My personal financial planner

If you’ve been around this space for a while you know we live by a budget. Bryan does all the monthly work and I try to keep us on track each month. (Haha, and by try I mean I help him by trying  to pay attention to spend.) He tries to track spend halfway through the month so we know what we’ve got left. Last week he was working on tracking and sent me a summary email. The message included notes about categories that we had used up and how to deal with checks that are cashed months later. It was riveting for him to write and me to read.

“See that food is busted. Your dinner Thursday will have to come out of another category. It’s pretty much Abees that killed us this time. We need to stay out of those places that have waiters and waitresses.” Good call, sorry to those who serve food. It’s not worth our spend at this point in our life. We can make food that tastes just as well if not better. And we pay you more.

He signed his name and included a new signature.
Husband, Family Financial Tracker, Dish Washer, Lunch Maker, Dream Killer.

My husband is a funny guy. If you can’t laugh with him you’ll cry about all the dreams that he’s killed. 😉

In all seriousness, budgeting has saved our life. We spent a few years throwing away a lot of money on food and fun. At the end of the year we didn’t have anything to show for all the money we’d lost. Yet, we had all these goals for big items that we wanted to buy and felt like we couldn’t because somehow we didn’t have any money. So we started following Dave Ramsey’s plan and we’re in control of our money! It takes away the stress of finances. (Ok, for the most part. It can still be a little stressful when we want something and are putting our money elsewhere.) If we’ve learned anything about marriage, it is to remove as many stressful obstacles as possible.

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Budgeting OUR money

I’ve gotten a few questions about how we budget so I thought I’d answer them on here.

Do you have separate accounts?

We used. Then we took the leap to join them. It’s difficult to talk about finances and “give up your money.” It’s been one of our greatest changes. No secrets or different ways to managing money. We’re on the same page, forced to make decisions together, using up every last penny as a family, and communicating regularly about things that can be touchy.

How do you decide if something is a monthly budget or you save for it?

We play it by ear. If we know we have a large ticket item coming up, then we know we need to put something into the save category. We spend a few months saving up for it prior to when we need it. That means our savings isn’t depleted and we feel good that we planned ahead for it. Example: As soon as we found out I was pregnant, we started saving the money that would cover my unpaid time off and also the hospital bill. We chose to stop putting money into the new car fund and the furniture fund, instead we just focused on the baby-related money. We added up what we paid for Maximus’ birth, how much nursery furniture cost, and then how many paychecks I would be missing. With 9 months to plan, it was easy to save the money in time to buy nursery furniture and pay the hospital bill. Once I start unpaid time off, we’ll transfer that money into our checking account so we don’t feel the pain of my missing paycheck. {As I typed that, I just realized that we’ll be able to move a lot of that money back into our savings account because we saved paychecks, not money needed to pay bills.}

If there’s something that’s smaller like an event or we’re going to spend a decent amount of money on clothes, then we put it into the monthly budget. Most months that’s fine and we can usually put aside our regular savings amount. If it’s a month where we have the big items too, then we decide if we want to lower the amount going into savings that month.

We don’t like to use our savings account as a checking account. The majority of interactions are money going in.

How many savings accounts do you have?

Three.

  1. We have an emergency savings account that is not touched.
  2. We have a goal savings account that is our primary savings account.
  3. We have a 529 college savings account for Maximus.

What is your goal savings account used for?

This is anything we want to buy over the next few months to few years. We’ve put the dollar amount as something over a couple hundred dollars. Right now our goals are a new car, living room furniture, dining room furniture, maternity leave, and hospital bills. Some of these items have full amounts in there and others are works in progress.

Why do you keep a budget?

We wanted to keep better track of our spending, save money quicker, and get rid of our car loan.

When we went through Financial Peace University, we fell in love with the idea of paying cash for any big purchases. We decided that we wouldn’t use a credit card for anything and we’ve stuck to that plan. If we want something and don’t have the money for it, then we just wait. By waiting we are able to decide if we need it. Because we have this savings account, we’re able to decide if we want to rearrange priorities and buy something now or start fresh and save for it.

How much of your paycheck do you put into your savings?

