This week I finally was able to sit down and finish tallying up our expenses from the past year. I did have a couple of surprises.
- The past 4 months we’ve kept our expenses at about half of our $400 budget for all shopping.
- Our “entertainment/eating out” expenses have been more sporadic than I realized. Anywhere from 0 – $187 a month!
Now that I know what we’ve been spending and how much we’re earning, my next step in creating a budget (and getting out of debt) is to make a plan for all of our money. I don’t think it’s enough to wait until the end of the month and see what’s leftover to put onto our mortgage principals. That kind of attitude has caused us to feel like we have extra spending room when we really don’t – after all we still owe $164,000 to our mortgage lenders!
I’m not going to show you our completed budget but will share with you how I do it. We don’t change our budget from month to month. I take an average of our expenses to know how to budget for them. Some months we may spend more and some months we spend less. It all evens out to stay within budget for the year. Instead of having lots of categories on the budget we lump the majority of shopping choices into one household category (food, clothing, gifts, toys, home decor, newspapers, personal care, diapers, toys etc.) So when Christmas rolls around we don’t have to borrow money from food or personal care to pay for gifts- the extra is already there from previous months. Plus, I have room in the budget to buy gifts when I find them at fabulous prices. We budget $300 for all utilities/phones/internet etc. Because we lump things together there’s no need to raise the electric budget in summer and lower it in winter etc.
Gasoline and home improvements/repairs are not budgeted for per se. Our gasoline is only about $125/month on average and about half of that is from visiting family out of state. (we live in the city and very close to most places we go) We try to make repairs as needed, and make home improvements only after careful consideration or when we’ve been given a gift card.
With my new resolution to pay down our mortgages with more gusto, I’ve decided to lump our entertaining and eating out budget as well as home improvements into our $400 all inclusive household/shopping budget. Over all this means about a 20% reduction in our spending will be required. I’ll leave home repairs unbudgeted because delaying those could lead to larger repair bills. I’ll also leave gasoline unbudgeted since our usage is already relatively low and gas prices vary greatly.
Any time you’re making budget cuts it’s important to not do too much too fast and to give yourself some splurge money. That’s why I’m not making huge cuts (that and our expenses are already ridiculously low compared to most people). We haven’t really had any splurge or “blow” money for the past several years. When we made the decision to purchase a timeshare we basically said that was our spending money/gifts for each other for most years. Otherwise we eat at a restaurant once a month and just use our gift cards from our parents at birthday/Christmas as our spending money. It works for us. However, I think if we’re going to reduce our spending we need to have a tangible reward for our efforts. Staying in budget will mean an extra $100 or so going on the mortgages every month. So I’m going to reserve half of anything left in our $400 household budget each month as blow money for us in the following month. I’m going to put my splurge money into the Disney fund!
In addition to the extra $100 I’m cutting from our old budget, I’m also designating $350 a month during the summer (while the kids aren’t in preschool) and $150 a month during the school year to be applied to our mortgage. I’m so determined about this that I’m going to be making that extra payment of $450 at the beginning of the month and we’ll just have to stick within the total budget one way or another!
This is completely backwards from my usual approach to paying down debt, but I’m excited by the idea of making some real progress and knowing that we’re mindful of it. Go ahead and call me a math nut- I think we’ve already confirmed that fact multiple times. LOL
<p>Subscribe to RSS headline updates from: <a href=”http://feeds.feedburner.com/AThriftyPennySavingYouTimeAndMoney”></a><br/>Powered by FeedBurner</p>
Speak Your Mind