Budget Resolutions: Automatic Savings Transfers

Confession: We've been really lax about the budget since Nell was born. We gave ourselves the 6 weeks that I was on maternity leave off from the cash budget knowing that we make enough to cover any extra expenditures that came up, and we never got back "on".  And the reason? We've gotten lazy. We can afford for me to stay home and still put money into savings every month {though, at this time, I still work part-time from home}, which was always our goal. And now that we've achieved that goal - mostly through spending cuts - we're lazy about the budget.

So, we resolve to pay ourselves first in 2013.  We have always made the savings transfers at the end of the month with what's leftover in the budget, even though my meticulous spreadsheet clearly spells out what we should be saving out of each of Mr. B's paychecks. And in a way, we've done this with my paychecks, because we pretend like they don't exist: I'm an independent contractor, so I immediately take out what I owe in taxes which I file quarterly, then I divvy the remainder up between my Roth IRA, the kids' college funds, and if there's leftover after that, our general savings. But our spreadsheet tells us that we can live on just B's income and commit a good portion of it to savings every month, and I can guarantee that we never transfer the full amount we should be saving on our budget to savings.

Of course, that's what savings are for to an extent, to buffer the expensive months - ones with things like car upkeep - and grow in the less expensive months, but our hope is that by making automatic transfers on B's paydays, we will think more carefully about what we spend. At the least, we hope that having to transfer money back out of savings to cover extra, non-budgeted expenses, will make us prioritize our spending better than we have lately.

And speaking of prioritizing, we have some big expenses to plan for this year. Here are the current top five:

1) New tires for B's car in January
2) Golf trip for B in January
3) New tires for my car in May
4) One of my best friend's weddings in July
5) A 5 year Anniversary trip this summer

By planning for the bigger expenses on the horizon, we're hoping that we'll be able to reel in our superfluous spending. Anyone else re-framing their mindsets on their budgets with 2013 approaching? Trying any new approaches to your budget? You know I live for budget talk {I joke that my ideal date night with B is drinking a bottle glass of wine and working on our budget spreadsheet trying to eek the most savings out of our budget as we can}, so I'd love to hear what you're thinking for 2013!

PS: Here's a look at what we allot for our cash budget every month, it hasn't changed much at all since this post last year. Afew things (like life insurance premiums), cost more this year because we've added Nell to the mix, but that's about it.

Envelope System of Budgeting (a peek inside our budget)

I haven't talked about budgeting in awhile, and that's because...the budget has been crazy this summer. I should know better than to try to redo the budget when a new baby's arrived - there are hidden expenses with babies that I forget about. Not bad, but things like, "Oh yeah, I decided to throw Thomas's bathtub away after a year of solid use and forgot to buy a new one for the new baby" throw the budget off in those first few months.
But anyway, I'm back at work (very part-time for the next few weeks), we just refinanced our mortgage to take advantage of the super low interest rates, and it was time to get serious about the budget again. We fall off the bandwagon from time-to-time, and when that happens we just sit down, reevaluate the numbers to make sure that it's practical for our life, and redivvy the funds accordingly.  I updated our budget and transferred everything to new envelopes yesterday, so I figured it was a good time to do a quick post on two of my most frequently asked questions (followed closely by a grocery shopping post...someday I'll get to that, but this covers a lot of how we spend less than $300 a month on groceries).
I get asked a lot about how we do the envelopes - if we use physical envelopes or not. We use an accordion file folder instead of paper envelopes so that everything's in one place. Our envelope had seen better days after four years of use and I needed to replace it, and I was tempted by a cute $20 accordion folder the other day, and then I realized that this holds our budgeted money for the month. So I picked this one up from the dollar bins. Not cute or fancy, but it does the job. And since we never take this baby out of the house, it doesn't need to be cute and fancy. 

