Thursday, May 16, 2013

Our Savings Plan: An Update

Over the years, I've posted a few times about how we budget as a family.  I first talked about it here in 2010 when I shared our savings plan and our cash system, after we sat down early in the year to make a plan to save a ton of money.  

I couldn't mention it at the time, but we were doing that in anticipation of me quitting my job in a year and going back to school full-time (which I did in April 2011 - hooray!  Look for a sappy reminiscing post about that soon...).  

I came back in February of 2011 to say that our savings plan was still going strong and that we were 100% debt free (not counting the mortgage...) and we had shifted to living completely on Tony's income and saving all of mine.  

I can't remember now exactly how much, but within that year and a half from when we decided to overhaul our finances to the day I quit my job, we saved a significant amount of money - over $25k.  Sure, it  certainly helped that we both worked and didn't have children.  We made good money, but not a crazy amount.  I feel like a broken record because I said it so much in those older posts, but we've been blessed by so many things in our lives that had allowed us to get to those financial benchmarks (had parents who helped us through college so we didn't have undergrad loans, Tony was able to use a work car and phone, no major life hardships that required us to go into debt, etc.).  But it can't be denied that good old fashioned hard work and sacrifice helped too.  

If you had asked me at the beginning if it was possible to save that much money in such a short time frame  I would have said it was impossible.  We were saving some money, but it's amazing how that much money was just being frittered away somehow throughout the year.  It was there all along, but we just weren't aware of just how much we were spending.  With just some simple life adjustments we were able to save a tremendous amount.

This post from 2011, detailing the "hows" of making it possible for me to quit my job and to take on single-income status, is a good picture of how we are still living today.  To quote myself (shameless.):

So we have saved a ton of money.  The savings were supposed to be so we would have a fund to help pay our bills while I wasn't working, since we didn't think we could live off of Tony's salary alone.  We would take out student loans for tuition itself.  Turns out, we've whittled our budget down so much, that we ARE living off his salary - so we will be able to probably break even each month, pending no disasters.  We are even going to try to pay for school with our savings in an attempt to avoid loans.  It's all coming together beautifully. 

Turns out, we were totally able to make it work while I was in school.  Only on occasion did we need to dip into that savings fund, and that was usually when something unexpected happened - like when our water heater and ac/heating unit and stove and car went out all at once.  We begrudgingly learned that emergency funds are awesome, even when you have to use them.  We also were able to use some of the cash we had saved to pay two out of four of my semesters' tuitions in cash.  That was awesome.  We decided to take out student loans for the other two, so as to not clean us out completely.  Once I got a job, we would just pay off the loan as quickly as possible with my new income and continue to have an emergency fund.

Well, as you all know, I've not been working since graduating last summer.  So we still have student loan payments, but they are small and manageable with very low interest.  Once I do go back to work, we will have gotten so used to living on just Tony's income that we will be able to put 100% of my new salary towards those loans, our car payment, and back into our savings account.


Anyway, detailed history out of the way - where do we stand now??

We still live on a tight budget and stay out of debt when possible.  We owe money on our house, the student loan, and my car (we had to get a new one when my other one died - we were quite sad to take on another car note when we had just paid the other one off - but it had to be done.  We got a car neither of us loved, but it was affordable and safe. We are plugging away at getting rid of this car payment too.).  We never carry a balance on the credit cards.

We still do the cash system, as it has always worked well for us.  Yet in the interest of honesty and not sounding like we are know-it-alls (I'm really not trying to! Promise!!)- we have ups and downs.  Some months, we are totally ON IT and dominate the budget.  

Then, there are times when we slip.  For instance, last summer was a hot mess - we had a baby...  No matter how you prepare, there are always things that come up that you didn't prepare for.  This certain pacifier works? OMG buy 10 more on Amazon RIGHT NOW!  Money is no object when you are scared out of your wits and just want to have what works.  Exaggerating a bit, but we fell off the wagon some.  Luckily, we still had a nice cushion to fall back on, so we weren't going into debt.

