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Ashley’s June Budget

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Hi all! Happy Independence Day to the U.S. readers! I hope you all have a safe, happy, and healthy long holiday weekend! I’ve scheduled this post ahead of time because I’ll be spending time with family all day today. For those of you who would like an update on our Utah trip, we decided to split the drive into 2 days on the way there and drive straight through in 1 day on the way back. We’re coming back Sunday (meaning, we won’t be home until late Sunday night). I’ll try to write a post with this trip’s expenses as soon as we return.

I promised an update on our budget for the month of June. This was my second (and last) month of trying to do the envelope system. This month I’ll be using the YNAB free 30 day trial (and it sounds like some readers will be doing it with me!). I’ll certainly update about my experiences with that along the way, but for now let’s cut to the chase of how I did with our June spending.

Overall, we didn’t do terrible. I feel like I’ve given you a ton of budgets lately (“old” and “updated” – see this post), so instead of boring you with yet another budget, let me just give you the bottom line.

Here are our budgeting “fails” for the month:

  • First: We went way over with groceries. I had budgeted $380, and spent $453. Some of this was due to expenses from hosting the toddlers’ second birthday party. But some of it was just due to unnecessary spending on ‘gourmet’ grocery expenses (like cheeeeeese), and a big Costco trip. I have raised my grocery budget back up to $400 (where it was set prior to starting blogging), and I am excited to stick to the $400-limit. I will NOT go over this month. I will NOT go over this month. I will NOT go over this month. If I say it, it must be true. Yes? (psssst: but using the YNAB system, its okay if I go over a little because I can take that money from another category).
  • Second: We failed on our “eating out” budget. I had budgeted $75 and spent $149 (nearly double!!!) The funny thing is that I really don’t even remember eating out much this month. Then I look at my spreadsheet and see a string of drink stops (Starbucks, Sonic, Wendys – who has the best strawberry lemonade in the world!) All of these stops, individually, is only in about the $4 range. But they sure did add up! There are only 2 actual dinners out….ALL the rest of the expenses are little trips here and there that added up. This was total lack of constraint on my part. I WILL do better this month!

And here are our budget “successes” for the month:

  • First: Our childcare expenses were much lower than normal this month, so we saved a couple hundred dollars there.
  • Second: I was proud of myself in that I was “under” budget in all of my “miscellaneous” categories besides eating out (to jog your memory, the other categories include:  entertainment, personal maintenance, and “other”). I’m thinking I might be able to lower the “other” budget a little but I want to wait a month and see how things go. I was barely below budget this month ($120 out of $125 budgeted), but since I’m saving for so many different things now, I’m hoping I can reduce this category of spending.

All of my other expenses were pretty much in-line with what they should be (either at- or under-budget). The only other categories with higher spending were in debt payments (where we paid nearly $2000), and my gym membership (since the first month I had to pay $240 – to account for first and last month’s payments + an initiation fee). This should decrease back down to $70. (Side note = I realized in my updated budget I had my gym line-item as $50, but that’s the base fee…I’m paying an extra $10/child for gym childcare, so the monthly cost should be $70).

Whew! Lots of words! Now onto some numbers:

June Income: $9406

June Expenses: $5706

Income – Expenses = $3700 surplus (woohoo!!!)

 

How will we spend the surplus?

$500 = snowflake payment toward Chris’ license fees

$3200 = put money in savings (to build up one month’s living expenses)

I made our license payment earlier this week and it amounted to $1569 ($1055 regular snowball payment + $500 June snowflake payment + 14 extra for the processing fee). This brought the total amount due to just under the $2500 mark (at one point this was over $10,000….though when I started blogging here in March it was just under $6,000). I’m excited to think/hope that the license will be paid in full by August AND that we will hopefully have enough set aside to start living off of last month’s income in the month of September! Fingers crossed!!!

How have you done on your budget lately? Left with “more month than money”? (< a Dave Ramsey saying) What are you doing to try to cut expenses and/or make more money?


Living on Last Month’s Income

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I started my YNAB (You Need a Budget < not an affiliate link) trial and have viewed the “getting started” video (several people said these classes really helped).