The envelopes never leave the house. So if I'm going grocery shopping, I usually take $50 out of the envelope and head to the store with my list for the week {on the average I spend $40 a week on groceries for meals, and Mr. B spends another $20-30 on miscellaneous food and snacks in a second grocery store trip each week}. If I'm driving by the grocery store, realize I need milk, and don't have the grocery money? I go home and get the grocery money and go to the grocery store later. If I get to the register and I've exceeded what I brought? I take stuff out of the cart. It's the only way we keep ourselves honest about the envelope system. When we get lazy and start pulling the credit card out instead of paying in cash, the budget crashes quickly.
Another question I'm asked a ton is what I do when I'm buying for multiple categories in one store. My typical super store trip list includes diapers and other kid items, personal items (toothpaste, vitamins, etc), and household items (cleaning supplies, decor, etc) and the occasional gifts. I do some quick math in my head based on what I know things cost and what I'm willing to spend on things that I'm looking for but don't have exact prices on, and I pull money out of the appropriate categories based on my list. Here was yesterday's list:
Diapers for T: $19.99Diapers for N: $6.99Swimsuit for trip for Nell if on sale? $10 maxVitamin D: $10Birthday Card: $3
I always round up a little bit, so based on my list, I grabbed $40 of kids money, $10 of personal money and $5 of gift money. And it was pretty much on the nose after tax. I never have to worry about groceries for these trips because I only buy groceries at our local grocery store (due to the prices and the freshness of things like produce and dairy). And if I run across a sweater I want and didn't bring clothing money? I make a note of it for the next trip. Because, let's be honest. I go to Target at least twice a week...sometimes just because I can't stand the idea of not getting out of the house in a day. 
So that's the latest on the budget. Anyone else having budget successes? Or falling off the budgeting bandwagon like us during the summer months? Any other questions about the envelope system of budgeting? Let's hear about 'em.

Our Budget, Real Numbers

I thought I had put real numbers in the budget post yesterday, but it must have reverted to a draft before posting, sorry friends.  I'm hesitant to do this because I know that everything fluctuates, and everyone has different priorities, and our budget is by now means the be all and end all of budgeting. But, I also know it's helpfult to see real numbers. So, I'm sharing our cash breakdown - the cost of living is different everywhere (Colorado's middle of the road. We also didn't get hit quite as hard as other places in the real estate slide, though home prices took a small dive, our home is valued above what we paid for it almost 5 years ago). So, for that reason and privacy reasons, let's leave salaries and mortgage amounts out of this.

Cash Envelopes

Groceries: $300/month

Eating Out: $75/month (this allows for two less expensive dinners as a family, or one nice date night for me and Mr. B. Any leftover carries over).

Casco: $75/month (Casco's food costs $55 a month,a nd the other $20 is saved for vet bills when they come up)

Gifts: $100/month (This is our budget for the year - extra carries over every month and this amount must cover our Christmas spending, too. January and February are big birthday months in my family, the summer in B's family, so we have to plan accordingly).

Clothing: $75 month (for B and me - this carries over, too and becomes a savings account, and we pretty much just split it in half).

House (Decor, maintenance, etc): $50/month - carries over month to month

Personal (Shampoo, toilet paper, etc): $25month - carries over

Spending (aka Allowance - Mr. B and my monthly stipend we can spend however we want - lunches out, dinners with friends, movies, etc): $75 each/month

Diapers, Clothes and Toys: $100/month (Diapers cost us $20 a month at Target, and the rest usually isn't spent, but allows me to buy a Spring wardrobe for T or new puzzles when I can't take the old ones anymore).

Church Giving: Based on our income.

Stroller Fund (vacation fund, etc in other years): Any extra cash - checks from credit card rewards, Blogher income, gifts, etc.

Set Expenses (direct bill pay or credit card that is paid off every month)

Mortgage Payment: Less than 20% of our income (our only debt).
Water Bill: $35/month on the average

Electric/Gas: $75/month on the average (higher in hot and cold months, but we budget for the average because we can afford the spillover).

Cable: $150/month

Cell Phones: $100/month

HOA: $75/month

Car Insurance: $110month (paid twice yearly)

Life Insurance: $100/month

Gas (not a set expense, but paid via credit card rather than cash for safety and convenience purposes): $300/month (budgeted, but we go over and under).

Charity: We donate a chunk of Mr. B's yearly bonus to the charities we choose to support, and B donates a percentage of every paycheck to our Catholic Charities (an organization near and dear to my heart because of my own family history) and the organization he sits on the board of (by donating out of his paycheck, we lower our taxable income, which is great, and also it makes giving a no-brainer instead of something we have to part with after having the money in hand).

