Tag Archives: budgeting

Personal finance is romantic

love-and-money
photo by jeeked

I know I said yesterday that love and money have nothing to do with one another. That’s not entirely true.

It’s true that love doesn’t cost money. There’s no reason to spend any money on love. But money can certainly affect your relationship, especially when you’re having financial problems. It can increase fighting, distract you from the important things, and even lead to divorce.

I know, most people don’t consider budgeting to be a very romantic concept, but money problems can wreak havok on even the healthiest of bonds. Working together to get your finances in order is one of the best things you can do for your relationship.

It fosters a sense of teamwork.

There’s nothing more bonding than setting mutual goals and working toward them together. Teamwork is good for any relationship. It heightens closeness, especially when you succeed together.

It decreases (or eliminates) financial arguments.

Couples fight about money than any other thing. Most of these arguments stem from differences in how you and your partner handle money. But when you take the time to outline your goals and rules together, it allows you to get on the same page about money management.

Maybe you still won’t agree completely, but talking it through allows you to find common ground and set mutually agreed upon rules. Though we don’t completely agree about every aspect of money management, Tony and I have never fought about money. We set the rules, and we know what to expect from one another.

It decreases money stress, allowing you to focus on other things.

Anyone who has experienced money troubles knows it can be hard to focus on anything else when your finances are a wreck. Your finances won’t be perfect overnight, but when you take control and start to work toward financial goals, you at least feel more in control. You’ll suddenly realize your mind is much freer to think about more positive things, like how much you love your partner.

It allows you to accomplish your dreams together.

Whether your shared dream is to own a home, take your dream vacation, start a family, or own your own business, getting your finances in order is the first step. There’s nothing more romantic than achieving your dreams together, and fixing your finances can help you make that happen.

This Valentine’s Day, take some time to look at your finances — your mistakes, your accomplishments, and your goals. It may not seem like a romantic way to spend the holiday, but it’s one of the best things you can do for your relationship.

Organizing my finances electronically

Everyone has a different method for paying bills and keeping track of spending. For a long time, I struggled to find the right method for me. I used to track spending with my online banking system, but that didn’t allow me to create a budget. I was constantly looking at my balance and mentally subtracting bills that I knew were coming up. It was stressful and dangerous.

Then I started paying my bills on payday. This helped me avoid the constant fear that I wouldn’t have enough to pay my bills when they were due, but it often left me with a dangerously low balance at the end of the pay cycle.

Now that I’ve been budgeting consistently for about 6 months, I’ve developed a method for bill paying and financial organization that works really well for me. So I thought I’d share it with all of you.

My checking account is for bills and living expenses only. I keep enough to pay my monthly bills with a little cushion for human error, but the rest of my money goes into savings where it can earn interest and stay safe from impulse purchases. When there’s extra money in my checking account, it gives me a false sense of wealth. When I have just enough to cover my bills, I’m not tempted to spend.

Every month on the 1st of the month, I create a zero-based budget using Mint.com. Every penny of income for the month is assigned to a purpose. By this time, I’ve usually already received the bills that fluctuate from month to month — like the electric bill and gas bill. I set all of our fixed expenses first, then I balance our discretionary spending amounts for food, entertainment, and savings based on what’s left over.

I’m able to determine how much I can afford to put into savings, and go ahead and put it away before we pay any other bills. I’ve tried to wait until the end of the month to contribute leftover money to savings. The problem is, there’s almost always nothing left by the end of the month. If it’s in my account, I’ll spend it. It’s easier for me to determine how much I can save, and save it right away to eliminate temptation.

Because I don’t keep a huge surplus in our checking account, I stagger bill payments with pay periods. Tony receives his teaching stipend at the end of every month, but pretty much all of it goes to rent and savings on the 1st of the month.

I’m paid bi-weekly, so I base our bill pay schedule on my paydays. The bills that are due in the first half of the month are paid on the 1st. Bills due in the second half of the month are paid on my second payday. I use Mint to keep track of what’s been paid.