It varies each month depending on what other money we didn’t spend. We automatically set aside 17% of our monthly income. It’s high enough to really save money, but not too high that we don’t have any money to spend during the month. Almost every month we end up saving 25% of our take home.

Do you feel like you don’t have any money to have fun with?

No. We have entertainment money, personal money, and restaurant money. We made a conscious decision to save money so we can live the life we want to live. We have more money to spend now than we ever have before.

Do you feel like a budget constricts you?

No, it’s the opposite. A budget helps us live more freely. We’re able to save money to buy the things we’ve been dreaming of getting, but never had the money for. We’re able to live the life we chose to live. We’re being smart with our money now so we can build good financial habits for the future.

What keeps you motivated?

Bryan stays motivated on a daily basis by listening to the Dave Ramsey show. He pulls up pod casts on his phone so I can listen to them if the questions relate to us.

We both stay motivated because we developed a strategy for paying off our house in 10 years!

Lastly, because we want to “live like no one else, so later we can live like no one else.”

Monthly tracking and budgeting

I love talking to people about Dave Ramsey and budgeting. I’ve been having a lot more of those conversations lately and I think it’s for a reason. Not only is it helping others, but it’s helping me get the “intensity” back. Bryan and I have a renewed excitement towards our budget and our financial dreams. Our financial dreams have been the topic of many conversations lately and each conversation propels us that much further. Who would guess that money could get us excited?! {Not in a materialistic kind of way, but in a way that maps out our plan to pay off our house!}

Here’s what our monthly budget process looks like:

Monthly Spend Tracking

  • At the beginning of each month Bryan tracks our expenses from the previous month. We look at previous months to see if there are trends in over- or underspending. We decide if we need to adjust those amounts or if we need to tighten the shoestrings a little. 
  • Next, we move our goal savings money from our checking account into our savings account. Usually we have to recalculate the amount because we almost never use all the money we budget in a month. Technically, that means we need to keep working on the budget to create an accurate budget. Since it involves us not spending all our money, we don’t worry too much. It’s kind of nice to have extra money go into savings!

After these discussions, I’m usually toast and ready to end the conversation. I love my husband for his attention to detail. I need to change my expectations and know that these will be semi-long conversations.

Monthly Budget Planning

  • After we track our spending, I jot down things that I know are coming up that month. For example, gifts, events, parties, etc. I also look over my wish list of things for the house or personal items. 
  • Bryan takes the first pass at the planning. *See below for an example of our spreadsheet.
  • We sit down and review his pass at it and I add in the extras. Our budget usually doesn’t change too much from month-to-month. If we have extra money leftover, we decide what to move from the wish list or the goal list. We budget all of our money and agree on it.
  • Bryan sends me a PDF file so I know what amounts we agreed upon for the extra spending items.

We never started the envelope system because we felt that we could stay controlled when using our debt card. Recently, we decided to start doing it for fast food / restaurants. We wanted to control our spend because it was our worst offender. So far it’s working out well. With the cash, we can easily decide when we want to eat out. It has finally become more of a treat and we stay within our desired budget. {I hate the idea of eating away our money!}

Something else that we’ve started doing is reviewing the budget each week. This helps eliminate a lot of time for Bryan to track all of our spending each month. Instead, I’m writing down if I spend any money during the week and Bryan looks over our checking account and enters all the current spend. {Yes, my work is repetitive, but I like writing things down.} This does two things: helps us stay on track with what we said we’d spend and also gives us an idea of what we have left to spend. Another benefit is that we may realize we aren’t going to spend all the money in one category. I can look at the wish list and revise where I’m going to spend the money. So, instead of waiting until next month for new ink cartridges, I can buy them this month. {True story. I’m printing a lot of pictures!}

Goal Review / Planning

Once we agree on our budget, we immediately review our goals. 

  • We recalculate our goals savings account and look at our goal spreadsheet. On the spreadsheet, we have the savings amount and also the totals of each of the goals. These are big-ticket items such as a new car, furniture, maternity leave, or hospital bills. Items such as a new storm door or paint come out of our monthly budget. 
  • We get a good feeling for where we are on the big-ticket items and decide if there is anything we want to pursue that month.
  • It also helps us look ahead at items and decide if there is a better time of year to purchase any of the items.

