Wednesday, January 18, 2017

Shopaholic on a Budget: The Zinns Get a Budget

I didn't grow up talking about money. We're southern, that was seen as taboo. My husband, however, sees money as something you talk about to anyone and everyone. I'm getting better about it, but I still don't like to talk about my salary, how much I make, he makes, what we paid for our house, etc. It just doesn't feel right. But I'm going to alter that a little, because I want to talk about budgeting. I think its that one thing that everyone talks about, but don't actually do. And when you're married, it's even harder.

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Shopaholic on a Budget is going to be a series of blog posts. I named it that because I'm the one with the budget problem, not Aaron. I'll totally be the first to admit that. There are few things that make me happier than material gain, especially material gain at a discount. You might be thinking, "Sarah, this is a blog about fashion, food, and fitness, not money." You would be right, but also wrong. Because those things cost money. And they are mostly the reason that I'm on a budget (thank you Stitch Fix, Fabletics and LulaRoe). I wanted to do this series to follow our budget plan this year. We've tried some of the budget apps, like Mint, but they really didn't give me the control that we wanted and needed. Our budget is pretty strict, but not crazily so. I want to show what two people, without kids, can do and accomplish in a year. The best part - it can totally be adapted to whatever your lifestyle is! Not going to lie, blogging also helps keep me a bit more accountable. It won't really be on a schedule like my Measuring Success posts, but will be posted when we hit some major milestones!

So how did this budget happen? We both work. We both make good money and we don't have kids. We should have a ridiculous amount of money saved and we don't. We've been having the "what if we have kids" talks lately and really want to accomplish a few things before that happens. Yes, we are well aware that you can't plan for kids and nothing really prepares you. We get that. But there are also things that we can control and, being the last of your friends to have kids, you learn a few things.

In 2015, we did an amazing job of saving. We saved about $15,000 in one year. We added that to savings we already had and some help from my parents for a down payment on our house. The leftover was used to buy some of the stuff we wanted for the house (blinds, ceiling fans, my closet, etc). It was amazing what we did! But that was a super rough year. We didn't do anything fun, we just saved for the house. I burned out really quickly after that.

In 2016, we did all the big things! We went to Alaska, I started going to a gym ($99/mo), we bought a new sectional and coffee table. It was a lot of expenses. And then in November, we bought me a laptop, then our neighborhood had a power surge that fried our TV, so we bought a new 65" TV. After Black Friday. Then we bought a new Christmas tree. That all happened in one year folks. Alaska we were prepared for. The rest? Not so much. The Zinns were broke. We did some good things, though! We paid off the Corolla and we made two extra house payments. At the last paycheck in December, though, we had $24 in our checking account before we both got paid. Ouch.

We needed a budget. We needed one that would allow us to do some big things: pay off all the debt except the house and my student loans while also saving to replace my car. But we also needed a budget that allowed us to have some fun. If 2016 taught me anything, it was moderation. We need a budget that allowed me to do some shopping, but on a more purposeful basis. Not just buying crap to buy it. And we needed a budget that allowed Aaron to do the things he likes such as going to the range, seeing movies, etc. We had a snowed in weekend, so I took a Saturday and came up with our budget.

I'm not going to give you specifics about our budget, because everyone's income is different. But I will give you how I came up with it and what we are doing. It can easily be applied to your budget.

1. I determined our monthly take home and what our bills and spending needed to be. Aaron and I both work for a City. I'm salaried and he's hourly. My pay doesn't change, but his does based on the overtime he works. We also get paid bi-weekly. I calculated our monthly take home by using my salary and Aaron's base. Anything over that is extra that we can apply to the bank account cushion. Then I gathered all of our bills. For utilities, I estimated what our usual amount was. Some vary greatly, others not so much. We've been making extra principal payments on our mortgage, so I included that entire amount for our mortgage payments.  Also included in our bills are the minimum payments on the furniture and TV. Then I added in the rest of our expenses: the monthly amount for tithes to our church, our agreed upon spending money, going out money, gas and groceries. That is the amount that I know is going to come out of our bank account every month.  What is leftover goes to "other stuff", savings and debt payoff.

