Budget & Budgeting

March 2020 Budget Breakdown

March 6, 2020 by tanya

First, let’s do a recap of how things went in February.

February 2020 Budget Recap

Where I overspent:

Groceries

Budgeted Amount: $200

Actual Spent: $221

Where I spent less than allocated:

Auto Gas	Budgeted Amount: $150	Actual Spent: $0
Dry Cleaning/Shoe Repair	Budgeted Amount: $90	Actual Spent: $60
Pocket Change	Budgeted Amount: $120	Actual Spent: $114
Orthodontist	Budgeted Amount: $425	Actual Spent: $230
Ooma	Budgeted Amount: $17	Actual Spent: $16.55

A couple of notes on where I overspent and spent less than allocated:

Auto Gas: The way I managed to not spend a penny on gas for this month was that: (1) someone filled my tank for me and (2) I haven’t really been going anywhere. I had some gas left over from January, which carried into February. Then, Jameson took me out in February and, without any solicitation on my part, filled up my tank for me. Since I’ve been working from home for the most part, and working with clients who don’t require in-person meetings, the gas that he put in the car for me lasted for the remainder of the month. Nice, right?!
Orthodontist: I hadn’t been to the orthodontist in 5 years. I’ve been using the same retainers I’ve had for all of that time. Recently, my bottom retainer cracked. So, I finally made an appointment to see my orthodontist, have him look at my retainers, and get me a new bottom (and possibly top) retainer. The amount I budgeted contemplated me getting 2 new retainers. At my visit, he said I only needed to replace the bottom one that had split.
Ooma: Yes, I still have a home phone. I don’t trust these cell phones completely. I need back up.

I’ve written here about what I do with what I don’t spend in each budget category. What I plan to do this month, however, is to finally address the water heater issue I discovered months ago. My water heater is on its last leg and has been so for awhile. With the $8,600 HOA assessment I had to pay recently, I decided to wait on getting a new water heater installed until I crossed the bridge of the HOA assessment. With the money that I put into a sinking fund for home repairs (including the HOA assessment), and the excess funds that have been accumulating in my checking account (when I underspend in budget categories), I am able to pay for the water heater this month.

March Budget Breakdown

Like I did with February, I’ve based the March budget on income of $9,000.

I use Dave Ramsey’s EveryDollar software to do my monthly budgeting. Instead of using the premium version (EveryDollar Plus), I use the free version. The free version doesn’t connect with your bank and credit accounts, so this forces me to manually capture every single amount spent each month. I really want to connect with my numbers, instead of being able to simply drag and drop imported expenditures.

According to the summary of spending that appears in EveryDollar, here’s how the percentages of planned spending breaks down for the month:

You’ll see that:

18% of the budget is going toward giving (tithe) and savings
16% is going toward housing
44% is going toward debt

The debt percentage isn’t completely accurate, since my 2 mortgages that appear in the housing category are debt.

In the health, wellness and grooming category, the largest expense is a projected dentist visit. I’m due for my semi-annual cleaning and I also will purchase more whitening solution. My teeth are a big deal to me, so, every 2 years or so, I buy more whitening solution for the whitening trays I bought about 5 years ago.

I just made the second half of the payment due for that beast of an HOA assessment. So, now I’ve got those funds I was saving each month (between $1,000 and $1,500) to apply to my budget. I view this as money that should now go to my debt snowball. If I was able to find that kind of money in the budget in order to pay for the HOA assessment, why can’t I find it in order to “pay myself” in my freedom journey?

This month, I increased the amount I’m saving toward my 2020 taxes. Last month, I allocated $500. For March, I’ve increased that to $700. Again, this is me being proactive in preparing to address the tax bill that I’m likely to have for my 2020 tax liability.

I’ve stated that I pay myself from my business via two different forms of income – W-2 employee income and owner distributions. With the W-2 employee income, taxes are automatically withheld through the payroll system I use (ADP). The distributions, however, don’t include withholding. So, I need to be prepared to pay whatever taxes I owe when it’s tax filing time.

I’m glad to have that HOA assessment out of the way and that I can now allocate more funds to my debt snowball.

How are things looking for you for March?

