Budget Project: Baby Steps #1 and #2

Update on my Budgeting Project! Which thankfully, has been going extremely well. As I've mentioned before, I'm following Dave Ramsey's Baby Steps to work on getting out of debt. Here's a quick update.

Baby Step #1: $1,000 into an Emergency Fund -- DONE!

I am now complete with Baby Step #1. I have to admit though, I've done baby step #1 multiple times and I *always* ended up tapping into it! This time, I'm going to make sure I'm more disciplined and held accountable and NOT touch it.

Reasons I tapped into the emergency fund: travel expenses, holiday costs, TTC costs. Not true "emergencies". So, now I've completed Baby Step #1 for the 5th or 6th time! Time to stick with it. So far, so good.

Baby Step #2: Pay off All Debt with the Debt Snowball -- IN PROGRESS! 

Things that have stalled my debt snowball: The holidays, the adoption costs, December birthday costs, and the IVF charges.  Haven't made much dent into my debt snowball. But good news is, I'm curving my spending somewhat. I have the following debt to pay off:

1. Student Loan debt
2. Outstanding Credit Cards - only 2 cards carry a balance. Out of those, only 1 of those I actively continue to use for the above mentioned debts.  

Budgeting using YNAB

I've been using YNAB consistently for 3 budget months now (Nov, Dec, Jan).

First, I'm BUDGETING! Sadly, this is the first time in my adult life that I've kept to a real - true - honest budget. After the hurdle of getting acquainted with YNAB, I've really gotten used to it. What I've changed about my habits:

• Daily: I input any expenses "on the go". For example, if I get gas - I input it at the gas pump on my app. Makes life easier to have everything in there as the expense happens. The great thing about YNAB is it remembers your payees, so this is really quick. I have gotten behind on this a little bit because I seem to be spending left and right for Christmas. Need to be more consistent! 
• Time: Takes only a few seconds. 
• Weekly: I have a Reminder set on my phone to review expenses / clear transactions from my accounts. Why weekly? Honestly, it was just to keep me honest and to keep me on top of it! It only takes a few minutes. I only have 3 accounts I really "work" with: my checking account, my savings account, and my only active Credit Card. This is also when I reconcile my accounts. I've started off doing it weekly, so I can get into a habit. Also, so there's "less" to reconcile at a time. 
• Time: maybe 10-15 minutes (tops - but this is mostly due to learning curve, I expect this to be more like 5 minutes in the future). 
• Monthly: Once a month (usually on the 20th of the month) I've been setting my budget for the next month. I chose the 20th because all of my current-month expenses are cleared by the 20th.
• First, I reconcile my accounts, to make sure I didn't miss anything from my weekly reconciliation. I was importing the transactions from my accounts, but since I'm inputting my expenses "on the go" - I do not have a need to import. This saves me time. 
• Second, I input all income I expect for the month I'm budgeting for. I'm a month ahead, so what I earn in one month, I spend for the next month (i.e. November earnings go to December expenses). 
• Third, I input all the planned expenses into my bank ledger for the next-month, so I can get my "working balance" (just a thing for me - I like knowing how much to expect in my account, one way I reconcile). This makes weekly reconciling easier, since I do the majority of the work here. 
• Time: 15-20 minutes 

I'm in the process of seeing where I can curve expenses. Expenses that I plan to cut in 2016: 

• Massage - Yearly Savings $708
• Gym Membership - Yearly Savings $245 

Rainy Day Funds and Savings Accounts 

Something new that I'm going to start, now that the new year is rolling around - I'm going to start allocating funds to my Rainy Day Accounts and Savings Accounts. I just need to assign values to each category: Ultimate Goal, Time to Goal, and then monthly allocation. What's great about this is that I can figure out the values relatively easy since I'm in the mist of the holiday/birthday season. Here's what I'm planning to save for: 

• Christmas Fund
• Kid's Birthday Fund
• House - Hardwood Floors 
• Travel/Vacation 
• New Car 
• Pet Care - these costs always seem to sneak up on me! 
• Gift Events 

Rainy Day Funds: 

• Emergency Fund 
• Clothing 
• Car Repairs - going to need new tires soon 
• Home Maintenance 

I totally customized my Budget Categories. The goal around this was to look at my optional spending and see about curving the costs. I also wanted to lump together my expenses that I need to report on my taxes. I work from home and track my utilities for tax reporting. I love how you can totally customize YNAB categories to whatever you want. Originally, I had the traditional categories (House, Utilities, Food, Auto, etc). This works so much better for me. It just took me a little while to get used to the different organization, as I prefer the traditional categories for mental peacefulness. 

