15 May 2013

Summer Slimdown Part II

Growing up I was told that it wasn't polite to talk about politics, sex, or money.  We're not talking politics or sex today {you're welcome, Mom}, but we are continuing our chat about money.  I realize there are some of you who find this mind-numbingly boring, but I love, love, LOVE reading about the way other people, especially people my age, manage money. It's the financial equivalent of peeking into someone's medicine cabinet.

It's a little {maybe a lot} scary to be talking about our finances in such detail on here. Money is such a private thing and it's not something I sit around discussing with anyone other than M.  But I'm hoping through sharing our experience and our goals that this will provide some accountability and support.  I'm such a typical fire sign. I'll make a plan and have goals and get all pumped up for them and then a month later I'm totally off the bandwagon.  Maybe the fear of public shaming will help me get back on board when we inevitable fall off.

So.  When we left off yesterday, I was talking about how the hard part of all this is turning all of our exciting goals and dreams into plans and actions.  The first thing I did was pretty basic: add up how much comes in each month and add up how much goes out.  I added up all of the obligatory recurring expenses {rent, utilities, gas, car payments, student loan payments, car insurance, cell phone bill, etc.} and put them into one category.  Minimum monthly credit card payments were added up and put into another category.  Then comes the new part: the envelope system.

I vaguely remember my parents using the envelope system at one point in my childhood and I know I've seen other bloggers {the Duchess of Fork comes to mind} who use it.  But it wasn't until I read Emily's guest post from Nancy that I thought, "Hey, we can do that!".  And do that we did.

We are half way through our first month of the envelope system.  I can already see that I'm going to need to make some adjustments {I under budgeted for a number of items}, but that's OK.  We'll make the necessary changes and try again next month.  Most everything I've read says that it takes a few months to really get the hang of it, so perseverance is the name of the game.  I have to say, it is REALLY strange to be carrying around so much cash and see the resulting teeny tiny balance in our checking account. It's unsettling, especially because I rarely ever carry cash.

Here are the envelopes we have:

Groceries: pretty self-explanatory. Prior to our budget adjustment, we were spending about $400/month on groceries.  I cook pretty much every single night, plus we pack our lunches and eat breakfast at home.  We rarely eat out, not because we don't like it, but because the only restaurant options in our town are Arby's, McDonald's, and Denny's. I'm challenging myself to go down to $300/month.  I'd love to go even lower, but we're taking baby steps.

Pet Supplies: We have two dogs, one of which is on a special diet and medication due to allergies and anxiety. Right now I've got $100/month budgeted, but that may be able to scale down to $80 or $90. We'll see.

Pet Boarding/Vet: Again, pretty self-explanatory. I've got $100/month budgeted for this.  Depending on how much we scale back on our traveling, I may be able to trim this to $70/month, but it adds up quickly.  Two nights in the kennel for our two boys is $84.  This is a rollover envelope, meaning anything that doesn't get spent in a month just stays in the envelope.  The idea being that it builds up a back-up to our emergency savings should anything major happen to one of our boys.

Household: This envelope is for things like toilet paper, dish detergent, hand soap, etc.  This is outside of our grocery budget, which is new for me.  I budgeted $15/month this month, which was not nearly enough, but that was because we ran out of everything at once.  This will be a rollover envelope.

Personal Care: This envelope is for haircuts, highlights, body wash, shampoo, toothpaste, make-up, etc.  Right now I've only got $25/month budgeted. Some months that will be more than enough, but some months it won't even come close.  This one may need to be adjusted, but we'll see. This will definitely be a rollover envelope.

Fun Money: I'm sticking to the diet philosophy that if you deny yourself any and all treats, you're much more likely to crash and burn. I've budgeted a total of $80/month, or $40/each.  This may be a bit too generous, so depending  on what adjustments need to be made to the other envelopes, this may go down to as little as $50/month.

Date Night: Not negotiable. I see our de-debting plan not only as an investment in our financial future, but in our marriage. Money is a top cause of divorce and we want to be mindful of that, but I don't want to neglect taking care of our relationship as a means to an end.  I'm allotting $40/month, so not much more than a pizza night at home and seeing a movie.  But this is an important one that I want to try not to cut back on.

