The B Word

Budget.
budget
budge-it

See, it's not so bad if you break it down. A budget is a written plan of what you intend to spend money on during a given time frame. Some people see budgets as restrictions. "I'm an adult, no one can tell me what to do." Part of being a mature adult is telling yourself what to do. Just because you "can" spend all your extra money on expensive clothing (even worse if you do it on credit!!) doesn't mean you should. A budget doesn't make you less free; it makes you more free. Free from worrying about having "too much month left at the end of your money," as Dave Ramsey often says. Free to give yourself "blow money" that you don't have to be accountable for. Free to plan your future and shape it in any way you want. As the Bible says, "the borrower is slave to the lender." Start your journey towards financial freedom and peace now!

In my post probably a month or so ago, Step 0.5 was to sell toys. The bigger ones like ATVs and boats will make the biggest difference when you sell them--especially if you owe on them (not to mention maintenance). If your budget is tight, this will help free up money and get the snowball rolling. Selling other things that you're no longer using will bring in some extra money and free up space. We've sold old furniture, P90X exercise videos, Mitch's heavy bag and speed bag (and stand), and various other items on Craigslist. A few weeks ago Mitch shocked me when he told me he was thinking about selling his PS3. He finally realized on his own that he didn't have time for it right now with family, school, work, a rental in the works, and golf. He sold it for just over $200, plus two games for almost $60. THEN (this is really going off the deep end) he sold his big screen TV the next week!! I mean I guess we weren't going to use it with no PS3 to watch movies or play games on since we don't have cable. Idk, some kid drove in like an hour with his brother and bought it for $475--which is surprisingly high for a 3yr old TV. The same TVs were going for "$400 with free shipping" on ebay.. Plus Craigslist has no fees!! Anyway, I was really, really shocked with selling those things. Until he bought an expensive driver for golf and a new TV for upstairs. Our old one he'd bought almost 5yrs ago and the buttons were pretty shotty, but we have the remote so it still worked fine. Sold it to his little brother for $20 ;) I've REALLY, REALLY been enjoying seeing Mitch in the evenings and not having him fall asleep in the basement.

Step 0.6 normally meets with resistence. Cut lifestyle. This will become more clear once your budget is written. You'll go through every line and see where you're willing/able to make cuts. In my opinion, the fewer lines in a budget, the better. "Keep it simple, stupid," but it also means fewer payments and less money going out. Gym memberships, cable TV, smart phones, eating out, manicures, etcs are nice... but they're a whole lot nicer if you've got no debt to worry about. If you love manicures, still get them, but use your "blow money" on them, don't necessarily add an extra line in the budget for it.

We cancelled cable once two years ago, then had it hooked back up during football season. This last time we had it unhooked (over a year ago) was permanently. After having only a 30/mo internet bill, I couldn't reconcile paying 120/mo for the garbage that's on TV. The only tv channels we get upstairs are from a $10 antenna from Walmart which gives us a few of the basics. The only thing I watch (err, watch"ed" since it's the off season) is The Office. Life for a melonchaly soul like myself is much easier without the evening news. The ONLY news I watch/read is financial news that I look up myself on the internet.

Another important thing is to BRAG about your successes. Paying something off. Selling something. Cancelling something. Taking on a second job. Working overtime hours. BRAG! You're making positive changes, it's GOOD to brag! Just make sure you're bragging to someone who really loves you and won't be jealous--a sibling, parent, best friend (maybe!), ... or post anonymously and brag here! I'm extremely happy for other people's success. As I've said before, I think there is more than enough success to go around. Besides, "Whatever you do, comes back to you, multiplied by two, or twenty-two." Your happiness for others will bring more happiness into your life!

If you've hung in this far, you're ready for THE BUDGET! *horror movie screams* hahaha no, no, it's fine, because we're only going to "budge it."

Start by looking at Dave Ramsey's monthly cash flow plan, available here. If you're feeling lost or overwhelmed, click on the quickie budget form, or if you've got irrigular income check that out. I think he includes way, wayyy too many lines in his sample budget. Write down the ones you need, and we'll go from there.


