bottom line is that B is traveling a lot for work and I’m not going to bundle my kids up in a double stroller and take them for a run in the cold. Nor am I going to put them in a gym daycare so I can run on a treadmill in the heart of cold and flu season. So I won’t have a lot of run training time, but I’d like to get back into races this year, and two seems like a manageable number given limited training time.

So those are my goals for January and 2015 – what about you?

No Shopping October

In January, our family did our first “No Spending Month“, and it was fantastic – really made me step back and think about our money spending habits. I committed to doing it again. I decided July was a good month -  but I couldn’t actually do a “No Spending Month” – we had a vacation planned and Peter’s Baptism (while not a huge shindig, we normally don’t account for food and drinks for a party in our normal monthly budget). But I really needed to reel in my spending. So I took a long look at the last couple months and realized I needed to do a No Shopping Month instead of a No Spending Month. I’d just bought all three children new summer wardrobes, and on the tails of my Whole30 success, I did a wee bit of new wardrobe shopping for myself. And that was warranted, but I needed to check my online shopping habits before they got out of control. And No Shopping July was a success. Here’s why: We really don’t go overboard in the eating out or grocery shopping department. I don’t buy a lot of prepackaged snacks that generally send a grocery budget out of control – I mostly shop the perimeter of the grocery store and buy only what’s on the list for meals for the week. When we do eat out, it’s a celebration, not a daily occurrence, so it’s not like that was out of control. But a quick $50 online Gap purchase adds up when you’re making three a week.

So, with the kids’ Fall and winter wardrobes pretty well setup, my own wardrobe feeling meh but workable for Fall (not to mention three “killing time before we pick T up at school” Target trips a week over the last two weeks…that I honestly can’t tell you what I bought during) I figured it was now or never on my next No Shopping Month. Specifically, this means no impulse buying for myself or for Nell. Boy clothes, while adorable, just don’t have the same “BUY IT NOW” effect on me as toddler girl clothes do. I need to buy two black sweat suits and some felt for Tom and Nell’s Halloween costumes (because homemade sweatsuit costumes are my jam), but the weekly budget can absorb those costs.

So, that’s my October Challenge: No [Unnecessary] Shopping. I will buy Peter and Nell diapers this month because they’re both almost out. I will buy those two $10 sweatsuits for Halloween. And we’ll buy groceries and household items that we run out of. But otherwise, no shopping. No recreational Target trips, no wardrobe additions, no Pumpkin Spice Lattes (they’re not Whole30 anyway). And hopefully we’ll end October with a little extra in our savings account. How are your budgets going? Anyone want to join me in my No Shopping (except for Halloween costumes) challenge?

Adventures in Budgeting: Making the Leap to One Income

In October of last year, after years of working in some capacity after having kids, we made the jump to being a one income family. There were a lot of reasons for the jump, and I know that this topic can get touchy, so all I will say is that every family needs to do what is right for them in the moment, with the understanding that what is right for your family very likely may change on any given day. On paper, it was really hard for us to make the leap from a dual income family to one income. The logical part of my mind thought that B’s income had to completely replace mine before we could take this step, but as you’ll read, we have made it work with some diligent budgeting, foregoing some unnecessary expenses, and a commitment to frequent conversations about how the budget and our current setup is working for our family.

 

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No Spending Month: Recap

We did it. As of tomorrow morning, we will officially be in February. And with nothing but staying in out of the snow planned for today, I feel confident saying that we will come in under my projected $500 cash spending for January. That included 31 days of groceries (while I did not run out on December 31st and stock up, this was made easier by using up pretty much everything we had just sitting in the pantry and freezer the first week and a half), taking meals to several friends who had really hard Januarys, 4 birthday gifts purchased, diapers for Miss Nell, and even a get-together here and there at our house with some friends. Not included in the $500 were our monthly bills, tithing, or gas for our cars. As I was driving into our neighborhood yesterday behind a UPS truck after picking T up at school, I realized the UPS guy (Fedex, etc) has not been to our house once in January. In this day and age of Amazon Prime, that’s just not normal for us. After his nearly daily stops in December, he must have appreciate the reprieve.