Auto Care: This envelope is outside of the money budgeted for gas for our cars. The idea is for this to build up to pay for routine maintenance like oil changes and inspections, as well as a back-up to our emergency savings should anything more major happen with one of our cars.

Gifts: Pretty self-explanatory.  I've budgeted $40/month.  Some months we'll spend it all {it's already forcing me to be extra creative with our gift-giving occasions this summer!}, some months it will rollover to save up for things like our anniversary and Christmas.

OK, so some people refer to their fun money as blow money. But if I had an envelope for blow, I would assume someone was funding a yet-to-be-discovered cocaine habit.  Maybe for some people it's one and the same?

So I add up the recurring expenses, the minimum credit card payments, and the envelopes and subtract the total from our income.  Everything else goes to paying down debt.

We have a ways to go to really get the hang of this.  I can already tell there are going to be times when it really sucks {i.e. not a lot of built-in $$ for my drive-thru McDonald's Diet Coke habit}, but I can also already tell that it is going to be hugely helpful for us in reaching our goals.

Do any of you use the envelope system or some version of it? As a newbie, I would LOVE any tips/tricks/advice you might have.  And if anyone would like to help prettify our envelope system, you are more than welcome to buy this lovely wallet for me :)

Tomorrow is the last financial post of the week {I promise}. I'll be posting the different resources that have been helpful so far...


Elizabeth said...

I have enjoyed your summer slimdown series so far! :)

We do an excel budget each month (I'm an accountant so I LOVE it). But that's not to say we make the best financial decisions. One of our main goals is to pay off all debt (besides our house). We've talked about doing this envelope system so we're starting in June! Wish us luck. :)

(I'm a new follower & can't wait to catch up on your blog some more.)

Sunkissed and Southern said...

Thanks for sharing! We tried this when we first got married and then stopped. $40 fun money each is so admirable. It made me realize how much money I most likely waste in a month at Target or buying things here and there.

xx BHB said...

"Blow" money would also raise my eyebrows. Then again, you and I are such nerds, I'm sure "they" don't even call it blow anymore?

I've done this before - cash sometimes just helps. It's SEEING the money go from my hand to a vendor/store/bill payment. That helps *so* much versus just clicking some buttons and seeing some numbers switch around.

And thank you for loving me enough so I can call you a nerd on your blog :) xo

Baltimore Prep said...

This seems like a great system for you that you've put lots of thought and planning into! I totally agree with Sunkissed...my jaw dropped at the $40 for fun money and dates! g

Tasha Lee said...

Thanks for sharing, Sarah! We've started budgeting quite a bit over the past 6 months or so. With several lost jobs along the way, we've just been working day-to-day lately. When J and I got married, I had plenty of school loans but no CC debt. He had the CC debt but no student loans. He's been in and out of jobs the majority of the time we've been together, so we've racked up a little bit of CC debt merely because we needed a way to get by. We definitely don't have enough money to set aside for all the categories you've listed, but here's what we have so far.

My grocery shopping has helped our budget a lot. I know you're a big meal planner, so this will be right up your alley. I go to SAMs and Wal-mart once a month for all my groceries. I may have to make a pit stop mid-month for milk, eggs, and some produce, but I usually try to knock it out in bulk. Saves in time and money! I usually spend around $200 - and I've actually been able to stretch that food out to 2 months. I don't cook as much as you, so I bet you could get your budget down per month, for sure!!

We each have an "allowance" of $20/week for our own use - eating out, soft drinks, snacks, etc. This money rolls over to the next week, and we usually make a date night out of our allowance, too.

Dog food is just an extra - I haven't necessarily "budgeted" for it, but I know that's a monthly charge. I can't figure out how to budget for gas, but that's a must, as well.

Thanks for all of your ideas! I'm excited to look at your other sources tomorrow. I need all the help I can get!!

RitaMarie said...

Reading this post and some of the comments has given me several ideas about what to implement into our budgeting system.

I use an excel spreadsheet and try not to spend roughly the same amounts that you have set aside each month. It's hard and we fall sometimes, but at least we have a goal to gauge ourselves by.

Yeowch to the cost of pet boarding! It may be less expensive to have a petsitter. :) That's what I do with our little fur babies.