• Mandatory - Monthly Fixed
• Mandatory - Monthly Variable 
• Mandatory - Not Monthly 
• Tax Reporting - Monthly
• Tax Reporting - Variable
• Savings - Mandatory (Rainy Day Funds)
• Savings - Optional 
• Optional - Monthly Fixed 
• Optional - Variable 
• Giving 
• Pre-YNAB Debt 

What's been difficult: It's hard because I normally like going by the balance in my account. Previously, I would move all my extra funds into my Savings account and keep the balance in my checking account at $100 (one way I reconciled). I have a higher interest rate in my savings account, the main reason I moved the funds.

Now, I'm going by the budget since I'm saving for future costs and just keeping the funds in my checking account. Was thinking I could still move it to Savings, but it takes too much extra time to look at each category, add it up, and move the right amount. So, now the balance in my checking account is higher than I normally keep it because all the "savings" funds are staying in there. I'm still working on overcoming this mental barrier to accept that since I've been doing my old method for the last decade or so!

Overall, I'm extremely happy with YNAB! I just need to stay on top of things. Now, I need to curve my extra spending and start making a dent in my Debt Snowball. 

Budget Project: Budgeting + Baby Step #1

Things have been busy and I've been behind on adding an update on my Budgeting Project.

Partly to blame for my lack of progress on my budgeting project is: all the TTC costs (hard to save when you're spending so much!), getting a new foster son (busy!), and just trying to find a budgeting system that works for me.

When I started this budget project in August, I was going to use YNAB (you need a budget). I initially loved YNAB! Here's why:

• Makes taxes easier by tracking expenses by category. 
• You receive emails on why it's important to budget. 
• They have great online tutorials 
• They offer online training sessions with live Q&A. 
• I liked the zero-based budget method. 

It takes awhile to set-up, but once set-up it's easy to maintain. So, I did track expenses in August -- then got OFF track and skipped September and October! I ended up doing a 'refresh' and starting over starting Nov 1. I modified my budget a bit and I'm hoping to start cutting back on unnecessary costs.

When I attended Dave Ramsey's Smart Conference that I found an app that I really liked: EveryDollar. It's free (although you can upgrade it for an annual subscription cost). I really liked this app and I found it easy to use. Very easy to set-up and very intuitive. The main thing with this one is it doesn't really keep a ledger of your accounts. I like keeping a running log of everything so I know my account working balance and know where I stand with my budget. EveryDollar is also new, so it doesn't have that many good reporting functions that I like in YNAB. 

For example, in YNAB I can keep things in categories so I can easily export these for tax purposes (i.e. utilities, fertility costs, RX costs, co-pays, donations, etc). I can log them in YNAB and just export at the end of the year. Right now I'm keeping an excel spreadsheet on Google Docs. Starting in 2016, I'll be able to get rid of the spreadsheet. EveryDollar doesn't allow for this or just prefer YNAB's report "looks". 

Right now, I have my first "real budget" for November on YNAB. I'm working out the kinks, but I think I've finally gotten it where I need it. I'm still "playing" with it and am looking to modify in future months as I get more data/can see more trends. 

The other thing about YNAB, is there's a one time charge of $60 to use. For EveryDollar, they have a yearly subscription of $99. I have to admit, I love EveryDollar's interface and love how easy it is to use. I was tempted to go that route. However, the yearly subscription for the enhanced version just didn't work for me. YNAB has more functionality for cheaper. 

Both have iPhone apps that I like. 

