by Hope
I believe…and I say that cautiously that I covered all our regular monthly expenses in this budget. And that I can stick to it through this fall.
Tell me what I’ve forgotten…
| Description | Monthly Budget |
|---|---|
| Rent | $650 |
| Groceries | food stamps ($600) |
| Health Insurance | medicaid ($305) |
| Kids Activities | $250 |
| Auto (gas & maintenance) | $300 |
| Utilities (gas, electric, water, trash) | $290 |
| Auto/Rent Insurance | $268 (Sea Cadet pays $100 of this each month) |
| Car Payment | $400 |
| Misc - Entertainment/Clothing | $150 |
| Life Insurance | $23 |
| Total Personal | $2,330 |
| Business Expenses | |
| Cell phones | $286 |
| Internet | $65 |
| Annual Software Costs (Microsoft Office, Dropbox, Adobe) | $37 |
| Total Business | $388 |
| Total Monthly Costs | $2,718 |
Here are my thoughts with this budget:
- The twins’ birthday is in October. I typically budget $50 for each child’s birthday + dinner out. I didn’t include it in the budget as I already have their presents and will use part of our entertainment money for the meal out.
- Christmas…no idea. But right now, debt payoff is #1. I will revisit this in October when I’m planning to revisit the budget.
- Kid’s Activities – I know this is still high. And we are not spending anywhere close to that right now. But I want to build some cushion. Anything not spent will be saved, designated as kids.
- Same thing with car/maintenance. We don’t spend near that, but I don’t want to be caught unprepared. Whatever is not spent will be saved.
- I broke out the costs covered by my business account just to make it a full representation of our monthly costs. I am still working on lowering our cell phone bill.
- We are planning to go back to Texas for Thanksgiving. The only real cost will be gas money to get there and back. And my dad will help some with that, so right now I haven’t broken it out at all, but I may in October as it gets closer.
Because I have the $1,110 EF, I have not budgeted any additional savings right now. My goal is to get out of debt! My next goal is to put a preliminary plan together for all debts with anticipated pay off debts, a all encompassing plan as you have it. But I will probably continue with my baby step plans that have worked so well for me this past year.
All extra monies, because my income varies so much, will go to debt.
Give me your feedback, be brutal. What have I forgotten? Are there any other line items I should include that even if we don’t spend, we are designating money towards them?
Hope is a creative, solutions-focused business manager helping clients grow their business and work more efficiently by leveraging expertise in project management, digital marketing, & tech solutions. She’s recently become an empty nester as her 5 foster/adoptive kids have spread their wings. She lives with her 5 dogs in a small town in NE Georgia and prefers the mountains to the beaches any day. She struggles with the travel bug and is doing her best to help each of her kids as their finish schooling and become independent (but it’s hard!) She has run her own consulting company for almost twenty years! Hope began sharing her journey with the BAD community in the Spring of 2015 and feels like she has finally in a place to really focus on making wise financial decisions.
Things that jump out right away – why is your cell bill so high?! Also, you have only groceries listed here (covered by food stamps) but you said you were paying for princess to buy lunch at school?
Good catch, I completely forgot about Princess’ lunch. In fact, I don’t think I gave her any money today either. Oops. I hope she has some or she is going to be starving when she gets home from volleyball at 5:30pm.
Cell phone bill is for 5 lines. And I did just make a change that I believe will bring it down.
You can’t have your entire family’s cell phone costs as a business expense. If it makes you feel better to *budget* this way, just be sure you don’t account for it that way in your business, or in your taxes.
Understood. And definitely not how I file my taxes.
Why do you budget it that way to begin with? It is very confusing and not a real clear picture of where your family money is going.
A budget only works if you have the necessary income to cover the expenses. Do you? If not, then you cannot pay extra on the car, or have a category for entertainment, or pay for the kids’ activities or school lunches. Also, you should include your minimum monthly payments on any outstanding debts (this should come before any extras). Are you receiving $600/month in food stamps? Does that cover your entire grocery bill for the month (it should)?
Hi Anne,
Yes, I have made enough to cover our monthly expenses for the past two months and am continuing to grow. Yeah! There are certainly month’s where I won’t but that is also the nature of my business with project work coming and going. That’s one reason I want the buffers and to continue to live on last month’s income.
I am receiving $630 in food stamps at least for one more month and then I don’t think I will qualify any more. I am preparing for that time.
A line item for debt needs to be included in your budget. You have a minimum payment of 36 dollars monthly to the credit card company and a regular payment of over $200 to debt from time with ex. Those should be a line item that way you know it as a monthly charge. You can and should pay more to the credit card but you need to include the minim um. Also good for you for drawing a line on kids expenses. Now tell yourself to stick to it. Also figure out a way to multitask. You should not need to save a lot but you should save something even while paying down debt.
My debt numbers are on my list to tackle next week as I still want to make phone calls and see what I can negotiate. I am very focused.
Did you ever receive your unemployment compensation? If so, what happened to this?
I did. It was used to pay the monthly bills as I built my business.
