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?

I Like To Move It, Move It

Actually, it turns out I don’t like to move it move it. Or at least, house moving? Not my thing. There are people who can totally move every few years. I’m not one of those people. I told Mr. B when the final load was in our house on Sunday night, “If we ever decide we need more space, let’s build a loft over the family room or excavate the basement to make it full. I’m never moving again.” To which B said, “Nope, we’ll move before we excavate the basement, Em”. Which is probably true, but yeah. Moving. Blah.

The Numbers Game

You know that B and I live on a budget. We had been toying with the idea of moving for a few years, and after Nell was born, we knew it was a matter of time. We’ve always known that we would reach a certain point where putting more into our first house wasn’t a smart idea unless we wanted to stay there for a very long time. So we stopped short of finishing our basement, and when we remodeled the kitchen, we did it on a budget. With every improvement we’ve kept an eye on our bottom line – even in the downturn, we stood to make a profit on our house, and when the housing market started to recover, we felt pretty good about the profit we would make selling. I factored that after selling our house and considering commissions, concessions, etc, we’d probably net 90% of the sales price minus what we still owed on our mortgage. Our numbers worked out to be a closer to 94%, so that was great for our budget. We walked away from our first house with the 20% down payment we needed for our next house, which was always what we hoped to do. That coupled with the rates where they are right now made this a great time for our family to move.

When we listed our previous house, we were already under contract on our current house. Not exactly the way I planned to do things, but with the Colorado market the way it was, I knew that if we listed before we started looking, we’d end up in a rush to find a place. And I’m not very good at detaching myself emotionally from the house buying process – I fall hard for houses or don’t like them, there’s very little gray area with me. We were pre-approved to purchase without selling our house, but that wasn’t the route we wanted to go if we could avoid. However, it got us the house: There were multiple offers, ours wasn’t the highest, but because we made a non-contingent offer, we got the deal. And it all worked out. Luckily, things worked out and we had an offer within hours of being on the market. Our real estate agent helped us negotiate a few terms and the dates so that they lined up exactly how we needed them to. There were a few tense moments throughout the process, but overall, it all worked out and was a relatively smooth ride. But yeah, I never want to move again.

Then we had the inspections on both houses, appraisals, and when all went well, we started to think about the move. We were taking our washer and dryer and an elliptical machine with us, so B and I agreed we were hiring movers for the big stuff. Because we were making a local (five minutes) move, we decided to do the packing and small moving ourselves. We tried to get rid of as much as we could, but with two little kids and a pretty certain feeling that we’re not done yet, there’s not a lot that were willing to get rid of just yet. Someday, I’ll purge all the toys and baby clothes, but right now it just doesn’t make sense.

We got possession of our new house on Saturday at 5pm and had until the next day at 7pm to get out of our old house. Saturday night our families helped us move loads and loads of boxes and do some last minute packing. We got a ton done so that the house was clear for the movers to just move the furniture and big boxes. The moving company was money well spent.  The company we hired was awesome, bid the job for 9 hours and came in just under 6 – under what we budgeted and were so efficient and professional. I’ll put together a post in the near future about our awesome resources if you’re in the Denver/Boulder area.

My brother-in-law came over and mowed our new house’s lawn for us and trimmed. My mom scrubbed both houses top to bottom. My mother-in-law power washed our garage. My aunt dusted high cobwebs. My sister and cousin furiously packed my dishes. My friend Emily came over on Sunday to help me unpack. We are incredibly blessed with such a helpful family and friends.

So that’s the scoop on the move. A little bit of budgeting, a little bit of paying for things to make life easier like movers, and a lot of help from family and friends. And while I doubt that Mr. B and I will never purchase another house again, I’m currently thinking I’d prefer our next house be an investment property that I don’t have to physically move all of our stuff to. And maybe that I should go back to being the kind of person who has a garage sale every year.

Budget Resolutions: Automatic Savings Transfers

Confession: We’ve been really lax about the budget since Nell was born. We gave ourselves the 6 weeks that I was on maternity leave off from the cash budget knowing that we make enough to cover any extra expenditures that came up, and we never got back “on”.  And the reason? We’ve gotten lazy. We can afford for me to stay home and still put money into savings every month {though, at this time, I still work part-time from home}, which was always our goal. And now that we’ve achieved that goal – mostly through spending cuts – we’re lazy about the budget.

