Time to Deal with the Budget

Coming into the part I've been dreading...
Photo by Stuart Miles

Now that the emergency fund plan is set up and running, I’m finally able to move forward in the Planner.  Rather than reading it straight through and trying to create some sort of hybrid plan (my usual way of dealing with things, because I always somehow think I know so much more than the experts), I’m treating it like a workbook.  I’m doing the assignments as they come up, and I’m following the directions. 

I despise budgets.  It doesn’t matter what you call them:  budget, spending plan, cash management system… I know perfectly well what they are.  They stress me out.  Quite frankly, they scare me.  I keep finding myself going back to the weight loss analogy.  Who wants to go on a diet or make a budget?  I want to do whatever I want and nobody else can tell me what to do.

I guess we can all see where that particular attitude got me. 

I need to approach this part of the book the same way I am approaching the weight issue.  Namely, I’m tired of living this way.  Following this plan will help and I am dedicated to seeing it through to the end.  I’ve done a great job these last two weeks on the weight-management plan.  I’ve worked out every day, I’ve tracked my calories, I know exactly what’s coming in and what’s going out.  Hmmmmmm…. Kind of sounds like a budget, doesn’t it?? 

Answering the questions in the planner:

Which of these describes how I view a budget?

“I’m afraid of what I’ll find.”

Denial is my problem here, all the way.  I know our income is low and our bills are out of control.  We need to get Comcast and PSE paid this week.  That stresses me out.  I was hoping to toss a little cash that way, but then I remembered that my gas tank is on empty and I promised to make a payment to Elias’s therapist. Since we had to deal with a car issue, that pretty much cleans out the extra from our incredible grocery trip.  Looks like we’ll be calling them this week to ask them to hang tight ‘til Friday.  I hate doing that and I want that to stop. 

Describe the way your parents managed their finances. Did they have a budget?  Who created it?  How did they talk with you about finances?

Would it surprise you that the answer is “I have no idea”?  I had no concept of money or budgets. I had a vague awareness that we weren’t rich, but that wasn’t until I was about 12 and we moved to an old house out on the Peninsula.  I think our suburban two-story new home in University Place might have been foreclosed on, but I have no idea.  My parents divorced when I was 14.  Today, my mother appears to mostly have her finances in order – she is the one who loaned me the Planner, though, so she must have had concerns at some point.  My dad’s finances are, frankly, a disaster.  I suspect he’s actually quite a bit worse off than we are.  That’s a little frightening, since he’s in his 60s now.

What has kept you from sticking to a budget?

We’ve gone through periods where we’ve done pretty well, but I think complacency and denial are always what do us in. We go through a rough patch and don’t want to face the reality anymore, start borrowing from Peter to pay Paul, and pretty soon we are in a major downward spiral.

When was the last time you reconciled your bank statement?

In all fairness, I no longer have a checking account.  I have my Paypal account and with the debit card attached to it, that works fine for me.  Better than fine actually, since I can’t overdraw the damn thing.  My old checking account drove me nuts.  No matter how often I requested that they remove the “courtesy overdraft protection,” it never budged, mistakes happened, and I’d suddenly be drowning in overdraft fees.  Gavin watches his account online, but because he’s not good about keeping track of debit card use and check transactions, we get hit with “surprises.”  That has to stop.

Looks like our next step is to create an equity sheet.  Not sure if I have enough red marker for that.

The $1000 Emergency Fund Plan... As Promised!

Okay, that might be a slight exaggeration... not much, though.
Photo by Bill Longshaw

It’s a miracle!  We have our plan in place!

Gavin and I sat down and worked out our plan.  Just like everything else I tend to dread (I’m looking at YOU housecleaning), it didn’t take nearly as long as I thought it would.  It wasn’t too difficult to work out a solid plan.

My friend Erin was kind enough to forward me an interesting blog post this morning that took a slightly different spin on Mr. Ramsey’s plan.  This plan had a different approach to savings, namely just start saving and then figure out how you’re going to continue.  Without intending it, we had actually done just that. 

I had $50 hanging out in my savings account.  I left it there when I cashed a check.  We also have quite a bit of assorted change in the family jar currently, but I’m not going to sit down and count it all out.  It probably has about $5 or $6 in there.  We’ll work that out later.

Here’s the plan we decided on.  

