Tomorrow is the first day of a new year and I’m excited about some of my financial and budgeting goals and resolutions. 

Goals:

YNAB Budget
December marks the third full month of using my YNAB Pro Budgeting Software* and I’m excited to get a fresh new start tomorrow.  Instead of rolling over my 2007 data into 2008, The Husband and I have agreed to start the new year with a fresh new budget.  He has agreed to share all of his expense and income info with me so I can combine it with my receipts for a complete and accurate family budget instead of the more “household” budget I’ve been keeping so far.

Don’t get me wrong — my husband has never hidden money or info from me.  It’s just that he’s better at detail stuff and has always been the one to pay the bills — a task I willingly handed over.  I, as the stay-at-home-mom, am in charge of 99% of the family purchases — a task he willingly leaves in my capable hands.  In other words, we each do what we do best:  he makes the money and I spend it 

Since purchasing and setting up the YNAB software, I’ve been sharing the data with him and he’s gone from sceptical to cautiously interested to an as-long-as-I-don’t-have-to-do-it convert.

I’m really excited about this step forward for two reasons.  One, even though we’re definitely living within our means (spending less than we earn), I think we could easily trim our expenses without feeling a pinch.  I’d like to take an active role in putting more into savings every year and spending our money a little more consciously and wisely.  And, two, as much as I’ve learned not to live in fear of tomorrow, I can’t hide from the fact that my husband is old and sick and the odds simply are not in his favor to be around for another 30 years (he’d be 103).  The more informed I am about how much money we have and where it is, the better off I’ll be if and when he can no longer handle our finances.

So, put simply, that goal is to enter absolutely every expense and income — no matter what the source — into our YNAB program in 2008.

Not Paper or Plastic!
Another much simpler and somewhat silly goal is to keep track of how many bags I don’t use — in all my shopping, not just at the grocery store — by using my four ChicoBags* instead.  I also want to track how much bag credit I earn over the course of the year by using those same bags.  I plan to keep track of both the number of bags and the total bag credits earned in the side column of my blog.

If you’d care to join me in this challenge, please sign up in the comments below and we’ll do regular check-ins on our challenge status.

Resolutions:

No KnickKnacks or Trinkets
I’m not one prone to purchasing knick-knacks or trinkets but every once in a while I go all nutty and buy something silly for around the house.  Why do I do that?  They always end up being a waste of money as well as a waste of space and energy.  Knick-Knacks and trinkets take up space and they gather dust.  I resolve to not buy anything resembling a knick-knack or trinket for my house and I expect my readers to call me on it if they find anything like that in my daily $$ postings.  The one exception is artwork.  I do not consider artwork for my walls to be knick-knacks or trinkets and my walls are pretty pathetically bare.  I am slowly and carefully trying to remedy that situation.

Returns
I would say that my most costly weakness is un-returned merchandise.  I get heart palpatations when I think how many things I have lying around the house that I own but don’t use simply because I never got around to returning them.  If I were to kick just one bad habit, this would be it.  I resolve to end the year 2008 without adding a single item to my collection of non-returned items.

Culture and Life-Enrichment
The one area in my budget that has been most neglected is that of cultural and life-enriching events.  I have nothing at all budgeted for taking the children to concerts, plays, and other cultural events.  I resolve to correct that oversight in 2008.  I will create a category in my budget so that when I hear of an event that I know we’d enjoy, I will already have money set aside and won’t cringe at the price per ticket and say we can’t afford it.

Wednesday evening, while The Son was busying playing his cello in orchestra rehearsal, I ran a couple of errands.  The hardwood floor store didn’t have what I was looking for and I still had about 45 minutes to kill so I stopped in the Marshalls down the street.  I needed to return that pair of “swish” pants.  Having plenty of time left and no reading material with me, I decided to kill the rest of the hour looking around the store.  I ended up finding a nice $54 Lanz of Salzburg flannel nightgown for $16.99 that I thought The Daughter would like.  And she did — like it, that is.

  But as I entered the purchase into my YNAB budget that night, it occurred to me that I’d just spent The Daughter’s money.  We’ve been working up to her having a set monthly clothing allowance but now the YNAB Program* makes it really easy to keep track of exactly what I spend on her clothes and exactly how much she has left in her allowance at any given point.  So after entering the purchase in the register, I clicked on the “Budget” tab and saw that her clothing allowance had just decreased by $18.36.

