Cash and Budgets
November is so many things these days –
- No Shave November
- Mou-vember (moustaches?) (maybe those two are the same thing, don’t know)
- National Novel Writing Month
- Innovation in Mississippi Month (very important, obviously)
- Personal Finance Awareness Month in the Johnson Residence
I know, right? So exciting!
August and I have been putting off getting our finances in order for oh, approx 1.5 years. And why November finally seems like the right time to get everything together I don’t know, but it does. It may have something to do with the upcoming 20 week ultrasound and the new baby that’s barreling towards us like an oncoming train. Or it may also be reality setting in that our one big financial goal – to pay off our house in 5 years – ain’t just gonna happen without some planning. We want that mortgage to be GONE and its not gonna go away on its own.
Step #1 in this system overhaul was to create a budget. We already track all our expenditures on Mint.com. This is a free ‘quicken’-esque website. Its pretty slick and we’re big fans. It can collect all your online financial information, including most bank accounts, credit cards, mortgages, etc. The ipad and iphone apps are very handy, too. And, you have to spend a little time every week or two helping it to categorize each purchase, but at the end there are lovely pie charts and bar charts of your financial history.
I’ve found that this tool appeals largely to the ‘ipad set’, while others are queasy about having all their personal financial information in one place on the internet. And personally, if mint.com got hacked someone might know how much is in my checking account, but they wouldn’t have the ability to spend it, so it doesn’t concern me. (Kids these days, and such.)
So, on 11/1 we finally sat down and spent 15 minutes making a real budget. I opted to go uber-simple and make a really easy spreadsheet listing all our expenses in order, something like this:
- August paychecks
- Mary-Hall paychecks
- Mortgage payment (plus extra principal to meet our 5 yr target)
- Utility bills
- Grocery budget
- Gas budget (will make you cry)
- Household supplies budget
- Clothing budget
- Restaurant budget
- Entertainment & misc spending money budget
- Other one-off expenses we expect for November
And so theoretically, the sum of the paychecks should equal the sum of everything else. With help from Mint, we looked at how much we were spending in each category, and then considered whether we were okay with that, or not.
First, we realized that we may not be able to keep up our current pace of double mortgage payments every month once I go on maternity leave – not without some major cutbacks. We shall see. So maybe it’ll take 6 years, or maybe we can trim some of our other budgets.
Second, we realized that our restaurant spending of recent is just plain too high. And its not like these are quality experiences… More of the “I’m too tired to cook so we’re going to Sonic” variety. There’s a definite need for better grocery planning. But to make it simple this month, we switched from card (we’re debit only) to cash for this category. Once the cash is gone, its grocery-only for this family.
You always hear that spending cash is harder than spending plastic, so we’re giving it a trial run this month. Has anyone out there tested this theory? Sometimes I feel like I spend cash, especially $1 bills even easier than plastic. But at least there’s a hard limit on the spending. Here are some of our budgets for November:
- Gas – $550 – ack
- Electricity for November – $96
- Groceries – $300
- Restaurants – $150 – Last month we spent $350 so this is a sizable cut.
What about you guys? Any tips?