This is my first monthly review since I stopped posting weekly updates. I think giving a summary of each month’s financial happenings will be more helpful in the long run.
March was the first month we started budgeting off the previous month’s income.
Well, sort of, anyway.
I did budget off of February’s income, and that is the amount I used to set category amounts for March. But I never actually did any transferring of money (like I’ll be doing for April).
So, instead of transferring the entire income amount we made in February over to the checking account on March 1st, I ended up just using the weekly paychecks we received throughout the month.
I know, that’s not how I was supposed to do it. But I kept putting it off, and then all the switcheroos got a little confusing and I didn’t want to go through the mental torture of reconciling everything.
So, March was, how should I say … half-ass. Yeah, that’s a good word for it. Half-ass.
I did keep close tabs on the budget, updating it close to every day. I found I was fiddling a lot with the numbers to make everything come out to a zero balance. Taking away from some categories and adding more to others. It got a little wonky at the end, but I know this whole budgeting thing is going to take a few months to get used to.
The Good & The Bad
Here’s the good and bad from the month (and one pretty cool awesome!):
- GOOD: We didn’t go over the budget we set for our typical monthly expenses. This is actually a pretty big deal for us, since we are usually dipping into savings because of overspending in categories like groceries and eating out.
- BAD: A couple of large, unexpected expenses popped up that we did have to use savings for. One was a large medical bill that had gone to collections (even though we’d been paying on it every month) and another was a great opportunity for our son to play basketball. I didn’t mind taking money out of our savings to pay the medical bill just to get our record cleared, but the basketball academy tuition will be coming out of a future month’s budget and put back into savings.
- GOOD: My husband and I actually talked about a budget and followed one! Hallelujah! Granted, he ended up overspending for some, uh, ahem, *non*-necessity items. But, hey, it’s a start.
- BAD: Communication between us about the budget was not great. Actually, besides the budget meeting we had, it was almost non-existent. We need to get better at holding each other accountable.
- GOOD: I started the Financial Peace Flex online course. I’ve been familiar with Dave’s baby steps for several years, but it’s been really good to actually go through the course. Each lesson has a video, a worksheet, and a checklist to help you stay on track.
- GOOD: I was inspired by the Financial Peace course to take money out of our savings and pay off a couple small credit card balances. I hate using up our savings to pay off debt, but the course has taught me that I need to get rid of debt as fast as possible so I can start saving more.
- GOOD: We knocked off $850 from one of our medical bills after negotiating with a cash payment!
- AWESOME! We received a surprise check for $3,164, which went right into savings. This was the money that was left over in the old escrow account before we refinanced our mortgage. Our new lender didn’t mention we’d be getting this back, so this was just *bonus* money!
Since the first of the year, we’ve knocked out over $6K in credit card debt ($2K of this was in March). This was largely due to recently refinancing our mortgage. We were able to time the closing so that we skipped 2 months of mortgage payments instead of the typical one, and this allowed for a large increase of funds that we could pay down debt with.
But, my student loan also just came due, so we had to add that into the budget in March.
As of right now, this is how much debt we need to pay off:
$8760 (credit cards) + $13,375 (student loan) + $9,088 (medical bills) = $31,223 total
We will possibly have a good chunk of money left over from an insurance claim that’s being processed, but it may be a couple of months until we know for sure. If we do, it will go towards painting the exterior of our home. We’ve been putting it off for years, and now the HOA is on our backs so it needs to get done. That’s going to cost us about $5k (ugh).
For my student loan, I plan to get that paid off by next May with my substitute teaching pay. (I’m determined to pay it off solely with teaching pay!) If I can work at least ten days a month on average during the school year, I should be able to crush that goal easily.
We pay the majority of our medical bill payments with our HSA card. We contribute $75 out of each paycheck, and my husband’s employer throws in another $25. So, over the course of a month, we have about $400 to pay towards our medical bills.
That is not a lot, but it’s enough to keep us current and keep the billing departments happy. Right now I’m more concerned about paying off debt with interest.
Now that we’re on a budget I can start to be more intentional about cutting back in some areas so we can make our debt snowball bigger.
This is going to be a process, and it’s going to take time and effort and intention to replace bad habits with good ones, and to replace a scarcity mindset with an abundant one. It’s so much more than just getting out of some debt.
Although my husband is not very interested in our day to day finances, ironically he made the best long-term financial decision when he was in his early 20s, and that was to put money in a 401K. We currently contribute 10% of his paycheck, while his employer adds their max match of 3%. So, a total of 13% of his gross salary is currently going into a retirement fund.
Right now that’s the only retirement account that we have. Once the debt is paid off I’d like to bump that up to 15%.
We also have a 529 account for our kids’ college, but we’re only able to contribute $100 a month right now.
We do have a savings account that could cover about 4 months’ worth of living expenses in an emergency, and I do want to get that up to a 6-month coverage.
However, going through the Financial Peace course really has me conflicted between keeping our savings and paying off our debt. I know Dave says to have a $1,000 starter emergency fund in the bank and then use everything else that’s not already in a retirement fund to pay off debt. He even recommends stopping the 401K contributions while you’re paying it off.
I’m really struggling with this because using up our savings to pay off our debt doesn’t really help to change our behavior. I’d rather keep the money in the bank while we work on improving the bad habits we’ve been practicing for decades. Learn to stay on a budget, work on changing our mindset surrounding money, and make the sacrifices necessary to get out of debt.
One variable I keep forgetting about is income. I’m so used to living paycheck to paycheck that I don’t even consider the possibility of increasing our cash flow. Right now I can’t see it and I have no idea how I can make that happen. But I also know that most of that is just my limiting beliefs.
We’ve got so much going on right now in our family that sometimes I feel myself starting to shut down. I’ll tune things out just to give my head and my heart a break.
So, in order to stay in the game, I’ve started reading books that motivate me. I used to read these kinds of books all the time when I was younger and really ambitious. Now, they’re just helping me to remember that I have more control than I think I do, and it all starts in my thoughts.
It’s a good thing to be diligent and purposeful with your money. To have a budget, control your spending and save where you can.
But that will only get you so far, and it will take a long time to get to where you want to go.
I’m in my 50s – I don’t have a lot of time!
The answer lies in generating more income, which is one of my main financial goals. So the first thing I need to do is start working on those persistent limiting beliefs that hold me back.
In A Nutshell
We made some pretty significant progress in March:
- We stayed on a budget
- We started communicating about money
- We paid off $2,000 of credit card debt
- I started the Financial Peace Flex online course
- We added over $3,000 to our savings account
We should have the new roof on in April, and then I can schedule for the house to get painted. That will shake up our finances for sure, but I feel a lot better knowing we’re on a budget.
How are you doing on your budget so far this year? Do you feel like you’re more in control of your finances? Are you still struggling or have you found your rhythm? I’d love to hear from, so leave your comments below!