The Personal Budget – A Sobering Status Checker

Long story short, my wife and I have been discussing the possibility of her being a stay at home mom when we start having children.  Don’t get too excited, because there’s nothing cooking (um, excuse the pun) right now to speak of on that front. Just food for thought really at this point.

Anywho, being the financially focused person that I am, I thought I had a pretty good sense of where we were financially from an income and expense standpoint on a monthly basis.  Since we’ve been (relatively) successful so far in saving my wife’s entire paycheck, not having that income would certainly require a significant ramp down in our spending rate and most definitely our savings rate.  Needless to say, the thought of this literally kills me, but alas, I thought we’d still be ok.

As I’ve discussed in previous posts, I have a general aversion to budgets and believe an “automatic pay-yourself-first” method is generally more sure-fire and hassle-free. But alas, I thought I’d make a quick visit to the “Trends” section in my Mint account to take a gander at our level of spending over time.

So there I was staring at my page yesterday in sheer disbelief…

I was absolutely shocked at how much our spending had gotten away from us over the past year or so since we purchased our house!  My heart was racing and my head spun as I tried to fathom how this could be possible.  I clicked through my transaction history to see what caused all the madness.  Yep, lots and lots of home furnishings, appliances, decorations, updates, etc.

I calmed down a little once I convinced myself that most of these home projects were behind us, but I still needed to dig a little deeper.  I needed to actually map out our income, as well as our regular/recurring expenses to see what’s left over for discretionary “one-time” purchases that we convince ourselves are “just this once”.  You know what I’m talking about: A new pair of shoes, a purse for my wife, an expensive dinner out, a new coffee table, a toaster oven, whatever!  Every month it hasn’t just been SOMEthing, it’s been A LOT of things.  And they all add up!

So I decided once and for all to build an actual, dare I say, BUDGET!

So here are my recurring monthly expenses in all their glory:

Recurring
Home Mortgage (incl. T&I) plus $50 towards principal       1,503.00
Rental Condo Mortgage          521.25
Rental Condo Association Fee          225.00
Lawn Mowing            27.00
Total Home      2,276.25
All Other Insurance         261.26
Church          216.67
Bible Lesson            12.95
Total Church         229.62
Bar Method          155.00
24hr. Fitness ($55/yr…nice deal, eh?)             4.58
Heather Hair ($160 per quarter)            40.00
Total Health/Fitness         199.58
Student Loan         158.04
AT&T Uverse Bundle          151.47
Cleaning service ($95 bi-weekly)          205.83
Cell Phones          133.00
Ameren (12mo. Avg. = $68)            80.00
Leclede (12mo. Avg. = $80)            90.00
American Water            40.76
Sewer            35.09
Haircut            30.00
Trash/recycling ($62.85/q)            20.95
Transunion Credit Protection             9.95
Total Bills         797.05
Barron’s ($103.18/yr)             8.60
Amazon Prime ($99/yr)             8.25
Netflix             7.99
iTunes Match ($24.99/yr.)             2.08
Total Entertainment           26.92
Total Recurring    $3,948.72

My monthly recurring expenditures total roughly $4k, and this is before food and gas!   My food bill has averaged $1,100/month and gas has averaged about $230/mo.  So all in, that’s almost $5,300 in weekly spending!  That’s just ridiculous, and this has to be cut down.  Again, these are mostly recurring expenses, so they don’t include all the one time spending we’ve been doing as new homeowners.  My hope is that we’re squared away on that front for now, and will be able to significantly reduce our home related outlays from now on.

But anyway, I made the first step in spending control by cutting our AT&T Uverse subscription, and signed up for Charter Internet only for roughly $40/month. I think we can get by on Netflix for a while, considering we rarely watch TV anyway. This will save $100+ give or take.  Ok, that’s a start, but it’s still a far cry from where I need to be.

We also are cutting our cleaning service ($95 bi weekly). Ouch! I guess that means we need to buy cleaning supplies and vacuum cleaner.

In addition, we’ve got to focus on our food bills, which are incredibly high.  No more eating out on the weekends, as this tends to boost the number quite a bit.  Two people should easily get by on $800 per month on food, so we’ll need to cut at least $200 here.

I mentioned above that we’ve attempted to save/invest my wife’s entire paycheck which has taken the form of an automatic transfer from my checking account into my Scottrade brokerage account.  Unfortunately, we had to put this on hold for about 6 months following the closing of our house in order to get all of our huge expenses (appliances, furniture, decorating, etc.) out of the way.   And we still haven’t quite gotten over the hump yet.

Well as they say, the past is the past.  We’re moving on with a determined goal to reduce our expenses by cutting luxuries and more actively challenging ourselves on purchases.  Hopefully our home expenditures have finally begun to trend downwards as well.

Like I’ve always said, Income – Spending = Savings and Investment as the perennial equation for wealth.  In order to make the right site of the equation bigger, you have to either increase saving or decrease spending.  In many cases, it’s easiest to focus on the controllable: your level of spending.  I’ll keep you updated our progress.

How do you feel about budgeting vs. an automated pay-yourself-first method? How are you cutting back your monthly spending?  I’d love to hear about it!

Sincerely,

Wes

Comments

  1. Pamela says

    Hi Wes,
    I just discovered your site thru your interview at Gen Y Finance Guy! I had to respond to this post because I have been there and I have a few suggestions for your wife.

    I work in I.T. and wanted to be home with my kids. However, working in I.T. as a developer you may not have a job to return back to if you step away for a few years. Employers worry that you are not up to date, don’t have the drive, skill set is stale and worse – you are now older and won’t be able to pull the all-nighters from years past. I didn’t think it was possible until I was in a big meeting and someone asked where a co-worker was and the Associate Director replied “Oh, she works part-time, today is not her day to be in the office!” Bingo! Keep in mind no one had ever mentioned that possibility and it is a very long story but the result is – I was able to work part time for 7 years. I was on salary (my hourly rate disqualified me from being hourly) and I did get taken advantage of (more times than I care to count) but it was an experience I will never forget.

    For your wife – in our school district (Southern Ca) my children have been in classrooms where teachers “shared” a contract. One teacher would work 3 days and the other two days a week. My youngest has been in that classroom twice and FABULOUS experience both times. Another option is tutoring. With the Common Core – subjects are NOT being taught as back in our day. We have a school teacher who was laid off – she started tutoring the Common Core way,works with the child’s teacher to formulate a plan to get a child caught up (she knows all the teachers) – she makes $40 an hour – works Mon – Fri from 3 – 8pm and is booked solid with a waiting list.

    Best of luck to you and your wife. One last thought that I tell all prospective and new parents “This time will NEVER come back around again. No do-overs.”

    • Wes says

      Pamela,
      Thanks so much for sharing your story. I showed this to my wife, and she really enjoyed what you wrote. Time will tell how it all works out when we have kids, but your last point is right on! Time spent with children is quite possibly the most important time of all.
      All the best,
      Wes

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