99k by 2011

My husband and I both work full time salaried jobs, which means there’s no variations in our income to worry about.

Entering in our april paychecks into YNAB and doing a quick runthrough for april, entering categories willy nilly, I came up alarmingly in the negative. For those who do not know how YNAB works, you enter in your income, and it becomes the “available” balance with which to budget. Then you enter in dollar amounts in your budget categories, and as you do so, it subtracts those amounts from the available balance. You continue to enter until your available balance is down to 0.

When I was done entering budgeted categoryamounts, the available balance was around -$1000. NOT GOOD.

Now, I had been fairly generous in places, so I did a quick re-run through and try to hack off some of the excess. Good, but I only managed to get it down to about -400.

The biggest culprits:

• Mortgage payment: we have a larger payment than usual on our mortgage. We refinanced in february, and instead of having us prepay the interest in our closing costs, they tack that on to the first payment. It’s about $500 more than it will be in May.
• Savings goals: There are several things we’re saving for with monthly budgeted amounts, even though they won’t be paid/used until later.
  • car tax: We have $70 going into a car tax category for a estimated $700 bill that will be due in october.
  • tuition: my husband is completing his bachelor’s degree at night, taking 1-2 classes a semester. His employer pays for a good bit of it, but as he starts taking more general electives, they will cover less of those costs. We have $375 going to tuition each month.
  • christmas: we know it’s coming! We’re putting $110 toward our christmas category so we’ll have a tidy sum at the end of the year for all the festivities.
• Debt Reduction: When we started getting serious about budgeting, we decided we could throw $1k/month at our debt.

Please understand: I’m not saying I want to cut back on our savings or debt reduction. AND I’m not saying that the rest of the budget couldn’t use a little trimming. I just want to be sure to recognize (to myself & my husband, at least) that these are not insignificant portions of our budget. Tuition, Savings, and Debt reduction add up to $1555. Tag that with the addition $500 bucks going toward the mortgage payment, and you’ve got over $2k. Yeouch.

I’m mostly thinking about our debt number. When we decided to put $1k toward debt a month, I HAD NOT YET figured out what we should be saving for tuition costs, or other yearly expenses. Could it be that we were too hasty in picking this amount? I hope not, because I WANT TO PAY OFF THIS DEBT!! Unfortunately for our debt, that is the category that it is the easiest to lower down.

We have a busy rest of the week in front of us, as well as a busy weekend planned, but maybe Sunday night, Husband and I can settle in and take a look at April and see if we can figure something out.

I used to schedule the bills carefully according to when we got paid. I also set up automatic transfers between our two checking accounts when we were paid to make sure mortgage & daycare tuition payments were ready and waiting when the first of the month came. The problem with this method was if we started to run short of money, I could always transfer some of it back (and often did).

The two debts that are currently scheduled to be paid off last (car loan & home eq) in our 3 year plan, are through our credit union, which we don’t use for our every day checking. So, we have the exact amount of those 2 payments direct deposited into our credit union account, and the payments are automatically taken out when they are due. Everything with those two loans are completely automatic and seperate from our daily banking, which is very nice. Even though these last two debts are somewhat more “legitimate” debts, we are still going to get those suckers gone. (Notice I only say “somewhat more.” I don’t like that debt, and I don’t want that debt, and we don’t plan on ever incurring that kind of debt again. However, in the level of “evilness,” in my mind, those two are less evil than the general credit card debt.)

I used quicken and would enter future transactions (bills as well as paychecks) so that I could see how the next couple weeks would pan out. I would notify my husband if it looked like we would need to tighten things up. However, inevitably, at some point during the month, I would say, “We’re out of money, better use the credit card until my paycheck hits on Thursday.”

It would (almost, but not really) be better if there were some big ticket tangible items we could point to and say, “Look, we have $30k in credit card debt because of X, Y & Z,” but there really isn’t. Our car debt is obvious - my husband is driving that debt around every day. Our home equity loan paid off some credit card debt at the time, as well as finished part of our basement. Groceries, eating out, clothes the kids didn’t really need, and other small items make up the bulk of it. The rest, yes, probably some computer purchases and vacation spending could be found on there. Not that we haven’t purchased some whiz-bang gadgets, but we probably bought them with money from our checking, and then ran out of money early, and would “live” on our credit cards until we caught up.

I guess really, it’s po-taye-to, po-tah-to, because it all added up to the same mess we’re in now.

So there’s the “before” our little “aha” moment. What have we changed?

Lawncare:

Last summer, we had someone mow our lawn for $20 each time. I was growing increasingly frustrated as it seemed to me they mowed way too often, and when they mowed twice in November (TWICE! IN NOVEMBER!) I finally moved “cancel lawn guy” from the bottom of my todo list to the tippy top and got it canceled. We’ll be mowing our own lawn this summer, and saving ~$80/month.

