Budgeting & Debt Management Help

[KayMMIV]

some (hopefully) useful posts on Budgeting and Debt Management

 

[KayMMIV]

Monthly Budget Breakdown, Tips, Links & Explainations

Our budget is the result of decisions and struggling in the past to set us up to the point we can function more easily on a lower income. Like building up a stock pile of everyday items and food, buying presents yearly at after Christmas sales, living in a 1 bedroom apartment working overtime & taking an extra job to pay off $30k+ in debt in 1 year.

I'd like to start off explaining 4 things not in our monthly budget. Commission- which is very variable. A variabe 3-4k pretax a year we make teaching relationship & communication skills some weekends. The fact my husband claims 0 dependents on his taxes at work so to take the max out (for us the amount saved outweighs risk/interest lost) Lastly, I use 4 weeks pay for our monthly budget. Not a years salary divided by 12. This makes 2 months a year with 'extra' pay periods.

All four instances we take advantage of to save money. Any commission goes to a savings account, this money is used when something comes up we don't have budgeted (medical, cars, appliances, ect). In the past when we didn't have jobs with commission I budgeted a set amount each paycheck for this. This is one of the most helpful tips I have. Things always come up, however little you can put in is that much less to try & find. For taxes all refunds go to debt or cds. This creates a cushion for if something were to happen financially (like job loss). The money we make teaching & the 'extra' pay periods 2x a year is used to pay off immediate debt/bills if something's came up, or put in cds.

At this time we do not have any money from my husband's salary going into a 401k, however- his job automatically deposits the equivalent of 3% of his wage into his 401k, we are not required to match this for it to be applicable. Otherwise I would probably find some way to contribute something to it.

Our mortgage is only $320 a month. Where we live this is actually not an extremely low mortgage/rent (average is $500-$750). We choose to live outside the city to get a lower average mortgage. We also choose to buy a foreclosed home. It's not our ideal home, if not for the price we wouldn't have considered it. Howeve, we knew we wanted me to stay home while our children are young (maybe longer if we decide to home school). So that was a sacrifice we choose to make to live off one income instead of two.

Lastly I round up on EVERYTHING on our budget to a dollar amount, and round the 4week pay down to a dollar amount. This just creates a tiny bit of cushion room, granted it's literally a few bucks at the most, but when things happen even a few bucks extra wiggle room can help.

Here is the actual breakdown of our living budget:

Pre-Tax x 4weeks Breakdown $1752.60

• $138.32 Health Insurance
• $146.26 Federal Tax
• $91.46 OASDI
• $21.40 Medicare
• $40.00 Missouri Tax
• $1315.00 Living Budget

Post Tax x 4weeks Breakdown $1315.00

• $50 Mohela- Student Loans
• $20 Veolia- Waste Management (trash)
• $43 Centurytel- Home Phone & Internet
• $60 Cingular- Cell Phone
• $50 Progressive- Car Insurance
• $260 Boone Coop- Electric & Sewer
• $205 Anthem- Health Insurance
• $35 PWSD#1- Water
• $320 Callaway Bank- Mortgage
• $120 Gas Stations
• $152 Food/other

Now I know some of you look at $152 a month for food, household, clothes & ect.. and go that's not possible! But it honestly is and if you've read some of my other tips in this blog you have seen some of how I'm able to make that work.

We never lack for anything. We buy clothes second hand (see the +100pc 3T Name-Brand Fall/Winter Wardrobe $50 Thrift!!! post for example), stockpile lesser perishable food & non-perishables (so never HAVE to buy certain items, we buy perishables & stock up on good prices- see the Food Budget- It's ALL About Stock-Piling! post for more info). We garden & we hunt (no more organic meat in actuality or spirit then humanely killed, born & grown up wild) or buy meat with friends/relatives to get bulk discount & then split the cost per lb per each family. We cloth diaper- no recurring disposable cost (CLICK HERE for helpful posts on cloth diapering available to see by everyone in my cding group on cm). Make our cleaning supplies (CLICK HERE for recipes)- cost is negligent. Make homemade soap (CLICK HERE for tips) for personally & cleaning, again good natural products at a fraction of retail.

There are many other things we do also, just ask if you are curious about anything specifically, other have been added in various posts to this blog, like Making Your Own Suncreen, being thrifty in holiday decorations, making your own wall art and so much more. I hope this breakdown, explaination, and tips helps out some of you who have been asking for a budget breakdown and budgeting tips!