 

I accomplished a lot in January since I wasn’t walking the aisles of Target looking to kill time on cold and dreary days. I got quotes for our big exterior projects for this Spring (and was pleasantly surprised to realize I overestimated the costs of some big projects). I got our household pretty well organized to add a 5th human to in a month – I have a very small list of things we need to buy to either get Nell’s room up and running once we move most of her furniture to the baby’s room or a few things that we’ll need for the McNugget (I’ll post on the plans there, soon).

 

But mostly, it was a really good exercise for us to take a good, hard look at how and why we spend money. Towards the end of the month, I’ll be honest. I just wanted to go out for a burger and fries. And as Nell’s leggings and tops became increasingly short on her, it took all of my will power to hold off on the cute Spring toddler clothes ads that were flowing into my inbox – so I unsubscribed from all those stores and that, in and of itself, has been liberating. But I digress. No spending January was exactly what we needed to remind us of how our spending is a choice – we are not any less happy at the end of January than we would have been if we’d bought everything and done everything our hearts desired this month. And that is eye-opening.

 

But our no spending month also helped us highlight some areas of our budget that weren’t working for us and we have decided to make some budgeting changes for 2014. It turns out that after 5 years, the envelope budget might not be the best thing for us. We did a much better job with a lump sum of money that we had to spend for our entire household budget for the month than we had recently been doing with categories. I think a lot of this is just mindset – once we were used to the categories and the amount we could spend in them, we spent the money because it was there and we were allowed to. We’ve always justified the categories saying that they roll over and become savings vehicles – and for certain areas, that’s true. We will continue to put $75 a month into Casco’s envelope – it gradually adds up to help offset vet expenses when they come up and covers the pricey, limited-ingredient dog food that our first born’s allergies require. But the other categories we are going to take a long, hard look at and decide if we’d be better off living on less every month, and then occasionally spending a little bit in certain areas. Like, for example, when Nell outgrows her entire wardrobe in a span of 5 days.

 

The most important thing we took from this month was that things come up, but when we approach our budget thoughtfully, we can usually balance the unexpected expenses that come up. I mentioned that B’s car needed to be repaired on the 4th day of our no spending month and his last semester of tuition was due before the end of January, too. We were so annoyed, but as we talked about it, we realized that’s how we should always handle months when those things come up – cutting back in other areas so we can absorb the unexpected costs into our budget rather than just putting less into savings that month.

 

So B and I have to sit down and figure out how our budget looks for February – and the rest of the year. Beyond determining a plan of action for our budget, my financial goal for February is to look into cutting our costs for our recurring monthly bills – if it weren’t for sports, we could probably cut cable altogether and go with Hulu or Netflix…but that’s just not going to happen in this football/golf/baseball/hockey/basketball/you name it obsessed household. But, we’re feeling energized knowing how much we now know that we can save monthly when we choose to forego unnecessary items. So, that’s how January is wrapping up for us. I’ve heard from a couple people who are contemplating a no spending month in the near future, and I would love to hear how it goes for you! B and I are still discussing doing this more than once a year, but I think it will definitely be something we stick to as a spending diet after the holidays in January for a few years to come!

 

No Spending Month: Week 2

Week 2 (and a halfish) of our No Spending Month is under our belts. The second week was a little bit tougher in terms of resisting spending – catalogs came in the mail and suddenly I felt like a room needed a pillow or accent table update. But I really think this challenge has been good for us. Normally, I’d just take what we have in the house envelope and go buy something that we don’t need – but this week we just refreshed a couple rooms by moving things around and working with what we have. On weekdays that B doesn’t remember to take his lunch, he always runs out to grab something – I’ve been packaging leftovers into smaller containers so that he can take a lunch serving with him every morning so that he’s not in that situation. Here are the things I’m noticing during no spending month, so far:

 

  • We’re playing more at home. Normally when the kids wake up on a day when we have nothing planned, I add a couple errands to the day. Anything to not be cooped up inside all day long, right? But since spending is out, we either head to a park (though cold, extremely windy days have kept that to a minimum) or our local rec center where we can play for free. We’ve made more play dates with friends, because they’re free, and we’re spending a lot more time together playing in the mornings than rushing out the door to get things done.

