With the beginning of the New Year, comes the standard desire for change. At least for the majority of us. Well, we happen to be no different in that we know that we can do better. Therefore, when we had our end of the year budget meeting to go over all of the numbers, we decided to make a big change with our budget.
Budget Meeting
When we started doing a budget as a blended household last year, the first few months were a challenge. We had a really difficult time sticking to the budget in multiple categories.
The way I have my budgeting spreadsheet set up (I LOVE spreadsheets, by the way!) is that each month has it’s own sheet and then there is a year end final sheet that tabulates the monthly averages spent.
Here are the categories that we use on our budget spreadsheet:
- Income
- Bills
- Auto
- Food/Drinks
- Household
- Clothing
- Gifts
- Luxury
- Misc
What we were digging deep into was the year end analysis of the averages of each category to see where we were going wrong.
Where we went wrong
Let’s start with what we had budgeted as a total across all categories last year. That number was $4340.00. So, here is where we get to the issue. The actual average of what we spent monthly was a completely different number. This number came in at $6202.00!
Now, the caveat here was that we didn’t start the budget until July last year, so these numbers are only based on 6 months. But, I still want to break down what went wrong, based on our assessment of looking at the numbers.
Bills
The bills category was blown because I was paying for the rest of Reese’s braces, which is now done. There was also some emergency dental work that had to be done, which insurance didn’t completely cover. So that shot the bills category.
Auto
Both of us had to pay our automobile property taxes, renew the registrations and have 60,000 mile services done on our vehicles in the last 6 months of the year. So the auto number may actually be right in line with our budget this year, once we have a full 12 months of numbers.
Food/Drinks
We really struggled with this category a lot because there are 7 of us. We are very creative with food and I am pretty darn good at making great food on the cheap. But when we looked at what we were spending too much on, it wasn’t food. It was alcohol.
Household
We sold our primary residence last April and bought another house. While the new house was move in ready and had a lot of work done to it already, there were still things that we had to do. The in-ground pool was a big money suck, while we tried to figure out how to make it work. We finally did and turned it into a healing pool, but it cost us a pretty penny to figure it out.
Clothing
We actually don’t purchase clothes that often. But of course, towards the end of the year all of the kids needed multiple things. So even though we didn’t purchase anything in this category the first 6 months of the year, the last 6 months killed it.
Gifts
We had the same issue here as with the clothing category. A lot of family birthdays and the holidays blew this one.
Luxury
This category was another continual issue for us. Part of that was a trip we had planned to South Africa, but the majority of it was us just going out for food and drinks with friends when we didn’t have the kids.
Misc
This category was really just an anomaly from one month. During that month we catered a wedding and had to pay our staff for that. We also had a friend do some projects around our house so that she could earn some more money for her year of traveling. With the exception of that month, everything was on track.
New Year, new budget
Obviously our food/drinks budget and our luxury budget were the main culprits, so something had to change. We looked at what we were bringing in and what our base bills were and decided that we were out of control.
Yes, we have still been putting money in savings and retirement and we even started getting into real estate investing. That being said, we were still spending way too much money monthly!
So what we decided is that we needed to change our budget in all categories to a grand total of $4600.00. Our goal is to stick to this number, thereby reducing the average amount we are spending by $1602.00. We feel like this can be done if we make some changes to how we are doing things.
The Changes
- Now the major things that needed to be done to the house are complete. There are a few other minor projects, but nothing that will even come close to our monthly budget.
- We increased our food budget a little bit and are decreasing the amount of money we spend on alcohol.
- With the luxury category, we have decided that we will only be going out once a month for food and drinks, if that. We also will only be doing one international trip this year, in which we already paid for the plane tickets last fall. So the all inclusive hotel will be the only other cost associated with this trip.
- We are going to focus hard to get the rest of Bryan’s marital debt gone by the end of the year. Paying off debt faster just means that we will free up some money to start really attacking his car payment. Once we get rid of those things, we will only have our primary mortgage to contend with.
Now that we have a game plan, we are pretty excited about how this year will go. We know that we can do it if we really remain fully conscious of our spending and what is really important to us. After all, if I could survive on only $800 a month plus food stamps as a single parent of 2, then we can do much better than this. It’s time to see what we can really do!
$1600 a month savings would be incredible. I’m pulling for you!
We’re switching to an all-cash (er, mostly cash) system, trying to trim $8,000 off last year’s total spending, too, and bring us back down to $40k total. So far, so good…except for my surgery this week. That’s going to blow this month’s average, but we still have 11 months to go.
Well we are certainly trying! I can tell you that we did cut January’s spending by $1200. So it was a few hundred shy of our goal, but it is still much better than last year so far. I like the all cash method as well. We were doing that for awhile but switched to using one specific credit card last July instead because we are trying to do our first travel hack to get the Southwest companion pass. It’s still in the works though, so I am not sure if it will outweigh us just using cash because I think we spend less when we only use cash versus a card.
Life gets in the way, sometimes. For me it was always the unexpected expenses.
Actually, as a family we didn’t take a “real” (on an airplane) vacation until our children were 12 & 8 years old. We kept it local, to keep the costs down.
Good luck. I know you can do it if you and your partner are committed to your goals.
You are correct, Eric. Life can certainly get in the way sometimes! It seems that there is always at least one “unexpected” expense a month. We are trying to cut down on those, but life, especially with 5 kids, happens. We are planning to do a local vacation this summer with all of the kids and their cousins to help cut back on costs also. It is certainly a lot cheaper than airfare for all of them! And thank you for the vote of confidence. We are certainly going to give it our all!