February 2020 Budget Breakdown

February 11, 2020 by tanya

Last month was a good month. I had one budget surprise, but, otherwise, things went pretty well.

January 2020 Budget Recap

Where I overspent:

Groceries	Budgeted Amount: $200	Actual Spent: $221
Doctor Visit	Budgeted Amount: $0	Actual Spent: $80
Do It Scared	Budgeted Amount: $15	Actual Spent: $25

Where I spent less than allocated:

Gas	Budgeted Amount: $175	Actual Spent: $108
Dry Cleaning/Shoe Repair	Budgeted Amount: $90	Actual Spent: $31
Pocket Change	Budgeted Amount: $100	Actual Spent: $68
Chicago Trip	Budgeted Amount: $450	Actual Spent: $341

A couple of notes on where I overspent and spent less than allocated:

Doctor Visit: This was the surprise expense. Though I knew that I had appointments to see both my general medicine practitioner and my gynecologist, I didn’t expect to have to make any payments for either visit. Under my insurance plan, when you go for the purpose of an annual, preventative exam, no co-pay needs to be paid. What I learned when I got to my general practitioner’s office, however, is that if you discuss anything other than what is related to the annual exam, there will be a fee. If you get a prescription filled (for me it is Albuterol because I’m a mild asthmatic), you’ll pay a fee. So, anything at all that goes beyond the limited scope of an annual exam will push the visit from being an unpaid one into a paid one.
Do It Scared: This is a subscription program by Ruth Soukup, the woman who created the Living Well Spending Less Planner. When you purchase the Planner, you are given a 30-day free trial of the program – a program designed to help you crush the goals you’ve set out to achieve. I didn’t engage in the program enough during the initial 30-day trial, so I wanted to try it for an additional month to learn more about it and see if I found it to be valuable to me. When I registered for the program online, the sales materials stated that the monthly fee was $15. Once in the program, however, I found that they charged me $25.
Chicago Trip: The Chicago trip was made to support my friend in her graduation from a coaching program and to celebrate her birthday. She paid for my plane ticket as well as our hotel room, however, I budgeted to have travel money and to be able to get her something for her birthday. For her birthday dinner, she chose a super sexy Asian restaurant, Tao (loved it!). The restaurant serves in a family-style manner. Though there were 7 of us who ate, we only split the bill 3 ways because there was one couple there and my friend’s minor son and twenty-something Goddaughter were there. My friend wanted to pay for her son and Goddaughter, but the rest of us didn’t feel that appropriate for the circumstances. So, myself, and two other people (the married couple counted themselves as 1 person) split the $519 bill. I also paid for parking, for lunch for me and my friend’s son and an appetizer at an event for me and my friend. I’m glad that I budgeted enough to accommodate whatever she decided to do. I’m delighted that I came in under budget on that item.

I’ve written here about what I do with what I don’t spend in each budget category.

February Budget Breakdown

I’ve based the February budget on income of $9,000.

I use Dave Ramsey’s EveryDollar software to do my monthly budgeting. Instead of using the premium version (EveryDollar Plus), I use the free version. The free version doesn’t connect with your bank and credit accounts, so I am intentionally forcing myself to really connect with my numbers, instead of being able to simply drag and drop imported expenditures. This forces me to manually capture every single amount spent each month.

According to the summary of spending that appears in EveryDollar, here’s how the percentages of planned spending breaks down for the month:

I’ve got a lot that has to get done this month and, as a result, the budget is higher than last month. One would think that the increase in the amount available for the budget would automatically translate into a larger amount being paid toward my debt snowball. It doesn’t.

Note that I don’t have any funds allocated to a “Romance” category, even though Valentine’s Day is this month. I do have Valentine’s Day plans, however, I don’t have what I would consider to be a Valentine – at least not one on which I will be spending any money.

The increase in the budget will be used toward (1) taxes for 2020 and (2) medical expenses. I’m looking at spending an additional $1,200 between the taxes and the health-related costs. Saving $500 toward taxes is me being proactive in preparing to address the tax bill that I’m likely to have for covering my 2020 tax liability.

It’s a short month, so I need to make every day count. How are things looking for you for February?

What To Do With Budgeted, But Unspent, Funds?

