Tuesday, April 29, 2014

Episode 4: The Process

Now that you've established what types of accounts you want to budget for, AND after you've done all the calculations to figure out just how much to deposit into them each time you get paid - it's time to actually put everything into motion.

I set aside time to balance the check book, pay bills and attend to my budget binder every week.  It may seem crazy but I spend about 1 hour (give or take a few minutes, depending on interruptions and my amount of focus) each week making sure that things in our budget are running smoothly.

Here's my process:

1.  Gather ALL receipts to write every transaction down in both the budget binder and the master check book register.  You're already tilting your head to the side and thinking "huh?".  As I've said before, we have one checking account and our budget binder is what separates each individual "account".  We don't actually have 20 separate checking accounts for each one, we just have a binder designed so we can budget for separate accounts.  I am aware that some people constantly check their accounts online to make sure everything looks good - we do that from time to time as well...but we also receive a statement each month that I go through and cross check every last transaction.  Sounds tedious, right?  It is.  But, it makes us accountable for every last penny we bring in and spend.

We have this plastic envelope that we put our receipts in.  That way, none of them get lost or misplaced.  It's easy to empty out your wallet, purse, or pockets and put the receipts in one location so they're easy to find and grab.  I purchased this at TCS for $1.29 - worth it.  Oh, and of course a little Washi and label maker added a little spunk!

2.  I head down to my little area in the basement and get comfy.  I'm going to be here for a while.  BUT, I have to brag a little here.  Last week I received some pretty amazing gifts from some pretty amazing people. I finally have something on my desk that makes me smile every time I see it.  What more could I ask for?  Washi tape, a book ABOUT Washi tape, my FAVORITE pens, a little book for my thoughts and a beautiful blue bird to bring in some color!!!

I want to put some flowers in the little IKEA flower pot, but just haven't yet.  I just love looking at it!  Makes me happy.  Yay!   Thank you so much L, S & T!!!

3.  Write every last receipt/transaction into the account it belongs in (gas station receipt goes into the 'Fuel' account, grocery store receipt goes into the 'Groceries' account, etc.):
Remember these large check registers that I have for my budget binder?  This is where I write down every transaction, both withdraws and deposits.  Balance each account when doing this;  meaning, do all the addition and subtraction to each account to get down to your final total.

4.  You must remember to write down every last receipt/transaction into your master check register as well.  It's a redundant process, but it will make sense when I get down to the end of the process. 

5.  Now that you've written down ALL of your receipts, it's time for you to pay bills if needed.  This is where you can do an online payment, if you have an automatic payment withdrawn from your account - write it down, or if you need to write a check to pay a bill.  Whichever way you choose to do it, make sure to write it down in both your budget binder account AND your master check book.  Balance the accounts. Repetitive?  I know.  Stay with me.

6.  Time to deposit money.  If it's a pay day, it's time to deposit money into each account you've designed in your budget binder.  For some people, it may be every week that you'd deposit money, some people it's every other week, for some, once a month - whatever you've come up with. Balance the accounts. Remember to write down your pay check into your master check book as well...double duty!!!

7.  So, by now, you've: 
  • Written every receipt/transaction down in both budget binder and master check register.
  • Paid all bills that are due.
  • Deposited money into each account in your budget binder.
  • Written down your pay check into your master check register
  • Make sure to balance each account as you're going along.  You treat each account like a check book register!!!  You want to see what the total amount in each account is.
8.  Now that you've got every account, including the master checking account, balanced - it's time to do a little more math.  Like I said in the last Episode, saving money was one of my main goals.  Here's where that all comes together.  In our budget binder, I came up with our individual accounts both the "need" accounts (bills the MUST be paid) and the "important" accounts (accounts that you want to budget for).  When figuring how much needed to be in each account, I also tried to keep in mind that I wanted to save money in the long run.  So, I calculated our accounts with the idea to live on the LEAST amount of money possible.   

Example:  We have a 'Gift' account.  While I adore buying others gifts, I also know I can do it on a budget and still give a pretty stellar gift.  So instead of depositing $25 each pay check, we put $20 in each pay check.  You're thinking, "How is decreasing it by $5 going to save you money?"...add that up and in a year alone that's $130 in savings.  Never live ABOVE your means, try and live below them.  I'm not saying you have to wear holes in your socks because you want to save money!!!  I'm saying, if you're looking to save, shave a little off of your accounts to put more where you want it.