This conversation usually leads to more brainstorming about things we want to do around the house or in our lives. Without a goal review conversation, we wouldn’t be on the same page. It really helps open up the door for communication. This is very important during this phase of life with a toddler and newborn. There aren’t a lot of opportunities to have conversations where one of us isn’t exhausted!

We’ve been using a budget for two years. There was a period of time, when we became lax, that we didn’t actively review our budget. We got into a rhythm and had a feel for how much we should spend. We were in a good spot in our journey and weren’t worried about every extra penny. After a few months, we snapped out of it and realized that even if we had a “feel” or weren’t spending too much extra, we needed to get back on track. We may have not been in need of that money, but we were wasting it. For us, a budget means we spend our money wisely so we can achieve our financial dreams.

Leger Budget

Leger Budget

What’s your budget process? 

Other financial journey posts:

Baby Steps Four and Five

I’ve talked a lot about our financial peace journey and how we’re following Dave Ramsey’s Baby Steps plan. Until yesterday, we were on Baby Step 4. We really shouldn’t have been, but our own laziness kept us there for a very long time. With the new year, I’ve seen and been part of quite a few conversations related to money management and getting out of debt. It’s exciting to see and I wish everyone the best of luck. The Ramsey plan has worked well for us and I know many others who have used it also.

We were stuck on Baby Step 4 for at least a year. The problem started when we kinda, sorta stopped paying attention to Baby Step 3. We were saving but hadn’t decided how much we wanted to put away. One day last spring, we sat down and came up with a number that covered four months worth of bills if we both lost our jobs and eight months if just one of us did. Next {read: months later, more procrastination}, we transferred that money out of our savings account into a designated account that had a little ability to make some money.

With our emergency savings out of the way, we started talking about goals. We created a priority list that included maternity leave, medical bills, new living room furniture, nursery furniture, and a new car fund. We continued putting money away for our goals and started talking about the next Baby Step.

Our company has a 401K matching program and we both put 10% away. We’re maxed out on our current plans so our first road block was determining where to put that extra 5%. Bryan has done a lot of research to determine the types, benefits, and rules to pre- and post-tax plans. He’s the planner and doer in the family when it comes to our finances and I’m the free spirit. So, he knows the specifics and I remember as little as I need to survive in a conversation with him. 🙂 He had finally made the decision on what we should, we just had to make the changes.

Month after month we had the goal of getting that finished and month after month something came up. Wait until that raise goes into affect so we know how much our new take-home is. Let’s wait and see what happens with the fiscal cliff and how that affects our take-home. I’m having a baby and want to get the house in order instead of focusing on FINANCES.

I am excited to say, after way too long, we’ve finished Baby Step 4! Working by the glow of his computer screen, Bryan did one more round of research and updated both of our retirement portfolios. While I fed a newborn, he crossed off another Baby Step. It left us both wondering why it took so long! We don’t know how it affects our paycheck yet, but I’m glad it’s finally done even if that means we “lose” some of that monthly spending money.

Last week Bryan did something that’s kind of illegal when it comes to the Baby Steps. He completed Baby Step 5 before we’d finished 4. Again, Bryan had done an insane amount of research into what was best for education savings plans. He was getting a little nervous about Dave’s recommendation and the impending vote for the fiscal cliff. A Yes vote would take the yearly contribution max and cut it in half. So, he found a compromise between what Dave suggested and what wouldn’t be affected by a Yes vote. {Good thing, huh?} Since the vote, Dave changed his recommendation and it aligns with the 529 account that Bryan opened up.

So, Maximus is going to college! Heh, we were already planning on it and had a general savings* account set up with a monthly direct deposit. But, it wasn’t nearly the amount we needed to be saving per month. Now that’s completed and we can cross that off our mental to-do list! As he excitedly turned to me and announced that Baby Step 5 was complete, I lifted up our second born in a Symba-like style and reminded him that Quinten wanted to go to college too. Tomato / tamato. I say we aren’t done with the Step until we get one set up for Quinten too. 🙂

*Now that general savings account has become the yearly Christmas account! And that makes me so excited. Excited go be making smart decisions for our family so we can live like no one else! That’s something we’ve been talking about doing for years and guess what? We just hadn’t gotten around to it! Do you see our theme? Next year we won’t have to pull the money out of our savings account, which means we won’t have to put any goals on hold.

