Monday, April 29, 2013

Budgeting Update: Financial Literacy Month

I've been using the debt-free Magic Little Notebook for over a month now, and the best thing I am getting out of it is how to change my attitude so that I can continue to (1) pay off my debt, a little at a time, (2) build up my savings, a little at a time, and (3) play with my budget when I find myself straying.

I have already revised my budget items a few times. Beyond merely just building up my savings account, I am attempting to create cushions in the areas where I know expenses will only continue to go up faster and greater than an annual salary increase.

For instance, I started off budgeting my usual $80/week in gas - the amount I was spending when CA gas prices were at their highest. While I'm not spending that now,  I wanted to make sure I kept it at a level that I might have to spend, since we don't have any alternatives to our daily commute.

For the first couple of weeks, I took the excess and funded other more fun areas of the budget. But then I realized, I should re-name this line item "Car" so any amount over actual gas can start going towards car maintenance and repairs. Most likely, I will still have to dip into my savings from time to time, but hopefully not as much as I start to build that amount.

Speaking of savings, I can't explain exactly how it happened, since I only budget $25 a week for savings, but I still managed to grow my savings by $200 in one month. That even includes a momentary lapse where I put something on my credit card!

The very next day, I felt so bad about it that I transferred the $50 I'd spent to my credit card from my savings. I've previously used a lapse as an excuse to just keep spending blindly, but by being able to pay it off immediately, I felt like I really hadn't lost any ground and could just keep going.

There is one line item amount where I go over every week, my Dining Out category. On any day that I don't have lunch plans, I bring my lunch but, being a single working mother, lunch is usually the easiest plan to make with friends, and I sometimes have meetings related to my Board commitments at lunch time. I just can't resist it.

While I ask myself every week (around the time that I go over) if I should just increase that line item, I manage to find the amount I've gone over somewhere else. Other categories are over-funded to a certain extent because I divide monthly bills into 4 weeks and there will be a few bucks left over here and there or because my gas or electric bill aren't as high. So I leave the Dining Out category amount as is, and then just find the money (but not from the Car line item).

I am learning to resist from time to time. There was a recent lunch event that I was invited to, but I knew it would go way beyond my Dining Out budget. Not just a few dollars, but like double the amount. So I declined, and said that my budgeting wouldn't allow it. No one tried to coax me to change my mind, nor did they make me feel embarrassed about it. The truth was accepted by everyone, but most importantly, by me.

And while it's not a lot, I'm paying at least $15 more than the minimum required for both of my credit cards. If I just keep paying the same amount I've budgeted without adding to the balance, eventually that will turn into $20 more, then $25 more, etc. I'm still not convinced I will ever not have a credit card balance, but that realism should help me (not literally) die a little less next time I have to use a credit card.
I am also building the "Fun" and "Miscellaneous" categories. They are great to have when Riley needs new uniform pants or we want to buy an iTunes song. Still, I am most proud that I am funding them more than I'm taking from them. I just need to make sure that stays the case as much as possible. 

There are still some things that frighten me - like having to pay a car payment or buying Sylvia a prom dress. I'm skeptical that my turtle-like time table will be quick enough for what may came up. But there's only so much I can do, and there's only so much I can stress about the unknown.

For the past month or so, nearly every day, I feel like I am making the right decisions and doing the best I can with what we have.

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