This budget allows us to put a good chunk of Mr. B's income and my entire income into savings. Our first priorities are retirment and college funds: we contribute the max to my ROTH IRA (B does the same with his retirement accounts, but with pre-tax money directly from his paychecks) yearly which breaks down to $416/month, and we put the same into T's 529 (that will change a little bit with he addition of #2, though we're not sure how, yet. Leftover money goes to long term (we keep it in a high interst bank account) savings for things like a downpayment on our next house (we have over a year of living expenses stocked away in an emergency fund, but before we had that amount, all extra went into that fund), short term (kept in our local bank) for vacations, etc, and other investments.

So that's the breakdown. Any other questions? I'm always happy to answer them!

Envelope System of Budgeting 2012

It's funny to me how my priorities change year to year. Last year I thought we really needed to focus on saving for our next house - we even found a new build (which I've said I wouldn't do again) we loved and seriously considered a move. And now? I'm really content with the home we have. We have an easily affordable mortgage payment, plenty of room and the most wonderful neighborhood and neighbors ever. I sometimes get the green eyes of jealousy when I walk into friends homes with fabulous open layouts and big gourmet kitchens, but this house is perfect for us right now and I'm loving and savoring that content feeling.



B and I sat down and reprioritized the budget in January - we do this about twice a year to make sure that the budget is working for us, and with McKiddle #2 on the way we wanted to get a good picture of where we stand and what changes we can afford to make. Our health insurance is costing us more this year as B's company started charging monthly premiums on top of our High Deductible Health Plan, groceries cost more than they did a year ago, and salaries are the same. It is what it is and there's no point in fighting it - we live frugally for just these reasons - we just needed to re-divvy the budget a little bit to accommodate for the higher cost of living. 
Our grocery budget was probably our biggest budget problem starting around August of last year. Thomas started eating more, but I think it had the most to do with grocery prices going up (our basics are along the perimeter of the grocery store, and we noticed an especially big dairy price increase in the last six months). So we raised the budget and I'm also committed to doing a better job of meal planning because when we stick to my meal plan method, the grocery budget fares much better. 
We've also budgeted for charitable donations for 2012. We weren't very good at this before - we gave when we felt compelled and what we thought we could give, but this year we sat down and really budgeted our church tithing and our other giving - specifically one non-profit that Mr. B sits on the board of and our local Catholic Charities. B and I sometimes get so caught up in living according to our frugal budget and shuffling every last penny into savings that we forget how fortunate we are and that we not only can give back, but that we should give back. So that's probably the biggest lifestyle change for us this year - spending less so that we can give more. 
And of course, with the second baby coming, there's budgeting for changes there. Luckily we don't need much for McKiddle #2, but we'll want to fund a 529 for this baby like we have for Thomas, which requires smart saving.
Here's how our monthly budget's looking for 2012 (with real numbers this time, why not?)GroceriesEating OutCasco: GiftsClothingHouse (Decor, maintenance, etc)PersonalSpending (aka Allowance - Mr. B and my monthly stipend we can spend however we want - lunches out, movies, etc)Diapers, Clothes and ToysChurchCharityStroller Fund: B and I like to have a specific category to save cash for each year to keep us really on par with the budget - if we're saving for a concrete, attainable goal, we are better about the budget. This year it's a "Stroller Fund", but will pay for our double stroller, car seat (the infant carseat we used for Thomas became evidence in the child abuse case at his daycare), and likely a second crib. But one year this was a new couch fund, one year a pay off B's car fund, and next year we anticipate it to be a 5 year anniversary trip fund, etc.
And our set expense categories (paid via direct bill pay or credit card which is paid off monthly):Mortgage PaymentWater BillElectric/GasCableCell PhonesHOACar InsuranceLife InsuranceGas (not a set expense, but paid via credit card rather than cash for safety and convenience purposes) And everything else goes into savings. So that's how our Envelope System of Budgeting is shaping up in 2012 (way to get around to posting about it in March, Emily.). How's your budget these days?

Baby Purchases

Just a stream of consciousness post, here, because it's one of those weeks. Since I found out I was pregnant with #2, my focus has been on Thomas - focusing on every second with Tom, getting his new room ready and perfect, lots of special time together, etc. And that's pretty much what I expected - I didn't start work on Thomas's nursery until April (due mid-June), when it seemed like everyone else had nursery's decorated the second their kid was conceived. I'm not the type to have a baby's room or gear ready months before the baby comes - I know myself and know it would just make me crazy to have everything but the baby, so instead I give myself the final 2 months of pregnancy to get things ready, generally.