It struck me that I had just spent her money and that we had a potential problem here.

The reasons for giving The Daughter a monthly clothing allowance are 1) to demonstrate to her how quickly expenses such as clothes, shoes, bras, undies, sportswear, ect add up; and 2) to help her learn to live within a limited budget and make the corresponding necessary decisions now, while she’s still at home, rather than later when she’s on her own.

So as I entered the expense and saw her budgeted allowance drop, I realized that I’d have to make a few changes to my own shopping habits.  In truth, I don’t shop for The Daughter very much.  She’s a pretty typical 15-yo girl — she thinks my taste sucks, she likes to choose her own clothes, and I’ve taught her from early on to always try something on before buying.  The nightgown purchase was a whim.  I knew she could use another nightgown, I thought she’d like the pattern, and, well, just because.  [Note to self:  work on this impulse shopping thing. ]

Wednesday night, while tucking her in to bed and saying “good night”, I mentioned that I’d spent her money and that she needed to decide whether that was money she really wanted to spend and whether the nightgown was what she really wanted to spend it on.  With school and sports and life-in-general, we didn’t return to the issue until this morning.

Yesterday, The Daughter went window-shopping at the mall with her schoolmates/teammates/friends and ended up finding a $50 pair of American Eagle jeans she wants.  Having no money on her at the time and knowing that such a big purchase should be carefully considered first, she put them on hold as I’ve taught her to do.  Her plan was to ask for the jeans for Christmas.  I said “no” to Christmas — I’ve already decided what the kids are getting and a pair of jeans isn’t on the list.  “But,” I said, “you can take them out of your clothing allowance.”  Hmm.

Now some people would freak at spending $50 on a pair of jeans, myself included.  But I know that that’s actually a pretty average price for a pair of “designer”-type jeans.  I don’t like spending money on clothes but I sure can appreciate that some brands fit better than others.  I personally see no point in paying $15 for a pair of generic jeans that don’t fit well and one doesn’t enjoy wearing.  I also know, from experience, that AE jeans do consistently fit The Daughter well and that she gets her money’s worth out of the two pair she currently owns.  So I agreed to take The Daughter back to the mall today to purchase the jeans.

This talk of jeans and clothing budget brought up the topic of the nightgown.  It also brought up the fact that currently her “allowance” is completely arbitrary.  I’ve been assigning that budget category $100 each month for the past three budgeting periods (months) but I have no idea, really, of how much I think she should get.

One hundred dollars a month seems like an outrageously large amount of money.  But if you add up what we’ve spent to clothe her over the past few years, I suspect that $100 is pretty close to what we average every month.  She’s 15, after all.  Tastes and preferred brands aside, the past few years have been a complicated period for her.  She’s grown.  And developed.  And her style preferences have matured and gone through several changes.  In addition, she started attending school full-time, stopped swimming competitively, and joined two new sports.  So between basketball shoes and cross-training shoes, track pants and volleyball socks, sports bras and ankle braces, the dreaded “muffin-top” induced cup-upsizing and a change in underwear preferences, normal-growth- and weight-gain-caused outgrowing of pants and shirts, dressy-clothes and accessory requirements on game-days — all of this really adds up but I had no idea of how much it all added up to.  So I assigned a very arbitrary and most-likely generous $100 per month.

Now that her growth has slowed or maybe even finished and her weight stabilized, one would hope that the influx of new clothes would slow down. But, at this point I’m going to stick to that budget allowance — while also informing The Daughter that it might be lowered if deemed prudent by the parental units. :-)  And I’m going to stop spending her money.  Every single clothing and accessory purchase for The Daughter — except gift purchases — will come out of that budgeted allowance.

Oh, and the nightgown?  It’s going back to Marshalls and when the return is done the funds will be returned to The Daughter’s budgeted allowance.  And not because she has decided that a new nightgown is low on her priority list but because, after trying it on, she doesn’t love the fit and doesn’t think she’d wear it much.  I completely agree and fully support her decision.  That will teach me to spend her money!

November marked my second whole month of using the YNAB software* and I feel as if I’m getting a firmer grip on what the software can do for me and how to get the most out of it.  The Husband willingly sat down with me on the last day of the month and looked over the results of our November spending/budgeting.  This was an exciting step forward in my plans to become more involved and informed in our complete financial picture.

