Budget Review & Mortgage Update

I was scrolling through my budget document and saw the list that I used to break down my expenses into the categories: Essential, Lifestyle and Future. I had skipped this process in 2020 so was curious to see how my current budget lines up with my goal to flip the suggested 50-30-20.

Here’s how it lines up with both the aim and previous years:

	My Aim	2015	2016	2017	2018	2019	2021
Essential	20%	57%	48%	33%	25%	27%	34%
Lifestyle	30%	27%	28%	30%	29%	21%	20%
Future	50%	16%	24%	37%	46%	52%	43%

While my Essential and Future costs are moving to the more traditional direction, I noticed that my essential block contains an increase to my monthly mortgage payments. With the added payments, we’re on track to pay off the mortgage in 11 years and 5 months – June, 2032. This would bring us 2 years shy of the original 25 year amortization.

Paying off the mortgage ahead of 50, would give us a solid opportunity to save for our retirement. This would include not only the savings to cover reduced income but the ability to outfit our home so we can stay in it as long as possible.

Clean Slate – August 2019

At first glance, my budget is in shambles! I had not carved out time to do any real checks over the last few months. This morning I spent time combing over my finances and discovered some huge expenses that I hadn’t properly prepared for:

•   $540 on a friend’s bridal showers
• $1400 attending her wedding.
  • That money was definitely not saved! I suspect the $1400 could have been lessened but I was emotionally and physically exhausted from my work schedule that I did very little research into the trip and my cost saving alternatives.
• $780 on a conference, I will be reimbursed for this
• $600 on a vacation where I hosted someone.
  • This was fairly frugal as it was 2 weeks of entertaining and is largely us eating out. This vacation served to highlight that I still have difficulty saying no to things in stores and I’m apt to fall for ‘good deals.’

There are also a host of charges for things that I felt I should get:

• outdoor furniture as our last set had to be retired after 8 years
• outdoor covers for the furniture so that it won’t get damaged by the elements
• Just Junk – removal of the items that have been in the basement from the previous owners as well as our own accumulation of items

CLEANING UP

When I thought I was only going to be working 2 days/month from May – June I started putting away some money. As I had picked up a part time job I hadn’t touched the money. My hope had been that it would get moved over to the Pay off the Mortgage fund. That money will now be moved to pay for all the wedding related costs and the vacation.

MOVING FORWARD

This year, I haven’t managed to work within my budget as yet. I’m aiming to change this in August. My plan is to only use my debit card and keep a running tally of my spending in my wallet. I also need to submit my item for reimbursement quite soon as I find I get a bit lax on paperwork and end up paying for things I shouldn’t.

 

Preparing for Partial Layoff

I took a new position this year that has a partial summer layoff. This means that for May, June and July I will be bringing home around $700. To put this in perspective, my pay is going to be about the same amount as someone who is currently working for minimum wage in my community.

The last time I worked for minimum wage I was living at home with very limited financial responsibility. My goal at that time was to save as much money as I could while contributing to the household by taking over one bill payment and taking care of the majority of my personal expenses.

This time around, I am responsible for:

• Insurance for the house and car
• Internet and cell phone bills
• Netflix
• Groceries
• Pet care
• Home maintenance
• My Clothing, personal care items, entertainment and  life insurance policy
• Savings for gift giving, home renovations, car care, medical costs, vacation fund, rainy day fund

This seems like a lot until you take into account that ML pays:

• The mortgage
• Gas for the car
• Electricity
• Gas for furnace
• Water
• Rental for water heater
• His life insurance policy, personal care items, clothing and entertainment

The split we use is based on our incomes. Basically ML keeps us housed and I do the rest. It’s worked for our entire marriage and I don’t intend to shift it now.

As you may know I love seeing how our spending stacks up against conventional wisdom so when I got an email from a bank indicating the breakdown of funds to ensure that you were living within your means I plugged in my numbers (ML’s aren’t included).

		Annual Budget	March Budget
Housing (land tax, house insurance, mortgage top up)	35%	15%	15%
Household (internet, cell phones, Netflix)	5%	10%	13%
Food (groceries, entertaining, eating out)	15%	14%	12%
Transportation (gas, car repair fund)	15%	10%	10%
Personal  (pet, fashion/personal care, misc. fund)	10%	7%	5%
Savings (short-term emergency fund, home reno, vacation, medical, summer layoff savings)	10%	36%	36%
Debt  (As we don’t have debt I moved this to be Long-term savings)	10%	4%	4%

“Pretty good!” I thought before remembering the upcoming layoff. While these numbers work well with my current salary my projected income isn’t going to hold up. The savings will be decreased a bit as 20% of the current amount is actually money I’m putting aside to help with the layoff. The other 16% goes towards vacation, emergency fund, medical savings and gift savings. None are things I feel totally comfortable cutting as they’ll just end up on credit if we don’t have the funds available.