 

  • Meal planning. I’ve always said that the single key to keeping our grocery budget in line is planning out meals, and I’m not always very good about it. In honesty, there are few chores I like less than meal planning. But planning out our meals has made this possible. Where I need to improve? Planning for lunches and breakfasts. That’s my goal for the final two weeks of January.

 

  • No fast food. I’m not the worst about fast food, but the convenience (and deliciousness) of Chik Fil A suckers me in a few times a month after I pick T up at school – or when we just need to get out of the house for the love… Instead, we’re eating lunch at home, B’s taking leftovers for lunch to work

 

  • To go along with that, we’re eating more healthfully. I just went to the grocery store yesterday for the first time to get a few convenience snack foods – namely crackers to send with cheese and meat for T’s snacks at lunch. But otherwise, snacks have been fruit out of the fruit bowl.

 

I know that budget posts are interesting, but let’s be honest – without real numbers, it’s kind of hard to gauge. I’m always hesitant to talk numbers – cost of living varies SO much from region to region (Colorado is considered medium cost of living, generally, I think – higher than some, lower than some) and what is living frugally to some families might be extravagant to others – or some people might think we’re just not feeding our family this month. Keep in mind, this does not account for our bills we pay directly, gas which we just charge to the credit card, etc – this is just our cash spending. But here goes:

 

We’ve got two more weeks to go in January, and so far we’ve spent $200 total out of our cash budget this month. We’ve pretty much kept our spending to just groceries and gifts – we have a good amount of winter birthdays to plan for so our gift spending is more in the first few months of the year. I’d estimate that we’ve spent $70 a week on groceries (working with what we had – frozen meat, a couple frozen meals we were ignoring in the bottom of the freezer, etc going into January helped that a lot so I expect that to be a bit higher in the next two weeks) out of that $200. On top of the $200 total for cash budgeting, we spent an unexpected $200 when B’s car wouldn’t start during a cold snap at the beginning of the month and we had to get that taken care of so he would have a reliable car to get to and from work. Even with that unexpected car repair, we think we’re doing really well. We normally budget closer to $1250 a month for cash spending (I did a budget breakdown here, but our spending has increased in those two years) on top of our set bills and expenses, so we’re looking to save a lot this month. We have a couple more January birthdays to account for, two more weeks of groceries, and Nell will need more diapers before month’s end. I think I can handle all of that for under $300. Even with the unexpected car repair, that would bring us under what I originally set aside for our “no spending month”. B told me last night, “This no spending thing is pretty awesome. I love not constantly spending money.” Me too, and it was just the wake up call we needed about how unnecessary some of our spending has been.

 

So that’s the update, hope you’ve all had great weeks and are looking forward to a fun weekend.

No Spending Month: Week 1

So, we’re one week into our No Spending January, and can I be honest? So far, we’re pretty much loving it.  When I first started blogging about budgeting back in January 2009, we had so much fun with our budget. We started the envelope system of budgeting out of fear – I had been laid off from my job in the internet sector in November 2008. I was thankfully employed again within two weeks, but as soon as January 2009 rolled around, they were restructuring Mr. B’s department at work and we were acutely aware of how volatile the economy was. We were awesome about our budget – our goal was to live on one income so that we could roll with the punches of the economy 5 years ago, and we took so much pride – and had fun – cutting numbers in certain categories, being thrifty about going out, and even having to say, “It’s not in the budget” when we were asked to do something. B made it through the restructuring and has continued to work his way up in the company. Finally in October we made the decision that we’re financially in a place where we are comfortable on just one income and that at this time, the most important thing for our family is for one of us to be at home with our kids full-time. With that decision, and the impending arrival of Baby #3, I gave notice at my job and have transitioned from work at home mom into stay at home mom. (Please note, this has been a hot topic at imperfect over the years from some lovely anonymous readers. Everyone has to do what’s right for their family, and what is right for our family will change with time and continue to evolve. But right now, this is what works. Those of you who’ve been reading for a long time know that there’s a long long history of the crap that has led us to never trust anyone ever with our children, but that honestly doesn’t even matter. This is about respect, every woman should be entitled to decide how she wants to do the mom and work thing without judgment and with nothing but loving support from other moms and women. End of story.)

