Tag: budget

Budget Fail and Budget Win

Budget Fail and Budget Win

This week I had a budget fail that really stuck out to me as a “stupid tax,” but then also a budget win that almost made up for it just a day later! These were both pretty unique things so I figured it might be […]

July Budget Recap – the Good, the Bad, and the Ugly

July Budget Recap – the Good, the Bad, and the Ugly

This month involved some tough learning for us in the budget department. It was a bit of a slap into “don’t get too comfortable” reality. I want to end on the exciting positive, but first some guilty admissions. I might sound a little dramatic. We […]

Budgeting Utilities + Tips to Lower Utility Bills

Budgeting Utilities + Tips to Lower Utility Bills

There are a few ways that might be helpful when budgeting for utilities. I can tell you upfront that when we began, we took a complete guess based on the square footage of our rental and hoped that it wouldn’t be over that amount. It was. Not by much, but it was enough to raise our budget a bit. This was in winter, and we live in a cold area. A few months later and our bill was half of what it had been. So how do you budget for utilities when the weather changes monthly?

 

Budgeting for Utilities

 

For us, we have a set budget amount that is the high end of costs for the year. This means that we account for the coldest days in winter and the hottest days of summer and set our budget according to those days. We don’t average. In the spring/fall months, when our bills are gloriously low, we apply any extra money towards our “Baby Steps.”  Previously, this meant putting them to debt. Now, this means transferring that money into our 3-6 month emergency fund. It all depends where you are with your personal financial journey.

 

We have our utilities set up to pay the bill in full each month. The money is taken directly out of the bank, and I get a confirmation email when this is done. Then, I put any extra money where it belongs.  For example: If we had $75 budgeted for our Natural Gas, and I received a bill for $50, I would immediately put that money elsewhere. When in Baby Step two, I would go and make a student loan payment for $25. Today, I would make a $25 transfer into our emergency fund.

 

This may seem small, but you want every penny working for you. Even the little payments add up, especially when you are paying off debt. Every payment causes less interest to accrue. This is why you want to make those payments immediately when budgeting utilities. The key is to put the money where it belongs immediately. If you don’t do this, it’s easy to end up with an “extra” $20 to spend on unnecessary things. You don’t want that. You want to tell your money where it belongs and make it work towards your goals.

 

Just to be clear, this isn’t the only way to budget utilities, just the way that we choose to and what has worked well for us. Some utility companies allow you to average out the costs, but I like being the one in control of what is budgeted. Learning to adjust can take some time.

Lowering Your Utility Bill

 

Also, some tips for lowering your utility bill (these might not be groundbreaking, but every little bit helps!)

 

These tips are excellent for the environment no matter where you stand financially!

  • Open your windows and turn off the lights
  • Remember to make sure your outdoor lights are off too!
  • Turn off your sink when you brush your teeth
  • Use the “Sleep Timer” on your TV – we always fall asleep to the tv, but this keeps the electricity waste to a much smaller amount!
  • Unplug things when you aren’t using them – I don’t do this with anything that has a clock on it because that’s a huge pain, but things like phone chargers, hair tools, electric tea kettles) are easy fixes.
  • Brush your teeth in the shower  – some people may not like the warm water fyi
  • Shower warm, not hot.
  • Wash laundry on cold water
  • Hang dry clothes.
  • Open windows on opposite sides of the house to create a crossbreeze. Opening one window might not do much, but once you get that breeze in, it’s great!
  • Go natural with your hair – no heat tools=no electricity used.

With Motivation,

Rachel

Critical Anastasia Beverly Hills Brow Wiz Review

Critical Anastasia Beverly Hills Brow Wiz Review

So if you are familiar with my website, you know that I was able to score the Anastasia Beverly Hills Brow Wiz for $1.50 at Ulta a while ago. Yea. AWESOME DEAL. And I was so excited to try this because it is such a […]

Spring Sprucing: Free or Budget Friendly Ways to Freshen Your Home

Spring Sprucing: Free or Budget Friendly Ways to Freshen Your Home

This year, spring has been fantastic. Growing up in an area that didn’t have spring made me not care for the season, but here it is truly a beautiful time. I see so many gorgoues home accent updates on Pinterest and Instagram, but they usually […]

Starting Your Budget: A Quick Guide

Starting Your Budget: A Quick Guide

Starting your budget, adjusting a budget, or tightening a budget can be a daunting task, but it doesn’t have to be. When my husband and I got married, it was hectic for more than a few reasons, but we knew we were going to have to figure out how to budget for a new living situation. We lived with my in-laws while searching for a place to move our family. I’m so grateful we were able to do this because it took the pressure of timing off and allowed us to find a steal of a deal.

We use Everydollar.com (link) because it’s free and was recommended to us. It is an easy way to track spending. But when you are recording your budget, you have to have categories to determine where your money has been going, and where it needs to go moving forward. Starting your budget is the beginning!