We lost our motivation and got a little sidetracked on our financial peace journey in 2012, but with the new year comes a drive to keep pushing forward. We’re over the moon excited to cross Baby Step 4 off the 2013 family goals list! I might even give 5 a status percentage. 🙂

What keeps you motivated to continue moving forward with your financial goals?

Shopping on a budget can be fun!

We recently went on a BIG shopping trip. It was one of those trips where you pile all the bags on your counter when you get home. A trip that could have been overwhelming. With a budget, we found that neither of us felt bad after a day of shopping. I was tired, but not feeling remorseful about the purchases.

Bryan used to have anxiety about spending any amount of money on clothes or shoes. He’d always cringe when the total came up or decide not to buy something. I was used to the back-to-school shopping totals and expect a day of shopping to add up. I didn’t have anxiety, but have always wished I had some quality shoes yet never wanted to spend the money on them. We’ve been living deliberately for a while now. Telling our money where to go instead of looking back and wondering where it all went.

Last month I had money for maternity clothes and couldn’t find anything. After trying very hard, I decided to buy a pair of shoes that I had wanted for over a year. When spending money randomly, I had never wanted to put up the money. I felt guilty even thinking about it. Since I had built it into the budget, I decided shoes was where I wanted to put my money. I think I love those shoes even more that I get to enjoy them completely guilt-free!

This month we had a lot of birthday and baby shower gifts along with clothes for Bryan and I. We set out for a day of shopping with our list and amounts on-hand. We walked away from a Target trip having spent a lot of money, but realized that only $36 was our “blow money” for household / random items. Normally, that kind of trip would have caused major anxiety for Bryan and he would have wanted to eliminate any more purchases. Instead, we ticked off the items on our list and set out for the mall to buy things for us. As the day went along, we tallied our purchases up in our head and always knew how much we each had left in our allotment. I couldn’t find the maternity clothes I was looking for so I used up the last of my clothing budget on the boy’s bathroom. {Hey unborn boy! I’m decorating your bathroom. It’ll be done when you get here.}

Like I said, it was an awesome feeling to go home that night and have accomplished so much. We bought all the gifts in one stop. We had already planned out the month for spending so we were able to be prepared for the birthdays and showers. {I’m usually the one who buys the gift last minute.} We splurged on ourselves and each got things that we had been wanting. And we came home with extra stuff that wasn’t planned but was included in the budget!

A week later, we have no remorse about our big day of spending. We laughed that our checking account saw more action in one day than it does in most months. But, it was money we had and we don’t miss it! Some months Bryan says he feels constrained by creating and tracking our budget. After our shopping experience, he decided that it’s well worth it! Because our spending habits don’t change much from month-to-month, he doesn’t have a lot of tracking to do but we like to see if we’re staying consistent with things like household items, eating out, and groceries. We haven’t gotten it perfect yet.  Every month we go over in one account and way under in another and never spend all the money we thought we would, so we’ve got some room to grow when it comes to creating a realistic budget. But, we both like the leg room that we have to do that and consider it a win if we don’t spend all the money. That extra money either goes into general savings or towards one of our major goals and that is definitely a good thing!

I may have to turn people down or not eat out as much as my lazy self would like, but in the end it’s much better to make your money work for you instead of working for more of it! I was amazed at how much money “disappeared” before we started tracking it. Even when we thought we were being more considerate of money, we still wasted a lot of it on things that we don’t even know. I’m fearful that most of that money was consumed by way of food and drink. We’ve learned that we can live whatever kind of life we want to live, we just need to plan for that way.

