Just a quick heads up in the next week or so the blog will be moving. As part of Matt’s learning for his business, I will be moving this blog to its own site.
But now, I often, at least once a month, talk about our budget. It seems I have been working and changing it for the past several years. So today, I thought I would share with you some of the things I have learned and figured out that works for me.
- In order to actually know where your money is going and how much you have or don’t have, you must have a budget
- personally I am becoming more and more convinced that a realistic budget should account for all “expected” regular income. I do not include in my budget, some income simply because I can’t count on it. So when this extra money comes in, I have a choice to make. First; does this money need to be placed into the budget to help cover “regular” expenses? If not then the choice is even tougher. Do I keep the money for “extras” such as meals out, upcoming expenses I forgot to budget for or should it be placed in to our second account for the “irregular bills” or finally savings?
- Regular bills are all accounts that are due on a monthly basis, these include mortgage, car payments, electric, water, phone, cable and any and all loans and/or credit cards. I also include in this area gas and groceries. In the past, I have include a line for entertainment and dining. However at this point in our lives these are both luxury items. Therefore these items must come from unexpected/surprise income.
- Irregular bills- After much debate and thought we recently opened an online account to use for these items. I am already liking the idea of having separate money waiting to be used when things happen instead of finding an extra $200-$300 as things become needed. My list of irregular bills include Auto(both our cars are older and pay for), Auto Insurance, Gift (Christmas and Birthday), Clothing, Hair and Medical. Currently the Auto fund is for repairs, in the future this may turn into a saving account for a new vehicle Auto Insurance for us is due every six months. Gifts- the goal is $100. Clothing-$100 a month, Hair- $25 a month and Medical $100 a month. I will be placing money into this account as it is available, in the order of importance to me.
- Savings- We are working toward establishing an emergency fund. The goal initially is $500. We previously had reached this amount just prior to needing a new washer. So far we currently have $150 in this account. After we have reached the goal, I would like to use this to help cover the irregular flow of income. This means that months that either Matt’s work or my work provides an excess over the budgeted amount, we place the excess into saving for future months that are not so successful.
- Older expenses/bills- We unfortunately have a file of bills that we have been unable to pay in the past, the majority of these are medical in nature. Each month, my goal is to use at least part of any money that is saved, found or other acquired to slow pay off these debts. Once the Emergency Saving account reaches $500, I will then split extra money between savings and tackling these debits.
Do you have suggestions?questions? thoughts?