Envelope System of Budgeting: 2011 Budget

Our normally very strict budget fell apart the last two months of 2010.  We got lazy about withdrawing the cash for envelopes and were generally feeling unmotivated to live so frugally.  But we're back at it in 2011.

Despite falling off the budgeting wagon at the end of the year, we accomplished a lot financially in 2010.  We went to Italy.  We fully funded an emergency fund for 18 months of living expenses.  We payed off B's car three years early and bought a newer car for me in cash that has room for me to drive Thomas and future McKiddles around town for years to come.  We can survive on only B's income so we can save all of mine. 

We also spent way too much money on the holidays, unnecessary personal purchases (wants definitely not needs) and eating out in the last two months of the year.  We got lazy about our cash budget.  I saw cute things and I bought them (damn that Amazon.com that makes shopping so easy).  So, we're back at it in a big way.  2011 is going to be an expensive year.  We have five weddings to attend and three of them are out of state.  I would like to turn one of those weddings into a road trip along the Pacific Northwest for our big trip of 2010.  We need to go to Florida to see B's grandparents.  We will continue contributing monthly to IRAs, 501Ks and 529s.  And we'd like to start stocking away extra money every month for the specific purpose of seeing if we're ready to handle a mortgage upgrade.

So, we've cut most of our discretionary spending in order to fulfill our savings goals.  You can read more about our budget categories here and budget cuts after Thomas was born here.  Changes for 2011 include:

Car Payment.  We don't have this category anymore!  Yippee.

Life Insurance.  We added policies a year ago.

Diapers. I overbudgeted for diapers when I budgeted $75 a month (And that was a drastic cut from the $200 I originally - in a budget panic the day I found out I was pregnant - budgeted for diapering a baby - we spend $40 max each month.)

Food. We knocked the eating out budget down $25 a month and upped the grocery budget by the same to account for baby food.  That's currently a lot more than we spend, but Thomas will eat more someday.  I'm keeping costs super low by making my own baby food with organic produce.

Clothing.  We currently aren't budgeting for clothing for me and B and are keeping the budget small for Thomas.  B and I have too many clothes as it is, most of them are in good shape, and we need to get rid of lots before we can bring more in.  It's going to be a year of thriftiness for clothing.  Yikes.

Spending money.  B and I used to each get a significant monthly "allowance".  We cut it down a ton when we found out I was pregnant to allow for our one income goal to come to fruition sooner rather than later.  Damn priorities.  But, we decided to cut the spending allowance even more - we have some big dreams for the next couple years and decided that we could sacrifice lunches out during the work week for savings towards our more short-term goals (501K, IRA and 529 savings are already accounted for in our budget, but some more short-term desires weren't).

It's going to be a tight year, by choice, and it's going to take dedication to stick to it.  But I think we're determined to live even more frugally and save every extra penny.  Any budgets getting started in 2011? Anyone revamping theirs for the New Year?