For years I’ve taught people that your budget is simply a tool to make your money do what you care about. A budget is your Value Compass. In the end, a budget aligns your money with your values. You find contentment there.
Last Sunday night (and each morning since), I’ve been thinking a lot about the values part of this idea. The thoughts were spurred because I was setting up our March Budget (sure, a few days into March, but consistency is key here, not rigidity ;))
I was staring at our line items and amazed at the amount of money that flows through our household. That prior sentence is completely relative of course. I was amazed five years ago, and I’m amazed today.
The Budget can start to be a Thing on its own. It can morph into something that isn’t truly what you value. It morphs because you’re in the habit of doing it one way, you’re comfortable with how things are going (no debt, living within your means, paying cash for larger expenses) and you don’t call the line items into question any longer.
I think Dave Ramsey coined the phrase a “conscious spending plan” maybe? That’s pretty insightful. Conscious being the operative word there.
I can set up my budget (we even let you Quickbudget with that lightning bolt option at the top of each month!) in about two minutes. I’ve even bragged about that in the past.
I wonder if that’s something worth bragging about? Is the conscious part of the budget even there? Or am I just on autopilot?
So, as an exercise in conscious budgeting, last night Julie and I did an export of all our spending in YNAB for 2012. I then stayed up until 11:30 PM (um, I say that to tell you how extraordinarily late it was. Bedtime for me and the wife is 9:30. We get up at 4:45, so stop rolling your eyes) staring at each of the line items.
We’ve made it a point to increase the percentage of our income that we give every year, and I was pleased to see that giving is still climbing (not just absolutely, but relatively as well).
Our savings rate, as it related to our take-home pay, was 17 percent. This bothered me. I think we could do double that.
For specific categories, here’s a stream of consciousness:
- Restaurant spending was at $200 per month. We’re going to cut that in half. It really helps my workouts to not eat out anyway. The whole family’s better for it.
- Exterior stuff to the house like lawn care and maintenance was $300 per month. That’s stopping immediately. I don’t like giving up Saturdays to yard work, and would rather spend the time with my kids, but that expense was insane. We tried it for a year. Not continuing. I’ll maybe leave work early on Fridays to get the stuff done.
- Our home still isn’t completely furnished. Now that the mortgage is paid off (one of my goals before I was 30), we turned our attention toward furnishing. This attention cost us an average of $450 per month. Some of it was renovating, furniture, and paying an interior designer to narrow down the choice of lighting from infinite to “Which of these six do you like?” I wouldn’t change the employ of the designer. Probably strengthened our marriage as a result. How do I feel about that much money going toward renovating and decorating? Not great. We’ll bring it down 33% going forward and see what happens. My guess is that we won’t feel a thing.
- Repairs, Tires and Car Washes were $84 per month last year. Now that we have a Brand Spankin’ New Van (paid for), repairs should drop for the 11-year old Civic to probably $40 per month. And I’ve committed to washing the cars in the driveway instead of going to the Mr. Carwash place.
- Our utilities (gas, electric, sewage, garbage, and water) were $252 per month in 2012. Down from $336 the year before (could that really have been from the fact that I replaced about 100 bulbs with CFs?) I think with a little effort, we could knock this down to $180 per month. Just have to get my kids to shut the door when they come in.
- I cancelled Lifelock. I know it’s good to have for your kids, but I’m punting on that one. It’ll save us $18 per month.
- Our fifth baby was born last year, and since every YNAB employee provides their own health insurance, the deductible for us was I think $6,000. So monthly cost for the Doc in 2012 was $771. Ouch. Since no baby is on the way this year, we’ll probably settle at around $150 per month.
- “Miscellaneous” was $260 per month. Wha? Moved down to $100 and I’m going to watch it like a hawk.
- Our kids’ school tuition (the three oldest go to a private school), besides our giving, is our largest expense. We’re entertaining the idea of homeschooling…but only entertaining. (Thanks Facebook YNABers for the great recommended reading!)
- Julie and I pay a babysitter every single weekend so we can go out for a few hours. That cost us $94 per month in 2012. I’m having a hard time ratcheting that one down. I love my date nights with Julie. We could maybe do a date night in once a month and try and make it stand apart in some way. Dunno yet.