In order to do this, we will have to go a ways out.  Our goal is to have $1000 in our savings account by the end of the year.  Counting the $50 we currently have, we will need to withhold approximately $40 per Gavin’s paycheck.  It would be $20 per paycheck, but my Paypal doesn’t want to link with the savings account, so we are just going to do it this way.  I know to a lot of folks, that doesn’t sound like much, but that figure makes me a little shaky.  We are going to need to trim a few more expenses to come up with that amount.   We’ll discuss that in an upcoming post. 

We are also going to be contributing any amount of change we can gather into the family money jar.  We’ve had that jar for a while.  We usually let it accumulate for a bit and then use it on a grocery run.  From now on, it’s going to be deposited monthly into the savings account.  We debated whether to use that extra bit to lower our biweekly contributions or to reach the goal faster.  We decided to try to reach the goal faster, but like any other plan, we may eventually decide to tweak that.  We’ll see how it goes.

So there it is:  our plan to save $1000 by the end of 2012.  It feels good to have it in place.  

Will Somebody Please Invent a Perfectionism Cure?

Image by Grant Cochrane

I’m doing it again. 

We are supposed to be figuring out how to come up with that $1000 emergency fund.  It’s been our assignment for nearly a month now and we haven’t gotten anywhere with it. 

Excuse #1:  It’s the holidays.  Who wants to deal with it right now?

Excuse #2:  Rent’s due.  I don’t want to deal with it right now.

Excuse #3:  Gavin’s at work.  I want to sit down and have a real conversation about this, not over Google Messenger.

Excuse #4:  Gavin’s off.  I have other things I want to do. 

Excuse #5:  (I don’t know what this excuse is, but give me another day and I’ll use it.)

I want to come up with the perfect plan, the one that will solve all our problems.  I think I need to accept that that’s probably not going to happen.  I’m determined that the plan will be created tonight and will be posted here tomorrow.  It might not be ideal, but it will be good enough and it will be a starting point, which is all we really need right now.  We can tweak it as we go.  

The Breakdown

It adds up faster than you think.
Photo by Michelle Meiklejohn

Following the directions in the Planner, we’ve been tracking our spending since last Friday.  Here’s our report, warts and all. Take advantage -- be a little voyeuristic!  There’s some ugly stuff on here, so no judgments please.  We are aware of the problem, and that’s the point of this project.  Change isn’t overnight.

Friday:

• Gas   25.15
• Groceries (including Christmas/Birthday gifts)  167.30

Saturday

• Coffee with Dad  6.00
• Red Robin (Mom’s birthday lunch)  32.74
• Lunch at work (Gavin)  8.00

Sunday

• Gift for my brother   20.97
• Breakfast at work (Gavin)  4.93

Monday

• Hulu    8.75
• Gift for Gavin    13.93
• KFC   18.92
• McDonalds   10.05
• Breakfast at work (Gavin)  6.47

Tuesday

• Gas   21.00

Wednesday 

• Parking (for Elias’s appt.)  5.00
• NSF fee through bank   25.00
• Payment on Merrick account (credit card)  23.30

Thursday

• NSF bank fee 25.00
• Breakfast at work (Gavin)  2.10
• Sodas  5.25

Okay.  I can see some serious problems and money drains.  They’re pretty ugly in fact.  But that’s not what we are looking at today.  Our assignment was to evaluate how our spending reflects our priorities.

I can see my family priority reflected in my spending on gifts and the treats on Saturday.  I spent money I really couldn’t afford because I wanted to participate in my mom’s birthday.  Responsibility and health kind of flew out the window when I was feeling lazy on Monday and opted to get dinner at KFC.  Convenience really took over at that point.

Gavin’s priorities weren’t very well reflected in his spending this week either.  Taking care of the family with groceries and Christmas gifts was there, but he also spent a lot of money trying to streamline his mornings.  He will probably say that he is eating out in the morning to keep from waking Maddie up, and that’s his way of helping the family, but it’s clear that we are going to have to find a better solution.

And what about those bank fees?  Neither of us has a goal of keeping BECU in business, so we definitely need to get that under control.  

The next step is to figure out how we're going to save that $1000 emergency fund.  It looks pretty challenging at this point, but we're going to sit down tonight and hammer out a plan.  I plan to post the plan, along with constant updates on how we are growing that $1000.  I think it will be fun to see how it grows!

Our Priorities

Spending money should reflect our priorities.  But first we need to know what those are.
Image by Naypong

So, moving along in the Planner.