Back to "it's time to do a little more math":  Everything is balanced now, your budget binder and your master checking account.  Since everything in your master checking account has been balanced, you already have a total in there.  Now, in theory, your budget binder total SHOULD MATCH what's in your master checking account.  BUT, if you've shaved a little off your budget binder accounts here and there, come pay day, you will have MORE in your master checking account than in your budget binder.  You always want both the budget binder and the master checking account to match in their totals!!!  The way you find out the total in your budget binder is add up every account totals after you do all the balancing. 

Example:   Groceries = $172.50
                 Mortgage = $500
                 Fuel = $98.63
                 Gifts = $71.98
                 Insurance = $244.59
                 TOTAL = $1087.70 in your budget binder

Here's an example of what it should look like if you're shaving a little here and there in your budget binder or if you've designed it to put extra in savings.  Or, if you've worked overtime, a holiday or received a bonus at work - any kind of money that you don't PLAN on receiving in your pay check.  It's simple subtraction.

Example:   Master Check Register Total = $1423.97
                          - Budget Binder Total =  $1087.70

Now, that you have the difference between the master account and the budget binder, which is $336.27, you can put it directly into your savings account (or anywhere else you want to put it)!!!  Point is, that's the money you can put away.  By budgeting on less, you save more.  
Gah!!!  That's me taking a breath after typing all this out!!!   Until Friday!

Thursday, April 24, 2014

Episode 3: Almost There

As I mentioned in Episode 2, we have a binder that is full of all our different "accounts" AKA check registers that are filled out as if each category is an individual account.  So, you first will need to calculate how much money per pay check will need to be deposited into each account in order to pay that specific bill.  Once you've established that, you can then add up how much money will be needed each pay check in total for the different accounts.  For example:

Mortgage:  $250/p.c.
Energy:  $75/p.c.
City:  $25/p.c.
Garbage:  $25/p.c.
Cable:  $50/p.c.
Vehicle Payment:  $200/p.c.
Cell Phone:  $75/p.c.

I'm aware that there are more categories than that, but this is just an example.  So, you'd total that up and you'd get:  $700/p.c. for all the bills that need to be paid.  Let's say you get paid $1100 on each pay check.  That would then mean:

$1100 (your pay check) - $700 (the amount of money being deposited into each account every pay check)=

$400 left over that didn't need to go into any bill accounts

That being said, here is where you'd budget anything else you deemed to be important.  Here are a few examples of the additional/extra accounts that may be of value to you:

-Groceries (food is a necessity but you can always bend your spending here)
-Fuel (Grrr...it's a necessary evil)
-School (dues, supplies, book orders, teacher gifts, fund raisers)
-Clothing for kids (they grow too fast!!!)
-Gifts (we estimated how much we spend on each person in the family for both Christmas, Mother's and Father's Day and birthdays.  We then added extra to cover weddings, going away gifts, random up lifting gifts, parties, etc.)
-Gifts for our kids
-Entertainment (this would include going out to eat, movies, etc.)
-Vehicle Maintenance (duh, this is self explanatory)
-Medical (just in case you don't have a flex account OR if you've run out of money in your flex account)
-Sports (extracurricular activities also fall in here, registration fees, t-shirts)
-Home Improvement
-Charitable Donations

You get to decide what you need or want to budget for your family and your needs.  This is where you allot x amount of dollars for each additional account.  Some of these accounts, left untouched, will really accumulate over time.  Let's say the 'School' account still has $100 in it at the end of the year.  You could either use that money for something else, bulk up a different account, or just keep on adding to it for the following school year.  It's completely up to you.  This is where the fine tuning would come in over the course of the budget.  In my case 1.5 years of tweaking this and that.

Full disclosure:  I've only been under budget in the 'Groceries' account twice in 1.5 years.  Yes, I'm serious. I know exactly why this happens as well.  When the ads come out, we've already done our shopping for that given week, so if something is on super sale that we feel we need to stock up on, we do.  How do we solve this problem?  Stop stocking up.  Spend less of the budget to cushion for stocking up.  Grocery shop after the ads come out (this one is just not feasible due to schedule).  There's always going to be a solution...I just need to follow through.  So, what if we go OVER budget for a certain account, such as the 'Groceries' account?  That's up to you but here are some options:

-Take money from another account to cover the over spending, in turn you would leave another account with less money.
-Slash spending on the next pay check on groceries.  Let's say you allot $200/p.c. in 'Groceries', but when it's time to deposit that money, you're already -$25.  Add in the $200 leaving you with $175 for that 2 week period until you get paid again.
-Transfer money from savings to make up for the loss.  This one is the one I don't recommend.  While it'd teach you a lesson by seeing your savings go down, I'm a fan of putting money in savings and NOT touching it.  Easier said than done.
-Up the amount that's deposited into that account every pay check.  If you're noticing that you can't keep it under budget, then maybe it's time to reevaluate the allotment.