Included in my numbers below are ALL of my expenses plus whatever expenses The Husband told me about or gave me copies of invoices/receipts for. What are not included in these numbers, like last month, are his everyday expenses (dry cleaning, the occasional grocery stop, his prescriptions, gas and car expenses, and his lunches). I’d estimate his expenses this month at about $150 - 200.

The expenses outlined below are categorized just as they are in my YNAB budget.  The first number is the amount spent in that category in November.  The second number is the difference (+ more) or (- less) between November’s number and October’s.  If you’re comparing these numbers to the ones I published in my October overview, things might not come out perfectly — I found one or two instances of expenses that were recorded but not saved and a few things that were miscategorized, etc.

In November, I/we spent a total of $8,552.06 (that’s $2,008.09 more than in October).

Here’s the breakdown:

Auto Expenses — $1,092.74 (-1,232.72)

• Gas — $184.89
• Loan — $904.15
• Maintenance, Repairs, Tires — $3.70

Charity — $186.00 (+98.68)

• Offerings — $185.00
• Miscellaneous — $1.00

Food — $815.12 (+11.86)

• Groceries — $764.27
• Eating Out — $50.85

Gifts — $479.10 (+388.68)

• Immediate family — $296.39
• his family — $32.09
• my family — $111.98
• other — $38.64

Household — $148.93 (-20.43)

• Consumables — $72.22
• Durables — $13.79
• other — $17.16
• Postage, shipping, supplies — $45.76

Housing — $1,971.64 (+157.06)

• Improvements — $331.54
• Mortgage — $1,640.10

The Son — $131.48 (+93.60)

• Allowance — $7.50
• Clothing — $123.98

Kids — $140.00 (-198.43)

• Equipment & Rentals — $35.00
• Lessons & Activity Fees — $105.00

The Daughter — $2,935.75 (+2,710.62)

• Allowance — $30.00
• Clothing — $90.00
• School Lunches — $23.75
• School Tuition — $2,792.00

Medical/Health — $151.66 (+40.03)

• Co-pays — $25.00
• Prescriptions — $72.42
• Vitamins/Supplements — $54.24

Personal — $114.42 (-109.74)

• Books & Music — $13.97
• my Clothing — $34.27
• Other — $15.82
• Toiletries — $50.36

Recreation — $26.28 (-26.00)

• Entertainment — $26.28

Utilities — $358.94 (+94.88)

• Cable & Internet — $38.84
• Gas & Electricity — $103.30
• Phone — $143.24
• Water — $73.56

Well, there it is in it’s full glory.  You really can’t ask for more transparency than that, can you?  Could we live cheaper?  Most definitely.  I think we can cut our expenses to some degree without feeling a pinch.  If drastic measures were required, we could make drastic cuts.  But for now, they aren’t needed.  My goals in the next year are 1) to continue to track and anticipate/budget our expenses using my YNAB software* and 2) to see how many pennies I can pinch before my family says “ouch.”

I know that Thanksgiving is now just a distant, pleasant memory for most but I hope you’ll forgive me for my belated Thanksgiving post.

I’ve just been looking over my YNAB budget* and discovered an unforeseen benefit of the holiday — a lower gasoline bill this month.  With The Daughter being out of school for a whole week and The homeschooled Son not having classes, lessons, or rehearsal, and neither child having games or team practices, I estimate that the holiday saved me somewhere in the neighborhood of $60-75 worth of gas for The Tank.

In the spirit of sticking to YNAB’s Four Rules (specifically, Rule #2:  Give Every Dollar a Job), I’ve moved those $$’s originally budgeted to Auto: Fuel over to my Gifts categories where I’m sure they’ll be put to use (or more honestly, where they’ve already been put to use).

I’m already anticipating what the two-week school and activity vacation at Christmas/New Year’s will do for my gas budget (and, as a result, my gift budget).  Don’t get me wrong, though — I’m not pumping additional $$’s into my gift budget and planning purchases I hadn’t already budgeted for.  My gift list remains the same.  All I’m doing is taking real dollars that won’t be spent on gas and allocating them to gifts; before the gasoline windfall was discovered, the funds for gifts were coming out of other discretionary budget categories such as vacation and savings.

It’s been busy around here so my monthly overview/wrap-up took longer than I’d hoped. I wanted to make sure my numbers were as accurate as possible so I took the time to reconcile my YNAB budget with my three credit card accounts, Paypal, and my checking account before posting this overview.