 

How we came up with our budget numbers:

  1. Knowing Our Debt (Totals & Minimums)

We knew we’d be working really hard to pay off our student loans, but to start, we had to total up our minimum payments. All of our student loan minimums initially added up to over $1000 per month. YIKES to say the least! At this time, we also had a small interest free medical bill from our daughter’s NICU stay, so the total was about $1100 minimum per month. At first, I made an excel spreadsheet to track this, but a couple of months ago I found  UndebtIt which is a free debt snowball tool. More on the “debt snowball” later, but for now, it will help you record the balances on any debt, interest rates, and minimum payments you have to make. I can’t recommend that website enough. So we had those all figured out.

 

Note: just writing down all of your debt may be a big process in itself. It took me days to set up the online accounts for our student loan providers. Our federal loans required us to choose payment plans which took some time to be accepted.  It also took me additional time to figure out how to set up auto pay. This part can be scary, but beginning this is a step in the right direction! Comment and let me know if you are interested in more specifics on this, because it can be a lot!

 

  1. Insurance

We accounted for auto insurance, term life insurance (500K of coverage each for my husband and I), and renter’s insurance. Even though we didn’t have a rental, we anticipated $25 a month. It actually ended up being only $10.

Note: Renter’s insurance should NOT be considered optional. This is essential to your security in case of disaster. Your emergency fund wouldn’t be able to cover the costs of losing all possessions, so that’s where insurance comes in.

  1. Rent/Utility Estimations

We came up with a really rough estimate that our utilities would cost $200 per month. We figured this for electric, gas, water, and trash. This is a little below the actual cost, but since we were looking at the least expensive rentals possible, it evened out. In addition, we also planned for internet and phones. FYI cell phones are expensive, and we didn’t have the option to do cheaper providers based on coverage for the area we live in. I plan to write another post on How We Decided on our Rental.  We decided to apply as much of our income as possible towards debt, so our rental + all utilities is about 11% of our take home pay. Most people advise that your housing be “no more than 30% of take-home, but I’d say budget tighter. In fact, I would highly advise that if you are paying off debt of any type to find the least expensive option, because this will free up more $. Especially when you are not sure how far your budget will go at first.

 

  1. Daycare

Ouch. Daycare is so expensive, that I don’t know how some parents can even afford to work. We actually pay a bit more for daycare than our rent. It hurts. We found a well rated day care in our area that fit into our budget. In our current area though, the wait-lists are crazy long, so we were just happy to find an opening.

 

  1. “Living Expenses”

This will probably be the hardest part of starting your budget. Household goods, food, pet supplies, etc. I took some guesses, but this is something you will likely need to “troubleshoot” during your first few months. I took some averages that I found online for a family of three and made that our “goal” budget. To this day, we still seem to be working out our groceries vs household goods. It’s a learning curve but they seem to even out. We’re working on refining it every month.

 

  1. Extras

Make any extra expenses as minimal as possible.I’m going to refer you to Dave Ramsey on this one. Basically, don’t plan to be spending beyond necessities. We allow for eating out a couple of times a month (at INEXPENSIVE places like Chipotle), some “fun” money per person to keep us sane, and things like our gym memberships. This is where the smallest amount of money should be going.

Anything Leftover After Starting Your Budget? Follow the Baby Steps…

I really recommend Dave Ramsey’s “Baby Steps” This starts off with a basic small emergency fund. Dave recommends $1000, I say this can be different depending on circumstances but should be kept as small as possible. Next is to get out of debt (this is where Undebtit really helps!). Then you build a much larger emergency fund, and then move to investments, paying off your mortgage, and saving for other things like kids’ college. Refer to the DAve Ramsey website (link!So if you have nothing in savings, then the leftovers from your budget need to go there. Once you’ve got your mini-emergency fund saved, begin attacking your debt. Dave recommends the snowball method (smallest $ amount first), we have so far used the avalanche method (highest interest rate loan first) and it’s worked really well for us. When in doubt, use the snowball method.

 

Some Questions Answered:

 

What if I don’t have enough money to cover everything?

Tough love answer: you must decrease your expenses, or increase your income. It’s a math equation. You’ve got to have more coming in than out.

What if I don’t have debt, but am still new to budgeting?

Good for you! I would recommend lookiing here to determine what your next financial move should be. You will probably be able to be a little looser in some areas. For example: if we had no student loans, we might live somewhere slightly newer while saving our down payment.

Other recommendations for starting your budget:

  • Total Money Makeover or Financial Peace University –  Put it at the top of your birthday/holiday wishlist {link!}. if you don’t have the money to buy, check your local library! Otherwise, the Dave Ramsey Youtube channel and website are great free guidelines. This really helps with the “big picture” of what financial freedom can be.
  • Be INTENSE with your budgeting. Do not make excuses if you are overspending in one category. Slash your costs. Subscribe to my blog for ideas on this. I’m constantly coming up with ways to minimize costs.
  • Be Open – this is going to be a whole new post, but let some family at the very least know that you are making an effort to work on your finances. Hopefully this will help them understand why you can’t go out to eat with them all the time or go do lots of activities. Entertain at home!

I hope this helps you in the adventure of starting your budget and working towards financial happiness!

With Motivation,

Rachel

Save Even MORE Money On An Already Tight Budget

Save Even MORE Money On An Already Tight Budget

Do you feel like you are already doing everything right as far as budgeting and pinching but still need to somehow save even more money? Me too. Even though our debt payoff had been in a good place, we yesterday were given the news that […]