House Cleaning:

We had a house cleaning service come every 2 weeks, and let me tell you, this is a big sacrifice. With both of us working and 2 small children, I’d rather pay someone to scrub our toilets and oven then to spend the few hours we have together as a family cleaning. But we could not afford it, and so we canceled the service. We will be having them come in once or twice over the next few years, especially when we do any entertaining, but it will be budgeted for accordingly. We are cleaning our own house and saving ~$250 a month.

Eating Out:

My husband and I both work, and both used to eat out at lunch. He has always been much better in this regard, bringing in leftovers when he could and eating out only about 3 days per week. I was not nearly so attentive. I, not only bought lunch every day, I usually bought my breakfast on the way to work as well. My eating TWO MEALS out of the house a day cost us probably $12-13 a day. I was spending $230 a month on eating out. Add in the estimated expense of my husband’s eating out (3 days x $8 X 4 weeks) and our eating out was costing us $326/month.

Now, we both bring in our lunches. And if we forget, or want to go out with our co-workers in a group lunch, then it comes out of our own individual “fun money” budgeted amounts. So if I blow $10 on lunch that week, that’s less fun money I can use for the rest of the month. Ditto for my husband. It’s very motivating.

Menu Planning:

BEFORE: It’s the end of the day, I’ve just gotten home from work and my husband and the kids also just rolled in the door. “What’s for dinner?” he asks me. I stare at him blankly, and just shrug my shoulders. “Um… PBJs for the kids maybe?” I might say. “What about for us?” I have no answer. We’re both too tired to try to think about what to make for our sustenance.

This sort of scene no longer happens. Every Saturday we sit down and plan out the week’s menus. We decide who will be making it, what day. We scan through the fridge and pantry and determine what we need to purchase. Sometime over the weekend, we go shopping and get everything on our list. Now, when we come home, we know what we’re having, who’s making it, and we know we have everything we need to make it. We plan big meals for Sunday so we can take in the leftovers. We no longer have “kid dinners” and then eat our dinner later after they are in bed. We sit down and have a family dinner every night.

I’m not saying that we don’t still have surprises where we have to scrap what was planned for something else, but we are planning in advance and our grocery bill is pretty low! No longer are there trips to Super Target where I spend $200 on groceries, clothes, kitchen gadgets, and a miscelaneous toy for the kids and it all gets lumped into the “Groceries” category. We seperate everything out now, and toilet paper and kitty litter goes into “toiletries” and not into “groceries.” Clothes don’t get purchased unless something specific is needed and is budgeted for accordingly.

It’s hard to say how much we’re saving in our menu planning, but I think it’s got to be at least $500/month. Our grocery bill was $330 last month, with about $80 going to toiletries and household (for some reason, I like to keep household seperate. toiletries = handsoap, toilet paper, household = air filters). Not too bad!

All this is adding up. We never use our credit card anymore. Mine is still in my wallet, but I never touch it. I’m thinking about what we have coming up that will need to get paid for and planning ahead for it. All payments toward credit card debt would get eaten up with charges in the past, but now with our budget, goals and debt reduction plan in hand, we can make some real progress.

We had our own “wake up” moment at the beginning of the year and these things would have happened regardless, but I must say, YNAB has been an invaluable tool in really getting our budgeting goals accomplished.

ps- still waiting for our last credit card statement to post. BLARGH.

Well, I have found the culprit, and the culprit is me.

I *did* enter in the expected escrow check refund.

CORRECTION! It was mostly me, but partly YNAB - it was entered, but YNAB has this little quirkiness where even though there aren’t enough entries to span the entire screen, it will still have a scrollable scrollbar, and the scrollbar was scrolled down ever so slightly so that the pertinent escrow entry was hidden from view.

Doh!

So, in a way I’m relieved, because this means I didn’t make a truly HORRIBLE mistake that I have no idea what it was. I deleted the escrow income entry which threw my top “Available” balance into the negative around 1600. Not fun, but it wasn’t *too* hard to tweak things around to fix.

I moved everything out of our “buffer” category (which is pretty much like savings, for those not in the YNAB know). I had to get rid of any savings in the car repair/tires categories, and then I was really in a pickle. Since it’s the end of the month, it’s not like I can change our grocery budgeted amount, because we’ve already spent all our money on groceries. Now, maybe it’s just me, but it’s awful hard to cut back on money you’ve already spent. I didn’t mind pulling money out of the car categories, because when the check *does* come in, it will just go right back there (buffer too).