 

Okay, so with that back story behind us, a little after Thomas was born – about two years into envelope budgeting – budgeting became less fun. We were still living on our restricted budget despite income increases, and sometimes, it was just dull. We’d give ourselves some leeway, and then get annoyed when we didn’t transfer as much money to savings every month as we were used to. Having a second child, and then moving, didn’t help what was becoming laziness about the budget. We were living on our budget because we knew we should, not because we had to or wanted to. And that led to budget resentment.

 

Which is why, entering 2014, we needed to refresh the way we look at our budget. We weren’t good about coming home to get cash anymore before running an errand. We were so used to having a certain amount to spend every month that we spent it quickly, and then as the month rolled on we’d either resent the budget or just buy something anyway. But, as we look ahead, we need to prioritize savings. The kids aren’t going to get less expensive as activities and school start. Mr. B’s car will likely be replaced in the next two years or so. We’ve got some trips planned and some weddings committed to. We’d like to continue to prioritize saving for the kids’ college educations. And those goals required us to cut spending and really focus on savings. And so, I cut out all non-necessities in our budget this month as a way for us to refocus our energy on living frugally. We have cash for food, for our bills and utilities, for gas, and for diapers. We’re still giving our friends and family with January birthdays gifts. I’m still taking meals to our friends who have just had babies. But otherwise, we’re saying no:

In the first week, we’ve said no a lot. I’ve turned down dinner with a friend and just honestly said, “We’re doing ‘No spending January’, so I can’t go out tonight”. We always go out to breakfast with our friends after church on Sundays, and last week we told our group that we’d be opting out this month – but that we’d love to have everyone over for bagels and juice at our house instead of in a restaurant one week. The kids and I have hit up the rec center to play while it’s been cold, and we’ll be doing a lot more parks and the zoo (where we have an annual membership – my birthday gift from my parents. Memberships are some of my very favorite gifts to receive!) when the weather warms up. I wanted to refresh the pillows on my couch to get anything Christmas-y out of rotation, so I went through my fabric stash and found some good options for new covers.  B was given tickets to a CU Basketball game and while I’d normally opt-out of basketball – the only thing I ever liked about that sport was the way the shoes squeak on the court – I said yes for the free activity. And we just went to the game – parked on the street, didn’t buy food – and had a blast.\

From a grocery shopping perspective, we went to the store for the first time last night. We didn’t run out and stock up before January started (that would be cheating), but we had a good amount of stuff we’ve just not used in our pantry and freezer because we didn’t want to. We spent the first week of January using what we had on hand. It was bleak at times, but it was really good to clean out.

The first week itself has been enlightening. I realize how often I spend money just because it’s allocated for something in the budget, and not because we need it. Our normal budget allows a good amount of money to be spent on the kids each month. And while sometimes – like the months both kids need new shoes – we use it quickly, other months I just spend it because the cash is in the envelope labeled “Toys and Clothes” and I can. I haven’t set foot in Target since January began, the only stop I’ve made at the mall was to return a sweater I’d bought for Nell to wear to Christmas Mass…her Christmas Eve illness kept us home instead. And I’ve been loving it.

So far, one week in, we’re energized. I will say, that despite our “No Spending” choice, we won’t actually save much money this month. B’s car needed to be repaired on day 4 (Murphy’s Law!) and his tuition for his final semester of grad school – and books for those classes – is due this month, too. I was annoyed when I realized these would fall in our No Spending month, but then I realized it’s a really good thing. This is how we SHOULD handle months with these bigger one off expenses – cutting all other spending to account for them. We’ve always just justified one off expenses saying we save so that we can handle them, but this has been an invigorating way to approach them instead. I’m almost looking forward to writing that tuition check this month.

 

So that’s our very long budget back story and check-in on week one of our no spending January. I’ve talked to a few friends who are doing a similar thing this month, so let me know how your progress is going – and as always, if you have questions, ask away!