Every other day or so, I check our spending in Mint. I try to make sure we’re on track to avoid overspending. We have very few discretionary spending categories, which makes it easier. I really only monitor food, miscellaneous expenses, and entertainment.

Pairing zero-based budgeting with electonic spending tracking and a consistent bill pay schedule allows me to stay on top of spending. It also lowers my stress. Because my budget is zero-based, I know I’ll always have enough to cover my bills and expenses. That works for me.

How much do your kids know about your finances?

Tony and I don’t have children yet, but we will someday. As we sort out our finances and plan for our future, one thing that we’ve discussed is how much we’ll tell our kids about our personal finances.

My parents were always pretty open with my sisters and me about their finances. It could be scary to know as much as I did at times, especially when I was too young to fully understand.

Looking back, I appreciate their openness. It allowed me to learn from their mistakes. If they had kept those things from me, I would have missed some valuable learning experiences. I want to be the kind of parent who teaches my kids from my own mistakes.

Tony’s parents chose a different tactic to teach him about finance. They weren’t as open about their personal financial issues, but they did work hard to teach him general lessons about money management and finance. Tony opened a savings account at a very young age, and even had some experience with loans early on. If he wanted something he couldn’t afford, his parents loaned him the money and allowed him to pay it back with his weekly allowance.

I didn’t get a lot of practical experience with money management skills until I moved out. My parents were very generous when times were good, but we didn’t receive a weekly allowance. When we needed money or wanted something, we simply asked for it. If they could give it to us, they did; if not, we went without (though that was rare).

The current economy has made me think a lot about this topic. How open should you be with kids about personal finance?

I think I’d like to use both tactics. I want to combine age-appropriate openness with practical money management lessons like the ones Tony’s parents taught him.

For instance, I wouldn’t sit my 5-year-old down and say, “Daddy lost his job, so we might be homeless in 8 months when our savings runs out.” But I would explain to him the changes we’d be facing, such as fewer outings and extra purchases.

As my kids get older, I want them to know more — especially when it comes to our own mistakes. If poor investment decisions lead to a loss, I would want my teenage children to understand what we had done wrong and learn from it. I certainly plan to explain to them my own mistakes with student loans and credit cards so they can benefit from the lessons I learned after college.

My point is that I don’t plan to keep our finances a secret from our children. I want them know and understand as much as they can about how much it costs to maintain a house, feed a family, and save wisely. I want them to know how much we make — and spend — in a year.

On the other hand, I acknowledge that the lessons they learn best will come from personal experience. That’s why I’d like to allow my children the opportunity to make their own financial decisions from as early an age as possible. We’ll give them an age-appropriate allowance and let them decide how to use it. When their own money is gone, I won’t give them more unless they plan to pay it back. My hope is that this will better prepare them for budgeting and money management when they’re on their own.

What works for you? Do you believe in full disclosure or do you prefer to stick with a general education?

Planning a frugal Thanksgiving for two

Photo by dennissylvesterhurd

Thanksgiving turkeyWith the election over (thank goodness!), we’re all turning our attention to Thanksgiving, which is now exactly three weeks away. (Where did the time go?)

I’m no exception. Tony and I won’t be traveling for Thanksgiving. We’re making a big trip to see family for Christmas, so we’ll be home in North Carolina enjoying a quiet holiday. We may invite a culinary-challenged friend or two if any of Tony’s classmates stay behind and want to join us. If not, it’ll be just the two of us.

That doesn’t mean we’re not cooking a Thanksgiving dinner with all the trimmings, though. My amateur chef husband wouldn’t miss roasting a turkey for the world. We had the most wonderful holiday last year. We invited a friend over for dinner and enjoyed a Thanksgiving feast. The leftovers lasted days. I’m looking forward to continuing our tradition of a low-key, no-stress Thanksgiving holiday cooking and eating good food, watching movies, and relaxing.