[KayMMIV]

Beginning Debt Management Tutorial & Tips

In another cafemom group the group owner asked the question "What has helped you to become debt free? What websites, books, info, etc, have helped you to become debt free?" If you read this thank you for the great prompt mama. The following was my responce to her; I got to the end of it, reread it and realized it was a great tips post for this blog. I wanted to share it especially with those who are struggling to take those first steps to managing debt, but this would probably even be helpful to those who are well into their journey or even at your goal, you may just pick up some tips you hadn't thought of before. At the very least if you take nothing else from it I hope it makes for an informative/interesting read.

In answer to the direct question- "What websites, books, info, etc, have helped you to become debt free?" I didn't even think about using books or sites or whatever to become debt free honestly, it probably would have been easier if I had. I come from a background without much money at all and so always lived within my means, I was terrified of the idea of debt after watching my parents struggle with debt. I saved up $2500 and bought my first car flat out with cash when I was 19 years old (the same time I got my license). I had a credit card to build credit only and paid it off in full every month. I had never taken out a loan for anything, my parents couldn't co-sign my loans for school because of their credit issues but they made too much for me to get help from the goverment (even though most of what they made went to debt so there was no way they could help me with school). So I took classes as I could afford them.

When dh and I moved in together he brought almost 30k of debt with him in credit cards, student loans, engagement ring loan, car loan, pay day loans and ect... it was a mess. He had never paid late, thank Lord for that, but still. Then on top we ended up with another ~10k in medical bills from the health issues during the pregnancy (again thank Lord we had good insurance or it would have been several times what we were left with) then we were also trying to pay for our wedding that was coming up.

It was daunting so what I ended up doing was getting a binder and labeling it it Finances 2006 and I laid out EVERYTHING that was owed, how much a month and ect. The first thing I did was call each place where money was owed and see what the interest rate was and wrote that down and found out if there was anything we could do to lower it, which often there was- including with one of them just asking got it lowered and the student loans we got lowered from 8+% to 1.35% just for having them fax us a special agreement form and switching to automatic withdrawal of $50 a month from our bank account. If you are doing this for someone else & you aren't a legal spouse or guardian all you have to do is have them call the company or be on hand to give permission & proof of identity (usually social and birthday) for the company to discuss the account with you. The companies are use to this happening so it shouldn't be a big deal. The entry page I made up for each debt looked something like:

Such & Such Company
(side note of what it is, credit card, car loan, ect..)

Amount Owed dd/mm/yyyy: $$.$$

Minimum Monthly Payment: $$.$$

Original Interest Rate: $.$% Altered Interest Rate: $.$%

notes on how to lower the interest rate if possible

Then once I had everyone figured out as far as amounts, what was due when and interest rates I started working on how to condense the debt accounts down. This was pretty easy, I figured out what had the highest & lowest interest on the credit cards. Then I talked to the credit card company with the lowest interest rate, got them to extend his credit there and mail us checks. Then I switched as much over from the higher cards to the lower one as possible, I think I totally closed out one card and paid off about half of another. So then I went back and put a big X through the page from the above quote for the closed card. I suggest doing something like this, it's very satisfying and helps you feel like you are getting somewhere, proof you can see and the action it'self of the big x through the debt is very theraputic in my opinion.

I also made sure the companies faxed us a sheet saying the account was closed when we closed each debt account. This was important later because one particular credit card company (citi) tried to screw us, multiple times, and without the fax it would have been very hard to fight. So every time I closed a debt account I always asked for faxed proof that the account was closed with a zero balance and no further charges are owed from us to the company. I kept the payment records and faxes in manila envelopes in my desk drawer with a copy of the above quoted page written on the front of the envelope so I could find each debt's info and important papers easily.

I also started another section in the finance binder that what the monthly & biweekly (since that's how we got paid) budget. For a more in depth look at monthly budgeting you can check out my post- Monthly Budget Breakdown, Tips & Explainations. Now that I'm more use to budgeting I just break it down monthly then break it down by dating when things get paid for the biweekly part. For example:

www.mohela.com
$50 AutoPay 15th of each month

www.billonline.com/veoliaenvironmental
$58.54 3/28

www.centurytel.com
$41.57 05/10 (call in to make sure went, technical error showed)

www.cingular.com
5738237631 $59.13 4/26

www.progressive.com
paid $295 2/13 ‘til sept

www.booneelectric.coop
169369 $198.17 05/10

www.Anthem.com
204.76 04/30

 

The above is an excert of a few accounts from the version I keep on the computer. Each month gets a seperate on hand paper write up in the journal still, the version in the computer is an up to date easy to access and record while doing bills on line- this is especially helpful for keeping track of the ones like auto insurance that we have gotten where we can pay off 6 months at a time and save even more money that way with the 6 month discount. The date it's labeled is the date I paid it, then after I see the payment clear on our bank account I will go back and highlight (with the yellow highlighter tool on word) the payment info to show it's cleared the account. Just an extra precaution to make sure things don't get mixed up with how much money we have in the bank. However, when starting out it was really helpful to do both a total monthly budget breakdown and a what your you're going to pay each pay period budget breakdown.