So, we resolve to pay ourselves first in 2013.  We have always made the savings transfers at the end of the month with what’s leftover in the budget, even though my meticulous spreadsheet clearly spells out what we should be saving out of each of Mr. B’s paychecks. And in a way, we’ve done this with my paychecks, because we pretend like they don’t exist: I’m an independent contractor, so I immediately take out what I owe in taxes which I file quarterly, then I divvy the remainder up between my Roth IRA, the kids’ college funds, and if there’s leftover after that, our general savings. But our spreadsheet tells us that we can live on just B’s income and commit a good portion of it to savings every month, and I can guarantee that we never transfer the full amount we should be saving on our budget to savings.

Of course, that’s what savings are for to an extent, to buffer the expensive months – ones with things like car upkeep – and grow in the less expensive months, but our hope is that by making automatic transfers on B’s paydays, we will think more carefully about what we spend. At the least, we hope that having to transfer money back out of savings to cover extra, non-budgeted expenses, will make us prioritize our spending better than we have lately.

And speaking of prioritizing, we have some big expenses to plan for this year. Here are the current top five:

1) New tires for B’s car in January
2) Golf trip for B in January
3) New tires for my car in May
4) One of my best friend’s weddings in July
5) A 5 year Anniversary trip this summer

By planning for the bigger expenses on the horizon, we’re hoping that we’ll be able to reel in our superfluous spending. Anyone else re-framing their mindsets on their budgets with 2013 approaching? Trying any new approaches to your budget? You know I live for budget talk {I joke that my ideal date night with B is drinking a bottle glass of wine and working on our budget spreadsheet trying to eek the most savings out of our budget as we can}, so I’d love to hear what you’re thinking for 2013!

PS: Here’s a look at what we allot for our cash budget every month, it hasn’t changed much at all since this post last year. Afew things (like life insurance premiums), cost more this year because we’ve added Nell to the mix, but that’s about it.

Envelope System of Budgeting (a peek inside our budget)

I haven’t talked about budgeting in awhile, and that’s because…the budget has been crazy this summer. I should know better than to try to redo the budget when a new baby’s arrived – there are hidden expenses with babies that I forget about. Not bad, but things like, “Oh yeah, I decided to throw Thomas’s bathtub away after a year of solid use and forgot to buy a new one for the new baby” throw the budget off in those first few months.

But anyway, I’m back at work (very part-time for the next few weeks), we just refinanced our mortgage to take advantage of the super low interest rates, and it was time to get serious about the budget again. We fall off the bandwagon from time-to-time, and when that happens we just sit down, reevaluate the numbers to make sure that it’s practical for our life, and redivvy the funds accordingly.  I updated our budget and transferred everything to new envelopes yesterday, so I figured it was a good time to do a quick post on two of my most frequently asked questions (followed closely by a grocery shopping post…someday I’ll get to that, but this covers a lot of how we spend less than $300 a month on groceries).

I get asked a lot about how we do the envelopes – if we use physical envelopes or not. We use an accordion file folder instead of paper envelopes so that everything’s in one place. Our envelope had seen better days after four years of use and I needed to replace it, and I was tempted by a cute $20 accordion folder the other day, and then I realized that this holds our budgeted money for the month. So I picked this one up from the dollar bins. Not cute or fancy, but it does the job. And since we never take this baby out of the house, it doesn’t need to be cute and fancy. 



The envelopes never leave the house. So if I’m going grocery shopping, I usually take $50 out of the envelope and head to the store with my list for the week {on the average I spend $40 a week on groceries for meals, and Mr. B spends another $20-30 on miscellaneous food and snacks in a second grocery store trip each week}. If I’m driving by the grocery store, realize I need milk, and don’t have the grocery money? I go home and get the grocery money and go to the grocery store later. If I get to the register and I’ve exceeded what I brought? I take stuff out of the cart. It’s the only way we keep ourselves honest about the envelope system. When we get lazy and start pulling the credit card out instead of paying in cash, the budget crashes quickly.