We soon righted ourselves and went back to it.  Then this spring, one month we found ourselves a few days into the month without getting our monthly cash out.  So we used our cards.  Then it was too late so we just went with it.  The budget was a mess - we feel there is so much less accountability with our cards. We learned from it, we righted it.

Our most recent struggle has been with using our debit cards and not accounting for it.  For instance, things bought online can't be paid for with cash.  We also keep our cash at home and only grab what we need before we head out somewhere.  But there are always those little things that crop up - stopping into the grocery store to grab milk or a soda at the gas station - and sometimes we just don't have the cash in hand to use.  One month, Tony added up stuff like this - and we had spent over $200 on our cards during a month that was supposed to be all cash.  It was simply little stuff that added up in a major way.  


I don't want to come across as obnoxious at all in these posts.  I simply wanted to share what we've learned as we have gone.  Money is a big part of most people's lives, whether they like it or not, and it's something that is influential in this season of our lives especially.  I hope to just add another voice to the chorus out there of people who are making it work.  I hope to come across as supportive and not judgmental   Everyone has their own way of making it work for their family.  Our way works for us.  I just want to share the value we found in actually making conscious decisions about how our money affected our lives and how we struggle, but how we find so much joy in our successes.

So, here's what we do now (the details):

  • We pay our fixed bills online (house, car, loan, utilities, etc.) and use the debit card for gas.  We have whittled our fixed expenses down as low as we can, within reason.  There was a time when we didn't have cable at all, had non-smart phones, and had slower internet.  We have changed some of those things as we have been able to - we have basic cable and I have an iPhone (we get a discount through Tony's work for my phone and he uses a company phone (and car!)).  But at the times when we needed to get to bare bones - we weren't afraid to go there.  
  • We have $800 in our cash budget each month.  Anything else we want to spend that isn't a fixed expense must come from here. The total has changed as we've gone through different phases in the past few years, but that's where it stands today.  We used to have a lot less.  We used to break our cash envelopes into many specific categories, but now we just use three envelopes:  Grocery ($400), Entertainment ($200), and Incidentals ($200).  We found we were just shifting money around if we broke it out more precisely, so this works for us.  We no longer have personal money for just ourselves (it all goes to the baby now, it seems!).  We consider anything you could buy at Walmart as Grocery, including paper towels, diapers, shampoo, etc.  Incidentals are things like gifts or haircuts or fees or whatever.  Entertainment is basically meals out, since we don't do fun things like movies anymore :).  I usually don't worry too much about the envelopes themselves, they are more so just a guide - what really counts is the total at the end of the month.  Again, this is just the way that works best for us.  Whether you have 50 envelopes or just one, as long as there's a system that works for you, that's all that matters.
  • We keep an empty envelope for online/card expenditures.  Now if we have to use the card, we take cash out from our budget and put it into this envelope.  At the end of the month, the money in there goes into the total for the next month and we just get less money out of the bank, so we aren't going over budget by using the card.  I write on the envelope when I put money into it so I can go back and make sure all is accounted for by comparing with our bank statement.
  • We're saving.  It's not much, but we've gotten to a point where we can still save a little (something we couldn't do while I was in school).  This helps maintain our emergency fund and also allows us to not feel as bad when we want to go over our monthly expenses occasionally for something substantial, like re-doing our kitchen or go on a vacation.  Our savings are taken automatically from Tony's check and go straight into the savings account.  We used to put into our 401ks, and one of our goals is to move to eventually funding that type of saving again, and hard, to make up for lost time.
  • We're donating.  Again, automatically   

Again, I don't want to sound smug or ungrateful.  So many other people would love to have what we have, and that's never lost on us.  What feels like a tight budget to us would be a windfall for others.  I don't want to ever seem like we are struggling, because truly, we are not.  I try to remember that on days when I am being self-pitying and sad, and I just want to buy new pretty things for our house, or cute clothes for Harper (heck, or just clothes that fit me!), or actually tackle more than one house project a season.  I try to remember that we are so lucky, so blessed, in such a great position.  