February 7, 2020 by tanya

Before the beginning of each month, I prepare a budget using the Dave Ramsey’s EveryDollar app. Doing so is now a habit that I’m very proud to have. Ramsey points to the budget as the foundational element of financial control. He’s right. Having and using a budget is powerful. Very powerful.

I do a “zero-based budget” which means that I make sure that it balances completely. Every anticipated dollar of income is allocated toward an appropriate spending category. On paper, there are no extra, hanging funds that are not intended to be used for a particular purpose. There’s a budget category for everything from my pocket change to the additional funds that I’ll be contributing to my debt snowball that month.

Though my budget is zero-based, not every allocated dollar gets spent during the course of the month. I often underspend in discretionary categories like auto gas, drycleaning and pocket change. What I’ve been doing with these allocated, but unspent funds is . . . nothing. They’ve remained in my personal checking account. When I prepare the budget for the following month, I make it as if there isn’t any residual money available from the previous month or months.

The result is that about $1,500 has now accumulated in the account. Of course, I could take the excess for every month and apply it to the debt that I’m attacking in my debt snowball (right now it’s my 2016 tax bill) and start off every month fresh with no money in the account. But . . . I don’t want to do that.

Dave Ramsey would probably say that I should be using the excess funds every month toward my debt snowball. I’ll admit that having the money functions almost like another baby emergency fund. The point of having just one $1,000 baby emergency fund (under the Dave Ramsey Total Money Makeover Plan) is to make you feel a bit uneasy – so uneasy that you hustle as much as possible in order to pay off the debt as soon as possible. For someone who isn’t facing over $300,000 of debt (and the length of time it may take to pay it off) and who doesn’t work for themselves (like I do) that’s not as scary a proposition. For my self-employed, extreme debt-having self, the idea of some extra money in the account makes me feel good.

For my self-employed, extreme debt-having self, the idea of some extra money in the account makes me feel good.
~ Single Girl

Having come from a place of being so out of control with my money, I like having money in my account. I lllooooovvveeee no longer feeling out of control. Even though it’s “only” $1,500, having it and seeing it sends a message to my subconscious self that abundance is a part of my life. The presence of the money represents my ability to deliberately set intentions for my use of funds and to operate in accordance with a system. The $1,500 is not enough to make me feel comfortable by any means; it just looks and feels better than just the $1,000. Look, if it’s okay for someone with only $10,000 of debt to have a $1,000 baby emergency fund, it seems reasonable for someone with $300,000 of debt to have just a smidgen more than the $1,000 hanging around.

My plan is to use the accumulated funds to make large payments on my debt snowball, but I don’t intend to totally deplete the funds in doing so. When the amount gets to, say, $2,000, I’ll take $1,000 or $1,500 of it and pay it toward my debt snowball. Then I’ll let it replenish back to $2,000 and make another lump sum payment. I may change my mind later about how to handle these funds, but, for now, I want to do it this way.

What do you do with your budgeted, but unspent funds each month?

Do you only keep $1,000 in a baby emergency fund?

If not, what amount do you prefer to keep in your savings account?

January 2020 Budget Breakdown

January 10, 2020 by tanya

I’m heading to Chicago this month.
Photo by Alex Livingston on Unsplash

I feel pretty good about the first budget of 2020. I’ve been preparing a monthly budget consistently for several months now. It is such a valuable exercise. It forces me to be intentional about my decisions and has made me feel much more in control of my money.

I’ve based the January budget on income of $8,000 this month.

I use Dave Ramsey’s EveryDollar software to do my monthly budgeting. Instead of using the premium version (EveryDollar Plus), I use the free version. The free version doesn’t connect with your bank and credit accounts, so I am intentionally forcing myself to really connect with my numbers, instead of being able to simply drag and drop imported expenditures. This forces me to manually capture every single amount spent each month.

According to the summary of spending that appears in EveryDollar, here’s how the percentages of planned spending breaks down for the month:

You’ll see that giving (tithe), savings, housing, transportation, insurance, and debt comprise a total of $6,482.02 – 81% of the budget. A significant chunk of that is going to savings for that beast of an HOA special assessment I have coming due in February (½ of $8,200) and early March (½ of $8,200).

