Thursday, February 15, 2018

Shopping Ban and Stretch Goal

Hi Friends!

As I wrote about in a previous post, since moving to our new home, Chad and I set a stretch goal to have a fully funded emergency fund in six months (July 2018). After further looking into our budget this looks like it will be unrealistic because some bills in our new house ended up being higher than anticipated.  (It really does cost twice as much to heat a home two times bigger, even if it's 100 years newer than your last one. Bummer!)

However, since we made a 6 month plan, we wanted to stick with it, even if we don't quite fully fund our emergency savings.  Our goal is to save 12.5% of our monthly income, plus, 50% of our tax refund. To some people, 12.5% doesn't sound like much, but if you consider the money we save for retirement and healthcare before taxes, Remington's school, and our envelopes that carry over, we are saving quite a bit more for the future. While we would love to save 30% and fully fund our envelopes, that isn't feasible at this time of our lives.

To succeed at saving 12.5%, we need to clean up our spending and tighten up the budget. Following Cait Flanders book, The Year of Less, we talked about a shopping ban and what it would entail both personally and as a couple. Today I am going to share a what our budget looks like.

We start by evaluating our income each month. We have several different areas of household income, but one area is strictly used for Remington's housing, food, school, activities, and so on. Our monthly income also includes Chad's paycheck, renting the apartment, and any money I make from sales either locally or online.

Once we know how much money we'll have for the month, we follow by paying our monthly bills such as our mortgage, utilities, insurances, gym membership, nexflix, and cell phone.  Chad pays these bills online or with a check every month. These bills are around 44% of our household income. We would like to get them to the 40% range so we may eventually look at how we can lower the amount spent in these areas.

We then have categories where we set money aside in envelopes, which is funded with cash. This system has worked well for us in the past and setting aside a certain sum every month in these areas helps us avoid having an unexpected bill throw off our whole budget. Below are the envelopes and what we allow ourselves to buy in each category.

GROCERY - Essentials such as, food, supplies for cleaning, and toiletries like soap and shampoo. This also includes products for the hair and haircuts. Usually there is no money left in this envelope at the end of the month. I've been trying to clean up the grocery spending since we moved.  That means meal planning, shopping weekly so there is less waste, and buying only what we need for the week.  Eating Vegetarian 70% of the time also helps keep our budget low. Additionally, I make about 75% of my cleaning supplies, which is much cheaper than buying store-bought. If we stay on budget in this category, it will be reduced by 25% since last fall. We spend about 15% of our household income on food. As a person who loves to cook with quality ingredients, I'm not sure if I'll ever get this percentage lower.

FUEL - This isn't technically an envelope, but a separate account with a debit card so we can pay for gas at the pump. We set aside 4% of our income for fuel, but we don't always use it every month. Carry over is nice for months when we travel.

MOCHA - I set aside a sum for Mocha's dog food, grooming, medicine, and vet visits.  There is often money left over so it carries over for months when she may have a vet bill. Mocha takes up 2.5% of our household income. We may lower this at some point, but she is due for shots in the spring so that will mean a vet visit.

CAR REPAIR - Oil changes, other maintenance that may need done to the cars, and savings for tires. Usually there is money that carries over from month to month. Once we have a fully funded emergency fund we will increase the amount in this envelope each month and begin saving money for a different car in the future. Car repair takes up about 1% of our household income.

HOUSE REPAIR - This is not house updating, but repair, such as when the washer quits, the air filter needs replaced, or an outlet doesn't work. Again, there is usually money that will carry over from month to month. House repair is also 1% of our household income.

GIFTS - For birthdays and Christmas. We decided how much we wanted to spend this year and divided this by 12. We may reevaluate this envelope next year and increase the amounts. Gifts are 1.5% of our household income.

DONATIONS - We set aside a sum to be used where we feel led. Sometimes it gets used in a month and sometimes it carries over. Donations take up 2.5% of our household income. Obviously, this is an area we need to increase, although there is more to donating than simply money.