After we dreamt about having a million dollars, our next job was to think about our top five priorities.  Gavin, Elias and I all worked on this, with fairly different results. 

I think Elias was probably the most honest in his priorities.  I know what my priorities should be, but sometimes I forget, especially when something tantalizing is in sight.  Gavin didn’t even list “fun” as one of his priorities, but I know that isn’t true.  I also noticed that each of us interpreted the question slightly differently.

Without further ado, here are our lists:

Amee

1. Family
2. Friends
3. Having Fun
4. Responsibility
5. Health

Gavin

1. Being a good husband/father
2. Being a good friend
3. My job
4. Money
5. Myself

Elias

1. Having fun
2. Reading
3. Learning science
4. Colors (his fish)
5. Maddie

I should probably be worried that he considers Colors to be higher priority than his sister, but he is, after all, only 11.  I also don’t think it’s necessarily true.  This morning, he made breakfast for Maddie, but I had to remind him to feed the fish.

So, on to the next question.  How did spending our million reflect our priorities?  Elias’s spending decisions clearly reflect his desire to have fun above everything else.  Because he has Asperger’s, he is also limited in his ability to look past himself and his own desires. 

Gavin felt that using the million to take care of the bills and other responsibilities freed him from stress, which would in turn allow him to be a better father.

I felt like my desire to have a house represents my need to put my family first. 

Our assignment for the next week is to track our money that we spend.  This is where things always tend to fall apart, but we’ve done alright for the first couple of days.  I don’t think it will be a fair representation of our spending habits, though, since Gavin is in between paychecks and we’re trying to cope with Christmas being right around the corner.  We’ll report the results when they are in, though.  The goal is to see if our spending habits reflect our priorities. 

What are your top priorities?  Do your spending habits reflect them?

If I Had a Million Dollars....

BNL back in the day....

This was a fun assignment in the Planner.   Each person in the family has an opportunity to create a list of what they would do if they had a million dollars.  There’s obviously more to this assignment, but we’ll take it one piece at a time.  I created my list, and I asked Gavin and Elias to create lists as well.  Maddie is exempt…

My list:

• Buy us a new home, nothing too fancy.
• Buy a newer car.
• Pay off all of our debt.
• Help out family members and friends who need it.
• Donate to charities.
• Set up an investment plan, including 401k.
• Finish school and go for my Bachelors, and maybe a Masters.
• Take a nice long vacation, maybe do some travelling.

Gavin’s list:

• Pay off medical bills and all other debt we owe.
• Get Elias into the school that specializes in working with autistic children.  (This is a really good one and I wish I’d thought of it).
• Buy a home (about 300K).
• Place enough money in the bank for the kid’s college (about 60K).
• Send Amee back to school so she can get the degree she wants.
• Buy new vehicles outright.
• Place a good amount of money (about 300K) in the bank for our retirement.
• Donate to a charity like Child’s Play (or another children’s charity).
• Host a thank you party for family and friends to thank them for all the past help.
• Buy new PCs for the home.
• Invest the rest into accounts to protect it, while still having dividends to use as we may need them.

Something interesting I observed about both of our lists:  Neither of us said that we would stop working.  We would use the money as a buffer, but we still plan to earn our keep. 

Elias’s list:

• Buy a house that I don’t have to keep paying bills on.
• Buy myself some new clothes.
• Buy a car like the one we have now.
• Buy an indoor movie theater.
• Buy my own Xbox 360 with Halo and Fable.
• Buy a desktop PC.
• Buy a widescreen TV.
• Donate to the army.
• Donate to some hospitals.

Spoken like a true 11-year-old boy, I guess.  Looks like we’ll need to keep working on that whole “materialism” thing with him.  The last two came only after I prompted  him with “Is there anything else you would do with it that doesn’t involve buying things?”  I’m not entirely sure what he means by “donate to the army,” but I didn’t press for details. 

Coming up next – a discussion about values.

What would you do with a million dollars?

Catching up on the Financial Peace Planner: Stuffitis

The problem with wanting the best
Image by Danilo Rizzuti

Have I been procrastinating on keeping up with the Planner program?  You bet I have.  One of the goals of this blog is to make myself accountable and practice building good habits.  But it’s so darn easy to fall back into the old habits.  Procrastinating, pretending my bills don’t exist, putting off the hard work.  It’s a lot easier to write fun blog posts about chicken recipes and try out new and cheaper ways of doing things than it is to face up to the major problems. 

