Monday, January 25, 2010

Budget Review

In part of my 2010 theme of Simplify, I chose to tackle our finances.

I made up a budget for January and committed to stick to it.

And then...January happened - which means life happened. It's funny how that works.

I think we blew our budget in just about every way possible, HA!

Some of it was our own fault, but some of it was just unexpected bills. For instance, my budget plan forgot about the 12-month no interest purchase we made on our Lowe's card last year when remodeling the kitchen - and those 12 months were up!

Okay, not a problem, but then...Hayden's numerous bills from his November hospital stay started coming in...oh yeah, right, forgot about those...and the big one is still out there - we are disputing some of the ridiculous charges (like thousands of dollars of breathing treatment therapy that was done by me, not the staff).

And then, there was my CT scan bill - ouch, honestly what DO I have insurance for? Add in Mark's birthday and a last minute party and that ups the total.

Then, I replaced some clothing that was in dire straits - my one and only pair of yoga pants have been sagging for months with shot elastic, and let's face it, that is the uniform of the stay at home mom. Mark's been commenting on my saggy butt pants, so it was time for some new ones.

But, of course, I also just plain overspent. "Wants" became "needs". Poor planning and exhaustion became eating out and extra trips to the grocery store. All in all, we didn't exceed our income, but we didn't save as much as I'd hoped either.

Forward Progress

Yet, after all the mishaps and extra spending - I'm not discouraged at all! Building a budget is not a one time event, but a monthly - maybe even weekly - method of fine-tuning. I make the budget, the budget doesn't make me. I love the end of the month because I can go back and look at why we overspent and how to prevent that in the future.

For me, it's not as easy as just telling myself - don't do that. I have to have real solutions and replacements for my problems. Otherwise, I'll just find myself right back where I started.

So, here are a couple of real world examples of evaluating the previous month's spending and making changes that will improve the budget outcome for next month:

Don't be unrealistic

That's my first downfall. In January, I said we would have no eating out. Uh, huh. First off, I'm a mother of two very small children. I prepare 3 meals a day without exception - very often more than that if you count snacks. Kids get sick, it's cedar season, and I'm not the energizer bunny. That means I'm not always going to have the energy or desire to cook.

Now, how do I translate that into an affordable budget plan?

1. Mark and I discussed the situation, and came up with doing lunch on Sunday's at Wendy's. It's affordable - usually under $10 to feed us all, and it's an enjoyable and relaxing thing to do after a long Sunday morning at church.

2. Planning some "easy" meals that don't require an hour in the kitchen to prepare. This means my grocery bill might be a bit higher, but is nothing compared to the almost $100 we spent this month in eating out.

Take the "impulse" out of my buying

I'm a big lover of buying online. I can do it in my jammies, I have my credit card number memorized (don't worry, we pay it off every month), and I have the world at my finger tips, without even getting in my car!

I love books - and I get suggestions for such good ones from numerous blogs I read. I have a favorite online clothing company that sells such great clothes and their sales are awesome - seriously, like $50 sweaters for $6 if you catch it right. There is just too much good stuff out there! I'm pretty disciplined about my buying, but there is always room for improvement:

1. I started making a list of all these "wants" or even "needs". Even things for the house that Mark and I would like to purchase. My idea is to write them down whenever I get the urge to run out and buy them, and then...wait. Wait 30 days, and then see how "urgent" these needs really are. Very often, I no longer want or need the item I thought I couldn't live without.

2. I'm also making use of "lists" already available to me, like Amazon's Wish List. If I get a recommendation for a new book - I just add it to my Wish List, to be reviewed next month! If I still want it, and I have the money budgeted for it - I'll buy it.

Both of these items, if done well, should save us a couple hundred dollars in excess spending! What I love is that they are simple, yet still effective in keeping us on budget. Next month, I can re-evaluate these changes and see if they helped. If not, I can find out why, and then try another solution. If they DID work, I can move on to another area in our budget that could use some work!

How about you? Do you use a budget? How often do you stay on budget? What are your biggest pitfalls? Where have you found success?


Gail said...

So my first thoughts were this: Lowe's kitchen remodel stuff, hospital bills, cat scan, new clothes, books, eating out,plus the usually monthly bills...and you didn't go over!!!!!, I have to hold myself back with envy....the biggest pitfall to our budget is the we don't have the income for those type of things, so overspending has dire consequences larger than less savings...

