I'm Moving! Please join me

Monday, May 19, 2014

I've been hesitant to move my budgeting posts to a new blog platform and away from my personal blog because truly our personal finances are wholly integrated into our family life - not separate beings.

But separating the two subjects physically on different blogs cannot possibly cut the influence that once has on the other.  I speak as a wife and mother, so my voice on personal finance will always be influenced by these roles.  And I intentionally bring personal finance into our family life because I believe that being open and honest about money is necessary to raising financially responsible children and then adults. 

Since I want my blog to be focused just like our finances, I've decided that the subject of budgeting deserves it's own space!

The budgeting journey will continue at:

Last week I delved into being "focused" with two key categories that make for efficient budgeting (now over HERE).  Next week I will elaborate on this concept with two must-have checking accounts!

Thanks as always for reading and I hope to see you at the new space!


Weekly Progress and Savings

Friday, May 16, 2014

In the several Weekly Progress and Savings that I've posted previously, I've unintentionally focused on the "savings" more than the "progress."  It's pretty darn rewarding to see actual dollars saved that can be put toward goals.  But budgeting "progress" is equally, if not at times more, worthy of focus because to me progress is staying within our budget!

While listening to Dave Ramsey's radio show this week, a caller detailed her situation and asked Dave's advice.  Her husband made $150k salary (they are a one income household) and they had $150k in debt (not including the house).  $90k of that debt was credit card debt.  Dave's conclusion was "you are living on $200k a year and bringing in $150k" and advice was clearly to change their spending habits and get on a written budget.  It just goes to show that you can be broke on any income. 

Living within your means, regardless of how much means you have, is worth celebrating!

And if you aren't currently living within your means, it is never to late to start.  For the woman caller, it took $90k on a credit card before she got mad enough to change their situation.  We all have different breaking points, but let's hope each of ours is at significantly less debt.

All that to preface that savings this week is:  $7.00

But, in perspective, that is okay because at least $0.00 was to debt!

What we accomplished within our budget this past week:
  • We spent all day last Saturday painstakingly staining the outside of our screened porch. Cost: between $60-$70.  Savings from doing it ourselves: easily several thousand.  And the pride and satisfaction from completing a project like that from start to finish:  of course, priceless.
  • After this exhausting 7 AM-6 PM work, we treated ourselves to Mexican food and margaritas at a restaurant!  Since we have all but cut out restaurant eating, this was a treat - and we still didn't break bank!  And I must say it was especially good...absence makes the heart grow fonder, or more grateful perhaps.
What we have put off for another day:
  • Depending on how much you have read of my blog, you may or may not know that we moved several months ago.  Unlike some people in my family who magically settle-in and decorate within several weeks (you will not be named, but if you are reading then you know who you are :-), we are still in the thick of settling and arranging and decorating.  I have ideas for family room curtains, roman shades and pillows (which mostly will be DIY) and I'm anxious to begin!
  • Clothes...I'm in need of some Summer tops and my husband needs some work boots for around the house (current pair is being held together with duct tape!).  I honestly don't even have the time to shop, but I'll get around to it one day.
This coming weekend brings with it no costly projects that I know of.  Plus we are putting stuff in a garage sale which I hope brings in some money.  Maybe next week I can start on the DIY decorating!

Have a great weekend and thanks as always for reading!


Focused! Two Categories for Efficient Budgeting

Thursday, May 8, 2014

Having a budget is simply being intentional with money.  And being intentional, in any aspect if life, requires that we focus our energy where it is most effective or needed.  

Most of the energy involved in budgeting goes not into deciding, but in doing.  The first step to budgeting is of course laying out a written plan.  But the bulk of budgeting involves controlling and tracking expenses - a process that can be time-consuming and cumbersome.

But over 80% of the items listed on my family's budget are for amounts which we do not control on a daily, weekly, or even monthly basis.  Short of moving or refinancing, our mortgage will stay the same.  Our subscriptions are for services that we plan to keep long term.  And while we can be conservative with utilities, the amounts we are billed reflect our family's routine and lifestyle.

As a working adult and busy mom, tracking this 80% as a part of my budgeting routine is not an efficient use of my time or my energy.  Now if I need to cut expenditures then by all means I will turn to these items and trim the fat.  But once the budget is lean, these amounts are not where pennies will be pinched.  So quite frankly, I set these aside and focus on the remaining 20% regarding tracking and controlling spending.

Yes, that is right.  I only regularly track and control 20% of our budget!

I first divide my full written budget into two categories.  Once I have listed all of my monthly expenses and have assigned a function to every dollar of income, I select a small number of items for my "mindfulness needed" category and all the rest (the 80%) fall aptly into "out-of-sight, out-of-mind."

"Mindfulness Needed":  The Items to Regularly Track and Control

Essentially these are items that I can influence on a day-to-day basis and can squeeze pennies out of every purchase (whether I choose to or not...some weeks are better than others).  Therefore, tracking and controlling these expenses pays off!

And importantly, I keep this list as short as possible.  The goal is to focus my energy, not spread it too thin.  The only items I now include in "mindfulness needed" are groceries, clothing, entertainment, and miscellaneous spending (misc because it varies depending on season).

"Out-of-sight, Out-of-mind":  The Items to Track Infrequently

All other items (the 80%) are then lumped into our "out-of-sight, out-of-mind" category.  Playing the role of a responsible adult, I of course budget these items first and foremost and ensure that they are paid each month.  But I can simply have these payments auto-drafted and, despite their importance, they essentially do become out-of-sight and out-of-mind.  These items include tithes, savings, mortgage, utilities, insurance, and subscriptions. 

Other items in this category are highly predictable in both frequency and amount such as gas, vet/grooming for pets, oil changes, and haircuts.  I include these with the 80% because I do not influence these amounts (i.e. gas) or do not influence these amounts on a daily or weekly basis (i.e. pets, oil changes, haircuts).  My focusing on these items more than every 8 weeks, twice a year, or yearly, is simply wasted effort on my part.

Chances are that if you budget you already focus to some degree.  I have a good friend that uses the cash envelop system very successfully.  She actively decides which budget items to turn into cash envelops so that she and her husband control their spending.  She of course does not make a cash envelop for her mortgage or insurance or the like because she does not need to daily track and control her spending on these items.  Already her efforts are focused!

If you do not currently budget, likely one reason is due to the time, energy, and effort involved in tracking and controlling expenses.  But perhaps you would be more likely to budget if you knew you only had to track and control a handful of items and thus drastically reduce the effort involved.  After laying out the big-picture as far as focusing the budget, I will walk step-by-step through the planning process.

If you budget, how do you focus your energy?  If you do not budget, would you be more likely to if you only had to track and control 20% on a regular basis?
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