This was my first whole month of using the YNAB software* so I don’t have any numbers to compare this data to. But I think it will prove an interesting and helpful baseline for the future. Included in my numbers are ALL of my expenses and whatever The Husband told me about or gave me copies of invoices/receipts for. I’m still working on introducing the YNAB budgeting software to The Husband; he’s been very open to it but these things take time. What is not included in these numbers, then, are his everyday expenses like dry cleaning, groceries he buys (minimal), his prescriptions, gasoline in his car, car maintenance (which I know he did this month) and his lunches. I’d guess that his monthly undocumented expenses are in the $200-300 range.

So, are you ready for this? It’s positively scary! I/We spent a total of $6,484.90 last month.

Here’s the breakdown:

Auto Expenses — $2,325.46

• Insurance (Impreza, 6-mos.) — $503.31
• Gas — $270.22
• Loan — $904.15
• Maintenance, Repairs, Tires — $647.78

Charity — $87.32

• Offerings — $75.00
• Miscellaneous — $12.32

Food — $783.03

• Groceries — $712.33
• Eating Out — $70.70

Gifts — $90.42

• Immediate family — $37.86
• my family — $44.06
• other — $8.50

Household — $169.36

• Computer Software — $39.95
• Consumables — $56.49
• Durables — $21.16
• other — $20.81
• Postage, shipping, supplies — $30.50

Housing — $1,814.58

• Improvements — $174.48
• Mortgage — $1,640.10

The Son — $37.88

• Allowance — $6.00
• Clothing — $31.88

Kids — $338.43

• Books & Materials — $6.71
• Equipment & Rentals — $35.00
• Lessons & Activity Fees — $255.00
• Other — $41.72

The Daughter — $255.13

• Allowance — $24.00
• Clothing — $101.47
• Cosmetics — $71.16
• School Lunches — $28.50

Medical/Health — $96.14

• Co-pays — $25.00
• Prescriptions — $15.59
• Vitamins/Supplements — $71.04

Personal — $224.16

• Books & Music — $54.41
• my Clothing — $86.12
• Other — $58.09
• Toiletries — $25.54

Recreation — $52.28

• Entertainment — $52.28

Utilities — $225.22

• Gas & Electricity — $96.58
• Phone — $128.64

I wonder how this compares to other families in our area. How do these numbers compare to your?

Late last week in the wake of our What if Daddy Were Rich conversation, The Husband and I were discussing budgets. I’d been a bit reluctant to tell him about the YNAB* program I’d bought and was trying to learn to use because I knew he’d write it off as another wild hare I was chasing (and possiblity rightfully so). So I’d been introducing the subject of budgets and finances one small conversation at a time.

This weekend I showed him the software and we had a little chat about cutting some of the “fat” out of our spending. I admitted that part of my issue over the past several years has been that I have no idea of how much money comes in. When I was younger earning my own paycheck and paying all my own bills, I was good at saving and good at budgeting and good at being frugal. These days, all I’m responsible for doing is spending money. I keep the fridge stocked, the kids clothed, and ensure that there’s always a supply of TP in the bathroom cabinets.

So I explained to The Husband that while life is good the incentive to be frugal has disappeared. Call me shallow or short-sighted but I need an incentive to save money. I need to see the results of my effort.

The way it works now, I spend the money and he pays the bills. In other words, I’m fat, dumb, and happy. But I’m tired of being fat, dumb, and happy. I told The Husband I want to be fat, smart, and happy.

Could this be a dawn of a whole new era?

Update on my YNAB Purchase

A week ago last Thursday (Day 40) I purchased and downloaded the You Need a Budget* budgeting software. I will admit that despite my initial excitement about the program and determination to get the most out of it, the process has not been without hitches. I’d call myself fairly technically inclined and I’m used to being able to jump into a new program and, with a little trial and error, figure out what’s going on pretty quickly. I had no trouble understanding and getting on board with the programs 4 rules.

1. Stop Living Paycheck to Paycheck
2. Give Every Dollar a Job
3. Prepare for Rain
4. Roll with the Punches

And I had no trouble understanding the general layout and design of the program — the what-it-does part. What I had trouble with were the nuts and bolts mechanics of the program — the how-to-do-it part.