- Christmas was a Grand Experiment in Going Overboard. The year before, in 2011, we did our normal thing, which is to scrimp. Julie felt guilty. So for the entire year of 2012, we set aside $300 each month for Christmas. And, come Christmastime, we rocked the house. It was a Grand Affair. And something we won’t be repeating. Our plan is to use Amazon Points from the Business Visa to fund the bulk of Christmas this next year.
- “Dates and Family Activities” were $82 per month. I’m pretty happy with that. Might want to bump it up actually.
- Our gas for the cars was $245. I moved my home office to an office about six minutes away, so my commute went from 0 to 2.5 miles each way. That happened in November. My plan is to buy a bike a ride to work. 300 calories burned, gas saved, and Mother Earth smiles.
- Groceries were $1,123 per month. Julie pays no attention to prices. We shop at Costco and Macey’s (avoiding Walmart like the bubonic plague, not because they don’t have everyday low prices, but because of the allday long lines, plus Macey’s is locally owned.) Now, am I upset that Julie doesn’t price shop? No. She’s expressed her gratitude to me on multiple occasions for how nice it is to be checking out with 3-5 kids in tow and not have to be watching the register for any unusual radar blips, doing mental math, while also recording her purchase in YNAB (which she’s a pro at now). I have a mind to knock our grocery bill down to $750 to feed our family of seven. I’m not sure how we’ll do that, but I think it will involve me maybe doing the shopping :) I just don’t want to burden her with it. She’s slammed.
- Vacation was $400 per month. I’d have to go back through the actual transaction list to be reminded of where this all went. I know we had a Spring Break trip with the kids that ended up raining the entire time, so it was really watching Harry Potter in a home that we were paying for…Julie doesn’t like me to bring it up. And we call it “Vacation” when we pay for my MIL to fly out and see the grandkids. It is kind of a vacation when she comes, because she’s awesome. We’re going to simplify that line item a lot this year, do some camping, hiking, more Staycations and see if we can’t drop it significantly to about $100 per month.
- I have some bills that are in a FIXED category. Property taxes (no longer escrowed because of the mortgage being gone), license and registration renewal, life insurance, HOA dues, homeowner’s insurance, and car insurance. Can’t move those too much. Oh, and our Crossfit gym membership. Julie’s told me numerous times that’s fixed, and I agree.
- Clothing was at $174 and with some effort, we could get it to $100 per month.
- Finally, our Car Replacement Fund. We bought the nicest car I’ve ever owned last December, financed it to get an extremely good deal, then paid it off two months later and paid some immaterial amount in interest. That was a good thing. But now the new car-ness is wearing off and I’m thinking we could probably settle for spending about $24k per car going forward. Our Civic still has eight years left (especially if I bike to work), so we’re thinking $400 per month as a Car Stash will get us there. I’ll definitely buy used for my car, but may still consider buying new for a family vehicle going forward. It would just depend on if we needed a van or not, since those are impossibly hard to find (in good condition, a few years old) in Utah.
The important thing here, and I’m no pro at it, is to call everything into question. The big one is the kids’ schooling because we love where they’re going, love what they’re learning, and have always felt really good about the situation. And homeschooling terrifies me (for my wife). Where’s a
baroness governess (my English friend corrected me) when you need one?
I’m excited at the prospect of increasing our savings by adding some more to the autopilot portion of our monthly Betterment deposits.* If I make it an automatic thing, we’ll be forced to lower our expenses in these areas. Rule One will make that happen and I think we’ll need to be a little more conscious as we go along, instead of trying to do it all at once like I did last night.
At any rate, going through your budget and calling every category into question is a good thing. While I’m no frugality extremist, maybe I can take some inspiration from some of them to move the needle in my own life in a meaningful way.
* Our 401k is invested in Vanguard Target Date retirement funds, but our investing beyond the 401k limit heads to Betterment, which is, in my humble opinion the easiest way to invest smart. I need a way to invest that doesn’t take a ton of time–especially if I’m going to be mowing my own lawn again ;) You can see my mega-in-depth review of Betterment here.