But in an effort to keep my Amazon Mom prime benefits going, I had to make a purchase from the Amazon baby store - and Tom no longer really qualifies for baby store purchases. So I made my first baby #2 purchase - which spurred others, naturally. And it feels good.
I gifted myself with the Aden and Anais blankets I envied throughout Tom's first six months (now my favorite new baby gift for second babies - because second babies should have special blankets, too). And since we don't find out the sex of McKiddles, and the thought of pastel green didn't excite me, I opted for bright Yellow, Red, Orange and Green stars. And I'm in love with them. They're sitting in the hallway upstairs because I refuse to infiltrate Thomas's current room with baby gear until he's in his new room.

And while I was thinking baby, I decided to just purchase the carseat - especially when I found a price mistake online and was able to get it for a song. In theory, we could reuse Thomas's carseat - always intended to, in fact. But it played a big role in the daycare neglect case we are still waiting to learn the outcome of, and so I decided that old carseat needs to be banished from our (and other children's) lives - it was put to use well beyond it's needs and despite the fact that I emotionally associate the daycare situation with it, I can't guarantee that it didn't fall, etc while not in my care making it a safe choice, still. I had originally planned to buy a fancy, european styled car seat because, dammit, I was going to have the carseat I wanted. But I'm more reasonable than that when it comes time to actually buy things, and in the end bought the same brand we had before so we could reuse our bases, just new and in a totally different color scheme (neutral with a hint of orange...weird). 

I would have been more excited about a fancy carseat, but this baby was safe and did the job, and in the end, I just couldn't justify a $400 car seat and base buy based purely on emotions when the point was to buy something that was safe and new so that we could move on. 
And the other purchases are all in my head - a crib (T will be in his still, we suspect, come June), a comfy chair for the nursery that I decided I didn't need the first time around and have thought better of this time, a double stroller, a stuffed animal I want the McKiddle to have, and new fabric to transform T's nursery into this baby's nursery. Good thing I've been busy at work and it's tax return season. I'm ready to spend! (And a note for all of those who are wondering about our budget: in reality, we budgeted for the baby expenses and have an envelope of cash to spend on this stuff - I started stashing extra cash and cash gifts away in a "Baby Expenses" envelope as soon as I found out I was pregnant. Our tax return will go to savings, T's college fund, the new McKiddle's college fund, and having our fence painted...but it's more fun to pretend like I'm shopping with it!)

Guest Post at Life Uncluttered

Hey guys, you can find me over at Life Uncluttered today taking part in Lauren's Top 10 series. Jump over to Life Uncluttered to learn about my top ten ways to put a budget in place [painlessly].

Meal Planning (and a Shrimp Scampi Recipe)

Since there was so much interest in our $250 a month grocery budget, I thought I'd share my meal plan for this week.  You can check out my personal grocery shopping rules here and my meal planning technique and last week's meal plan here. 

Wednesday - Leftovers

Thursday - Chicken Pot Pie

Friday -Spinach Lasagna (new recipe, I'm giving Lasagna another go)

Saturday - Leftovers

Sunday - Shrimp Scampi (shrimp is on sale this week).  I use a recipe from the Joy of Cooking that I love because it calls for ZERO butter.  And because it's delish.  Here it is:

• 1/2 cup Olive Oil
• 2 T minced garlic
• 1 1/2 to 2 pounds large shrimp, peeled and deveined
• 1/4 cup minced parsley
• 1 T fresh lemon juice

In a big skillet heat olive oil and cook garlic over very low heat until garlic is golden - 10 minutes.  Don't skimp on the time here, it's important.  Toss your shrimpys in the skillet and cook until they are pink on the bottom, turn over and add parsley.  Cook about 5 minutes.  Serve over rice pilaf or pasta and top with lemon juice.

Monday - Leftovers

Tuesday -  Homemade Chicken Fingers and sweet potato fries

So that's what we'll be eating over the next week.  The spinach lasagna's a new recipe, everything else is tried, tested and Mr. B approved.  Is this something you guys want me to post every Wednesday for a couple weeks, or are two weeks worth of meals enough to give you an idea of what we do? Thoughts?