I don’t know if it was the threat to my self-image as a technically “with it” middle-aged mom or my determination to get full use out of a program that showed so much promise, but I stuck to the task and worked through my initial confusions. Of course, the really friendly and knowledgeable forum users who answered all of my questions didn’t hurt in helping me over the hurdles. I’m pleased to announce that I think I’m well on my way to mastering the program and putting it to full use. Also, at this point in the process it appears that my initial expectations of what this program had to offer were, if anything, too low.

Building My Categories

I know from past Quicken experience that it helps to put the extra effort into fine-tuning your categories before you put a ton of effort into entering transactions. The YNAB program* comes pre-loaded with some basic categories but new users are sure to want to make changes and additions to fit their individual needs.

Over the past few days I’ve played around a bit with categories and will share my category list below. First, though, I’ll share some of the questions I asked myself in figuring out how detailed I wanted to be in tracking my spending. Past experience has taught me that being too detailed leads to unnecessary time requirements and the longer it takes to enter my transactions, the less likely I am to continue using the program over the long term.

So I asked myself:

Q. What are my goals in keeping a budget?

A. I have two. First, I want to see where our money is going and then, second, I want to see where we can cut back. As I posted yesterday in Our Debt Load, debt reduction isn’t necessary but even we could benefit from spending a little less and saving a little more. I suspect we could reduce our monthly expenses a satisfying amount without feeling any real pinch.

Q. Specifically, what information do I want to break out? And what information can be lumped?

A. For example, which categories do I want to know how much we spend down to the person (clothing). Which categories do I want to know how much I spend on each individual child (cosmetics, allowance) and which items do I just want a combined children total (activities fees, books & materials). Which items am I happy having lumped into one big catchall category (charity). Which items should logically be lumped together because they’re billed together (Gas & Electricity, Cable & Internet).

For each person/couple/family, the answers to these questions are going to be different. Obviously, if you don’t have children you don’t need to know how much you spend on their clothes, toys, or activities fees. If you’re living on a really tight budget, breaking your grocery purchases into smaller categories like staples, treats, beverages might help keep splurge spending in check.

So, as promised, here is a breakdown of what my budget categories look like right now:

• AUTO
  • Car Insurance
  • Gas
  • Loan Payment
  • Maintenance, Repairs, Tires
  • Registration
• CHARITY
• FOOD
  • Groceries
  • Restaurant
• GIFTS (*)
  • Immediate Family
  • J’s Family (The Husband)
  • L’s Family (Me)
  • Other
• HOUSEHOLD
  • Computer Hardware
  • Computer Software
  • Consumables
  • Durables
  • Postage, Shipping, Supplies
• HOUSING
  • Improvements
  • Mortgage
  • Other
• I…. (The Son)
  • Allowance
  • Clothing
• KIDS
  • Books & Materials
  • Equipment & Rentals
  • Lessons & Activity Fees
  • Other
• L…. (The Daughter) **
  • Allowance
  • Clothing
  • Cosmetics
  • School Lunches
  • School Tuition
• MEDICAL/HEALTH
  • Alternative Care
  • Co-Pays
  • Prescriptions
  • Vitamins/Supplements
• PERSONAL
  • Books & Music
  • Cleaning & Laundry
  • J’s Clothing (The Husband)
  • L’s Clothing (Me)
  • Haircuts
  • Memberships & Subscriptions
  • Other
• RECREATION
  • Entertainment
  • Vacation
• SAVINGS
  • Buffer
  • Emergency Fund
  • IRA (Me)
  • Joint Savings
  • Personal Savings
• TAXES
  • Property
• UTILITIES
  • Cable & Internet
  • Garbage
  • Gas & Electricity
  • Phone
  • Water

* With The Husband’s five grandchildren and my six nieces and nephews, two siblings, and parents to shop for in addition to our own children, I like keeping our gift budgets separated out like this. It helps at Christmas time when we seem to hemorrhage money. Also, a few years back I became aware that it was important to The Husband that I spend more money on his grandchildren than my siblings’ children (hey, we all have to have a few little issues, right?) so separate budgeting is helpful for that as well.

** One of my main goals with budgeting is to calculate how much it costs to clothe and accessorize The Daughter. I don’t want to guilt her or give The Son ammo to use against her but I do want her to have a sense of how these expenses add up. Thus the separate categories under each child and the combined categories in the general Kids category. Also, this is laying the groundwork for a clothing budget project I have in mind (more on that soon).

So there you have our budget categories. How do they differ from yours? Did I miss something important? Do you think I’ve over-categorized?