But after I cut out the “easy” stuff, I was left with the hard stuff. I have $375 budgeted to tuition, as my husband is in school and that’s the amount I figured would keep us OK each term for tuition, and I worked hard to figure out what the “average” monthly amount should be. I also have $110 going into a “Christmas” category, and I didn’t want to pull it out of there either, even if I knew I could just put it back the next month. Something about those categories staying rock solid and never ever changing just makes me feel happy.

But there was no other place to pull the negative $100 I still had!

I sat and looked at my budget screen for a long while and finally, I decided I would lower the budgeted amounts for categories that had already been spent. I chose to do this in our “debt reduction” categories, as that’s an area that won’t mess up the data too much. (ie: i want to know that I budgeted $400 for groceries, and I don’t want any weird tweaking to mess that up.)

In doing this, the negative amount is carried over to the next month, subtracting it from the available balance.

This is better shown by looking at YNAB:

Lowering the budgeted debt amount:

OK, so I’m getting a little slap-happy with the photoshop, but it displays my point - much easier to reallocate money you *haven’t* spent yet, then money you have.

YNAB - Please fix that damn scrollbar thing. And let me reconcile, while you’re at it

So I logged on to our bank account this morning to see a puzzling number. ~$1700.

How can that be? Let me explain.

I just wrote a check this morning for my kids’ school, which is ~$1400, so that number up there will soon change to ~$300, not to mention a few gas purchases that always show up as $1 until they finally clear for the real amount.

School tuition is budgeted for! Gas is budgeted for! And I have money built up in my “buffer” category, and there is also a couple hundred built up here and there in categories that won’t be spent until later in the year.

What is going on?

Have I miscalculated something?

I must have, because this can’t be right.

The only thing I can think of, is maybe I have already entered our expected escrow refund check as “income” (thus making it available to assign to categories and spend), even though it hasn’t arrived yet - but I checked on that last night, and I *thought* that I hadn’t entered it.

Hmmmm.

I have to admit, I used to be a quicken user. I would go through spots and spats of not using it, and then have a ton of transactions to download and enter at a time. I would plan ahead by entering upcoming bills/paychecks ahead of time in the register so I could see the timeline of when the money comes in and when the bills getting paid goes out, but even doing that, it didn’t give me/us the control over our money that YNAB does. I actually hadn’t opened it up since about November. And with YNAB, I haven’t done any hard core reconciling or register balancing. I enter in the transactions by hand every night, or every other night, and since we have money socked away, I idly make sure the balance on my checking is kind of close to the balance in YNAB, but I haven’t really worried about the actual account balance.

OK, I take that back - when we refinanced our mortgage, I was VERY worried about the checking account balance/register and timed everything out just so, in order to take enough money to closing and still have money for certain bills etc. But now? This is nothing like that.. I was clear sailing, the end of the month is nigh, everything should be comin’ up roses.

I feel like I’m cheating on YNAB or something, but I really do need more register/account balancing going on.

I have checked out a few other money programs, one my brother swears by adamantly (Ace Money), and it does look pretty good, but the budgeting aspects of it are nowhere close to YNAB, so I’d be doing 2 money programs, and that just makes me tired thinking about it.

Argh. Frustrated.

Oh, and a teeny side note on the power bill - Last night I was feeding our cat, and thought, “Damn, it’s cold over here in this corner!” glanced at the window, and realized it was open a crack.

ARGH! ARGH SQUARED!

So while I am anxiously awaiting our credit statements to actually happen, I’m also very anxiously awaiting our power bill.

I was not happy when our December bill came to the tune of $350, but was REALLY not happy when January’s bill came to $450!

We used ~4000 kwh in that bill!

Now, there was a few culprits, namely, we hadn’t changed our air filters in some time, so we quickly did that.

Next, I set our programmable thermostat on the main level (which is for main level and basement) to be quite low while we are away during the day. Since we both work, and the kids are in school/daycare all day, there’s no need to heat the house while we’re gone. I set it to start heating again about 40 minutes before we’re due to be home, and then turn down low again at night when we’re all snug in our beds.

We have another unit in the attic, with the thermostat in our bedroom, but it is not a programmable one, so we haven’t done anything with that. Also, I don’t think the attic unit uses gas - I think it’s the heat pump variety, and I am unsure of the issues of setting the temperature super low while you’re out for that type of unit, so it’s just as well.

The only other culprits I can think of, is .. well.. we’re geeks. We have a LOT of computers, and some gadgets. 3 TiVo’s, a firewall server, the husband’s desktop, all running 24/7. The husband has since turned his computer off when he’s not using it, but the others pretty much have to be on all the time. We both open up our laptops for a few hours every evening as well.

We do use CFLs in our basement and in our kitchen, but we haven’t changed out many in our upper level (or the hallways of the main level, now that I think about it) so that’s something we can target next month.

I can’t WAIT to see if the filters and thermostat made a difference in our next bill.