What I pay myself consists of both payroll and shareholder distributions. In determining what I’ll pay myself, I balance the two. (See The Tsunami Situation – Tax Edition, which explains why business owners often split their income between W-2 employee income payroll and distributions as an owner).

Lifestyle – My Lifestyle category allocation this month is a bit higher than usual. I’ve allocated $450 for a trip that I’m taking to Chicago this month to support a friend who is graduating from a professional program. When she invited me to come, she told me that she would pay for my airline ticket and hotel (because she knows that I’m on my debt-free journey). The $450 I’ve allocated doesn’t include the flight or any hotel expenses. It includes funds for food when I travel as well as a gift (like flowers, dinner or something) for my friend.

Food – This is also higher than normal (for a few months in the later part of the year, my grocery budget was $100 for the month). I’ve been changing my diet and trying to figure out a sustainable eating plan that will allow me to be at my desired weight without having a bunch of irritation and tension around food choices. I’m eating things I haven’t eaten in years. My aim is to figure out what works well for both my body and my budget. So, some experimentation is required. I’ll share more about this in a later post.

Sinking Funds – This month I resumed the funding of my sinking funds. Since I had some funds in the accounts, I stopped funding them in the later part of last year. With this being a new year, however, I want to make sure that I have the money I need for what might arise this year. My sinking funds are for the following needs:

Home Repairs and Maintenance
Car Replacement/Repairs
Gifts
Clothing (this is included in the “Lifestyle” category)

I plan to have a great start to the new year!

Tight Month Ahead – December Budget Breakdown

December 4, 2019 by tanya

Geeeeezzzz. I’m concerned about the budget this month. Because I’m self-employed, and my business doesn’t have any significant reserves, my personal budget is integrally related to the performance of the business. My projections for the business this month don’t look so good. In fact, I’m wondering how the business will possibly bring in what I need it to produce this month in order for not only the business’ budget to work, but my personal budget as well.

With this being December – the last month of the year and the month of 2 major U.S. holidays – I don’t see there being a high volume of certain types of client work. Everything kinda slows down this month. People focus on holiday parties, travel, and preparing for next year. It seems that, when it comes to certain legal services, the prevailing thought is, “If I haven’t gotten it done by now, I’ll just focus on it next year.”

Anticipating that this month will be tight, I’m planning to pay myself less than I’d like. This month, I’ll have $7,000 with which to work.

My hope is that the income will come in this month – even if it’s by the hair of my chinny chin chin.
~ Single Girl

I use Dave Ramsey’s EveryDollar software to do my monthly budgeting. I use the free version instead of EveryDollar Plus because I wanted to force myself to really connect with my numbers, instead of being able to simply drag and drop imported expenses from my bank account. I wanted to force myself to manually capture every single amount spent each month.

According to the summary of spending that appears in EveryDollar, here’s how the percentages of planned spending breaks down for the month:

You’ll see that giving (tithe), savings, housing, insurance, and debt comprise a total of $6,256.97 – 89% of the budget. A significant chunk of that is going to savings for that beast of an HOA special assessment I have coming due in February (½ of $8,200) and early March (½ of $8,200). Gas for the car, food, some minimal Christmas gifts and food for my Vegas trip (click here and see the section “Plans With the Bulldozer”) make up the remaining 11%. This all assumes that the business is even able to pay me an amount that will equal the $7,000.

Another challenge is that, with this being December, I really want to focus on getting ready for the New Year. I want to truly “hit the ground running,” which will require some dedicated planning and organizational time. I don’t want to start 2020 lacking in clarity or not having positioned myself to succeed. I really don’t want to write a post like this in December of next year. So, though I want to hustle, hustle, hustle, I also don’t want to hustle in a way that makes me feel unready at the beginning of the year. New beginnings are a big deal to me.

I’ve already started doing some business development by following up on previous leads (e.g., people with whom we spoke regarding potential representation). I’m also doing what I normally do to drum up business. My hope is that the income will come in this month – even if it’s by the hair of my chinny chin chin. How terrible . . . the fact that I’m even saying that I “hope” the income will come in this month. I should be in a position to be confident that a certain level of income will be produced every month. But, I deal in what is, not what should be. Unfortunately, I’m not yet in that position.