Last night we began preparing by putting together our Thanksgiving menu. We’ll be making all the traditional dishes, including turkey, mashed potatoes, cranberry dressing, stuffing, greenbean casserole, fresh bread, and pumpkin pie. It’s a lot of food for two people, but we plan to eat nothing but leftovers all weekend. :)

Last year we didn’t roast a whole turkey. Instead, we bought a small bone-in turkey breast. I highly recommend that you do the same if your dinner party will be small.

To reduce the impact on our budget, we’ll be spreading out purchases for the menu over the next few weeks. At some point in the next week or two, I’m expecting a big sale on turkey at the grocery store. We’ll pick up our turkey then, and pick up an item or two for the meal on every shopping trip in the coming weeks.

Here’s how some of the bloggers from my reader are preparing for the holiday:

How are you preparing?

October budget round up & November goals

Another month of spending more than we earned. Sigh. We were a total of $93 over budget for this month.

We started the month with a trip to Seattle. We bought our plane tickets months ago. For this month, we budgeted for gas to drive to and from the airport, parking, boarding costs for the dog, and meals on the run at the airport. We did a pretty good job of staying on budget for the trip, but we struggled to get back on track after we got back.

The result was an out of control $125 overage in our food budget. Part of the problem is that I knocked the budget down about $50 from our normal monthly food budget to account for vacation spending in other areas. Then we ate out a handful of times, including a pretty expensive sushi meal for my birthday. Those meals out really add up.

There’s good news, too, though. We were on track in all other spending categories. We were even under budget in a couple, which made up for about $32 of our out of control food spending.

The bottom line is that we spent $93 more than we made this month. Not good. We managed to reach our monthly goals for savings and debt payments, but my goal is to make sure that our output, including debt and savings, is less than or equal to our income. In that respect, we failed this month. :(

For November, my obvious goal is to make sure we’re not spending more than we make. Eventually, I’d like to get to a point where we’re under budget consistently and sending that extra money to savings and debt. We have a long way to go before we get there, though.

This month will also mark my final credit card payment (yay!). That’s one bill I’m looking forward to paying this month.

I’m still waiting to hear from Chase about my personal student loan consolidation. Once my credit card is paid off, I’ll start focusing on paying off my student loans. Hopefully the consolidation will go through, which will lower my interest rate and minimum payment and make it possible for me to pay off the debt sooner.

We’re beginning our Christmas shopping, so I moved some funds around from other areas to give us some extra “spending” money to put toward gifts. We’ll have to keep everything else pretty tight to meet our goals. We’re shopping for our five nieces and nephews and our parents. For our nieces and nephews, I redeemed MyPoints for a $50 Amazon gift card. I’ll use that to shop for toys. We’re buying a number of small gifts to make a gift basket for our parents, so we’ll be spreading those purchases out throughout November and December.

How did you do this month?

Feeling down? Don’t let it tempt you to overspend (or overeat)

It’s just been one of those weeks. Everything is just … blah. Nothing in particular, really. Maybe it’s because it’s my first full week back after a short vacation. Maybe it’s because I’m feeling deprived of fall in the 85-degree heat. Most likely I’m just more than a little homesick for the beautiful Midwestern fall weather and for my friends and family back home.

At any rate, I’ve been feeling down in the dumps.

Usually when I’m down, the first thing I reach for is something extremely bad for me to eat. Chocolate. French fries. Pizza. Whatever. But I’m watching what I eat now, so that’s not really an option.

Instead, I was craving seared tuna. A downtown restaurant makes a delicious seared tuna that I found myself thinking about as the afternoon wore on. It seemed like the perfect comfort food. I was so tempted to call my husband after work and tell him to forget about the meal we’d planned (roasted chicken breasts) and take me out to dinner.

But we’re already cutting it close with our grocery budget for the month. And honestly, overspending or overeating never really make me feel better when I’m down. Sure, it’s great temporarily, but when the meal is over and the bill arrives, I feel sick — not just because I’ve probably eaten too much and wrecked a week of dieting, but also because it’s extra money we shouldn’t have spent.