Hope
I feel like you are doing yourself a major disservice with the way you budget. The idea of budgeting for several months when you have a variable income just does not make sense. I think you could reasonably call this your anticipated expenses, but a budget is really something that you should be doing at least monthly. What happens when the income is lower? What is the plan when the income is higher? How are you going to adjust?
I can’t win for losing…
I was doing a monthly budget, but BAD readers encouraged me to do a more long term budget.
I guess I kind of sit somewhere in the middle. I forecast out 4-5 months at any given time based on income, expenses and any unusual occurences.
The budget I use to guide me as monies come in every month. With this situation, once I reach the monthly need (living on last month’s income) I start putting extra toward debt.
I’m not sure I’m explaining this well. But I’m really using a combination of the forecast I have, which is my primary tool and the budget as a guide as money comes in.
Does that make sense?
But you are right, with my variable income, my “budget” changes every month. Anything above and beyond the need goes toward debt right now.
You might consider a line item called financial freedom and use it to fund the next month income line item. You can cap it when it comes to $3000 and the n decide to just give it minimal attention as you tweak your budget. I do worry that an 1100 emergency fund is not enough considering that you are now reliant on yourself for your income and do not have unemployment or anything else to fall back on. You have had experience with seeing firsthand how critical savings can be to your survival last year. The $10000 you had helped you weather a financial storm. 10% of that(less than a month of income) will not last as long. It is CRITICAL that you multitask and learn to save while paying down debt so that when a financial crisis comes along you are able to adjust minimally Instead of putting every single extra cent to debt maybe split it and put half to debt and half to financial security. Variable income means you have to have fled built into the budget more so than a regular paycheck sum.
How much do you have left on this car? I don’t mean to sound rude, just wondering, it just jumps out at me to have $600 coming in food stamps but a $400 car payment. Have you always had this car payment? seems I don’t remember it from a time before. “payments payments payments” it’s what gets so many of us in trouble so fast.
I purchased the car last September after my last car died. My required payment is $308 on a 3 year loan. If I continue paying at the same rate, I will pay it off 10 months early (2 years and 2 months of payments.) I hope to reduce that further and eliminate the car payment completely.
Is that a typo for your car payment?? $400? If not, WOW! What kind a car are you driving? That’s a high car payment!!
I believe Hope is paying extra on it and the actual payment is lower.
You are correct. My required payment amount is $308 and it’s a 3 year loan. Continuing at the same rate, I will pay it off December, 2020 vs October, 2021.
It is a 2012 Chevy Impala. My payment for a 3 year loan is $308 per month. I pay the extra $92 per month because I want it paid off ASAP. Right now, I am scheduled to have it paid off 10 months early. But hoping to reduce that further.
I got the car in September, 2017 after my last car died.
She has a higher interest rate and has admitted her credit is less than stellar. She lives in a lower cost of living but rural region so a car is a NEED not a want. Unfortunately those factors mean that for the next two years she has to deal with a large payment.
Hey guys, I think she is doing what she needs to and I think the critical needs to stop let her work and figure this out. We are here for advice and support.
Thank you, Kim. I appreciate your support and definitely all the advice!
I think this is a great starting point! If you track your spending against this budget, you’ll find irregular expenses that you may have forgotten about and will be able to fine tune the exact amounts.
I also love knowing that you have a mini emergency fund and are working on building some sinking funds for eventual car maintenance.
After a lot of instability, I’m excited to see this budget and look forward to regular debt updates and a monthly reconciliation to the budget.
(And, the obligatory commentary, your cell phone bill has terrified me since the very first time you posted it way back. I know your phone is your life line for your business, but could the kids at least be moved to a cheaper phone plan? Check out The Frugal Girl for a plan suggestion that works with iPhones.)
I am with you, the stability is REALLY, REALLY nice!
And I’ve been tracking my spending pretty thoroughly since reading the Your Money or Your Life book over and over again this year. I’m fairly certain I have all the expenses covered in my categories and my numbers are accurate.
It always makes me nervous as a CPA that you list your entire cell phone bill as a business expense. I hope that you are not putting that entire amount (or the entire internet $) on your Schedule C. You can only claim the % that is for business use.
This is not a reflection of my taxes, just wanted to make sure all my monthly expenses are accounted for.
I feel like this is a much better look at your expenses in any given month than you have had in a while. Great progress! There may be other semi-annual expenses that pop up to add but this feels like a much more complete picture of your monthly expenses and I love that you have an emergency fund!
If you are on food stamps, you should qualify for free breakfast and lunch at school through the free lunch program. Usually all you need is a Food stamp number. Princess could buy her lunch without costing you anything. Also, this program helps the school since aome federal school money is based on the % of free and reduced lunch kids. More kids = more money.
I suspect she is not giving her money for the actual school lunch, but for a la carte snacks. She’s mentioned the long days with volleyball practice the need for the money. If this is the case Hope then have her pack her snacks from home. And if not, yes, sign up for free or reduced lunch.
Actually, she takes snacks and eats breakfast from home. But she purchases a hot lunch for mid-day.
I have picked up the application for free lunch and plan to get it turned it next week.
If she can afford to spend $260.00 a month on activities why can’t Hope buy school lunches?
I think you are on the right track. I’d like to see you put more into the emergency fund, because life happens. But overall, you are making progress!