One of the goals of this kind of budget was for me to find a better way to save more.  Well, this is where the "saving more" can come in.  Example:

$400 (what was left over from your p.c. after depositing money into each account)-$325 (the amount of money you allotted for your "extra" accounts) =  $75

That's $75 that can go directly into a:  savings account, toward a vacation, towards purchasing a large item like a vehicle, pay down a loan, etc.  Again, this is just an example! 

I'm also a huge advocate for paying yourself first.  Meaning, set up a direct deposit into your savings every pay check.  Even if it's $20, it's still $20 that's going directly into savings.  Something is better than nothing!!!

I really hope this is all making sense.  It does to me when I'm reading and writing it, but it's my budget.

Until Tuesday!!!

*Starting next week, I will be blogging every Tuesday and Friday.  Say goodbye to Thursday bloggin'!*

**This is my first blog post that doesn't have a picture.  Sorry!**

Tuesday, April 22, 2014

Episode 2: Getting Started

Definition of Budget according to Yahoo:  The total sum of money allocated for a particular purpose or period of time. 

Definition of Budget according to Me:  Organizing your money so you don't end up without heat and a home.

In August of 2012, I was looking for a different and new way to keep track of our money.  Our system at the time just wasn't yielding as much savings as I was hoping for but most of all, I had no idea where our money was going.  Sure I knew it was going to the mortgage, electric, water, groceries...blah, blah, blah.  BUT, what about the money AFTER the bills?  I needed a new system that I could SEE where every last red cent was going.  After doing a tinge of research (OK, maybe a little more than that), I found a system I was ready to try.  I stumbled across another fellow bloggers system from the book called 'America's Cheapest Family'.  I purchased the book for my Kindle, here is the link:  http://www.amazon.com/Americas-Cheapest-Family-Right-Money/dp/0307339459/ref=sr_1_1?ie=UTF8&qid=1398125477&sr=8-1&keywords=America%27s+cheapest+family .  This book is jam packed with information and great ideas but the only section I was really interested in was the budget chapter.

After reading and re-reading this section, I was ready to get the ball rolling and implement this new system.  It took me the better part of 4 hours to get everything arranged, calculated, and organized (duh), but after 1.5 years, I'm very happy with the results and the system.  Of course over the 1.5 years of using this system it has needed constant tweaking to fit the needs of our family, but in the end, it all works out.  I will be the first to say that you need to dedicate 1 full year to this budget for it to work.  It takes getting used to but it's VERY doable!!!

*Before I get into the actual nitty gritty of our budget, I can without a doubt tell you the ONE thing that will make a budget work.  THE ONLY thing that will make it work.  Can you guess what it is?  That's right!!!  Have LOTS of money!!!  Just kidding.  Will power.  It truly boils down to having the will power to make the budget work and to keep yourself (and your buckaroos) in check.  If you have the will power (and I suppose determination as well), then a budget will work.  This may just be one girls opinion, so you can sure take it or leave it.*

The very first thing that I did was got out a sheet of paper and wrote down every last MUST pay bill we had each month/year.  YES, you read this right, each YEAR as well.  These are just examples of what may or may not be on your list:

-Mortgage - monthly
-Energy- monthly
-City bill (water and sewer) - monthly
-Garbage - every other month
-Cell phone (hate this one - they're all crooks) - monthly
-TV & cable (I'm trying to get hubby to agree to get rid of cable-not happenin') - monthly
-Insurance (home, vehicle) - monthly
-Life Insurance - yearly and twice/year
-Property taxes - twice/year
-Vehicle registration - twice/year (only because one is registered under Hubby and one under mine)
-Daycare - weekly
-Vehicle payment - monthly
-Credit card - monthly
-School loans (um, yuck!) - monthly

Some of these things are  MUST to put into our budget.  These are bills that MUST be paid.  Weather it's weekly, bi-weekly, monthly or annually...bills are bills.  They need to be paid.  Period.  

My ultimate goal was to calculate each category to find out how much money needed to go into that "account" each time we got paid to meet the bill total.  We get paid 26 times/year, so I did some number crunching to figure out how much certain "accounts" would need every other week.  For example:

Life Insurance = $300/year --> divide that by 26 (number of pay checks/year) = $11.54-->$12/p.c. (pay check)

I round up to the whole dollar amount for each one - makes a little tiny cushion over time. In the Life Insurance account alone, you'd make $11.96/year off of just rounding up to the nearest dollar amount.  More on this later.  Back at it:

Now, some categories for us simply cannot be calculated the same way.  For example, our mortgage is a once/month payment, we get paid at least twice/month so I calculated it this way:

Mortgage = $500/month-->divide that by 2 (number of pay checks/month) = $250/p.c.