It never fails. I feel worse than I did before the meal.

Instead, I called my husband and asked him to start thinking about how we might recreate the seared tuna recipe. On my way home, he gave me a very short grocery list. Basically tuna and rice. We had the rest of the ingredients on hand.

For about $10, we made our own seared tuna at home. It was absolutely delicious and completely satisfied the craving. The chicken breast that we defrosted in the refrigerator last night will be just as good for another meal early next week.

The money we spent will fit easily in our entertainment budget for which we allow about $12.50 a week. No big deal this weekend since we’re going to a work-related picnic Saturday that won’t cost us a dime.

After a healthful, delicious meal I’m feeling better, and I didn’t have to break my diet or my budget.

September Budget Round up

The good news is we were on budget in most of our spending categories in September. The bad news is we were $42 over in our miscellaneous “shopping” category. Part of the problem was five shirts I bought on clearance for $21 a couple weeks ago. I also forgot to budget for the $25 I spent on Tony’s birthday present. Oops.

We also went $30 over our food budget. As I look through our spending, I’m seeing red flags like Starbucks and ice cream shops. Looks like we stopped for a coffee, ice cream, or other snacks while running weekend errands several times throughout the month. Those little purchases added up to a $30 overage in our food budget. Good thing I’m getting my diet back on track now. It’ll be good for my waistline and my wallet!

Setbacks: Overspending in food and shopping. These are our two biggest discretionary spending categories, and also the ones we need to watch closest to avoid overspending. It also looks like this months’ budget included five trips to the grocery store instead of four. (The last shopping trip of the month in August and the last shopping trip in September were both included in September.) I’m not sure how to account for this in future budgets. What do you do when that happens?

Successes: We’ve been putting money aside for our dog’s yearly vet bills and flea and tick prevention medicines. Last week, Howie was due for his yearly physical, vaccinations, and city license. The $100 bill didn’t throw off our budget at all, because we had $75 saved and $50 budgeted toward pet expenses for the month. So we ended up being $14 under in pet spending instead of $60 over. Yay for planning ahead for necessary expenses!

This is also the second month that we immediately moved a little over 10% of our income into savings. I used to try to move what was left at the end of the month into savings. Bad idea. As you can imagine, there was usually not much left. I love getting it out of the way in the beginning of the month. It removes the temptation to spend what we should be saving.

Snowflakes: $50 refund from Costco membership (my employer pays provides membership as a perk, so I was able to cancel our current membership and get a refund). $60 printer cartridge refund from 123InkJets.

October Goals: Remember to account for everything in the budget, especially purchases outside our regular monthly expenses, like Tony’s birthday gift. Avoid letting little purchases add up to a big overage in the budget. Check up on spending in food and “shopping” every week to make sure we’re on track.

Bottom line: +$14 (from pet spending category) – $72 (overage in shopping and food) = -$58 for the month of September. Not counting snowflakes and the money we put into savings, we spent $58 more than our income this month. Not good. I’m reminding myself that this is new, and it’s going to take us some time to get used to sticking to the budget. Next month is an opportunity to do better and learn from this month’s mistakes.

Hope you were more successful that we were in your budgeting for September!

The hidden danger of budgeting?

Photo by jonnystiles

When we created our first budget, I felt instantly liberated. I knew our absolute spending limits. As long as we didn’t go over those amounts, I knew we’d have enough to pay for everything. I no longer had to wonder, “Can we afford this?” I knew exactly what we could afford. I also knew exactly how much we could afford to put toward savings and debt.

I view our budget as a challenge. “How low can we go?” That’s my mantra when it comes to discretionary spending for groceries, entertainment, and other shopping. Every penny we go under budget automatically goes toward savings or debt, and watching those balances go up or down is my favorite part of budgeting. It’s what makes me feel so free. I’m constantly trying to lower our budget for discretionary spending so I can increase our savings and debt repayment.