So far, I’m not sure this is for me. But there is one aspect of YNAB that I am getting really excited over: living on last month’s income.

Now, this isn’t rocket science or anything. I don’t know why the thought hadn’t occurred to me before being introduced to YNAB. I’ve even had people mention it in the comments before when I’ve talked about our variable income (the main problem with doing a zero-based budget at Dave Ramsey suggests). But it always just seemed so daunting and scary to try to save up enough money to live off of last month’s income.

But now I see the light.

Doing this will solve so many of my budgeting “issues.”

First and foremost, it resolves the issue of not knowing exactly how much we will be making during the month. Also, I’ve mentioned how I’ve had a hard time waiting until the end of the month in order to make our snowflake payments out of any surplus funds we have from the month. Now I’ll have all the funds up-front so I can make these payments immediately at the beginning of the month. And it is my hope that it will make sticking to my budgeted categories easier because there is ONLY “x” amount of money, and that is it (currently, I’ve tried to do that with the money envelopes, but it hasn’t stopped me from swiping my debit card when needed for the girls’ birthday even though I was out of money).

By living on last month’s income I’ll know, from the beginning of the month, exactly how much can be paid toward each variable expense. That money will get budgeted and/or spent and then I will literally be left with only “x” amount for groceries or spending money, so going over budget is not an option. If I really need more money in a category (like gasoline), then I’ll have to take the money from another category where I’ll have to get by with less (like personal maintenance). I like this flexibility, and yet the rigidity of the structure, too.

What I’m not “sold” on yet is the actual software, itself. I can’t even explain why, but I don’t like the way the system is all set up. I much prefer my usual Excel file spreadsheet. But that could just be a “comfort” thing. I will, indeed, use the YNAB software for a month to give it an honest chance.

Honestly, though, I’m excited about the whole “living on last month’s income” thing. I think it will be a positive change for me, and the saver in me likes that it essentially provides one additional month as a “buffer” should worst-case-scenario happen that disrupts work.

But, from a debt perspective, what does this mean?

I’m still crunching the numbers (hope to get a budget update up later today, Friday at latest), but I’m thinking this will probably mean no (or very small) snowflake payments this month. Instead, I’d be setting that extra money aside until I can build up enough to live on for a full month. The YNAB class said it takes most people 4-6 months, but with all our extra income lately, I think we can do it in 2 months. We shall see.

In the meantime, I’m going to create a new subaccount of my Capital One 360 savings called “one month’s income.” I’ll use it as the place where I stash the extra money until we get to one full month’s income (and, thereafter, it will be used for storing our income until the start of the following month). Make sense?

 

Have you ever lived on last month’s income? How long did it take you to build up a full month’s income? What were positive experiences? Negative experiences? What do you think of YNAB?


What Can I Do Right Now?

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This week I am enjoying 2 kid free hours a day.  And that NEVER happens!  While most of that time has been spent working, this morning I had a few down hours.  I piddled with watering the plants, cleaning out the dog crates and washing their blankets and then I realized that I could do something right now to work towards my debt re-payment!

So for the next hour, the last I had kid free for the day, I spent listing found items on ebay….I’m going to make a killing…well, at least in light of my debt pay off it will be because every extra dollar gets me that much closer to my goal!

What are things you do in those rare down times to help you financially?

Note: By found item I means things that have been sitting around my house gathering dust that I keep saying I’m going to do something with.  Well, today I did it, they are all up for sale…old Nintendo 64 games, older iPod Touch, picture frames.


I quit…after a Week

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So this past Wednesday in my rushed post, I wrote about some new income.  I now come before you to retract that, well at least part of it.

I had been sought out and hired by a online marketing exec trying to build his “system of tools” and while it seemed like it would be a good fit for my skills and of course I was tempted by dollar signs in light of my plight to get out of debt ASAP, it just quickly overwhelmed me.  So I quit.

In fact, I sent him an email that night and quit, it had just been a week.  I was so relieved.

No matter how much I may want/need the additional monies, I have to balance what I’m doing and this wasn’t healthy for me.  I’m really proud of myself for determining this quickly both for me and the client.

