Dollars and Sense, Part II

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Happy 2016, Readers! It’s that time of year again when I don my financial cap. Chad and I began our journey into finance in the late 90s when Chad attended a course on budgeting and investing. Keeping close attention to our spending and saving has become a hobby of sorts. Earlier, I wrote about dating while on a budget and the modern piggy bank: Virtual envelopes. Recently, I noticed a few flaws in our finances while reviewing the previous year’s expenses.

Chad and I create a monthly budget spreadsheet every year and attempt to record all expenses (still working on that). Then in January, we review our budget and make necessary adjustments for the following year. While fully embracing my “budget nerd,” I noticed a flaw in our system: Large, once per year expenses.

While home and car insurance and property taxes were planned, many expenses throughout the year interfered with the budget: Snow plow services, senior pictures, garbage/recycling services, hay for the farm animals, car tags, etc. These bills ended up being paid at the cost of other things in our budget. Date Night is a big deal to me; losing a few to a budget error motivated me to improve our financial plan. That’s where the previous year’s budget sheets helped. I was able to see many expenses that did not fit in our regular budget, which month the expense was needed, and how much extra was needed for the future.

After some organizing, I formed a plan. Adding a line to our budget for Miscellaneous Expenses took care of many larger expenses (If you try this, be sure to record those miscellaneous expenses for future reference). However, some expenses exceeded that amount. We saved for larger bills by adding just a bit of extra money to the savings account where home and car expenses were paid.

Where will this extra money come from? Personally, I enjoy eating out, not just date night. While little money is spent (usually $5-10), the frequency adds up, so limiting the number of trips per month was a first step. I also admit that I bring home too many animals.  Can anyone recommend a support group?

Can your budget be modified? Morning coffee from Starbucks?  Are you expecting a tax refund? Adding that amount to savings could create extra funds for occasional expenses. On the other hand, if you’re receiving a tax refund, perhaps readjusting withholdings would create enough monthly income for a Miscellaneous Account. The government doesn’t need an interest free loan.

In closing, as Michelangelo said, “I am still learning.” Last year, I noticed we weren’t saving for our next vehicle. After a few adjustments, the Car Account is slowly on the way. I’m really hoping my car holds out for a couple more years! Between adding money to a Miscellaneous Account and setting a bit extra in savings, our finances are another step closer to where they need to be. Keeping a budget helps meet our needs and pursue a few wants.

Happy budgeting and thanks for reading!

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Date Night on a Dime

 

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I LOVE date night! We are foodies, and enjoy trying new restaurants and seasonal specials. However, with three kids, a mortgage, and other expenses, Chad and I have to be careful balancing this in our budget. So here are a few frugal ideas that have helped us continue our tradition of a regular couple’s outing:

  • Go out for breakfast or lunch instead. The overall cost will be less, and many upscale restaurants offer meals at this time of day, so couples can visit new restaurants without breaking the budget.
  • When going out for dinner, skip or limit alcoholic drinks. Adding a few drinks greatly increases the bill by the end of the night.
  • Instead of a meal, try going out for a few drinks and appetizers. This is a fun alternative and usually combines well with other outings.
  • Look for opportunities and adventure in your area! A few years ago, we found a cocktail hour at the Grand Rapids Art Museum. We received free admission, bought a few glasses of wine, sampled the complimentary hors d’oeuvre (Thank goodness for spell check!), and spent an hour or so enjoying the art work while listening to a talented classical pianist.
  • Try a stay at home date! Sometimes we purchase some of our favorite meat, cheese, and wine, and just enjoy hanging out together at home.

What are some of your fun, yet affordable outings?

Dollars and Sense

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How many of you are dreading that one piece of mail due to arrive soon? The credit card statement! At some point in our lives, we lean too heavily on easy credit, and it comes back to bite us. This is the first of a few money organization posts to help avoid unnecessary debt.

Many of us are skilled at developing and maintaining a budget; however, what about those expenses that do not fit neatly in a monthly plan? This is where the use of virtual envelopes can streamline a family’s finances. Virtual envelopes are small savings accounts where money can be added and saved throughout the year. I use my local credit union. (Note: Their technical term is just a sub-savings account. I named them virtual envelopes, each labeled for specific use.)

Gifts: How many of you despise the monthly credit card bill that arrives after Christmas? Or the birthday present you figured to pay later? I have a “Gift Fund” virtual envelope set up through my credit union. Every paycheck, a certain amount goes in and when birthdays arrive or Christmas, we have a budget to work from (or at least an amount to start with and add from our monthly budget).

Vacations: How many of you take vacations with only the current paycheck, then the following month dread the credit card bill with all the unexpected purchases? Yes, even vacations require a budget. Setting aside a virtual envelope for the year’s weekend adventures, day trips, or spring break is a useful tool for staying on track or even planning for that once in a lifetime trip (see how we saved over a seven year period for our family trip to Ireland!).

Any other envelopes needed? Do you heat with propane and need to save for winter fill ups? Do you need funds for specific teen activities, camps, driver’s education, etc.? A little planning and organization now will prevent future credit card anxiety. Do you have more needed “envelopes” than money? Pick the two or three that interfere with your budget the most. Even in my own hyper planning, I still have neglected to start an envelope for future vehicles…baby steps. Those of you who usually receive tax refunds in a few weeks, consider starting your family’s fiscal year on a positive note by paying off credit cards and setting up a few virtual envelopes.

Happy Budgeting!