Over the weekend, I had an interesting conversation with my husband about the different ways that we view budgeting. It made me realize that everyone doesn’t view budgets the same way I do. For some people, budgeting can actually work against them.

After creating our menu plan and grocery list, we realized we’d be on the low side of our grocery spending limit. I was happy, as my goal every week is to lower our spending so we can be under budget.

My husband’s first reaction, though, was to start adding things to the grocery list … things that we don’t need. “We can afford it this week,” he said. “We’re under budget.”

Wha …? I had never thought about it, but it made perfect sense once he put it that way.

I see the budget as an absolute limit. Ideally, we’ll spend less than that, but we absolutely can’t spend more. My husband, however, viewed the budget as the number we’re trying to reach. If we go under, it’s a license to spend more. We can afford it, after all. It’s in the budget.

I have to admit, the conversation somewhat blew my mind. We’ve been married since May, but this is only our second month of strict budgeting. I had no idea he viewed it this way.

The conversation illuminated a hidden danger in budgeting. By setting hard figures, are we in danger of reaching them? Can a budget actually lead to overspending? When people like my husband manage budgets, do they overspend without knowing it? Maybe they could spend less, but they’ll never know because they’re constantly reaching to meet their budget goals.

It’s a scary thought. Luckily, my husband and I are working together to amend both of our bad habits when it comes to money. He shares my views on savings and debt repayment. He also feels liberated as our savings account grows and our debt diminishes, and he agrees that the best way to make them grow and diminish faster is to spend even less than we’ve budgeted to spend.

His view on the budget was just if we’re meeting our goals, why change them? The budget is an outline of how much we can afford to spend, so why not spend it? He didn’t see the harm in spending all of our budget as long as we’re meeting our goals for savings and debt.

Though we set our budget together each month and discuss how to manage our money, I handle the day-to-day finances. So his views on budgeting haven’t caused problems in the past two months. But it could have eventually if we never discussed it and explained our differing points of view.

I guess the moral here is something about the importance of communicating about money. Mostly, I just thought it was a fascinating perspective on budgeting, and something I never even considered. I always thought that people got into financial trouble by not budgeting, and never once considered the idea that for some people, the budget can be part of the problem. Huh.

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Menu Plan & Grocery Round Up: 9/27-10/3

My menu plan and grocery round up are a little late this week. We opted to skip the grocery yesterday for Tony’s birthday.

Our grand total this week was $42 and some change! Looks like we had a phenomenal week, huh? Well, not so fast.

We’re leaving town to visit my sister in Seattle on Friday, so we only needed to buy groceries for 6 days this week.

Based on our $50/week grocery budget, we spend roughly $7 a day for groceries. That means our $42 bill was dead on with our budget. Great, but not as great as going $8 under budget would be. :)

Since we’re preparing for our short vacation, we decided to keep our menu very simple this week. We’re also trying to use up some of our pantry staples.

Here’s our menu plan for the shortened week:

Saturday: Monthly restaurant meal (and Tony’s birthday dinner! :))
Sunday: Herb roasted chicken breasts with green beans and mashed red potatoes (see recipe below)
Monday: Whole wheat penne with garlic herb marinara
Tuesday: Sandwiches/leftovers
Wednesday: Whole wheat spaghetti with pesto
Thursday: Homemade pizza
Friday: Dinner with my sister and my parents in Seattle!

Herb roasted chicken breasts and red potatoes

4 boneless, skinless chicken breasts
2 tsp. dried rosemary
2 tsp. dried thyme
1 tsp. kosher salt
1/2 tsp. ground pepper
1 clove minced garlic
2 tbsp. olive oil

Combine seasonings with olive oil in small bowl. Spread liberally onto chicken breasts. Cut red potatoes into fourths. Coat in olive oil, and season liberally in salt and pepper. Surround chicken breasts with one layer of potatoes in roasting pan. Roast in 375-degree oven for 30 minutes or until chicken is cooked through and juices run clear.

Now head over to OrgJunkie for more menu plans!