Now, you're probably thinking, what about the two other pay checks throughout the year?  Well, you can do whatever you see fit for those amounts.  We'll use the Mortgage as an example:

With the above calculation, we would only be putting money into the Mortgage account 24 times in a year, but if there are 26 pay checks in a year, that would mean that we would have $500 (the equivalent of 2 pay checks) each year to do what we wish.  You could:

1.  Put that $500 towards the principal balance of your Mortgage.
2.  Save that money in a savings account.
3.  Spend it - we all need to have some fun!!!
4.  Bulk up some other accounts in your budget (more on that later as well).
5.  Pay off or pay down another bill such as vehicle or credit card.

The options are endless...

When I implemented this system quite a few of our "accounts"  had to be pro-rated.  Meaning, since I wasn't starting fresh with no previous payments or bills paid, I had to calculate a little differently.  Perhaps you would have to add a little more each pay check to meet the bill goal, but once you paid that bill and had that "fresh slate" you could re-calculate and "deposit" a little less each pay check to meet the bill goal.

You'll notice that I keep using the words "accounts" and "deposit"...like it's a check register.  Well, that's precisely what we use.  Allow me to show you our "supplies" for the budget:

We have two binders, one would be sufficient, but I didn't have one that was thick enough for all the stuff I needed in them.  So, two it is!!!

We have page protectors, little tabs that you can purchase at any Target or Walmart, divider folders (love those things!!!  Target or Walmart again), and these handy, dandy full page check registers.  I got mine off of a blog called:  I Heart Organizing.  They are free printables from her site and you may even snag up a few more you think you could use:  http://iheartorganizing.blogspot.com/p/free-printables.html

Essentially, our budgeting system is a bunch of smaller "accounts" with in the checking account.  No, we don't actually have separate accounts at the bank for each "account" listed above, but we DO however have a binder that has each "account" individualized in it. 

This is where I'm going to stop for today...I'm actually typing this post in real time.  I've written this post twice already-deleted and started over.  It's VERY difficult to explain via blog how we do it, so bare with me.  I'll continue with all the leg work that goes into this in my next post on Thursday.

*Side note:  the monetary estimations above came out of nowhere but my brain.  They are not actual numbers that are used in our budget, but for ease of explanation, I used nice round whole numbers.*

Until then, have a most wonderful day!!!   

Thursday, April 17, 2014

DIY Wreath and Flowers

My SIL recently made a wreath that was made of burlap and some clip on flowers.  SUPER CUTE!!!  I decided I wanted to make a fun wreath as well...so, off to the store we went!  This post is going to be a LOT of photos.

I purchased all my supplies at Walmart and Michaels:

-1 wire wreath ($3.99 - Michaels but I had a 50% off coupon - $1.99)
-3 rolls 10 ft. long burlap ($3.47/roll - $10.41)
-Glue gun and glue sticks
-Felt sheets x 6 ($.29/sheet - $1.74)

Of course I forgot to take photos before I dove in.  I was excited!!!  All you do is push the burlap through the wires and poof it out a bit.  I went for a small poof to conserve my burlap (I only had 2 rolls but my SIL graciously gave me a third one).  There is no hot glue needed for this part.  And there is no right or wrong way to do this.  Just thread it and poof it.
It should look like this when finished.  You can manipulate the burlap to cover up all the wire.  I wanted to add some flowers to the wreath.  Michaels had some adorable flowers for sale, but they ranged from $1.99-$3.99 - I wasn't too thrilled with that idea because I either wanted 5 or 6 medium flowers or 1 XL flower.  SO, I decided to try my hand at making them myself.  Thanks to Pinterest (again), I was able to do that with just a few sheets of felt - for a fraction of the price.

Here's my array of felt flowers.  Took me about 1 hour and some 3rd degree burns, but I dig the final product!!!  Next task was to figure out how to attach them to my wreath...

I just glued the strip on the edges, leaving the middle open for a clip.  In the end, I used bobby pins rather than clips.  The flowers were too heavy to just clip onto the burlap.  Instead, I bobby pinned them to the wire frame of the wreath.  Here's the final product.  I think it's just the thing to welcome spring and summer...yeah, still waiting for spring!

It turned out pretty nice - not sure Hubs is too wild about it, but he is so nice and smiles and says "looks good babe".  Total cost for this wreath was:  $14.14.  Michaels had burlap to purchase as well for less expensive because they had 50% off their ribbon, but I really wanted a chevron print on mine.  So, you could easily do this for less.