DATE - As a married couple, we know dates are a very important part of a healthy marriage.  We lowered the amount by 33% during our challenge, so we'll need to go on cheaper dates or no money dates like hiking or picnics. Date is 2.5% of our household income

TRAVEL/HOSTING - This is a new category for any trips we will be going on and also extra expenses that occur when we have guests, such as a meal out or activities. Eventually, we would like to increase this amount because we love to travel and have people visit. In the past, these expenses would throw off our monthly budget so hopefully this will help. This category is 1% of our household income. 

PERSONAL SPENDING - For things we want to buy such as books, clothing, and other fun things. Chad's is 1.5% of  our household income and was decreased by 40%.  Mine is 1% of our household income and was decreased by 50%.

The remaining 10% is used for Remington's school, activities, clothing, and other expenses for him not covered in our budget above. The funds are in a separate checking account with a debit card that I use for paying for these things.

Personal spending is an area I would often go over on when I wasn't on a strict budget. Chad is pretty good at not spending over his allotted monthly spending and is allowing himself buy whatever he wants with his spending.  My personal spending, unlike Chad's, is strict.  The reason why is I find it's easier for me to just say no shopping other than my list. Say I have $50 to spend and I go into TJ Maxx for a picture frame....I come out with a top, throw pillows, soap, and socks and NO picture frame and having spent $60 and robbed $10 from another envelope.  This, in turn, leads down a slippery slope and usually ends up with too much month left at the end of the money, which is why we were not the best at saving the last few years.

I DO have an approved purchase list I can spend my personal spending on though, very much like Cait Flanders has in her book......and none of it involves going to TJ Maxx! (Although Lowes can sometimes be worse!) Below is my list of approved purchases.

Rebecca's Approved Personal Shopping List February - July

Fixing my Birkenstocks or buying new ones

Flowers + dirt for pots in spring

New chair for deck

4 plants either for the house or outside

1 book per month

1 lunch out with friends per month

As you can see, other than the Birks, I am not spending money on clothes. My inventory showed me I have plenty of clothes and about 10% of what I bought last year never was worn!  What a waste!

I also did not include house decor in this list. I have plenty of decor, and this will hopefully make me be creative with things I already own and find new ways to repurpose my heirlooms, which I love to do.

Things I'm Not Allowed to Buy

(Other than Birks)

House decor

New pots for outside plants
(I have plenty. I may buy a can of spray paint to freshen up the ones I already own though.)

(Except for a new bed)

Meals out by myself, including coffee.
(This does not include if I travel, my 1 meal with a friend, or dates.)

Essential oils 
(I have plenty and I need to experiment with what I have rather than buying new ones.)

New kinds of makeup, nail polish, or hair stuff
(I can buy the basics only if I run out.)

(I need to continue making my own.)

Linens for my home.
(There are some that need replaced but this can wait 6 months.)

We will be a getting a tax refund back this year and will take about half of it for home improvements that need to be done before July. Our backyard is dirt so every time it rains, (which is several times a week in the spring) Mocha comes in with dirty paws. We want to lay sod in the backyard to help combat this issue. I also recently ripped the carpet off of one flight of stairs with the intention of refinishing them.  I will need to buy stripper and stain and I already have sandpaper and paint. Also, after months of waking up hurting, it's time for a new bed! If there is any money left after those two projects and the bed, we may also replace the carpet in the family room with something more dog friendly, or, replace the tile in the hall bathroom. They may need to wait until later in the year, though. The other half will go into our emergency savings fund. Once our emergency fund is fully funded, we will add a saving envelope for additional house updating.

Whew! That was long! I hope to update every month how we did on the goals. Did we stay within the budget? Did we save 12.5%?  If this post is helpful in your own personal budgeting, is there other content you would like me to include? Let me know in the comments.

I also will update my personal and health goals at the end of the month.  Plus, I will try to post some recipes and other life updates.

Have a great week, friends!

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