The $250 Grocery Budget - Meal Planning and Grocery Shopping

Okay, here's how I meal plan and grocery shop.  Let's start with the meal plan - I've tried a lot of different ways to do this, but the way that works for me best is a week at a time.  I used to plan out a month but realized I needed more flexibility than that - commitment scares me.

Here's our meal plan for the last week (Wednesday to Today):

Wednesday: Mac & Cheese (already in pantry)
Thursday: Beans and Rice
Friday: Sesame Chicken
Saturday: Chicken Parmesan, Pasta, Salad, Bread (Friends for dinner, feed 5)
Sunday: Enchiladas, Rice, Salad (Friends for dinner, feed 7)
Monday: Leftovers
Tuesday: Creamy Chicken and Pasta

We normally eat leftovers at least one other night a week, but because we were having friends over both weekend nights, the normal routine got thrown off a bit.  On that menu, Beans and Rice and the Enchiladas were new recipes (both great, btw).  Sesame Chicken, Chicken Parmesan and Creamy Chicken and Pasta are tried and true - I have all of the spices for those already in my cabinet, so shopping for those meals means just buying the food items - chicken breasts, a few canned goods, some produce, etc.

Once I know what I'm making for the week, I take a piece of paper and fold it into sixths, In the top left hand column I write Meals and then I list the meals for the week under that, folding accordingly.  For the remaining five columns, I list grocery departments - in the order that they are in my grocery store.  Dairy, Grains, Canned Goods, Meats and Produce.  Then I list everything I need for the recipes in the appropriate section.  This keeps me on track - when I get to the grocery store, I start in dairy and just go down the list.  It keeps me from moving off into the Oreo aisle.  Because when Emily's in the Oreo aisle, the budget and the diet fall apart.  If something's not on the list, it doesn't go in the cart, that's the rule.

B will occasionally make a small grocery store trip on the weekends if he needs more oatmeal for work, or lunch meat, but the bulk of our shopping is done on Wednesdays.  And last Wednesday, I spent under $36 for a week of meals, and then we ran to the grocery store for a few last minute for freshness items - like bread to go with the Chicken Parm on the day of the meal.  All told, we spent $45 this week - more than normal, but only because we scheduled two friend dinners in the same weekend.

And that's how we think we keep to $250 or less a month on groceries.  The month is coming to a close at we've only spent $160 so far (though we were out of town for 4 days).  I loved hearing all of your grocery saving tips yesterday, so if you have more, keep 'em coming.  Any meal plan tips you want to share?

The $250 Grocery Budget

Until recently, I didn't realize that we had a low grocery budget compared to most households.  I'd mention our monthly budget to people and they'd say "We spend that each week".  And then, I posted the number here a few weeks ago and wasn't expecting the main question in the comments to be "How do you spend $250 a month on groceries?".  Honestly, I don't know...we just do it.  But, I'm going to try to walk you through our grocery budget.

But first, a few disclaimers:

• B and I are not "foodies".  We love and appreciate good, fancy meals, but we can do without them, too.  My philosophy on feeding the family is to put nutritious, good food on the table and not beat myself up about presentation, how frequently we eat it, etc.  If we cared a lot about different cuisines and unique side dishes, we'd exceed our budget. 
• I'm not hung up on organic food.  We can find organic produce for a decent price at our local natural foods store and so I buy it.  But, if I wanted only organic meats, we'd need a larger grocery budget.

So, here's how we feed our family (well, two eaters and a pint sized 7 month old) on $250 a month.

1) Meal planning.  On Wednesdays (grocery ad day), I plan out the meals for a week.  I don't get hung up on planning meals around sale items, but I take them into account.  I cook 3 - 4 times a week, and we eat leftovers the rest of the week.  We eat leftovers or Turkey Sandwiches for lunch, and we both eat oatmeal (cooked on the stove for me, generic instant for B, iron fortified for Thomas) for breakfast.  Breakfast works out to about $5 a month.

2) I shop the perimeter of the grocery store.  I make the occasional foray into the canned goods aisle and pasta aisle, but otherwise I try to avoid packaged foods.

3) I don't buy chicken breasts (our main meat) unless they're $1.99 a pound or less.  I buy chicken breasts in bulk when they're on sale and keep them individually bagged in the freezer.