*Side Note:  You'll notice the sign on my door that says 'Please Remove Your Shoes' - that is yet another thing I am OCD about.  We spend a lot of time playing on the floor, having picnics and I fold laundry on the floor sometimes, so, I am the crazy woman that asks you to take your shoes off at the door.*

**I am not proof reading this post...so mock me if you will!**

Tuesday, April 15, 2014

Episode 1: The Spending Stops Now!

Paying bills.  Balancing the checkbook.  Yuck.  It's not a fun process, but I must say, it can be very eye opening.  Today, at this very second, I am vowing to do better.  What I mean is, I see our money going out-out-out, but I'm not doing a very good job of keeping it in.  While we do have a budget in place, lately, I've been using it more as a guideline.  I implemented our current system (which I love) to do better - that was over 1.5 years ago, and I've slipped lately.  I'm ashamed BUT, I know I can do better.  So, starting now, I'm taking a pledge to do better!!!  I'm not talking about just my DIY's or organizing projects, I'm talking about spending in general:  groceries, staying home instead of going out and about...everything!

NOW, I am not saying that every once in a while I won't splurge, but I'm also not going to go all crazy and shut the power off in the house at 9pm every night so we save a few bucks (yes, I've seen this on some TLC show...insane [I'm shaking my head while typing that last sentence]).  I will splurge but ONLY if I've saved the money ahead of time.  You've seen in my past posts that I've said that I "splurged" or "saved my pennies" for certain items.  I am being 100% honest about all of that.  But, I want to do better.  I know I can do better about saving more AND be more frugal.  CHALLENGE ACCEPTED!!!

A couple weeks ago, I decided to try a new method of saving.  It's an all cash system rather than putting money in my savings account.  I've heard of a money guru Dave Ramsey that swears by the cash envelope system.  We do not use that system and I'll get into what system we use in a later post...all that budgeting jive will probably end up being a multi-series post.  Here's what I did:

  • I purchased this accordion file from Target in the dollar bins.  Love me some CHEVRON!!! 
  • The accordion file came with some handy labels, but in true Megan Style, I had to put a little fun into it!

  • The labels were rounded but...we all know I don't roll like that, so out came the Washi Tape!!!  Pretty feather blue print.  I made them rectangular labels instead of the rounded.  I didn't feel like taking the scissors to round it out.  And with the help of my trusty label maker I came up with the photo below! 
  • I thought about the different things I wanted to save for, so here are my categories:
    • Vacation-we don't really vacation, but Hawaii IS in my future - maybe not now, or 5 years from now, but it IS going to happen
    • Organizing Money -I'm fortunate enough that I have a large store of organizing supplies in my utility room (from YEARS of OCD), but sometimes, there's just a few items that I MUST have.
    • Fun Money-this is money reserved for my shopping trips with my sister (sometimes my Mom and cousin get involved) and/or friends - usually consists of clothing, shoes and purses.
    • Bedroom-I have a dream to re-do our bedroom.  Nothing big; paint, curtains, bedding - but it's not free.  :(  I'm always brainstorming ideas to cut costs and do DIY's (Hubby is usually a must have in this department - he won't teach me to use the saw or nail gun - rightly so).
    • Laundry Room - I want to paint, add new shelves and sew a shower curtain and window curtain...again, not free.
    • Fives - I very RARELY have cash, but when I get my hands on a five dollar bill, I don't spend it.  It goes directly into the 'Fives' category.  No idea what I'm going to do with it, but I don't think about that money and someday, it will add up! 

  • Lastly, I thought having a type of ledger in a couple of the categories would be helpful.  I estimated how much I thought it'd cost to do what I wanted to do in both the laundry room and bedroom.  I wrote it all out and on the bottom half I put how much money is in the file and I'll keep adding to it as I save (just an FYI, this is a dummy ledger - I just implemented this new system so it's a work {I should say 'saving'} in progress).  I simply used a piece of scrap paper that I had on hand and wrote out my estimates.  While I REALLY wanted to use Washi tape, I refrained since this paper was cute and colorful on its own!
Every time I get my hands on cash, some will go into this little slice of savings.  While I'm fully aware that it's going to take a LOT of time for it to add up, it'll also keep me (and my spending) in check.   You've got to start somewhere - baby steps!!!  This is just one of my ideas to save some moolah - there's plenty more ideas where that came from!!!  So, consider this Episode 1 of 'Budgeting & Money-Saving Ideas'.

*Side note:  There's yet another rogue bullet within my post...seriously, tricky little suckers!*

**Side note 2:  Starting the week of April 28th, I will be posting every Tuesday and FRIDAY - rather than Thursdays**

Until Thursday...