Major Problem Number One:  According to the Planner, I have “stuffitis.”  I try not to.  But I do.  Apparently if you check more than one statement in the little quiz, you have it.  I checked two, so it’s only a slight case and, most likely, curable.  Gavin has this condition far worse than I do.  That’s not me placing blame; he’s totally upfront about it. 

Here’s the statements I checked:

1.  “It’s not unusual for me to say ‘It’s only a few dollars extra’ when I’m shopping for something I want.”
2.  “So I spent $100 on a pair of running shoes.  The top of the line lasts longer.”

I can sit here and try to justify those responses (and believe me, I can justify damn near anything), but I’m not going to.  I’m going to accept that this is a problem.  It does no good to catch a great deal on chicken if I go out and blow $40 on a dinner out because I didn’t feel like cooking.  I have several bills piled up on my desk that I could be putting that $40 towards, and there’s really no excuse. 

I do like to have nice things.  When I can get nice things at a lower price, it can sometimes be seen as a justification to purchase something I don’t really need.  This time of year is especially difficult.  I don’t just like to have nice things, I like to give nice things.  It’s fun to have someone unwrap something you got them and see a big smile on their face because it’s just what they wanted. 

If you look around our place, you might say “How can these people be in financial trouble?”  We have two desktop PCs, our son has a laptop, we have a flat-screen TV, an Xbox, a Wii… and that’s just the living room.  Well, the PCs have been mostly cobbled together (it’s nice to have a hubby who knows his way around a computer), the laptop was purchased several years ago and is no longer of much use other than as a word processor, the Wii was purchased as a family Christmas gift quite some time ago, and the Xbox and the flat-screen were both donations from people who had more than one. 

So why don’t we just sell these items and pay off the darn bills?  Well, I work online, and Gavin sometimes has to communicate online with his job, and we both really like our games.  So, come to think of it, I actually meet one more of the criteria for “stuffitis”:  “I can’t get rid of my boat/truck/Andy Warhol print.  That would leave a huge hole in my life.”  Just substitute TV/computer/Xbox for the other items.

I’ll keep working through Chapter 2.  This is usually the point where most debt plans make you actually pull out all your bills and figure out your debt.  I have to confess:  I’m pretty scared of that part.

Taking a Look at the Financial Peace Planner

Reader Rachel left a kind comment on our very first post detailing our slide to the bottom.  In it, she recommended Dave Ramsey’s Financial Peace University.  “Aha!”  I thought to myself.  “I think I actually have a Dave Ramsey book floating around here somewhere.”

You should know this about me:  I’m an avid reader of both fiction and nonfiction.  I’ve read my way through many of the authorities on the subject of personal finance and budgeting.  Suze Orman, Mary Hunt, Joe Dominguez… I’ve read ‘em.  And I’ve tried working their programs as well.  Unfortunately, I always lose focus before I can really get anywhere.  It seems like the first step is always to build up a buffer in a savings account.   We’ll get to about $150 and something goes hideously wrong and “poof!” there goes the savings. 

No matter the system, I can find a reason why it won’t work for me.  Same thing goes with diets.  Hmmm.  Might have to think about this correlation a bit! 

Anyway, I did a little poking around and found my copy of The Financial Peace Planner.  Okay, it technically isn’t my copy, it’s actually my mom’s, but she loaned it to me quite some time ago.  I borrowed it with good intentions, but then set the book down and left it to gather dust.  I wasn’t ready.

I dug out the book, brushed off the dust and read the first chapter.  We’re going to give it a go, and we’ll post our progress here.  The Christian perspective of the book is somewhat distracting, but I can probably work it into our own worldview.  I’ve found that a few of the money management books I’ve read have a decided Christian slant on this.  I imagine it has something to do with the way we feel so out-of-control when our money situation is so crazy.  I’m thinking there might be a blog post in that.

One my “homework assignments” this week was to create a list of my fears about money. Here's my list:

• We will lose the apartment.
• I won’t be able to pay for my son’s treatment.
• Gavin will lose his job and we will be destitute.
• No one will want to pay money for my writing and we will sink further into the hole.
• I won't be able to feed my kids.

One of the other assignments was to find a “financial buddy.”  Anyone want to sign up for that position?