Oh my. I missed last week’s weekly progress post. Sorry about that!
This blogging thing requires more time and effort than I realized, but I’m not giving up! I think I just need to find my flow and it will get easier to stay on top of it.
But the good thing is I completed everything on my list, and I did need that extra week!
Weekly Goals Review
Okay, these were my top three goals from two weeks ago:
- Create a money tracking system that both my husband & I can use
- Create a “financial snapshot” of 2018, so we can see how we handled our money last year
- Determine how we’ll allocate the extra cash flow we’ll get from the mortgage refinance
#1 Money tracking system
I knew this would be time-consuming, and it was. In fact, it turned into something bigger than I originally planned. I was going to whip up a few spreadsheets and call it done, but the more I put into it the more ideas I got. So, our tracking system went from a basic budget form and bill calendar to a full-on financial binder.
My husband gets paid weekly, and he gets a lot of overtime, so his check is different every week (except when he gets zero overtime). So, it’s always been tricky for me to plan ahead in our budget. He adds up and submits his hours on Sunday night, then gets paid for those hours on Friday.
In the past, he would tell me his hours and then I’d estimate his paycheck based on previous checks. But that would only give me a 5-day planning window, which doesn’t help for longer-term planning.
I’ve thought about using the weekly average from last year’s annual income, but I’m working more now so our income is different this year.
In the end, I decided we’ll try the YNAB way and budget based on last month’s income.
This means some pretty cool things:
- We’ll know exactly how much to budget on the 1st of every month – no more week-to-week planning.
- I don’t have to wait for a paycheck to come in to pay a bill. I can pay all the bills at the beginning of the month, and the rest is for other things in our budget.
- I can make a monthly meal plan instead of just weekly. So I can do the bulk of my grocery shopping at one time, and meal prep farther than a week out. Hopefully, this will cut down on last-minute restaurant runs.
- We’re breaking the paycheck-to-paycheck cycle. This is going to be a big shift in our financial mindsets.
- We’ll get a wider view of how we’re using our money. I’m hoping if we start looking through a monthly lens instead of just weekly, we will be more future-focused and purposeful with our finances.
Of course, this method requires one to actually have enough in savings to pull from. Fortunately, we do. If we didn’t we would need to start a “last month’s income” account and start socking money away. This could take us months, so we’re just going to utilize our savings to get this plan into action quickly.
In addition to this change, I also created a budget spreadsheet to keep track of variable “lifestyle” expenses. This includes food, gas, entertainment, recreation, and anything else we don’t get a bill for. Once I pay all the bills on the 1st of every month, the rest will go towards these types of expenses.
The spreadsheet is for a 7-day period, and I did this so we can keep a tight watch on how quickly our “lifestyle” balance is depleting. For each day and each category, there is a space to record how much we spent for each day along with the new balance. I looked high and low for something already created that I could just download, but never found exactly what I was looking for.
I was originally thinking I would post the lifestyle expense spreadsheet on a cork bulletin board behind his home office door, together with a bill calendar and debt tracker. I wanted it somewhere we could both look at it but outside the view of our kids and visitors. But then I decided a notebook would be better because we could just pull it off the shelf for our budget meetings.
And that’s when my brain considered a whole financial binder, with not just budget records but everything connected to our financial state. This includes our insurance policies, 401K statements, a net worth tracker, credit card info, financial goals, etc. I think this will really help us to be more like-minded with our finances and have a more realistic view of our financial health.
#2 Create a financial snapshot
For this goal, I wanted a summary of how we spent our money last year. This will help us to see what mistakes we don’t want to make again, and how we can do better in 2019.
First, I made a spreadsheet of our credit card debt. I started with the beginning balance in January 2018 for each credit card, then rows for how much we charged that month, how much we paid on the credit card, and what the new balance was. I also included sums for how much we charged and how much we paid on our credit cards for the entire year. This is just a nice reality check on paper that hopefully will motivate us to stay on track this year.
I also put together a spreadsheet of every detailed budget category and how much we spent on each one for the entire year. For example, instead of just adding everything up for our “auto” category, I broke it down into gas, insurance, maintenance, parking, and tolls. I really wanted to know this degree of detail so I could see where there were any budget leaks. And it wasn’t difficult, because I break it down this way when I input entries into the program we use to track our spending. So, I would just run a report on everything auto-related, and the program told me how much was spent on each sub-category. Pretty handy.
So now I know when in the year our expenses were higher and lower, and I can calculate a monthly or weekly average to estimate future payments.
#3 How to allocate extra cash flow
This one was the easiest and least time-consuming. I basically added up the extra cash flow that resulted from our recent mortgage refinance and decided which debt it would go to and when.
We timed the closing of the refinance so we could skip two mortgage payments instead of the usual one. Of course, we’re not getting out of making these payments, they just got pushed into the new loan. But, it did allow for a significant increase of extra funds that we could apply to high-interest credit card debt now.
Because we rolled our home equity loan into the refinance, we were saving payments for both our first and second mortgage. And Because my husband gets paid weekly, I’ve always made equal weekly payments (approximately 1/4 of the monthly payment). So, in January I stopped making payments for February to the two original lenders and won’t start making payments to the new lender until April. All in all it’s 8 payments which total $6,566. That’s a huge chunk off our credit card debt! And on top of that, we received a $1,646 payout from closing. That’s $8,212 all together!
So, I determined I would pay off the low balances first, then start hacking away at our biggest balance, which has a 0% promotional rate until June 2019.
It feels good to have a plan and be purposeful with these extra funds!
For Next Week
I feel like I got a lot done these past couple weeks, and we’ve got some good tools to help us be better managers of our money.
For this next week, here are my top 3 financial goals:
- Create a debt payoff plan and timeline
- Research affordable vacation ideas for this summer
- Get quotes on homeowner’s insurance
With the first goal, I’m always hesitant to nail down a date to be out of debt, because, well, who knows? There are hundreds of what-ifs that could potentially happen, which could push the goal date further back or even pull us further into debt.
But still, I do think it’s important to at least have a target. The target may move, but at least we’re shooting towards something.
My second goal is about doing something really special this summer with my kids. My daughter is graduating high school, my younger son from middle school, and both my husband and I turned 50 this year. I’d like to celebrate by taking a trip somewhere we’ve never been, possibly even out of the country.
I’ve been waiting for Southwest to start flying to Hawaii (should be happening within weeks!) to get the lowest fare, but they aren’t available yet. Costa Rica is another idea. I just need to find out what kind of budget we’d need and if it’s even doable. Gotta start planning now, graduation is in 3 months!
The third goal may reduce our already lowered mortgage payment by another $50. When I was talking to lenders to refinance, they all told me our USAA premium seemed really high. So, I need to make some calls to see if it’s worth it to switch insurance companies. We’ve always been with USAA because my husband’s dad has been with them forever. But a neighbor (who is also an insurance agent) told me that they are usually more expensive than most other companies. Might just be time to part ways.
How are you doing on your 2019 financial goals? I’d love to hear how you’re crushing them, or even how you’re falling behind. Either way, we can all learn from each other!