It’s a family philosophy to not get carried away or swept up in material things. This family grows on love and affection, not possessions. But, we both agree that spending money on possessions is much more enjoyable when you weigh the benefits of giving away your money versus the value of having the item. It’s less about blind purchases and much more about need and enjoyment. Following a budget can be fun! Our family will be sporting new Iowa State gear this fall to prove it! 🙂

Prioritizing financial goals

It’s been a while since I’ve talked about our finances. {Let’s be honest. It’s been a while since I’ve talked about anything!} We’ve found that our motivation for following the budget flows up and down depending on the time. While I was nursing my broken foot, we floated by from month to month. We weren’t spending much money so we weren’t spending much time looking at it. Once things got back to normal we decided to attack some areas of our finances. Specifically, our mortgage. We’ve been following a plan where we are paying more than our monthly payments, but we wanted to get more aggressive and shave more time off our loan. Of course we started this plan after we got through the first few Dave Ramsey Baby Steps.

As always seems to happen with us, other things come up. I got pregnant and our financial goals changed. We had saved up money to buy a new vehicle. Like we had all the money we wanted to save, but just needed to decide what we wanted and if we wanted to use all the money. {We expected to feel a giant pull at giving away all that cash!} We reassessed our finances and decided that money would be used elsewhere. Specifically, medical bills, hospital bills, covering paychecks that we wouldn’t get while I’m on maternity leave, and nursery furniture. So, gone was our car fund and in its place a baby fund.

Here’s my dilemma. I feel like we’re always saving up for a goal and we get so close to obtaining it and then we have something else come up and spend the money another direction. Yes, most of these goals are materialistic, but at the same time we will eventually need a new vehicle so it’s a little of necessity and desire. If not because of space and car seats, well then because one of our cars will crap out on us soon. Since starting the Dave Ramsey plan, we can’t imagine ever buying a car on a loan. So, now we start back at zero for our car fund. And now we’re left deciding if we aggressively build the car fund back up and cut out all extras until we do. Or do we slowly build it back up while reaching some of our other “fun” goals too.

How do you prioritize your goals? How do you plan for these goals? 

Giving Thanks

On this Thanksgiving, I am thankful for so much.

Looking for good deals

            1. My husband. Without him I wouldn’t be the person, wife, or mother that I am today. He has un-waivering faith in my career, my goals, and who I am today as well as who I want to be tomorrow. He’s my biggest cheerleader in and out of our home. He knows when I need space, when I need a break, or when I need a good laugh. He knows me better than I know myself. He knows me so much that I spend a decent amount of time rolling my eyes at his snide comments because we both know they are 100% true. I take advantage of who he is and what he is for me, but we complete each other. Without him, I would be half the woman I am today.
            2. My baby. He made me a mommy. He made my heart complete. He made me feel things I didn’t know I could feel. Every day he makes me grow as a person and a mommy. I look back on these past 16 months and I can’t imagine a life without him. I can’t see what the future looks like, but I’m excited to watch him grow into a little person. I’m excited to watch him accomplish big things! He is so inquisitive and interested in how things work. I can’t wait to see how that works into his future.
            3. My family. I wouldn’t change one single thing about them or who they are. I love each and every one of them and their individual personalities. We all bring something different to the family and our family is whole. We welcome new additions, whether by birth, marriage, or a relationship, and love them like our own.
            4. My friends. I feel especially blessed to have so many close friends who feel like family. Friends who are there for me when I need them. Friends who drop anything to hang out. People who know when I need to forget about everything or talk it out. As I’ve gotten older, distance has had a great impact on my relationships. But those friends who live far away are always near in my heart. We make the best of what we can and love each other despite the states that separate us.

 On this Thanksgiving, I look back at the past year and what it has done to me as a person, my family, and the people around me. There have been hard times and really fun times and ok times. But on this day, I can’t help but reflect on the really amazing things that are in my life. I won’t let the bad or the sad pull me down. I won’t dwell on the unhappy things or things I wish I could change. Instead, I will love and appreciate what my life has become. I will rock this life like I was intended to do!

 And as much as this little guy may be plotting, I won’t be going shopping tomorrow. I won’t be going because we don’t need anything. Everything we have is right here, in our hearts. Instead of spending our hard-earned money on “things,” we’ll save it. We’ll save it for very important things that we will eventually need {be it out of necessity or want}. We’ll save it so we can buy things with that hard-earned CASH. We’ll save it so we don’t spend recklessly. We’ll save it because we want to give Maximus the best life we can give him!

Picking out Christmas toys