4) I improvise.  Let's say a recipe calls for mayonnaise, which we usually don't have in our house, and therefore wouldn't use except for in this recipe.  I just switch it out for something that we already have or would use - like plain yogurt or sour cream.

5) I choose recipes that have relatively simple and few ingredients. 

6) We empty the refrigerator every week.  Seriously.  When we have no food in the house, we literally have no food in the house.  We don't stock the pantry, we don't stock the refrigerator.  We buy enough for the meals planned, eat those meals for a week, and then do the whole thing over again.

7) Thomas is on the home brew and now that he's eating solids I keep costs low by making my own baby food.  I buy organic produce and puree it myself.  Saves money, takes about an hour a week, and I feel better knowing that I know exactly what went into the food Thomas is eating, anyway.
And, in an effort not to have the longest blog post ever, we'll continue with the meal plan and actual grocery shopping tomorrow.  Anyone else have any tricks for keeping their grocery spending in check?

Envelope System of Budgeting 101

After my latest budget post I got a lot of questions and requests for a more in-depth post on getting a budget started. 

I do love talking about budgeting.  When I was a senior in college, I was taking a Family Conflict Communication class.  I loved this class, and one of our focuses was on family finances as a leading cause of resentment in marriages and families.  Our professor had us read money books, and we talked a lot about financial smarts.  On our last day of class she gifted us with Suze Orman's The Money Book for the Young, Fabulous and Broke, and I devoured it in four hours.  I had always been a good saver since I was a kid, and I remember my parents talking about "living within your means" and paying off credit cards in full every month.  But the book helped me prioritize my spending and savings as I dove head first into the real world.

B and I always operated under the assumption that if we paid our credit cards off every month, were able to pay our bills and had some savings, we were doing fine.  But three months after we got married, I was laid off from my first job in the volatile internet industry.  And I was scared.  So, I got serious about a budget and Mr. B and I started the envelope system (popularized by Dave Ramsey - though I'm not his biggest fan personally, I swear by the envelope system) in January of 2009. 

In order to get started, I perused two months worth of credit card statements to come up with the categories where we spend money and a general idea of what we spent every month in each category.  Every six months (or more frequently if necessary - 2010 was a big year of finance talks with Thomas's birth) B and I sit down and talk about the budget, the categories, where we could spend less, where we're going to need to spend more, where our savings should go, etc.  I really look forward to these talks.

When we put the envelope system into effect, we immediately saved $1000 a month.  Which shocked me - I thought B and I were frugal.  But to realize we were spending $1000 a month on things we couldn't even tell you we'd spent money on? That was crazy.

The key to this budget is not to cheat.  If you don't have the grocery envelope and need to go to the grocery store? You have to go home to get the envelope.  Forking over the cash and visibly seeing what you have left for the month is the only way it works.

Our budget categories now:

Set expenses we pay monthly (via direct bill pay or credit card that we pay off at the end of the month):
Mortgage
Utilities (Water, Gas and Electric, Cable, Internet)
Cell Phones
HOA Fees
Car Insurance
Life Insurance
Day Care

Gas (not a set expense, but we pay via Credit Card)

Discretionary Spending Envelopes
Groceries (we feed our family - including having friends and family for dinner - on $250 a month)
Eating Out
Casco
Gifts
House - fund for house purchases, projects, etc
Personal - Toiletries, haircuts, etc
Spending - Personal spending allowance
Diapers
Clothing
Toys

One of the most stasifying things that's come from budgeting is saving for purchases.  In the past, if we wanted a new sofa, we would have gone to the store, ordered it and paid with our credit cards.  We would have paid it off out of savings and figured we were doing just fine.  But I saved the house envelope for a year in order to purchase our new sofa last March.  And everytime I sit on the couch, I'm proud of that.

I'm happy to answer any questions you have - you can email me (I try to respond within a couple days - the inbox gets a little crazy from time to time) leave a comment or request a post on a specific topic of budgeting.  Here's to a financially successful 2011 for everyone who wants one!

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?

