February 01, 2018

January Budget Update

I really should have been updating on our get-out-of-debt progress each month, but it doesn't really seem like there is much to say--everything is going very well! So, this will likely be a short post (although, I say that all the time and it ends up being way too long--so we'll see.)

To recap in a nutshell, back in June 2017, we had about $14,500 in credit card debt. The story of how that came to be is on this post: Budgeting to Pay Off Debt (on a Varied Income).

Since our income varies SO much week to week and even month to month, budgeting has always been difficult for us. Whenever we got a paycheck, we just spent it wherever it was needed at the moment. It always felt like we were broke--but now that we've been budgeting for eight months, I see that we have quite a bit of extra money we never knew we had.

So, we started a "zero-sum" budget, something I read about when I was trying to find a good budgeting solution for us (such a varied income). And it has worked wonders. Truly. (I went into a lot more detail on this post: Zero Sum Budgeting)



After writing up the budget, I couldn't believe that it actually works! My stress level dropped immediately, because we were actually ahead on our bills for the first time in our lives. I didn't have to worry about paying bills when when they came in, because the money was in our account already.

I had my own spending money (we call it "allowance", even though that sounds juvenile), so I could buy whatever I wanted and not feel guilty for it. Jerry and the kids found it very easy to stick to as well (thanks to allowance).

In the post I linked to above, Zero Sum Budgeting, I explained exactly how it works, but basically, we have a "bare bones" budget each month that will cover all of our bills, food, gas, medical co-pays, and allowances. Whatever we earn on top of that bare bones budget gets paid toward our credit card debt.

There are always things that come up where we need to spend extra (this month was Joey's vet bill--updating all of his vaccines--$188!; also, Eli's birthday was this month, so we spent some extra for that).

Anyway, after all was said and done, I was thrilled to pay over $1000 this month onto the card:


This brings our debt down to $3,150.89... almost under the $3,000 mark! 

When we started this budget in June, I was super overwhelmed looking at $14,500 of debt. I thought there was no possible way we could pay it off with the amount of money we make (we later realized that we have more than we thought; we just didn't realize it because we never saw exactly where it was going). 

I have to say, a HUGE part of sticking to this budget is that we each get our own allowance. This way, the kids pay for their own things and I don't get suckered into buying them stuff whenever they ask. And it keeps control over how much Jerry and I spend on things we don't really "need". 

I got an email recently asking me to write more specifically about our allowances--how much we get, what we use it for, etc. So, here goes...

Jerry and I each get $100 per month. And the kids each get $40 per month. We budget everything by the month rather than the week, so on the first of each month, I withdraw $280 for allowance (this money comes from our "bare bones" budget). This amount may seem like a lot or it may seem like a little, depending on what is deemed necessary to people.

As for the kids, they have to use their allowance for any non-necessity they want. We obviously pay for their food, clothes they need, field trips or other school-related stuff, gifts for other kids' birthday parties, etc. I don't think our kids should have to use their allowances on that stuff. 

But when Noah goes to the movies with his friends, for example, he has to use his own money. After his first time, he came home a little shocked at just how expensive movie theater popcorn is, haha. He had no idea the value of a dollar before this; but now that he has to use his own money for things, he is much choosier about what he really wants. 

The kids use their allowances on anything that Jerry and I don't deem necessary. And $40 seems to be a good amount for kids their age. Usually, they don't spend it all, and it's nice that they have been saving up a little. They have a little extra set aside for when we go to Boston next month.

As for Jerry and me, our allowance goes toward anything we want that doesn't fit into the budget. When it comes to food/drink items, if it's something that only one of us eats/drinks, then we have to use our allowances for it. Jerry's craft beer, for example, comes from his allowance rather than our grocery budget, because he is the only one that drinks it. And likewise, I buy tea with mine, and the fruit snacks I was eating so much of all year (I just recently got out of that phase).

We have joint bank accounts, and have always shared our money. It seemed so odd, then, when we started doing allowances, because we each have our own spending money. So, if we decide to go out to dinner (a rarity), one of us typically "treats" the other to dinner (usually, I treat--Jerry has always let money burn a hole in his pocket until it's gone, haha).

Other than food items, we use our allowances for clothes, travel (when we went to Portland, for example, we used our own allowances for spending money), going out with friends, and other things like that. Again, I think $100 is a good amount for what we use it for. We don't feel deprived of things we really enjoy, but we definitely think carefully about what we choose to spend our money on.

It has helped us so much in sticking to the budget! And by sticking with our budget, we've paid off well over $11,000 in eight months. I'm super excited to make the final payment--hopefully in March, if all goes well, but likely in April. I can't remember what it feels like to not have any debt ;)


22 comments:

  1. Hi Katie, this is so interesting!I'd love to learn to budget, although I have to admit it seems very daunting to me... I don't have an analytical mind like you, and so I find myself a bit lost. Though I'm surprised to say I've been quite good at counting calories (with an app). Do you think it's achievable to learn budgeting with a non-analytical mind??

