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Simplify Money: Your Year in Review

I want to take a quick second to welcome you to the first post in our new Simplify Money series.  Some of you may have been around for my webinar series in September 2013, but this time I’m teaming up with the awesome Erin Branscom of ErinBrans.com to bring you lessons and accountability from moms that are in the trenches of financial rebuilding.  Be sure to join our Facebook group for accountability and community!

Simplify Money

2015 is the year of financial change in our home.  Don’t get me wrong, 2013 and 2014 saw MAJOR strides in both income and how we handled and spent our money, but 2015 is going to be a whole new ball game for us.  We know we have to move early this summer, and our hope is to move closer to Josh’s place of work.  I mean, who wouldn’t want to gain an hour and a half back in their day from not having a long commute?  And bonus of more homeschool groups and activities in a small radius for the kids.  The trade-off though is having a much higher cost of living.  

This means a number of things for our budget and financial plans/goals.  Mostly, it means attacking debt and saving up for general moving costs (truck rental, labor for loading/unloading, packing supplies, deposits, cleaning, etc).  It also means figuring out how to increase my income as a blogger and freelancer and how to reduce more of our everyday costs to make up for the higher cost of living.  

When you’re making big financial changes and goals, it really helps to get a good grasp on your most recent numbers and patterns.  Something I did for 2014 was record every. single. penny. that we spent.  Honestly, I wish I’d done a better job of guiding that money rather than just tracking, but I can’t change what I’ve already done, just take that knowledge and apply it going forward.  What I do have is an amazingly detailed snapshot of our spending habits for this year.  

I spent 6 months this year working with the most magnificent Briana Cavanaugh through Own Your Money with Belinda Rosenberg and I learned a lot about the mental and emotional relationship I have with money.  One thing that was a HUGE AHA! moment was that where I thought I wasn’t being disciplined with our money, was actually that I was a poor planner.  I was doing what Briana called yo-yo budgeting.  I’d tighten us down to a bare-bones budget with the goal to set a ton aside only to be hit with expenses that I should have foreseen and arranged for.  Then I’d spend for that, get lax, and then beat myself up for being undisciplined and not sticking to the original budget.  Yep, that sort of behavior is as dangerous in budgeting as it is in dieting.  

What I didn’t have last year was anything to look back on to see when we had some of these outlying expenses that seemed to creep up on us.  And let’s just say that with 5 young kids, those seem to happen all the time!  

So for 2015, I’m setting out with this snapshot and planning in these spending bursts (very-variable expenses) so that they are IN the budget to begin with.  

So just how exactly does one apply the k

nowledge of what they spent in 2014 to what they plan to spend in 2015?

Total Spending by Category for 2015

1) Know your monthly expenses. – Don’t try to fly by the seat of your pants with these, especially if some of them are auto-paid and small.  I was great about keeping a list of the big ones — rent, utilities, insurance, van payment.  But for some reason, I bucked against listing the small little subscriptions, our Amazon Subscribe & Save, and our supplement autoship.  Sure, they aren’t “bills” but there is absolutely no excuse for being surprised by them – and the fees for forgetting and not having the $ waiting in the account can add up QUICK!  So make a quick list of ALL of the money you know is coming out of your account each month along with the amount (even if it’s an estimate) and the due date.

 Variable Expenses

2) Average your variable expenses. – Next make a list of all of the things you control in your budget on a daily basis — groceries, fuel, spending money, pet supplies, clothing.  Now look at how much you spent on them each and every month last year and average those out.  Quick check, but was the average anywhere close to what you’ve been budgeting?  If so, AWESOME!  Good job! If not, let’s look at why and see if you need to adjust either your expectations or habits.  In our case, I was over budgeting for the cat supplies, but under budgeting our groceries (clean eating can be quite pricey compared to buying cheap not-so-healthy foods!).  Two years ago we noticed we were blowing the restaurant budget our of the water and I’m happy to say that’s a habit we were able to correct in 2014.  

Variable Expenses

3) Take a look at your month-specific expenses. – These are going to fall into two categories: cash flow and funded.  Your cash flow expenses are going to vary and be things like birthdays and anniversary gifts, holiday supplies, and annual pass renewals.  Be sure to note these for each month so that when you do that budget, you remember to include them right away.  Others are going to need to be funded ahead of time like large insurance payments, Christmas gifts, travel, your pet’s annual checkup, large medical expenses you can plan for (birth of a baby, planned surgery, etc), and property taxes.  These you’ll need to divide up by how ever many months away they are and include those increments in your budgeting. 

