The moral of this story is obvious: It's a lot easier to get ahead financially before children enter the picture.
Now that I have that brilliant thought out of the way, let's get into a keepin' it real kind of post by analyzing the last few years of the Aberle budget.
2009 – Making more money. Start targeted savings accounts. Pay off car loan. Only the mortgage is left.
2010 – Find a nice side job. Add to savings accounts. Work more hours and make more money.
2011 – Side job turns into an amazing opportunity. Work more. Find another side job. Keep adding to savings accounts.
2012 – Continue with all side jobs. Saving. Big adoption costs. As part of my decluttering effort, I paid bills immediately. Paying extra on mortgage. Finances are automated. Haven't worried about overdrafts or having enough money in the accounts when the credit card bill is withdrawn. There is always enough. My finances are under control, and I like this. I can't tell you how good it felt, because, today, I am trying to remember.
But now we're in 2013. This is the year that rocked my confidence in my financial skills. The year that is forcing me to (again) adapt my lifestyle to meet my finances. And I thought I had planned for this!
Twenty-twelve closed with the highest household income ever. Nice.
Twenty-thirteen started with my husband's new job and resulting significant pay cut. Nice for him, bad for the checkbook. Then we spent two months overseas. July 31 was my last day of full-time employment, so that meant our family income dropped again. In fact, between our job changes, our household income is just two-thirds of what it had been.
But that's not all. We've increased our spending, mostly due to some medical expenses associated with the kids. And our evenings are now spent on homework, laundry, reading, and playing. We don't have time to do side jobs in the evening anymore.
While I am no stranger to financial woes, I prefer not to have them. Still, the truth is that we have dipped lower than usual in our checking account balance. I haven't paid our mortgage in four months (which is OK since we were ahead so many payments). And almost every month, I have to transfer money out of savings into our checking account. That isn't sustainable. And if that isn't enough, I forgot about our credit card payment coming out of our checking account. I think I will be lucky enough to escape a $20 overdraft, but this isn't the financially savvy me. What happened to her?
Time for asphalt on the potholes
It's a lot easier to save money (and make it) when you have less responsibility. But now that we have a family, we have to change our process. We're still making enough money to pay the necessary bills, but we need to buckle down and realize that we are living on less.
1. Budgeting and tracking our spending. I have tracked our spending before, most recently in a tedious spreadsheet. But it was saved on my computer, and my husband never looked at it. Now that we have to communicate about money more often, I want something that helps us both.
I have seen YNAB mentioned many times in the comments here before, so I checked it out. What I found was a 34-day free trial. Free sounds very good right about now. Well, I am nearly done with my 34-day trial, and I like almost everything about it. Dropping $60 is worth it. Plus, their smartphone app is now free when you purchase the desktop version.
I believe this will help my husband and me stay on the same page. I also think that an at-a-glance look will keep us focused on our goals and help us not to overspend. I'm interested to see if my nine-month net worth growth comes close to $3,300 (as they claim their median is) or not.
2. Fun money. Now that things are going to be tighter financially around here, I will need $20 per month that is mine to use as I want to. If I know I have a little bit of cash, I hope that I won't feel deprived and spend more.
3. More careful planning. When you have spare cash, you can afford to buy when you feel like it. When you don't have spare cash, you can't. My son needed gloves. A careful planner would have started looking for them before he needed them, but at least I planned by going to Goodwill first! I did find some very warm gloves for less than $2. Staying organized will help.
4. Cut down on credit card use. I always pay the balance on my credit cards, so it's not something that is hard for me to control. However, it's a surprise every month now when the bill comes due. And I confess, it's a lot harder to come up with the money to pay the bill than it used to be. So I think it's time to stop using our credit cards for random expenses. I will still leave monthly bills that are paid automatically on the card, but it's time to control our spending.
I am having a surprisingly difficult time adjusting to all the changes that have come to our family in the last year. Even though I know we're making less, I am having a hard time getting myself to act like we're making less. Have any of you had to change your financial course or plan mid-stride?
Lisa Aberle is a college professor by day and a freelance writer by night. Always an aspiring writer with an interest in money, she once ironically misspelled “mortgage” during a spelling bee. Most of her current adventures take place on the four-acre mini-farm she shares with her husband in the rural Midwest (where she writes with gel pens whenever possible).