Well, ya, we do.
That's not to say that we're always under budget. How much of a challenge would that be? But we do live with our budget and track our spending regularly.
I'm looking forward to using GNUCash this year to track our spending. Setting up our file and entering transactions has been a blast (budgeting enjoyment varies from person to person). Plus, I've been able to spot and correct a few errors that had slipped by when we were just tracking with a spreadsheet. (I think a properly setup spreadsheet can be an awesome tracking tool. Ours was a strange compromise and I'm happy we've moved on.)
Getting back on top of our finances has also meant that I spotted a few mistakes in our budget. So, this weekend I righted the wrongs. I like to update our budget throughout the year to make sure it is the best reflection of how we want to spend our money, so this will probably be the first budget update of many.
Many people avoid budgets because they don't want to feel restricted or because they haven't been able to stick to their budget in the past.
Our budget is our strategy to our financial goals. If we follow our budget, I can stay home with our Little Miss, we will have money set aside for emergencies, and we'll be completely debt free in our mid thirties. For us that means mortgage free too. The budget evolved over time to reflect our goals and priorities and it will keep evolving as we do.
That might sound a little too theoretical for you. So I decided to over share and post our January expenses compared to our budget.
Get ready for my full internal dialogue on our monthly spending. You've been warned!
I'm not sure if this is something that I'll do each month, but I wanted to show at least one example of how all this budget/tracking stuff works in real life for us.
If this is something that you find helpful, let me know in the comments or by email/twitter/facebook and I'll make sure to do it each month.
January Expenses vs. Budget
|Repairs and Maintenance||32.50/300||We can wash our hands in our powder room again! We've been DIY'ing the bathroom since the summer. Maybe we'll be finished by next summer!|
|Property Taxes||250/250||We won't get our bill for a couple months, so we've put in an estimate of our expense.|
|Mortgage Interest||183.84/175||We record our payment then look at the balance remaining. Any part of our payment that doesn't reduce the balance is recorded as mortgage interest. I think we're recording one month off, but it's easy and close enough. We can do an adjustment when the year is done to match our mortgage statement.|
Reminder: the principal portion of our payments aren't included here because they are debt repayment, not an expense. Our total monthly payment is about $1,500, and we're on track to be mortgage free in our mid thirties. Here are 5 reasons to considering paying off your mortgage early.
|Home Insurance||64.07/65||Monthly payment.|
|Natural Gas||62/65||We're on a monthly payment plan, so we pay this amount all year. Actual usage for January was $104 and we have a $10 credit left on our account. Because our bills are pretty close to our usage, we just track our monthly payment. If there's an adjustment, we'll record it when we get it. We live in Ottawa, Canada. It gets very cold here. We have a natural gas forced air furnace and we wear slippers and sweaters inside.|
|Electricity||51.99/60||Unlike with natural gas, our monthly amount billed ($140/month) is not close to our usage. So, we expense the amount that we actually use and keep track of the amount they owe us. We've made some huge improvements with our usage since last year. We made a few extra double payments last year (oops!) so our account balance is getting pretty high.|
|Water / Sewer||48.15/50||Typical month.|
|Housing:||692.55/965||Under budget because not many repairs or maintenance done this month. Some months will be higher than others.|
|Gas||105.19/125||Cheaper gas prices.|
|Repairs and Maintenance||359.2/100||That fan broke. Again. We need to keep following up to get refunded the cost of the part.|
|Auto Insurance||59.74/75||I think there was an adjustment included in here. If not, I might be updating the budget again soon.|
|Bus Passes||100.75/50||The passes are about $100, but there's a tax credit and Simple Cheap Dad gets reimbursed for a portion through work. Last year we put $50 in our budget because we knew it would work out in the end. Now that we have a more sophisticated system, we might need to budget for this differently.|
|Licensing||0/15||Nothing this month.|
|Bikes||0/10||Nothing this month.|
|Transportation:||624.88/375||Car repairs were high this month. We're lucky because we should be able to get a refund for the parts, but I'm not counting my chickens before they've hatched. (Notice that our car expenses were almost as high as our house last month? Crazy.)|
|Groceries/Toiletries/Cleaning Supplies||392.04/303||You can read about why we were over budget in my Update on the January No Eating Out Challenge. The real challenge will be spending only $214 in February to get back on budget!|