So I do have a new website to do in the next few months, but I’m really back to square one with adding income on a regular basis.

 

 


Monthly Income

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Remember when I first “auditioned” to start blogging, and I said our monthly take-home pay averaged $5,000/month?

Then, aside from that first month, our income has been WELL over the $5,000 mark and every month I talk about how this is very atypical and much higher than average. I have stressed this because I don’t want readers to think I was lying in my original post. I certainly was not. I track all of our income and expenses (even before starting to be strict about a budget), so here’s a little snippet of our (net) income for 2013 versus 2014 comparing the months since I started blogging here about our debt.

 

  2013 2014
February $3795 $5465
March $882 $7595
April $5232 $8290
May $4883 $10965

 

We had several months with abysmal income in 2013. I was still a graduate student so I made very little, and Chris’ income could fluctuate wildly. In March 2013 he actually had a net negative income for the month due to a myriad of business expenses, so our income was tiny. There were also a handful of months with income only in the $2,000ish range. By comparison, you can see that our 2014 income has been steadily rising every month. One reader asked a great question – “how will you keep your income up?” I want to address that here.

There are a couple important changes that have taken place that will hopefully provide a big positive impact on our income. First, I’ve already mentioned how I have taken on additional work. This is great because it has helped balance out some of the “ups” and “downs” of our unsteady income. Just as an aside, I did not get paid this month from either University A or University B (my two contract-based jobs). I’ve continued doing work but this is just a timing thing with the schedule of payments. But, instead of making nothing, I was able to bring home that giant paycheck I mentioned. So our income had a bit of a “buffer” even though I didn’t get my two regular paychecks. I have also continued to take on little side-ventures to earn a hundred dollars extra here or there. Everything adds up over time. So I have taken great strides to increase my income.

In addition to the pay I generate, my husband has also taken some strides toward increasing his income. Remember that he owns a small wood-flooring business. Until recently, it has only been him and one other employee and he has done everything himself (e.g., placing bids, doing scheduling, and completing the actual work). But at the end of March he hired two additional workers. Now he has 2 “crews” of people to complete jobs. Instead of only being able to do a single job at a time, he can be on a job with his “helper” (it’s called a “helper” in his field, but you could also call the person an apprentice or simply an employee), while another crew (“boss” and “helper”) works simultaneously on a different job. By being able to work on multiple jobs at a time, my husband has increased his business profits and has started bringing home additional money.

Nothing is guaranteed and things can certainly change. For instance, all of the research I do for University B is grant-funded by large government grants. When the funds are gone, they have no way to pay me. So far, they have excelled at obtaining grants so my work has been steady, but there is no guarantee of future work

And my husband’s job has even more potential volatility. The second crew he has working for him currently have been great. They do good quality work in a timely manner and my husband has been pleased with their progress. But, without going into too much detail, my husband had tried to expand his business once before (about two years ago), with disastrous consequences. He hired too many people too quickly and was unable to oversee everyone properly. People did poor work and it ended up costing my husband thousands of dollars to replace entire floors (since he warrantees his company’s work). This was a painful lesson to learn. He had to let everyone go (except his one “helper”) and go back to a small 2-person business. He’s trying not to repeat mistakes and this time around he took great time and care to select a skilled and highly qualified person to run the second crew. So far there haven’t been any problems, but there are still no guarantees (and, of course, even good employees can always quit or leave, so even if the crew does good work the income generated from them is still not guaranteed).

Where does this leave us in terms of our income?

Well, we’re not really sure what our new monthly “average” income is. The plan is to continue operating based on our standard budget, which assumed we made only $5,000/month (although, note, we have increased money allocated toward debt and savings so our total budgeted expenses actually amount to $5272/month). The hope is that if we can keep our spending down and continue bringing home a larger-than-usual income then we can keep funneling extra money toward debt every month.