I am still figuring out how to just be content with what I have, and not want.

But I like the idea of making lists of wants, so they are done on paper/computer screen, and then waiting, and re-evaluating, cause some actually do change, and then that would have been wasted money for sure.

Gail said...

I also make myself sell stuff. You know you have stuff in the house you can sell. That you really don't need. That you really don't even use. That you are holding onto when you can release it, and it will be ok. If I am going to break the budget, I try to make myself sell something. You can find one thing. It doesn't have to even equal up the difference, it is just the principle, haha (though it helps if it equals the difference).

Amanda said...

This sounds so familiar right now because I made the budget for January and then we totally blew it in the category of "food money." I think this is partially due to me being like 15 months preggo or something (exaggeration!), but the fact is that is our biggest area of struggle.

I am trying to use cash for all food -- groceries and eating out -- and when the money is gone it is we shall see what next month holds.

Also, the thing that works for me in the spending on "wants" department is that I have allotted $100 a month ($25 a week) to both Jeremy and I for spending cash. We can do whatever we want with that money with no consequences. If you spend it, you spend it and you get no more...if you don't and you save it, then you have more for something bigger or whatever. It definitely takes away the guilt of buying a book or fabric or [insert wanted item] every now and again.

And I love Amazon's wish list -- I use it all the time to mark stuff all over the internet that I might want as a reminder for later. They have a universal button you can add to your browser so you can mark any item anywhere. love it!

Just Me said...

Well, part of our budget has a category for medical bills, since we know they WILL come eventually. We just usually don't spend it every month, so that adds up to pay off a big bill.

Also, we have a lot of categories that might not get spent each month like house or car maintenance. Which means, although we didn't spend more than our income, we weren't saving for that "raining day" either, which is just as bad because it WILL come, haha.

And then there were those things we just cut out to make more money - like our monthly date night!

Also, our biggest spending by far was eating out if that gives you an idea of our "overspending". We didn't do a $400 splurge or anything if that's what you think, haha.

Robyn said...

We definitely use a budget! And we very rarely get off budget, partly because of the sort of weird way ours is structured. We stuck with the same system Aaron was using before we got married (it worked, so why not?). Basically we have all of our categories that get money each month, and we try to make sure each of them is slightly over-budgeted so that a surplus adds up over time. So when I have one of "those" weeks with groceries, it's ok if I go a little over because most weeks I come in at least a few dollars under. When I don't spend the full budgeted amount at the grocery store every week, the leftover money is still grocery money -- it doesn't get reclaimed for another purpose unless the surplus really adds up and we decide to reallocate a chunk of it. And then of course the categories that don't get spent all the time (furniture, clothes, etc.) build up over time so when we do need to buy something, the money is there.

Occasionally, one of those categories comes up and we don't have enough. Our vacuum died a few weeks ago, for example, and we didn't have enough in the appliance budget to cover a good quality replacement. I could get something cheap on Craigslist, but we'd rather spend the money to get a nice vacuum that should last for the next 20 years or so. The vacuum that Aaron really wanted to get was $400 -- we had $165 budgeted for appliances, and I was NOT going to go a few months without a vacuum! But, we have a general "savings" category that we can tap into when this kind of thing comes up. It's still not THE emergency fund, but sort of a buffer before we hit the emergency fund. (I love that my husband is so cautious about these things). So, we decided to "self-finance" by borrowing the money from savings and paying it back to ourselves over the next few months. We try to do that as little as possible, but that's what the money is there for so we use it when we need to.

As far as stuff for me that I want, we have personal spending money each month like Amanda and Jeremy. I think ours is $35/month for each of us. We can do whatever we want with it, but when it's gone it's gone.

We have a budget category for eating out -- I think $20 or $30 per month, but I'd have to check. If we have the money we can use it, and if not, we're eating at home. I just didn't like that being in my grocery category because the cost is so ridiculously different that it always messed with me. We also have a very small entertainment budget (renting movies, that sort of thing) and if we really want to eat out but are a little short, sometimes we'll call it entertainment if we have the money there.

Robyn said...

I should add that the eating out budget is for our family eating out -- neither one of us spends it independently. If I go out to eat with friends or get myself a milkshake while I'm out and about, it comes out of my personal money.

Anonymous said...

These are all great ideas ladies. Thanks so much for the input. That's exactly what I been missing. . .A Budget!! I'm so getting one! Today!