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  2. Did you check out any other budget programs before this one? I've heard of Mint and YNAB (You Need a Budget). Just wondering.....

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    1. Go with YNAB! It makes it super easy to do the budget the way you are speaking about. You have the added benefit of graphs and trackers to look back and make better decisions the next time.

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    2. I feel like I tried them all over the years! Because our income varies so much, it made budgeting very difficult. I found the zero-sum method works really well for us for that reason.

      Amanda, funnily enough--as much as I LOVE trackers and all that good stuff--I like to do my budget the old fashioned way on paper! haha

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  3. We call our allowance "pocket money" and treat it the same way you do. It is money we can do with whatever we want without any guilt or accountability to the other.

    Good job on the road to freedom from debt.

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    1. Thank you! Spending without guilt or accountability is so nice, isn't it?!

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  4. Great job, no better feeling than having control over your money. We do something very similar for our budget. At the beginning of the month we each get $200 a month for our "stash money" as we call it. We have done this for years. I think an allowance is a great idea and it helps keeps you on task for the other stuff.

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    1. I have been so amazed at what a difference just having an "allowance" has done for us. You're right, it really does keep you on task for other stuff!

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  5. We call our allowance money "blow money" cause we can blow it on what we want and we handle it exactly like you do. My husband pays for craft beer with his and I usually use it to go out to eat with my sister. For vacation we have a travel fund but we use our blow money for souvenirs and activities that aren't airfare, food or hotels. Congrats on paying off so much debt!

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    1. I love that you call it "blow money"! I may start using that term, because I always feel embarrassed saying "allowance", haha.

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    2. "Blow money" could have a few other connotations. Just sayin".....

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  6. Wow, what a great accomplishment! Great work!

    I like that you give the kids an allowance and make them use it for the non-essentials. That’s one area where I could definitely improve...I but my kids way too many little “wants“ that they really don’t need. I may try it your way! ;)

    Thanks for sharing!

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  7. Congratulations on paying off so much debt so far! That's amazing. I also think it's a great idea to give your kids an allowance and make them stick to it. I remember that my parents did that when I was a kid, and I became much more careful about spending. And like your kids, I saved up what I didn't spend - and one summer I had enough to buy my first 3-speed "adult" bicycle! That felt like such an accomplishment.

    Today, so much money is spent online through mobile apps or the internet. Do your kids do that at all, and do you track it through their allowances? Just curious, not judgemental. I think it would be very difficult to be a parent today with all of the online things kids can get into.

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    1. The online spending is VERY tough when it comes to allowances! Not necessarily from games (although they do ask for an occasional app or game), but also from Amazon. I make them pay for those things, but they give me cash--and I'm terrible about taking the cash to the bank to use it to "return" the money. I think I'm going to tell them they'll have to buy Amazon or iTunes gift cards with their cash, and then use those when they want something. I was trying to figure out a solution to this recently, and that's what I came up with. The online spending is hard for me, too! Amazon makes it so easy to order things on a whim.

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    2. Check this out. I wish they had this when my kids were in allowance years! http://www.thefrugalgirl.com/2018/01/how-we-do-allowance-with-famzoo/

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  8. I have always struggled with credit card debt. Currently we are in debt for the last two Christmasses. I hope to pay down on it when the income tax return comes. I'm like Jerry, that money burns a hole in my pocket. You guys are doing great. Once again, you inspire me!

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    1. Ugh, we didn't do so well with Christmas in 2016--that was the first card I wanted to pay off when we started our budget!

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  9. We gave our kids a dollar per year in age they were per week. So each birthday they got a raise. If they were 14 they got $14 a week, etc. We had three spread across 6 years so it really worked out well and was appropriate too.

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    1. I love that idea! As they get older, and go out with friends, I'm sure they'll need more. Maybe we'll switch it up soon!

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  10. Isn't it awesome feeling like you are in control of your finances?!?! It's such a relief. We started really sticking to a budget about 10 years ago. We paid off our house in December--that was huge. When we needed a new car, we paid cash, because we had been saving for it for years. Now comes the REALLY tough part....2 kids in college soon! ��

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  11. Congratulations! That is a huge accomplishment! I like to budget and paying off debt is really freeing! I am almost done paying off two graduate degrees of student loans. It feels so good to buckle down and get things paid off. We’ve paid off about 40k of student loan debt in the last five years and it feels so good! Think of how you can save when the debt is gone! Keep up the awesome work!

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  12. Hi Katie! I read this blog post the other day, but I came across this info today and immediately thought "I have to go back and tell her about this!" I just learned that amazon has an "allowances" feature, where you can set up a one-time or recurring amount that automatically funds to an amazon gift card. I'm sure I sound like a weirdo for being so excited about this, but since I also struggle with "paying back" to the bank when I buy something online, I thought this was pretty cool! :)

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