After rereading this, I think putting some #s in here might be helpful to those who want to compare, even though we're a 5 (almost 6) person family. Here are the lines we have in our budget:
Tithe 10% varies because of overtime
CFCA (charity) $30
Save $varies because of overtime
Sinking Funds (for car insurance, security system, car tags/taxes, Christmas) $260
PITI (prinicpal, interest, taxes, insurance on primary residence) $560
TI (the taxes and insurance on the rental since it won't have a mortgage) $100
Gas/Elec $100
Water $30
Gasoline $250 (what we shoot for! back before gas was so expensive..)
Food $300
Toiletries $60
Cell $78
MMA (Mitch's kickboxing) $65
YMCA (need to cancel because I haven't been able to go because of the pregnancy!) $33
Kids$ $120 (will be $160 as of mid-November!)
Pets$ $40
Mitch$ $60 + 8% of overtime pay after taxes (of course overtime is incintivized--is that a word? ha)
Mandi$ $60

In a zero based budget, everything "leftover" goes (at the BEGINNING of each pay period, because once we're done we'll know exactly when each payment is going out) to knocking out debt smallest to largest. If you're debt free, then it goes towards the 3-6 month emergency fund, and if that is fully funded, start on retirement, college funding, and paying off the house.

We have health/dental insurance, life insurance, taxes, and union dues, all taken out before we ever get a paycheck, which is why these things don't have a line in my budget. We don't have any copay for doctors visits, and if one of us gets sick it's only like $4 per prescription, so it just comes out of toiletries or some other line. The Kids$ includes diapers, clothes, and anything else they might need that doesn't fall under food or toiletries.

The two ways to have more money is to increase income or reduce expenses. Obviously paying off debt reduces your monthly expenses, but we also have to look at lines in the budget that can be reduced or eliminated. Start at the top and move down.

Sinking Fund: Every year or two I check rates to make sure we're still getting the best deal on car insurance. Also, I pay our car insurance yearly to get a 10% discount. We get a discount to pay the security system yearly as well. We have to pay a little bit more because we only have cell phones, but it's less per month than having a landline. Last year for Christmas I think I spent just over $1000. We did homemade gifts for lots of people--the kids LOVED it. Gabi has many requests for homemade gifts she wants this year. I think it's the sweetest thing ever that she wants me to make her a teddy bear and bunk beds for her Barbie dolls. I'm feeling confident in being able to make their Christmas dresses this year, too like she's requested. Mostly because I have my Grandma and mother-in-law to fall back on!!! I'll do an entire post on homemade Christmas gifts later... it's fun, and, much more than saving money you're spending more time thinking about what the receiver would like--not just what deals Walmart has in their Black Friday sale!

PITI: Can be lowered if you find lower house insurance (or get a discount for having a security system, etc) or if the home values in your neighborhood have gone down you can try to get your house reappraised.

Utilities: Be mindful of your consumption. We keep our AC at 79 in the summer and heat at 68 in the winter. I'd go lower if I didn't have small kids who liked to run around half naked all the time! When I was on bed rest with Rafe I was really good about unplugging everything not in use--lamps, cell phone chargers, keyboard, computer charger, and I even tried to get Mitch to put the tv/dvd player on a power strip so I could turn that off but he thought I was getting too crazy about it! When he redid our bathroom we made it all water efficient with a low flow sink, shower, and toilet. The worst thing for our water budget is summer, heat, and flowers. UGH! I'd rather let them die than spend $130/mo on water (which, YES, we did last night). I've been looking into water barrels and planting basically a field of prairie flowers native to our climate in the backyard. The kids would REALLY love that. They already have a section of our yard they call "The Field" lol.