For reference:  Our new budget (reflecting some of the changes mentioned this morning)

Place Funds Budgeted
Rent 1055
Electricity 150
Water 75
Natural gas 25
Sprint (2 lines) 115
Cable/Internet 85
Car Insurance 90
Health Insurance 350
Trash 35
Debt 1697
Miscellaneous 250
Groceries 380
Baby Purchases 600
Gasoline 100
Saving for Irregular Expenses 265
Total Budgeted 5272

What does all this mean for the month of May?

We did well! Best month on record for our pay! We earned $10965. Subtract $8967 (for our expenses…note this is a hugely inflated number due to massive debt payments, plus going over on our monthly envelopes), and we are left with $1998 surplus for the month of May. Two things to note:

  1. This means I don’t have to dip into June money in order to “pay myself back” for the huge payment I sent to Wells Fargo in May (recall that I had sent a huge check and thought that if our May surplus wasn’t enough to justify it, that I would use funds from June to “pay myself back.” Since our income was high enough in May, I won’t have to dip into June funds to cover this money).
  2. Even after paying a HUGE quantity toward debt, we still have some excess to the tune of $1998. Guess what guys….this means BoA is 100% for sure GONE this month! I currently owe $2154. I have the $1005 regular payment + I can use $1149 from the May surplus to pay off Bank of America in full. I’ll still be left with an extra $849 that I believe will be sent to savings (though it may also be allocated toward debt. Need to have a budget meeting with the hubs).

I cannot believe I am so close to being credit-card debt free!!! This is a huge accomplishment and one that deserves a bit of celebration. I talked to my husband about it and although definitive plans have not been set yet, I think we’re going to take a mini-trip to visit family in Utah for 4th of July. My Dad has been asking us to come and graciously offered to cover gas money (plus allow us to stay with him, instead of getting a hotel). With gas covered the costs would be relatively minimal. The largest cost would be in missed work for the husband (although, he does have that second crew now, so he will continue bringing in at least some income). We’ll discuss the details, but I think we may plan that as a celebration of being out of credit card debt. We still have a LONG way to go until we can say we’re totally debt free, but this is a big milestone and I want to celebrate it in some way. A short family trip to Utah seems like a good way to do it without breaking the bank.

Whew! That was a long one! If you stuck around the whole time you deserve a gold star!

Give me your thoughts!

Our variable income has been on the rise. How/when would you conclude what your new “normal” is? If we can say “we now make an average of $6,000 or $7,000 per month” (or whatever) then we can allocate more funds directly toward debt (rather than waiting until the end of the month to make snowflake payments). How would you handle this? How long does it take to determine our new normal?


Goals for the Next Month – Hope

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As I am enjoying my weeks traveling and visiting with my family, I am starting to plan my next month money wise. Per my post earlier today, I have A LOT going on in my head as I try to envision the next few years of our lives both financially and life experience wise.  I am a big proponent of self-fulfilling prophecy, not that I think I’m all powerful, but that in order to accomplish something, envisioning it and planning for it and working toward it are key to success.

With that being said, I know the next month is going to be pretty tight financially as I have to:

  1. Restock my cupboard as we were close to bare when we left and brought much of the remaining with us.
  2. Prepare for additional travel next month (end of July.)
  3. Equip my oldest son with everything he needs for his Navy Sea Cadet boot camp (hopefully he will make enough money to cover this, but I will pick up the tab if he is not able too.)

With this being said, I am VERY motivated to move this debt payoff along, so in addition to my regular contract work and part time job, I am looking for ways to increase my income.  I entertained the idea of going back into the corporate world, but after just a few short weeks back in part time, I KNOW that is not what I’m supposed to do on a full time basis.

So here are things I am considering:

  1. Working more diligently on listing things on Etsy:  I have TONS of craft stuff as a scrapbooker and even before BAD, my year long goal was to use it up, get the scrapbooks updated and convert to digital rather than having all this stuff.  I could easily with some dedicated time create some sellable crafts, but haven’t really spent a lot of time on that as I’m sure really sure what kind of ROI I would get on my time.
  2. Purging through donating: I am getting to the point that I HATE clutter, with a passion. If it’s not used, it should not be here is my philosophy.  As a result I’ve made great headway in cleaning things out of our home through donating.  While this wouldn’t net much money, it could lead to substantial tax write offs and there are definitely intrinsic values to not having so much stuff.
  3. Project work: The one that comes most naturally is to attempt to find more work on an on-going or project basis.  Currently I’m contracted for 35 hours a week + 12 for my part time job so I could definitely take on 10 or so more hours with ease (much of my 35 hours is done in the wee hours of the night.

