Crunching Numbers

Today, I present an oversharing post on budgeting.  Now, as I've already made (hopefully) clear, our family is that of the one-income variety. And I'm still in residency, so the pay, while it's obviously more than I've ever made in my life, and is more than a lot of people make, isn't a whole lot for a family of 4 with a mortgage. So this is how we do it.

For some background, when D & I were in college, we were pretty poor. I was a single mom in college by the grace of an academic scholarship and he was a college student in the work-study program.  In med school, I suddenly was blessed with a stipend through a different scholarship.  D had a grown-up job by then, made a heck of a lot of money, and wasn't at home often enough to spend very much.  When we got married, we both through budgetary concerns out the window, bought whatever we wanted, and ate out almost every night.  It's not healthy to have a lot of money when you're very young, by the way. You become greedy and you waste a lot of things.  That changed when we decided to live on my income only, and budgeting became much more important.  It's even more of a factor now that we have 2 children, and a house payment.  So let's dig in.

First off, I went through our bills and factored up the average cost of every single thing we spent money on.  Car payment? Put it on the budget. Water bill? Budget for it. Clothing? Unless you want to be naked... Gas money? Can't walk everywhere in this town, so you'd better have money if you don't intend to take the bus. Even incidentals have to be accounted for. For instance, I noticed that for various reasons over several months, we were spending about $100/month on car maintenance (oil changes, new tires, windshield wipers, whatever). That had to go on the budget, too.  I also calculated how much we were spending on our credit cards every month. This all went into a nice pretty spreadsheet with formulas and labels and everything.

Then, I figured out how much I get paid per month through various sources, did some addition and subtraction and voila! I know how much money I can spend. At the beginning, the numbers in the income bracket were a heck of a lot lower than the ones in the spending column.  So then I went through and decided what we did and didn't need. Cable was unnecessary, so it went.  Eating out is not only expensive, it's bad for the waistline, so that wasn't too hard of a sacrifice.  Home decor changes and upgrades had to be put on hold, for the most part.  A car payment was too high, so the car was traded in (much to my husband's chagrin, and I've promised to make it up to him with a much nicer car when I get real money, so hold me to it, Blogosphere).  I even negotiated our internet bill down by about $15/month.  We stick to a grocery budget now, which prevents me from being brainwashed into purchasing a bunch of junk from the pretty displays at Target. I look at our bills every month and make sure that we're allocating money where it needs to go, and that none of the numbers have changed without me noticing.

The next step, once you've balanced your budget and it's going at a steady rate, is money goals. I keep a list of goals at the bottom of my budget spreadsheet. It includes short-term goals, like "pay hospital bills" and long-term goals, like "pay student loans".  Other examples of goals could be saving up for a vacation, saving for a new baby ;-), saving for that beautiful couch you saw last weekend, paying off a car loan, paying off a credit card bill, you get the picture.

At first, we had to tap into some of our savings, which was a bit of a downer, but now we're able to save a little bit every month, so I feel better about it. We also haven't had to touch D's retirement fund or stock from his old job, so we still have a lot saved up for a rainy day.  Although our grocery budget is tighter now, we definitely don't have to worry about paying for food. We've just changed what we do with the food we get.  I eat leftovers now (something I grew up doing, so I'm not sure how I started thinking it was such an undesirable habit).  E had to finish the breakfast foods we had before I'd buy more breakfast cereal.  It sounds so simple and commonsense, but see my statement above, about how we got careless.  We both come from families that are careful with their money, so we had no excuse other than the fact that we went straight from almost no money to too much money.

As far as how this impacts our kiddos, one of them is too young to care/notice (and her food source is free...).  For E, he doesn't know anything about how the bills get paid anyway.  He asks how much money we have sometimes, but I always dodge the question and say we have enough (haha, which is what my mom always said).  I think the only time he really notices money is when it comes to groceries and eating out.  We try to put the emphasis on health and avoiding waste rather than money, or that we're not eating out because we're saving money for something else, not that we don't have the money to do it.  There are definitely ways to screw with your kids' psyche when it comes to moolah.  One way is to act like you have too much of it and give them everything they have ever wanted, so that they've never had to earn a thing and are incapable of feeling grateful for what they do have.  But I think it's also possible to err in the opposite direction, so that your kids have an overwhelming desire for money and possessions because they never had either.  So we remove money from the equation entirely, and make it more about what we need rather than what we can spend.

There have been a lot of good things about having only one working adult in our family, but I think one of the biggest lessons has been about money. I'm definitely more appreciative now about what we do have. And budgeting took a lot of the question out of our situation. Bills weren't a surprise any more, and when surprises do happen, I can change my numbers around a little bit to find room for negotiation.  It appeals to my obsessive-compulsive side and helps me feel that I have more control in my life overall.  Which is a nice thing to feel in an uncontrollable world!