Once I had the debt consolidated down to fewer accounts I filed the closed accounts in a new section at the back of the binder and set up an order for what to pay off first (again what had the highest interest rate) I didn't set up a certain amount to pay, I literally just would pay as much as we could spare after bills, groceries and minimum payments to the other debt accounts.

It was at this time I also started another budget technique we still practice. I set up up a seperate binder section for each 'event' we would need money for. One of these is always what we call the 'uh-oh' expense, when the car breaks down or some other uh-oh happens you need money for. At the time one was a 'baby' section (we moved in together shortly after finding out we were pregnant) and another was a 'wedding' section, thankfully we had already put the down payments on all the wedding buildings and priest and had bought my dress and (although I bought it before being pregnant, so for a while we thought we were going ot have to buy a new one) so that just left decorations and other ods and ends which still add up, but it could have been much more daunting. Anyways, I degress, I also did a christmas & gifts section (check out my Tips For Paying Less For Gifts post for what I do now for christmas and other gift occassions, this has saved me thousands of the last few years). But you get the idea, then I would sit down and figure out what was needed (as close as we could know anyways) for each occasion and guestamate a dollar amount.

You can go a few ways with how you work it from there. To start out I took more manilla envelopes and labeled them with each 'event' and we started off putting $25 from each of our paychecks (so $50 a pay period) to 'events' and we would just withdraw the money and put a certain amount in each envelope and date and amount the envelope on the front, then when we took money out of it to pay for an expense for that event we would also date and amount that on the front. This just helped keep track of it and worked pretty well. BUT keeping money in the house like that isn't always great for sleeping easy. So another way we tried was setting up a seperate savings account for each event, but for us this also proved more confusing, and a hassle then helpful. What we finally ended up doing was setting up one savings account, and keeping track of money deposits and withdrawels for what event in that event's section in the finance binder.

It's also really helped us to stockpile (see Food Budget- It's ALL About Stock-Piling!) and to seach for deals when buying things instead of buying at full price (that's why you often see me posting stuff like It Never Hurts To Ask- Making A Deal, BOGO & $20 off $40 Gurney's Plants & $50+ of FREE Natural Products!!!)

hmm.... I am sure I am not telling you all the set up, something seems to be nagging but I can't think of it, so I'm going to leave off there. If anything isn't clear or you want me to expand on anything or address something I didn't address here just let me know and I'm happy to help. We have paid off all of that initial debt except a few thousand in student loans- which we make more off cd interest right now then we pay in the interest of student loans and they are a tax write off, so we are just letting them sit and paying them off the minimum $50 a month. We have about ~6k in cds, savings and money market right now and bought a foreclosed house last august that we owe just shy of 40k on (we bought it for 35k and took and extra 5k to install ac and a new furnace and build new decks- since the others were literally falling apart and the old furnace didn't work) We've put another 5k into the house now in updates and the value has risen 10-20k, (it had risen 10k last time the bank appraised it, but we have done more updates since that should raise it another 10k) at a time when all the other houses are still dropping in value. But we used that same 'event' budgeting to come up with the money to do the updates :)

Anyways, hope something helps, but this is basically how we've done it. Please share your own tips below, or if you want anything clarified, or addressed that maybe isn't here buy you are struggling just ask and I'll be happy to answer from my own experience if I can.

[KayMMIV]

Food Budget- It's ALL About Stock Piling!

This is the first of a compilation and expansion of the tips and explainations in Monthly Budget Breakdown, Tips & Explainations sparked by questions and conversation in response to the Monthly Budget Breakdown, Tips & Explainations discussion and question replies on Cafemom.

http://green-mom.blogspot.com/2009/02/food-budget-its-all-about-stock-piling.html

I know it doesn't seem like it would make such a big difference but it does. You would be amazed at the deals you can find when you don't HAVE to buy certain foods. Stock piling is wonderful when you are on a tight budget. I talked to another mama yesterday on cafemom that has found out the same thing about stock piling and spends an average of $160 a month for food, but also has a "disastrously large stockpile" as she put it ;-) We normally spend $100ish once a month or sale items (I've figured out all the grocery stores in town that have organic and a route that takes the least gas) then use the $50 throughout the month as we need perishables or whatever.