Gasoline: We spend way too much here. Both cars have V8 engines and mine is a huge SUV. Mitch has to go to work 5-7 days a week and school 4 days a week. We do the best we can, I usually only drive out West to my parents house once a week, but we still spent $500 last month in gas. Prices are just ridiculous!! This fiscal month (which ends tomorrow) we've only spent $275. Still, I hate it.

Food: Meal plan, cook from scratch, and don't eat out!! Or use your blow money to eat out or only do it occasionally. I love cooking; I hate meal planning. It's so hard with Rafe's milk protein allergies to come up with stuff! Lasagna is off the table. Meatballs have to be modified to not have parmesean. I have to make white sauces with almond milk or water instead of milk and use walnut oil instead of butter (which believe me is expensive!). Even breakfast items like pancakes, french toast, and muffins have to be modified to not contain milk. I really hope he outgrows it. I use coupons but only if it's things I need. Unfortunately a lot of it seems to be things I don't give my family. You never see a coupon for grapes!!!

Toiletries: Definitely coupon here! Making your own laundry soap is another more "radical" option. I did it for over a year, but Mitch didn't like this his clothes smelled like nothing, so I bought a big thing from Sams and use a small amount!

Cell: Talk to your provider and see if you switch to a cheaper plan. Some people go with prepaid phones they buy from Walmart and put their sim card in.

MMA/YMCA: I'm going to cut the Y today until 6wks post partum. No point in paying it if I can't go, even though Mitch's work does subsidize and pay for part of it. Mitch loves his kickboxing. It's 65/mo for 4 days a week, but I know he needs something to do, and there's no way to cut it.

Internet: This is where cable would go if we had it. We just called and cancelled! The first couple weeks will be hard, but try it out for 2 months, and I bet you'll like it. Get outside, play a board game, talk, figure out a way to increase income, be productive!!

Kids$: I made homemade baby food for all the kids and will do it again this time. As far as diapers I tried cloth for awhile with Rafe and Addy, but Addy potty trained fairly quickly and Rafe with his allergies would blister if he was poopy for 1 minute before I saw/smelled it. I might try it again with the new little lady. My dad made me a sprayer that attached to the toilet, so changing poopies weren't that bad. Right now I spent $40 every 6 weeks on diapers from Amazon for Rafe, so not toooo bad. Plus I get free Amazon Prime (2day shipping). We're also about to take a trip into homemade clothing. Gabi's really into it. Everything she sees she wants me to make. Poor child thinks I'm Martha Stewart... I'm going to try!! We found a very simple (free) skirt pattern. It shouldn't take too long to whip up, especially with help. Here it is! It'll be nice for Addy, I'll be able to make it fit her super tiny waist, and she won't have to have it pinned or rolled over!

It's basically just having a frugal life mentality. Things like making a lot of food at once and freezing it so you don't have to use the oven/stove as often, adding lentils or beans to meat to make it stretch further, or hanging towels/sheets out to line dry. Not to mention the garden which I anticipate will grow larger every year I'm alive and able to plant! In my opinion, the less reliant upon the grocery store the better and healthier. Even though our income will be going up about 550 after taxes/insurance with the rental we're not going to suddenly eat out more, increase our blow money, or get every TV channel known to man. We're going to increase our retirement fund (which to me is actually saving money to obtain more passive income--more about this another day, but I don't have more in the stock market than I'm willing to have go to $0) and save for vacations and experiences for these kids!! Really, when you look back on your life do you remember all those great, awesome tv shows you watched? Or do you remember time spent with family? It doesn't have to be a Disney World vacation. It might be primitive camping, fishing, swimming, and hiking, but that is when lasting bonds are made. Now that I've written a short book I'll leave you with one final thought:

We are spending less on life but living more.

PS: It's easy to write "Food $100" but unless you go cash with an envelope and STOP when the envelope is empty, you'll be bleeding money somewhere. I'll go more in depth next time. For now, just write out your budget items and the amounts you think you spend on them. Look at that total vs your total monthly income to take your "financial temperature." We've still got work to do. Today I just wanted to look at what a budget consists of and ways to lower expenses.