Our Last Car Payment

Mr. B and I have done a lot of financial soul searching since the fall of 2008 when the economy became visibly awful.  Only months before my layoff that scared us into budgeting, though, we'd taken on our first car payment - traded Mr. B's fully paid for (but questionably operating) Honda Accord for a new small SUV.  We were bright eyed and bushy tailed DINKs and didn't think twice about having a car payment and thought it was the smarter choice rather than putting a sizable dent in our savings account to pay cash.

I quickly came to hate that car payment.  Interest and pay-off quotes, a penalty for early payment - it all made my head spin.  We talked many times about just making the savings transfer and being done with it, but there's just something about withdrawing from savings that causes our hearts to drop. Then Leah (literally, within days of my being laid off) linked to Dave Ramsey's car philosophy and it just clicked with me.  It took us until the next summer to put it into action, but we decided we'd pay B's new car down aggressively and save specifically to replace my 2 door VW Beetle with a family friendly car down the road.

Within minutes of starting to save to replace my car in the next few years we found out Little Tom was on his way and ramped up the car savings.  We went from putting a moderate set amount each month into the "Car Savings Fund" to putting as much savings as possible after retirement contributions and every bonus into the car fund and within seven months we paid cash for my new to me car.

I set a goal of saving to pay off B's car by Tommy's first birthday (about 3 years early), but when we calculated the daily interest we're paying, we just decided to be done with it.  So, last week we used the excess from the car savings fund and a transfer from savings to pay off the you-can-take-the-kids-out-of-Boulder-but-you-can't-take-Boulder-out-of-the-kids Subaru.  And it was liberating.  Our final car payment.

We will continue to fund a car fund - though not as aggressively - for repairs and replacement down the road, but so long car payment.  Our main priority right now is to take excellent care of our cars so that we won't be replacing them anytime soon - between the two of us we can transport an entire soccer team, so room won't be an issue for years to come.

Babies Don't Need Much

Hi, my name is Emily and I hate clutter.  And I had a baby three months ago.  And babies come with clutter.  PLASTIC clutter

I won't bore you with my thoughts on the baby industry playing on first time parents' fears in an effort to sell more gear.  I'll simply say I wanted the bare minimum when it came to nurturing, loving and entertaining Mr. Thomas.

Really, you don't need much.  A crib and/or pack n' play.  A breast pump.  A car seat and stroller of some kind. A load of white onesies.  And a few pieces of plastic that you can cycle in and out of the basement.

Here's what we have:

Baby Trend Car Seat (Here's the really thought out process I used to pick a car seat:  Found the two safest car seats per Consumer Reports, and picked the one with colors I liked the best.  Mother of the year.)

A crib upstairs for sleeping, a pack n' play downstairs for occasional naps and diaper changing - now that Tommy is past the newborn stage, we'll probably fold this up for travel use more than napping and diaper changing use.

Snap n' Go Stroller.  Did you know I'm not a matchy matchy person?  The last thing I wanted was a car seat that matched my stroller.  I'm fickle like that.  This folds up with one hand, weighs next to nothing and is super cheap.  LOVE.

Luckily, our friend Jenna loaned us most of her plastic baby stuff so we didn't have to purchase new.  Because some babies (ahem, mine) don't like swings.  So from Jenna we have lots of baby gear - bouncer, swing, play gym, etc - that we pull out and put away with each use. I would never have bought the play gym - seems like a blanket could work just as well so it wasn't even on my radar - but it's Thomas's favorite thing in the whole wide world.  It lives in our living room, everything else filters in and out of the basement as needed.  Jenna is our lifesaver.

And, here's the single most invaluable thing for me.  My breast pump.  I used it daily since Thomas was born to establish milk supply and pump a daily bottle, it enabled me to build up a stash of milk for going back to work (and on dates with Mr. B), and is now my sidekick three - four times a day at the office.

We did buy an inexpensive Jogger (a discounted floor model at $109, that after a gift card cost us $9) after the fact because I was craving running and the snap n' go? Well, it don't run.  I like it a lot, but it's huge and hard to transport so we still use the snap n' go when we're out and about and for regular walks around the neighborhood.

I figure by spending $9 on a jogging stroller now, I can justify a spendy one in a few years when we need a double.  Instead of spending other gift cards we received on cutesy plastic, they're going towards future must-have purchases - like a bigger car seat.  And that's that.  Really, you don't need much.  My house is mostly plastic free and our bank account didn't take a huge hit with baby purchases.  Works for me.