There are more in-depth reviews of YNAB vs. EveryDollar on YouTube and on various blogs. I think that either could work well, as long as you actually USE it! That's my problem, I just need to stick with it and use it. I think I finally have enough motivation to do that now. With the adoption coming up and life really changing for me, I want to focus on Dave Ramsey's baby steps and really start changing my life. 

What's nice is: 

• I've paid off all my CC's, accept for two. 
• I am half way to baby Step #1: $1,000 In An Emergency Fund. Which I will complete next month. 
• I'm refinancing my house to have a lower monthly payment. 
• I'm financially a month "ahead". Meaning I'm using income earned in prior month for current month expenses (i.e. money earned in Oct is being used for expenses in Nov). 
• What else is "nice" is that I should get a sizable tax return next year, which means I can make a huge dent on these last two CC's and then start making headway on my student loans. 

What's bad is: 

• There are so many more expenses to come this year! 
• I am going to have more out of pocket expenses for IVF. 
• Christmas is coming
• Little Guy's 2nd birthday is coming 
• Our adoption is coming 

What's hard is: 

• Not using CC - took them out of my wallet. All accept one, that I use for Gas and recurring charges (I don't like auto debiting from my checking account - had fraud before). 

I think that's one of my issues, I have a lot of recurring charges hit my CC and I'm not paying the entire balance every month. I'll get there though. I think after the holidays, after the IVF expenses, and all the events coming up -- things will be "calmer" and I can really tackle things. 

Some financial decisions for next year: 

• No big trips. 
• No big purchases. 
• Little to no travel. 

Wants: Attend Financial Peace University in 2016. 

I also wanted to note that I have a Blow$ Account. I put a certain amount of money directly into my account and I use it however I want to. I do not count this in my budget. It's automatically taken out and deposited into my Blow$ account. So, if I want something extra - I can only get it if I have enough Blow $. It just gives me piece of mind and makes me stress less. It's not a huge amount, but it's enough where I can do a little extra without feeling guilty about spending money in the budget. It works for me! 

Next Steps:

• Finish Baby Step #1. Already budgeted for next month. 
• Baby Step #2: Pay off All Debt with the Debt Snowball <-- I'll be here for awhile! Outstanding debts include: Student Loans and the two credit cards with high balances.

Budget Project: Where does it all go?

I've never been a big budget-er. I admit that I am not the best with money matters. I always make ends meet and have enough to go on trips/vacations when I want to.

But, I need to do better than that. With my upcoming adoption of Little Guy and all the TTC costs -- I want to implement something new & become more cognizant of where I spend $$$. 

With August beginning anew and no travel this month (Yay!), I'm now going track every single dollar I spend for the month. Then, from there - I'm going to make a budget and find areas to curve spending. After extensive review of budget management systems, I decided to download the free trial of You Need a Budget (YNAB). I think it'll work well with Dave Ramsey's zero-budget method.

I'm planning to re-start Dave Ramsey's Total Money Makeover. Which, of course I've started and re-started so many times. I just need it to stick! Will be starting anew with Baby Step #1. 

Some Financial Goals: 

• Setup a savings account for Little Guy. For college or just a general one? Not sure yet, going to talk to a financial advisor before deciding. Questions: what if he doesn't go to college - what happens to the funds? 
• Pay off revolving debt
• Put funds aside to make some house improvements. Want to get new carpet on the stairs and possibly hardwood upstairs (replacing carpet). 
• Create a travel fund/goal. 
• Create a gift giving fund/goal. 

This is just to begin... but first Baby Step #1. 

First things first: 

1. I need to see where all my $ is going by tracking everything for the month. 
2. Need to invest in a good money management system. I used to use Quicken on my old computer, need to figure out which system would meet my needs & also not be hard to manage! Let's see if YNAB works for me. 

This project is long overdue! It feels good though, finally tackling it. 

Seems like a lot of stuff going on: adopting, decluttering project, money management project, TTC, photo booking projects. Weird, but I don't feel overwhelmed! I just feel like I'm getting things in order and getting things done :)

Next Steps: 

1. Track spending for August in YNAB 
2. Baby Step #1: Save $1,000 Fast to start emergency fund.