What we've learned:
  • It's worth it.  I'll say it again - IT'S SO SO SO WORTH IT!!!  Three years ago when we started this process, I had no clue where life would take us.  School was a dream, kids were in the distant future.  I couldn't have predicted that I would be a stay at home mom three years later, and have the ability to do so, simply because we made the changes we did, way back when.  Our efforts then have payed off tenfold - we have the freedom to make choices now because of how we have set ourselves up for the future.
  • You have to be flexible - and patient.  Things change.  Our budget sheet has been reworked 50 times.  We've cut expenses and then added them back.  We've shifted money from envelope to envelope.  This kind of thing takes time.  You learn as you go.  We had cut cable entirely last year, using Netflix only for a grand total of $8.  It was awesome.  I gave birth to Harper and Tony was on the phone with Comcast three days later, re-installing our account.  We needed that TV to keep our sanity at the time.  And that was ok.  This type of budgeting took us a few months to first get the hang of it, and we're still learning.  We didn't see results at first - only the cuts.  But now, oh we see results.
  • It's takes attention.  Getting serious about finances doesn't just happen on its own.  It take attention - daily attention.  You have to think about each purchase.  No impulse buying allowed - or if you do, say goodbye to Chinese take-out this Friday.  You have to be conscious of every cent and know when you need to tweak things or make sweeping changes. 
  • You have to redefine "wants" and "needs."  There were so many things in our lives that we considered essential to human existence.  Turns out, when you get down to it, so many of them really weren't.  It was nice that Tony had a fancy truck, but it's even better that he uses a branded work car (that we can't use personally) and we just have our one car payment, one insurance bill, one car to gas up.  A DVR and a ton of channels was nice, but not wasting too much time glued to the TV is even better.  Our gym membership was convenient, but now it's just as fulfilling to push Harper on a walk outside.  Tony would like to have a non-work flip phone that can do more than just make calls, but a single cell plan is even better.  Like I've said - we have lived in leaner ways than we are even living today, but at the time, it was necessary to make cuts, and we did it.  We had a bare-bones cash budget for a while.  While it was tough, we found out the simple life was actually pretty rewarding.  Now we can really appreciate the things we have been able to add back in.
  • It's so worth it!!

The point of all this is - it's never easy.  Never.  It feels so so good to be frugal and responsible with our money.  It's a HUGE blessing that we were able to get our finances in order so that I could go back to school and now can stay home with Harper.  We don't have to scrape by and can still enjoy doing things in moderation.  We actually have it pretty great!  It makes us truly happy to live simply, but it's never easy.  It takes work and constant reorganization and renewal of goals.  It takes learning from mistakes and listening to wise voices.  It takes communication.  But it's so worth it.  It makes us stronger as a couple and sets us up for the kind of life we want to lead.

My final thought for you is this - If you've been on the fence about getting serious with your finances, just do it.  If you're in the thick of it - keep trudging!!  If you're on the other side - hooray!! No matter where you land, the important part is being intentional.  It's worth it.


  1. You guys are such an inspiration to us! Our budget is very similar to yours, and I agree...the debit card is no good for us. It's crazy how little purchases add up and how quickly you forget about them. Even sometimes with the envelopes, if I don't write it down, I'm like, where did all the money go?

    Thanks for being such a good example and for using your money wisely!

  2. Love this post! We follow a lot of the exact same principles and it's so nice to know we are not the only ones our age doing this! Sometimes it feels very isolating, but I try to keep my eye on the end goal. thanks for sharing so candidly :)

  3. You know I love a budget post! You guys are awesome. When we fail to get our cash out on the 1st of the month we derail big time, too. It's ridiculous. And I just gave myself the entire summer nell was born off the budget. Also ridiculous, but sometimes you have to allow life to happen. I think my biggest thing I've learned is we're so good most the time, I should beat myself up less about the not so great times, like when babies are born. Keep up the great work!

  4. Great post! I've always wanted to try a cash budget but have shied away because it seemed to complicated and rigid. I like that yours all sort of goes into one large lump. I think I could handle that.


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