I’ll spend today playing with numbers and realizing how fortunate I am that both ML and I are working at jobs that pay above  minimum wage and are able to enjoy the lifestyle we’ve grown accustomed to.

It’s also a great reminder that I really do need to be careful with my money. My $300 shoe extravaganza yesterday while fun and useful suddenly takes on a different tone in the light of my upcoming change in circumstances. $300 could be the difference between putting an unexpected fee on credit versus using our savings to fix it.

I’ve got 3 more full paycheques to go so I’ll be very conservative from now on.

 

 

 

My Credit Card Spending

My credit card company has been bought out by another institution and while I can’t say I’m happy with all the changes (goodbye easily downloaded transaction records!), I’m thrilled with the charting features.

This one allows me to see how much I spent in a specific date range and where I was spending the majority of my funds.

If you scroll over the bars it tells you the amount you spent*:

• Groceries: $116
• Shopping $57
• Restaurants: $33
• Transportation: $32
• Household: $12
• Services: $10

I try to use my credit card for all swiped purchases as I get points so the only thing not on here are my bills, cash purchases and e-transfers. This month is a bit of an anomaly as I spent nearly $400 through cash and e-transfers. It will be interesting to use this feature in coming months when I’m sticking to my credit card.

*The system doesn’t entirely align with my own tracking as it throws all the Walmart purchases into Groceries, whereas in my own spreadsheet I would put it in the category that aligns with the products purchased.

 

Debt Free (ish)

 

We just paid off our kitchen!!! The goal, which seemed quite aggressive, was to pay it off in 12 months. I’m in shock that we did and still had some savings left over. So much in fact that I was able to pay off a sizeable amount of the debt I accumulated in December through an emergency trip home as well as reckless spending.

Now I have 2 choices:

1. put money in my savings account as per my budget
2. put the money towards my debt

A large part of me wants to keep adding to my savings as they’re pretty tight and I’m very familiar with the cycle of debt when you don’t have built in buffers. The other bit is feeling very good seeing that I am now debt free if I don’t add to savings.

This would mean that I would begin February debt-free and able to put more money in savings as the debt allocation would be erased.

What do you think?

 

Image from Giphy

2019 Budget Planning

In previous years, I have pored over budget to see my trends and identify areas for improvement. This year I seem to lack the energy to engage in this level of self-reflection. I know a great deal of this is because 2018 was a tough year. I was constantly over budget and fell into some awful habits, such as telling myself., ” It’s just $xx, I deserve the treat!” or “It’s such a good price! We could use this.”

With a kitchen renovation that dragged on followed by lots of hosting it’s no shock that my grocery, eating out, and miscellaneous lines were insane. In lieu of delving into past misdeeds, I went ahead of planned my budget as though 2018 didn’t happen, with the exception of the grocery line as the cost of living keeps creeping up.

The traditional aim is to have 50-30-20 but as my salary has increased over the years I feel its more appropriate to flip my categories. Future for me refers to any savings so my retirement planning, vacation savings, sky is falling, summer layoff etc are all wrapped up in that figure.

	My Aim	2015	2016	2017	2018	2019
Essential	20%	57%	48%	33%	25%	27%
Lifestyle	30%	27%	28%	30%	29%	21%
Future	50%	16%	24%	37%	46%	52%

Did you catch summer layoff? 2019 is going to have a new challenge as I’ll be working only 2 days a week for 3 months of the year. The money that had been going towards the kitchen is now being put in an account to help us with those leaner months in the summer.

Next up to figure out my Big Hairy Audacious Goals.

Happy Planning!

Snapshot of 2018

I don’t give myself enough credit for doing good things and it was pretty obvious when I was wallowing in self-pity because I’m starting the year in the red. Let’s start with the bad news: I owe $4,000 on my line of credit.

It’s a big number but I’m working on getting some reimbursements for a trip ($700) and a medical expense ($400). We had also over-saved for the Kitchen so the additional $1,000 will be put immediately on the card. That should bring the debt down to $1,900.

Not amazing but not as terrifying as $4,000.

Now for some good news! When looking at my BHAG2018 I definitely rocked it!

Kitchen

After years of wanting to change our kitchen and attempting to save for the enormous expense we did it! We saved a great deal but we also made use of the (no interest for 18 months) store credit card. I know that my aggressive desire to pay off this debt led me astray as I didn’t adjust my spending enough. Though we don’t have to pay off the Kitchen until October, we’ll own our kitchen by the end of January.

Anniversary Party

We had always planned on throwing ourselves a reception do-over for our  10th anniversary. It was the research into that affair that led us to renovate our kitchen. We were not willing to spend $20,000 on one night to celebrate with friends and family! We did, however, through a fantastic party for $2,300 at our home over the summer. It may still seem like a lot but I tracked all our spending (invitations, decor, furniture rentals, cutlery, bar items and food) so I am confident that it was quite reasonable.