Another question I’m asked a ton is what I do when I’m buying for multiple categories in one store. My typical super store trip list includes diapers and other kid items, personal items (toothpaste, vitamins, etc), and household items (cleaning supplies, decor, etc) and the occasional gifts. I do some quick math in my head based on what I know things cost and what I’m willing to spend on things that I’m looking for but don’t have exact prices on, and I pull money out of the appropriate categories based on my list. Here was yesterday’s list:

Diapers for T: $19.99
Diapers for N: $6.99
Swimsuit for trip for Nell if on sale? $10 max
Vitamin D: $10
Birthday Card: $3

I always round up a little bit, so based on my list, I grabbed $40 of kids money, $10 of personal money and $5 of gift money. And it was pretty much on the nose after tax. I never have to worry about groceries for these trips because I only buy groceries at our local grocery store (due to the prices and the freshness of things like produce and dairy). And if I run across a sweater I want and didn’t bring clothing money? I make a note of it for the next trip. Because, let’s be honest. I go to Target at least twice a week…sometimes just because I can’t stand the idea of not getting out of the house in a day. 

So that’s the latest on the budget. Anyone else having budget successes? Or falling off the budgeting bandwagon like us during the summer months? Any other questions about the envelope system of budgeting? Let’s hear about ‘em.


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Our Budget, Real Numbers

I thought I had put real numbers in the budget post yesterday, but it must have reverted to a draft before posting, sorry friends.  I’m hesitant to do this because I know that everything fluctuates, and everyone has different priorities, and our budget is by now means the be all and end all of budgeting. But, I also know it’s helpfult to see real numbers. So, I’m sharing our cash breakdown – the cost of living is different everywhere (Colorado’s middle of the road. We also didn’t get hit quite as hard as other places in the real estate slide, though home prices took a small dive, our home is valued above what we paid for it almost 5 years ago). So, for that reason and privacy reasons, let’s leave salaries and mortgage amounts out of this.

Cash Envelopes

Groceries: $300/month

Eating Out: $75/month (this allows for two less expensive dinners as a family, or one nice date night for me and Mr. B. Any leftover carries over).

Casco: $75/month (Casco’s food costs $55 a month,a nd the other $20 is saved for vet bills when they come up)

Gifts: $100/month (This is our budget for the year – extra carries over every month and this amount must cover our Christmas spending, too. January and February are big birthday months in my family, the summer in B’s family, so we have to plan accordingly).

Clothing: $75 month (for B and me – this carries over, too and becomes a savings account, and we pretty much just split it in half).

House (Decor, maintenance, etc): $50/month – carries over month to month

Personal (Shampoo, toilet paper, etc): $25month – carries over

Spending (aka Allowance – Mr. B and my monthly stipend we can spend however we want – lunches out, dinners with friends, movies, etc): $75 each/month

Diapers, Clothes and Toys: $100/month (Diapers cost us $20 a month at Target, and the rest usually isn’t spent, but allows me to buy a Spring wardrobe for T or new puzzles when I can’t take the old ones anymore).

Church Giving: Based on our income.

Stroller Fund (vacation fund, etc in other years): Any extra cash – checks from credit card rewards, Blogher income, gifts, etc.

Set Expenses (direct bill pay or credit card that is paid off every month)

Mortgage Payment: Less than 20% of our income (our only debt).
Water Bill: $35/month on the average

Electric/Gas: $75/month on the average (higher in hot and cold months, but we budget for the average because we can afford the spillover).

Cable: $150/month

Cell Phones: $100/month

HOA: $75/month

Car Insurance: $110month (paid twice yearly)

Life Insurance: $100/month

Gas (not a set expense, but paid via credit card rather than cash for safety and convenience purposes): $300/month (budgeted, but we go over and under).

Charity: We donate a chunk of Mr. B’s yearly bonus to the charities we choose to support, and B donates a percentage of every paycheck to our Catholic Charities (an organization near and dear to my heart because of my own family history) and the organization he sits on the board of (by donating out of his paycheck, we lower our taxable income, which is great, and also it makes giving a no-brainer instead of something we have to part with after having the money in hand).

This budget allows us to put a good chunk of Mr. B’s income and my entire income into savings. Our first priorities are retirment and college funds: we contribute the max to my ROTH IRA (B does the same with his retirement accounts, but with pre-tax money directly from his paychecks) yearly which breaks down to $416/month, and we put the same into T’s 529 (that will change a little bit with he addition of #2, though we’re not sure how, yet. Leftover money goes to long term (we keep it in a high interst bank account) savings for things like a downpayment on our next house (we have over a year of living expenses stocked away in an emergency fund, but before we had that amount, all extra went into that fund), short term (kept in our local bank) for vacations, etc, and other investments.

So that’s the breakdown. Any other questions? I’m always happy to answer them!