When Victor took his new position we knew his salary would drop. It was somewhat inevitable as the past 3.5 years his salary has been inflated due to a generous salary "match" from GE. By salary match I mean that GE paid us the difference between his Navy base pay and his old GE salary which amounted to 2000 a month. GE did not take into consideration the fact that as active duty Navy you are also paid a housing allowance which was really part of his income, just lumped in a different category (plus a lot of your income is tax-free). We informed them of this but they didn't care and paid us anyway.
Because of this I have been able to be home with the kids with little to no financial concerns. The first year we were out here the GE match portion of his salary went to cover our WI home which was vacant (we thought we would be back) but the last 2.5 years it has truly just been extra income.
What did we do with that money?
Thankfully, Victor and I have very similar financial ideas.... Save first and always spend less than you make.
So, we invested some of the extra income. Some went towards nice vacations, buying a new vehicle, etc. The rest was really used on things that are not at all necessary. I am kicking myself that we weren't MORE careful with the GE portion or better yet - wish we had just saved all of it (at least during the time that we had renters in our WI house). But we didn't and there is nothing we can do about it now.
Anyway, back to today...
As I mentioned before, we anticipated that Victor's salary would drop when he changed jobs unless he took some terrible job that meant he was traveling constantly. Thankfully, Victor found a great job. The hours are nice -- way way less than he has ever worked since we got married (still gone 11 hours a day but he is off every other Friday). The salary is great, I would never complain about it as I KNOW most people in the US are living on less, but the drop in his take home was significant. HUGE really!
How much???
38.6%
SCARY!!!
Not to mention we are carrying an extra $450-500 of costs each month related to not selling the house in WI and our family is about to expand.
So, what does this mean? Well, in order to make sure we are still living by the ever so important principal of "Save first then spend less than you make" budgeting has become a requirement!
I have truly never lived on a budget for more than a month or two at a time. I like tracking our expenses and setting monthly goals though so I really don't mind. My plan at this time is to live by a budget for the next 12 months. Assuming we are sticking fairly close to it we will reevaluate whether or not every dollar needs tracked but I know for sure we need to be tracking now as our spending habits are going to have to shift a lot.
I am curious how many of you are actively budgeting?
Do you have a set budget or do you just track your spending?
Any good tips on saving money? I am already a fairly good coupon user.
I will do a monthly budget update -- letting you know how good/bad we were at saving each month. With the next budget update I will lay out our specific monthly saving goals and how I have the budget divided.
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11 comments:
when i first left PT school, i kept a budget list, but it was really more to just see where the money was going. i can't remember now if i did the same when i bought my house. i've been able to just get by by spending as little as possible within certain parameters. i am lucky! good luck. :) liz
I track everything so that I can see patterns and look for areas where we could reduce spending, but a lot of it lumps into the "credit card" portion and I just use the banks breakdown to see spending habits. I don't really say "there's XX amount to spend in X cateogry" and check against that.
I'm hoping our 2011 data will be more informative, it was significantly skewed in 2010 since for 6 months we had NO income and were students and we also paid for the wedding. Good luck with your budgeting!
I'm really bad, I don't budget anything on paper, just in my head know where our money is coming/going. Ben is even worse, probably couldn't even tell you within $5,000 how much we have in our savings account.
I have a friend who used to budget everything at the beginning of each month by literally taking cash out and putting it in envelopes. She felt like it was a huge visual incentive to save because if she didn't spend everything in the "food" envelope, for example, then she would still put the same amount budgeted in the next month, etc, and once she built up enough "extra" she new she could go out to eat, or whatever.
Good luck!
"Knew" not "new." I hate those types of errors!
Austin (as you might have guessed) is a super-budgeter. That doesn't mean we always stick to the budget, but it does mean that he is VERY on top of our spending. Recently we enlisted in the http://www.mint.com/ website. I think Austin mostly joined this for me because it has (and now I sound like a child) good pictures/graphs and color coding that helps me better understand where we're over and where we're under and where we're doing well in our budget. You can add any category you'd like too! I really like it! It will even altert you (if you'd like) when you are close to or have spent more than your budgeted goals in a certain area. Man I sound like a salesman for mint!
Did I mention it's free?
Yeah, we used mint.com too, when we were in the states. Now, my income is in cash, so we use a cash system. But mint still tracks all of our other assets.
We have lived on a pretty small budget ever since we got married, since our regular income for two people has been something like $30,000. We figured out how much we could save, what our required expenses were (rent/mortgage, car insurance, utilities, etc.), and then from that, figured out a weekly budget. The weekly budget has to cover all of our remaining outstanding expenses: food, clothes, household supplies, etc.
When we were in Princeton, the weekly budget was $150. We came in under many weeks, so when we went over (the weeks around holidays, etc.), it didn't blow the budget.
I would say that most of our budget goes towards food--fruit/veggies/grains and occasionally meat and fish. As much as possible, for the budget and the environment/our health, we stick the the basics, buying things in bulk with no packaging. Our snack foods are dried nuts and fruit, and we drink water and milk. The way we budget also means that we have enough money to support our local farmers buy high quality, sustainably produced meat, dairy, and veg.
We don't really buy a lot of household products, other than toilet paper. No paper towels. Baking soda, vinegar, and hydrogen peroxide are awesome for most household cleaning needs.
This is really long. Sorry. But good luck!!
Robyn - I can't believe Ben wouldn't be able to guess within 5K how much is in your savings account! Kind of comical. Good thing you are in charge!
Terri and Hanna --
I have looked at Mint.com. It was 6-9 months ago when we were first preparing for the salary drop so I should look at it again. My issue with it was that it seemed like the computer did all the entries for you. I like to be able to manually enter in all our expenses. Plus what do you do with cash expenses and things that are on the credit card. Can they be itemized/entered manually? I am a bit of a control freak if you didn't know that already!
Also Hanna -- Surviving on $150 a week seems quite amazing to me! I feel a bit sheepish being even slightly concerned about our salary change when I hear you were able to do that. Quite amazing!
Ann, we have no kids!! :)
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