Emergency Trip Home

My grandmother was suddenly rushed to the hospital in November and love had me making arrangements  to fly home for a few days. Luckily my mum and I split the cost of the trip and we had friends who drove us so we didn’t have to hire a car when we arrived. We were able to spend quality time with my grandmother, visit with family & friends, as well as get gifts for those who had helped us on both ends of the trip.

This was completely unplanned so there was absolutely no money budgeted for a trip. I was pleased that we were able to make it work.

Other lovely news

I had a few girlfriends make quick trips to us which was lovely. I got to spend quality time with one over a long weekend in September and another of the break. I will be starting a new job tomorrow which will be an exciting adventure.

I have been working harder at taking time for myself by setting boundaries and trying to honour my own truths. Sometimes those truths aren’t fun, they’re more along the lines of I need to go to bed by 8:30…

2018 was a year that we did a lot of big things. I know that 2019 will come with its own joys and struggles but I feel secure knowing that I will continue to improve.

 

Happy New Year!

 

Finding a Reset

When your electronics give you difficulties, the first step is always to restart.

I feel like I need to do that with my life. Our spending got a bit out of hand in February and as we don’t fully have our kitchen back I don’t feel that we have taken control of it again. This has led to increased food spending, which bleeds into other areas of our life, as well as not making the healthiest selections.

I’m afraid that my response has been rather juvenile. I’ve taken long breaks from budget planning and menu plan in a way that doesn’t really help me achieve my goal of healthy eating.

My first time getting rid of debt I used this blog. This time, I’m hanging on to that precipice. I do have household debt, as we opted to use a deferred payment plan for the kitchen, but this isn’t what’s stressing me. If we had to pay it back at this moment we could. We opted for this plan to allow our money further opportunities to grow.

The thing that is upsetting me is that I’m catching myself in dangerous thoughts: I deserve that, It’s not too much, I bet I’ll save a lot of money later. I’m using those three to justify purchases that don’t necessarily fit in my budget.

The bill for May hasn’t come completely due but based on my projected spending I’m going to be over budget. Some of that could have been saved for while some is a result of that not so great thought process.

Now that I’ve identified my problem my next step is to re-commit to weekly budgeting as well as to blogging. I did an awesome exercise through HR to help you identify what your big hurdles were in goal achievement. I’m hoping that using it for my budget will help get me back on track.

Planning for the Future

I’ve always had investments of some kind, my parents set them up in our name. When we moved the investor was a moron. She thought it cute that my parents were teaching us to save at such a young age and didn’t really help guide to the right accounts for our goals. She thought it darling that a 14-year-old wanted to save for a down payment for a house.

My parents had always worked with their friends. People who would call them at the end of the year and tell them if they needed to adjust their strategy. When we moved this was no longer the case and it was a hard lesson.

I’ve come a long way since that 14-year-old and meeting with the current financial advisor (FA) highlighted some of the gaps I still have but let me see how far I’ve come.

I don’t want to retire early but I want to have a nice pile by 55 so if I have career difficulty I can take a break. The FA doesn’t really get this so he’s choosing to think of it as an early retirement option that I’m creating so I can find my passion.

We had a brief conversation about passions but it turns out I’m not waiting. I am aware of my passions now and I’m pursuing them. In that case, what am I saving for?

I’m saving because:

• I want a similar paycheque in retirement
• I  want to know that if I get ill at the end I’ll be taken care of. I’d like to hire staff to care for me at home rather than go into a facility.
• I want to fund my funeral and have a bit leftover.

While both ML and I currently have TermLife Insurance to cover the house we don’t have Full Life. This happened when we decided to not have kids. For us, Full Life meant we could leave an inheritance to any children we have.

Now chances are good statistically speaking and based on our families, I will outlive ML by at least 15 years. Currently, my planning incorporates that. If however, I were to die first after we retired ML would lose a huge chunk of change.

While there were some things I didn’t like about FA, I definitely appreciated having this drawn out.

ML and I come from nuclear families that are very similar in the way we treat death. While mine is more religious in the end there is a cremation, scattering or burying of the ashes and a party.

Apparently, ML’s parents differ greatly from the culture they were raised in. They detest the idea of a viewing! Making them much like my culture. I’m less religious than my parents so my plan is:

• Cremation
• Urn/scattering
• Catered party at the house or a restaurant depending how the survivors feel
• No church service

Preparing for a no-spend week

I’ve dabbled with the idea of a no-spend timeframes before and each time I’ve improved upon my last attempt. Each time, it’s been part of an experiment to ease myself into intentional spending and with the goal of paying off debt more quickly.

This time I have a very concrete goal as part of an uber-frugal month. With the kitchen renovation happening next month I’m definitely feeling the pressure to make sure that I’m not paying interest on it. As it stands right now, the only thing left to pay is the contractor.

ML and I are looking forward to receiving next month’s credit card bill to confirm the total and set out our own payment plan as we’re aware that the minimum payment plan is not designed to have us pay off the card within the 18 month time frame.

How does the kitchen relate to the no-spend week? My plan is that any money saved goes to the Kitchen Fund.