I try to pick up as much organic as possible but I will not buy organic if it's not in the budget. As a result we have a pretty even mix of organic and conventional, leaning more towards organic. I make a lot of our own food like bread and cook meals from scratch, so that helps to get cheaper organic food when you are buying basic ingredients instead of the finished product. Honestly, mostly I have found that organic will go on sale/discontinue for the same prices as conventional goes on sales (or even lower since stores often discontinue organic for super cheap prices), and I can normally find coupons for organic in the pamphlets at our local health market, so check out the pamphlets at your local all natural stores for coupons.

When you see a good deal of something you use, buy it up. That's what stockpiling is! Stockpiling frees up larger amounts of money to use at one time on buying a lot of one item as good prices. Here's some examples of prices we find and buy large amounts at so you can see how this saves money (you will find low prices more common then you think when you are stockpiling and only buying when you find good deals):

• We got 20 boxes of organic spaghetti for 10¢ a box a couple months ago that was being discontinued from that store, I grabbed the rest of the boxes. Normal size boxes of long spaghetti.
• We got a shopping bag full of organic cheese for $1 for 8oz on a sale last month (cheese is stock-pile-able, it freezes and unfreezes really well)
• We stock pile lots of cans, organic cans go on sale a lot for the same price as their conventional counterparts or cheaper if the store is discontinuing it from the shelves, so when they do I will stock way up on them.
• We bought several bags full of canned organic tomato sauce for 15¢ a can in November that is great, because we use it for spaghetti, pizza, lasagna, meatballs, sauce on some meats and whatnot, just add applicable spices and you have whatever tomato based sauce you need.
• We stock up on organic flours whenever they go on sale. Those don't normally go as cheap as other organic products; I think the cheapest I have gotten organic flour for is $1.80 for 5lbs on time, which is still very cheap.
• The same with sea salt, it does not normally go as discounted as other organics products, but sometimes will, so we stock way up when it does. 

A great point another mama on cafemom made is that it doesn't help to get deals on foods you don't like. It's not as big a deal when you are buying more basic ingredient type items- sincethe taste difference from brand to brand isn't as large, and even where it is you are mixing these with spices and other ingredients to make the finished product. When buying prepackaged type food this is more of an issue. Personally we don't buy as much convenience food anymore, but in the past have found you can fix taste issues with spices or by making something entirely different out of it. That can be a pain though, especially if you were going for convince to begin with. Another quick tip for taste when buying canned veggies/fruits and ect.. that tend to taste like can, have tons of salt or tons of sugar, I put them in a colander (smaller the holes in it the better) and rinse them out in the colander under hot water in the sink. This helps a lot to get rid of the excess salt/sugar and to wash away some of the can taste that permeates the liquid in the can.

The whole reason stock piling works is that you just need a handful of things to be on sale each month when you are stock piling. You aren't looking to buy a variety of items and need many to be on sale, you just need a few good sales and you stock up on those particular items.  We still grab conventional when it's a good enough sale though or if we do get down where we need to pick up something until we find it on sale again (this rarely happens though, and hasn't for months) But I don't think there's any way we could afford me to stay home, or afford any organic at all without stock-piling. :)

[KayMMIV]

Trade Instead Of Buying

Trading is a wonderful way to not only get what you need for no or little out of pocket cost but to also send items you don't need to a new home where they will be useful.

For example. Right now I'm in the market for kangaroo style wraps for the first few months after baby is born. These wraps retail for anywhere from $30 to hundreds of dollars before shipping. Even used I haven't seen them for less then $20. I want at least 2 because I plan to use them a lot and want to be able to wash one and still have a second to use. This means at the least if I bought used I'd be shelling out $40 and new I'd be shelling out $60 + shipping.

Instead I posted in some of my related groups about being on the lookout for kangaroo/moby/loveyduds style wraps and what I have available for trade. Now I have 2 pending trades and am looking at getting 2 wraps for just what it costs to ship my part of the trade- which should be between $3 & $5 each.

So next time you are looking for something think about trading for it and saving some of the out of pocket expense.

[TelecommutingMo]

Wow, I thought I had a tight food budget. Our family of 6 spends about $400 a month on groceries. I do couponing and stockpiling. I will have to learn some new tricks from you.