2. We figured out our expendable income. Part of the "bills" is our allowances and going out money. We each have $100 a month that we can use for shopping, lunch or dinner out on our own, etc. This is definitely more for me than for Aaron. It actually gives him some money to spend. His spending was normally drinks when he was on the road and other small purchases, but nothing big. This gives him spending money for lunches, games, the shooting range, etc. I proposed the amounts, but we both agreed on them. Our going out money is for us to use together. This is for dinners or lunches out, movies, etc. We set that at $150 per paycheck or every two weeks. We had been spending about $200-$300 a weekend eating out. Yikes! We're through the first two weekends and I can tell you that you can do it, but it's not easy. You really do have to think about where you go, what you order. Ordering water is your friend!

3. We determined how much we want to save and pay to our debt each month. Most of our financed stuff is on credit cards with 0% interest. My laptop in on my credit card, so we're paying that off first. Because of that and the need to save for a car, we determined to save $1,000 a month with half going to debt payoff and half going to savings. This still leaves us a cushion at the end of each paycheck for the "other stuff" like hair cuts, birthday parties/gifts, etc.  That might not be the amount you can save each month, so I recommend figuring out a steady amount each month that you can throw to your debt and savings. Don't let it depend on the amount of money you have left at the end of the month.

4. I set up a ledger in Excel to track our expenses and see how we do each month. I have it categorized into bills, spending money, going out, groceries, gas/auto, other, savings and debt payoff. I set it up to track how we spend the money (checking account, cash, credit cards) and the running total to match our checking account. I enter all the expenses, even those from the credit cards, but have it set up so that expenses on the credit cards don't tally into the running total.  The credit card expenses total on a separate sheet that tracks our spending in the categories each month. On the ledger, they are tracked in the "debt payoff" category. Not going to lie, setting up that spreadsheet was intense. But now I can easily reconcile our checking account and also see how we are spending against our budget for each category. We also sat down and determined what paycheck we wanted to pay which expenses with. Most of our bills hit on the last paycheck of the month, which has been painful. We moved paying a few bills to the first paycheck of the month and added in our soft expsenses such as the allowances, debt payoff, etc. It's pretty much equal spending per paycheck now. No more tears at the end of the month because there's no money!

5. Finally, we went to a cash system. Yeah, you read that right. Cash. Most people don't even know it exits anymore, but it does! Cash control what you can't. For us, that's my shopping and our eating out. Therefore, that's what where we use cash. When the cash is gone, it's gone.  This also makes using the ledger so much easier because gone are the hundred tiny transactions! The only transactions now are the bills, debt payoff, savings and the cash we take out. I can enter everything in about 5 to 10 minutes and most of that time is due to signing into accounts. Obviously, some spending happens online. I handle that by taking that money out of the cash and depositing it back into the account. I actually just had to do this with my Stitch Fix purchases! We take all of our spending money out in the beginning of the month and then split the going out money by paycheck. Dave Ramsey talks about the cash envelopes and does it for everything. Personally, that's way more cash than I feel comfortable carrying. I'm also confident in how much we spend on gas, groceries and household items. The control was needed for spending and eating out, so that's where we implemented cash.

That, my friends, is the Zinn budget. I have a massive spreadsheet that I set up to track everything and we both sit down and pay the bills together. I'm usually the bill payer, but we're doing this thing together. The biggest thing with cash is just doing it. We talked about going to cash for a year and never did it. After the $24 in our bank account scare, the next paycheck, we did it. The Friday we got paid, we went to the ATM and pulled out our cash. We divvied it up and have lived with it for two weeks now. My next post in this series is going to be about how we did our first month on the cash system. So far, it's working really well for us!

Do you have a budget? Have you ever sat down and talked about your financial goals with your spouse, analyzed your spending and put controls in place? Have you ever given yourself an allowance? I know I can't be the only shopaholic out there! I hope this series helps you think about your budget, even come up with your own!

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