I would love to hear your ideas on this.  I know I can’t keep up my rate of work and intensity forever, especially with homeschooling the kids; however, this summer’s plan is pretty much set in place and with all I have in place for the kids, I am going to have more “free” time than I’ve ever had and I want to put it to good, productive use.

Note: Our home situation is significantly adding to my growing sense of urgency and with that my research into alternatives, but that will be discussed later this summer when I have a better idea of what my options look like.

 


Work and Travel

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Someone asked a good question in my post earlier this week about travel tips.  What do I do about work? Missed income? when I travel.  This is a key point as to why I travel and will continue to travel so I wanted to make sure it was clear thus this post rather than just my response in the comments…

As you know I am self employed and have been for going on 10 years now.  My income fluctuates but minimally unless I pick up new projects or work, and I have a pretty stable group of clients who I’ve been with for 5+ years.  With that being said, with my line of work, I can work from literally ANYWHERE and typically ANY TIME.  I appreciate this blessing EVERY SINGLE DAY as it’s key to making my lifestyle work.

This works because 1) the type of work I do; 2) the equipment and tools/technology available and 3) the way I have set up my business.

First, I am trained as a software engineer, which just a fancy way of saying I read and write computer speak relatively well.  So much of my work is either developing new code or troubleshooting old code, add to that I test out the products, document the products and teach people how to use the products of this work.  With this work I am able to work when and how I want to as long as I communicate with my clients and meet deadlines.  Without my education and experience, there is no way I could have made this change in my work after my kids were born.   In addition to this work, I am not afraid to get my hands dirty doing other things and in fact, love the variety as I do tend to get bored easily and love to multi-task, so rather than marketing myself as a software engineer, do so as a high tech virtual assistant.  This allows me much more access to work and different clients and I have found that my jobs have grown with my relationships with those clients so it’s the best of both worlds.  (I’ve writting more about what I do on my personal blog here and you can find my business site that has not been updated in forever here in case you are curious or in need of a good VA as I’m always looking for great clients and challenges projects!)

Second, thanks to technology such as laptops, smartphones and tablets, I can connect to any of my clients from anywhere.  My office line is a Skype line so I can use it as VoIP from my computer headset or from my phone when I’m on the road.  And my clients just have one number that will literally reach me anywhere.  When we travelled and will hopefully travel more often in the past, I had a subscription with my cell phone company for on the go internet access, but cut that cost a couple of years ago when we cut down significantly on travel.  I see that changing in the future but for now I rely on free wifi hot spots or staying places with free wifi.  I also have several software programs that I can 1) communicate my work schedule to clients without a lot of back and forth which can get time consuming and confusing and 2)helps me track work time and project deadlines so I can stay on task even if I’m moving around doing it.

Lastly, when I set up my business I knew that my priority was my kids, that was the reason I was leaving the corporate world; so from the very beginning I structured my work around their schedules and lives and needs.  It wasn’t easy and often feels like I am juggling 1/2 dozen balls at any given time (some of them on fire too,) but it’s so worth it and I feel that the benefits have been immeasurable in regards to my relationship with my kids and my ability to homeschool them.  I have been upfront with my clients and while it does sometimes take a while to gain their trust, I have found all of my clients have responded positively to my work arrangement, I don’t pull any punches, set realistic expectations and am very open and responsible with my communication.

I hope this clears up some of the questions regarding my ability to travel without losing any income and using my frugal tips and planning we are really able to not go too far over budget in most cases without some forethought.

*Note: The exception now is my new part time job; however, I told them upfront of my travel plans and have offered to make up hours if needed.  I hesitated to offer but felt I needed too, they have been fine with me not and since I have not added that additional income into my budget, it’s still icing on the cake as far as income goes.