January Resolution: No Spending Month

I know they’re not everyone’s jam, but I love New Year’s Resolutions, and I enjoy that they coincide with my birthday so that I can start the year – both age-wise and calendar-wise, with a fresh outlook. 2014 is the last year of my 20s, and I intend for it to be a great year. I don’t want to overwhelm the year with 30 things I have to do before I hit that milestone birthday when the clock strikes midnight next New Year’s Eve, but I also want to be thoughtful about it. I’ve always broken my resolutions into categories, and have been better about some than others. Last year, the only one I truly stuck to was not drinking Diet Coke – and can I tell you? An entire year off of that drug and I still crave it daily. So that’s my only hard and fast this year – stick to no Diet Coke. This year is also a flex year – I’ll be having a baby 2 months into it, so a fitness or diet goal doesn’t make much sense until Spring, and will probably be a big focus after the baby comes to get my self in done having babies shape. So I’ve thought about having one good, solid monthly resolution instead of a whole year resolution. And January, after December’s spending and before we add a fifth member to our household, is prime for a budget diet.

We’ve always done pretty well with our budget, but in the last year, we’ve been lazy. I know I’ve mentioned before that when we’re not saving for a particular goal, we’re not as good about sticking to our budget. Add to a lack of any big, exciting things to save for the move in June, and our active decision to do a little spending to get the house furnished and updated, and 2013 was not the year of massive savings for our family.

So, after a lot of thought, and research, I proposed to Mr. B that January be a no spending month. And after some research together and talking about it seriously, he agreed. Because we get savings lazy if we don’t have a specific goal, I thought we needed something drastic to get our 2014 off to the right start. So No Spending it is.

So, here’s what we’re doing for January. I recently tweaked our monthly budget to account for certain changes in 2014 – things like our HOA dues going up slightly, etc. From our monthly budget, I just left all of our bills the same. That means, we’ll pay our bills during our No Spending month. Whew, everyone can breathe a collective sigh of relief. So, our mortgage, utilities, cable and cell phones, insurances and Thomas’s preschool tuition are givens. I also left our gas budget the same because Mr. B commutes to work, and I have to take Thomas to school, etc. But I’m hoping that the lack of extra errands, due to the lack of extra spending money, will help reel in my driving (and therefore gas expenditures), too. And I left our giving budget the same – just because we’re doing a “No Spend” month doesn’t mean our friends and family with birthdays should suffer, nor does it mean we shouldn’t give to our church and charities this month, either.

But everything else got sliced. When I really study our budget, it has plenty of luxuries built-in. Sometimes it’s hard to remember that we do have unnecessary items built into our monthly spending, because it’s not like we live extravagantly. But the truth is, our budget features plenty of room for things we don’t need, and I think it will be great for us to do without those things this month. Instead of breaking the monthly cash budget into categories like we always do, we just came up with a number that should cover our household – groceries, diapers, toilet paper, laundry detergent, dog food…those kinds of thing) for the month and that’s it. It means that, towards the end of the month especially, we’ll have to make more choices than we normally do, but I think that will be good for us to get our saving (and thinking before we spend) back on track. When all is said and done, our spending budget for this month’s necessities is just a little over a third of what we normally budget.

 

The kicker here is that I am aiming to not spend the month making a list of everything I need to buy when January ends. This might be tough because of the whole baby coming a month after this challenge ends, but I’m excited to focus my energy this month on organizing what we have in our house already – and decorating with what we already own – rather than acquiring more. I will, undoubtedly, have a small list of things that I need to pick up to prepare for Peyton Manning McKevitt’s arrival when February rolls around, but I’m hoping that it will be smaller – and more thoughtful – than it would be if I just went out whenever I thought of something and bought it.

I think this is a good way to get our savings plumped back up (and more importantly to get us back in the habit of prioritizing savings) after December which always gets a little out of control budget-wise. I’ll keep you posted. Anyone else have any big resolutions – financial or otherwise – this year?

Adventures in Budgeting: Budgeting for Non – Monthly Expenses

So, you haven’t heard much about our envelope system of budgeting over here at imperfect lately, and there’s a reason for that. We’ve fallen off the band wagon. Hard.  To a certain extent, I want to justify it (We just moved, we agreed we’d spend a certain amount of money out of savings to update, etc. We took a vacation which always throws the budget off but is something we’ve agreed is worthwhile. Expenses just come up. Blah blah blah.). But what we realized is that when those “extra spending” months come up, we almost seem to say, “Oh screw it, let’s just go big” and buy things that we don’t need, or that we could save for, or creatively create ourselves. And that’s why we need to get back on track.