|Gifts||5/100||We did $20 stockings for each other for Christmas this year and I put a home made Steam giftcard for $5 in his. Apparently it's impossible for me to figure out how to buy a Steam gift card online. So, I recorded when he made his game purchase this month.|
|Entertainment||0/87||We didn't eat out at all and didn't spend any money on family entertainment either. We'll try to be more entertaining for the rest of the year.|
|Entertainment with Friends/Family||36.88/87||One of our goals for the year is to make the people we care about a priority, so we've worked them into the budget specifically. I'm pretty happy with the experiences we were able to have last month. Highlights were convincing friends to come out to the suburbs for a game night and when we paid for airport parking to surprise the in-laws and watch the planes.|
|Travel||0/83||I think this will need some more thought. We had planned to set aside some money each month for a destination wedding next year. But our "wedding" fund is already pretty healthy and we were planning to use our tax refund to top it up. So, I think this $1,000 will turn into our driving to see family, summer camping, etc. type travel. Hopefully we'll be under budget.|
|Spending on Stuff||0/83||Nothing special caught our eye this month.|
|Hockey||55.63/75||We split the fees for the season Sept-April or however long the season is. Nothing extra this month.|
|Clothing||0/67||Nothing needed this month.|
|Internet||55.31/55||Monthly bill for cable internet through a reseller.|
|Cell Phones||281.91/50||In January I bought my phone out, unlocked it, bought a sim card and a $25 pay as you go credit good for one year. My original budget didn't include all the switching costs. We'll come out ahead in a couple months from our previous spending, but we're over the random guess of a budget I set. So I'll have to decide if I want to update the budget (probably, otherwise it will drive me nuts every month). Our phones now are him on a $40/mo. plan and me with a $25/year pay as you go phone (challenge!).|
|Cat Supplies||40.66/40||Cat food and litter.|
|Little Miss Activities||0/25||No gymnastics or anything yet.|
|Medical Expenses||43.12/25||We were sick and had a couple dental appointments. I had actually forgotten about this category when I originally posted our budget. Ooops!|
|Living Expenses:||910.55/1,080||Over on groceries and cell phones, but we didn't have enough fun apparently. We'll try to do better for the rest of the year.|
Other Vague Stuff:
|Retirement||-||Simple Cheap Dad has a defined benefit pension. Over 10% of his income goes to his pension contributions and it's matched by his employer.|
|Health/Life Insurance/Union||-||We pay a small premium for extra life insurance, but the rest of our insurance is covered by Simple Cheap Dad's work. We also pay union dues.|
|Little Miss Education Savings||208/2,500||We're changing up our investments this year, so we haven't done the big investment yet, but we've set aside our monthly RESP amount.|
|Savings for Next Car||100/1,200||We don't have a car payment, so we set aside money to buy our next car in cash. Oh and our car was a family gift.|
|Mortgage Principal Payments||As much as possible||This is where all our extra money in the budget and side hustle income is going. We hope to be mortgage free by 35. Our regular payment has over $1,300/month going towards principal repayments. We didn't make any special extra payments this month.|
One of the reasons we wanted to start tracking our spending better this year was because we've joined the MoneyStepper Saving Challenge. You can read about us signing up for The Challenge here.
We challenged ourselves to growing our net worth by 10% this year and maintaining a 50% savings rate.
You can see our results and everyone else's on the Results Page on the 10th of each month.
There is a specific way to do the calculations for the challenge. Following the guidelines for January we increased our net worth by 0.88% and managed to rack up a 57% savings rate. One month down, 11 to go!
We busted the budget for a few expenses and rocked the socks off some others. Overall we were within our spending budget for the month.
It was our first month using our new 2015 budget and GNUCash for tracking. It's exciting for me (and probably super boring for you!) to spot the weaknesses in our spending plan and to improve the budget. I'm hoping to figure these out over the next few months.
One month by itself, good or bad, doesn't make much difference in the big picture. It's stringing each month together and staying the course that will get you to your goals. Stick with your budget, question your goals and priorities, and find a way to make it work.
What About You?
Was this helpful for you? Should I do a spending update each month?
Are you in the MoneyStepper Savings Challenge? Are you on track to reach your goals?
How was your spending in January?
*Part of Financially Savvy Saturdays on brokeGIRLrich and Simple Cheap Mom* - See more at: http://www.simplecheapmom.com/2015/02/financially-savvy-saturdays-77.html#sthash.4SNGVZyg.dpuf
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