The Start to Stretching the Budget




My goal this year is to save a few dollars.  It is going to be challenging.  Neither one of us are great with money.  We make enough to enjoy our middle class lifestyle with a few nice vacations and saved enough to buy some land.

Ideally we'd like to save between $5,000 and $10,000.  I think it is better to set a defined target rather than a range so my goal will be $7,000.  The reason for the lower value is based on 2 unexpected bills in the last week of 2018.  My husband's transmission was acting up and our 10 year old fridge died.  $2000 later!  This is why you save, right???  To cover those unexpected expenses?  It isn't fun but it is adulthood.

I did a good deal of research on personal finances to ground myself on perspectives.  At this point we are saving for retirement.  A financial adviser said we needed to put away another $500 a month, buy 2nd disability insurance for me and another life insurance policy all while saving $300 for our daughter college.   The adviser before him told me to 'save as much as I could'.    I was blown away and honestly don’t think it is realistic  or  valid advise from either adviser.  I don’t think either work acting in my interest or as fiduciary. 

So I started doing my homework.  I suggest you talk with a professional a few times in your adulthood journey but know that they make a great deal of money on your money so their advice may not be in your best interest.

My suggestion is to start with building a budget to be able to work toward the 10 Rules of Personal Finance as advised by Harold Pollack

Harold Pollack

How to create a budget
  1. Find out how much you are really bringing home. 
  2. Get a grasp on all of your spending
  3. Separate out your Core Expense, your Semi-Influence-able Expenses and your Influence-able Expenses. 
  4. Then work to maximize your Budget!

Let's get started
1. Find out how much you are really bringing home. 
Take your last pay check and look at the Net Income.  Add any other income that you know you have. 
For Example:  We have a rental (house we bought in the housing bubble that we aren't able to sell for what we owe).
We have some funds removed from our check, pretax, which we are reimbursed for.  These are for childcare and healthcare costs.
Anticipated Income


Yearly
Net Income
$60,000
Rent
$10,000
Childcare Reimbursement
$5,000
Healthcare Reimbursement
$1,000
Total income
$76,000
Monthly Income
$6,333

2. Get a grasp on all of your spending
This step will take the longest and hardest by far.  It is an excellent exercise to let you look into your spending and behavior and evaluate your choices. 
I downloaded all of our monthly statements from our bank's website.  This was all  of our credit cards, savings and checking accounts month by month running tab.  I downloaded them in xls and other formats to put them into excel.  
We have over 900 lines for 2017.  I removed paycheck deposits and transfer transactions.  I focused on money going out and money coming in that was not part of our Anticipated Income.

Example of my spreadsheet.  I added a few rows to help allow me to create pivots and classify my spending. 
Date
Month
Year
Description
 Amount
Classification
Card/Account
Note
1/3/2017
Jan*2017
2017
Direct Payment - Loan Pymt 
 $        862.74
Mortgage
Joint check

1/3/2017
Jan*20172017Direct Payment - cellphone$130.00CellphoneJoint check
2017/01/03
Jan*2017
2017
Restaurant
 $             8.87
Restaurants
Husband Checking Account

2017/01/03
Jan*2017
2017
Kroger 
 $           35.60
Groceries
Husband Checking Account



3. Separate out your Core Expense, your Semi-Influence able Expenses and your Influence-able Expenses. 
Now it is time to break out the expenses.  The reason I suggestion Core Expenses, Semi-Influence-able and Influence-able Expenses is it will allow you to make judgement calls on what you need and where you spend your income.

Example:
These are the bills you have little control over and can expect to pay each month

Core Predictable Expense

Expense
Monthly Cost
Home
 $     860.00
Rental
 $     760.00
Land
 $     750.00
Daycare
 $     500.00
Energy
 $     140.00
Water
 $     160.00
Trash
 $        15.00
Bed
 $     120.00
Life Insurance
 $        30.00
Taxes
 $        20.00
Car Payment
 $     400.00
Subtotal
 $  3,755.00

Core Semi-Influence Expense

 Expense
Monthly Cost
Health
 $          120.00
Kitties
 $            20.00
Cable
 $          130.00
Cellphone
 $          130.00
Car Insurance
 $          350.00
Subtotal
 $          750.00


Influence Expense

Expense
Monthly Cost
Charity
 $                   10.00
Entertainment
 $                   60.00
Groceries
 $                 500.00
Restaurant
 $                 100.00
Retail
 $                 200.00
Auto Upkeep
 $                 100.00
Home Upkeep
 $                 100.00
Gas
 $                 200.00
Subtotal
 $             1,270.00

 4.  Then work to maximize your Budget!
Here is where I will work to stick on plan and save
2018 Budget

Core Expenses
 $      3,755.00
Core Influence Expense
 $          750.00
Influence Expense
 $      1,270.00
Total
 $      5,775.00
Year Spends
 $    69,300.00
Yearly Income
$76,000
Savings
 $    (6,700.00)

~Anne

References:
How to Budget and Save money
Jordon Page Fun Cheap or Free
YouTube Freak

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