Non Monthly Expenses Budgeting

One of the big questions we’ve always been asked when we talk about our budget is how we budget for non-monthly expenses. Things like car upkeep, insurance, etc. We’ve done this two ways. You have to decide what will work best for your family with this, but here’s what we do.

In the beginning, when we were still working on really building up our savings and emergency funds, we divided those expenses (or projected expenses since you can’t always predict what you’ll need to put into your car in a year) into the months between payments and set that aside in our cash budget every month. We had an envelope for all of those things that rolled over month to month for when we needed it. We knew that while you can predict some things (like car insurance costs – ours is paid yearly), we couldn’t predict exactly what we’d spend in other areas. Like for example, what a car repair would end up costing. Or how much a vet appointment for Casco would run us. So we saved, knowing that sometimes we might have to dip into savings to cover the extra.

That was a good way for us to handle those expenses in the beginning of our adventures in cash budgeting, but as time went on, pulling the cash out of the bank to save in an envelope didn’t make a lot of sense to us. We started leaving any money budgeted for those non-monthly expenses in our bank account knowing that we were saving for those specific purposes. But somehow, even though we made those decisions, we were always mad at ourselves and felt like we’d failed at budgeting when we had to pull from savings (even savings we’d saved specifically for those purposes) to pay those non-monthly bills. We have finally made the decision that we can’t beat ourselves up about taking money from savings to pay for these things. We tell ourselves that by living on our budget the rest of the year, we are contributing that extra to savings to cover these expenses. So that’s what we do now, we are at peace with the idea that we can’t plan for every expense and that’s why we need to prioritize our savings, but that we also need to allow ourselves to use our savings when necessary.

To table the “Ugh, how did we spend THIS much last month?” guilt/heated discussions at the dinner table when we go over the budget, we have decided that at the end of every month, B and I are going to sit down and talk about upcoming “one off” expenses for the next month (and sometimes for the next month or two if a big event or holiday is coming up). Some of these will be upcoming expenses we will know we can use our envelopes for, but some of them are going to either use up that month’s projected savings or need to be withdrawn from our savings account. And we’ll categorize those as needs and wants, and then make decisions about what is a priority based on how the rest of the month’s expenses are looking.

Our September meeting identified these expenses for October: New tires for my car (a safety necessity), oil changes and tune-ups for both of our cars (safety necessity), and a plane ticket for Mr. B to go to his friend’s wedding back East (not a necessity, but something that we’ll make room for because it’s important to us). We both want to upgrade our iPhones and almost did last week, but with about $1200 of excess spending identified for October, we decided to hold off for another month or two on that want. It’s a good exercise for us, because we know that we can afford to do both – buy new phones and take care of necessities – but just because we can do something doesn’t mean that we should. And it’s time for Mr. B and I to tighten our belts to remind ourselves that there’s a very big difference between things we want and things that we need, and that we are very fortunate to be able to provide our family with those needs.

We’re also reeling in normally budgeted spending on our kids because Christmas is coming up and so much of what we might buy them now can wait until the holidays. Thomas and Nell both have new wardrobes for Fall that I purchased in August and September (I have a post half-written about how I budget for and save money on their clothes), so they don’t need anything there. We also like treating our kids every now and then to new things. I’ve been wanting to “upgrade” Thomas from his Strider bike to a pedal bike, but I have decided to hold off for Christmas and see what he actually asks for.  Nell’s Halloween costume we already have, and Thomas and I will make his together with about $20 worth of supplies.

And we also have set some new bigger goals to save for at the house, too. We always do best at sticking to our budget when we are saving for specific things that we both are looking forward to. In the next year, we will have our house painted and a few changes made to the exterior, all of which add up quickly. We’d also like to replace the carpet in our bathroom with heated tile in the next year (or a little more). For now, every extra penny is going to the house painting fund, and when we complete that, any roll-over will go toward our bathroom remodel. Fun things to look forward to remind us why we budget!

How are your budgets going?