January Bills Spreadsheet

4) Know your financial liabilities. – This is the scary one that no one wants to do.  (No one.  Not even me and I may or may not get a small thrill out of the rest of this number crunching.)  Take some time and comb through your credit reports, credit card statements, and loan balances.  Whether you go all nerdy-spreadsheet with details like interest and snowball accrual, or simplistic with just who you owe, how much, and estimated payoff date, get it done.  Make sure you don’t have any collections accounts that may have slipped past and start the process of verifying and arranging for them to be paid.  This list might be scary, especially if you owe ol’ Sallie Mae, but without it, you can’t form a cohesive plan of attack.  However you form that list, also go back and write down how much you paid them during the last year.  That might be just the breath of fresh air you needed.  You may owe a lot, but even if you just paid the minimums, you probably paid more than you thought.  That can either be encouraging, or the swift kick in the rear you need to tackle it harder. 

Ideal Budget

5) Write an “ideal” budget. – I call this an “ideal” budget, because you probably won’t be able to pull it off every month.  Life happens and a few things may sneak up on you despite this preparation.  But this will keep you from needing to reinvent the wheel every month.  Start with listing all of the monthly bills from step one and the average variables from step two.  Next add in the increments from your funded expenses, and an average or so of the month-specific expenses.  Compare that total to your income.  If there is anything left over, divide it between savings and debt using whatever method works for you (we’ll go over this more in a separate post).  If you’re already in the negative, you need to look at where you might be over-budgeting, if you can make any of the month-specific ones funded over a few months, if you need to make lifestyle or major income changes.  This piece becomes your starting point for each monthly budget for the new year and can be used as a guide when considering making changes that impact your budget.  

Phew!  That was a lot, wasn’t it?  If you don’t have a year of expenses neatly detailed and at hand, I strongly suggest going back over your bank statements for the past three months, or if that won’t work for some reason, using the next 2-3 months to track every penny.  A word of warning, DON’T OVER-COMPLICATE IT!  Most families don’t need to differentiate between groceries and sundries like aluminum foil and soap.  Save that for later if necessary and just call that line “Target.”  If you’re more seasoned or know full well that you have a spending leak in one of those sections, then by all means, give it a separate line.  

And doing this all by hand can be a recipe for disaster.  My tool of choice is YNAB and a handful of spreadsheets and printables.  In the past, I’ve had great luck with both Mint.com and Mvelopes.  All of them offer the option to import past banking statements to give you a head-start on backtracking to get your snapshot if necessary! 

And guess what, you can enter to win a copy of YNAB right here!  (Or hop on over here to buy it now, if you just can’t bear to wait, with this $6 off coupon.)

How to enter for a chance to win a copy of YNAB! 

  • Leave me a comment. Tell me – What’s your biggest financial goal in 2015?
  • Sign up for my email newsletter – leave me a comment below telling me you signed up.  (Make sure you confirm your subscription!)
  • Sign up for Erin’s email newsletter – leave me a comment below telling me you signed up. (Make sure you confirm your subscription!)

*Please note that each entry needs to be a separate comment and you may only do each task once.  Duplicates will be deleted. 

Fine Print – Winner will be picked by Random.org. Entries will be verified. Open to residents in the US and Canada. Winner will have 48 hours to claim their prize or I will pick a new winner. Giveaway ends 1/12/15 at 11:59pm CST.

And don’t forget to join us over at ErinBrans.com next Monday where Erin will tell us about her biggest money mistakes and what we can learn from them.  We’re so excited to bring you the Simplify Money series every Monday this year! 

Comments

  9. My husband and I are still trying to get ourselves grounded financially. As a newlywed and a recent member into the workforce, there is a lot of financial changes occurring. For 2015, we would like to save up to start our new family! 🙂

    Reply

  10. When we lost our daughter in Nov. 2014, I also lost my job because I was her IHSS worker. My goal for this year is try and figure out a way not to have to file for bankruptcy. Finding a job with the limited hours I can work outside my home is going to be very hard and to make up almost $4000 a month income is going to be even harder. Also to learn how to make and live on a budget too. I will also be doing a no spend month during January, except for things that have to be paid (mortgage, utilities, insurance, medical co-pay’s) that way I can see how much is left over for food and trying to pay on our other bills that we can no longer even pay the minimum payments on.

    Reply

  12. Oh man!!! My husband and I have been married 26 years and one of the BiGGeSt stressors in our marriage is money! We have both taken turns with the bills….but we just are willy-nilly and I hate it!!! We have wasted so much! We just need to set up a budget and track when and where we spend! I think a program like this would be an amazing tool!

    Reply

  13. My biggest financial goal for 2015 is to eliminate our credit card debt and to pay off two of our smaller student loans!

    Reply

  17. We have three major financial goals for 2015:

    1. Start to pay off my student loans
    2. Sell our current home, move across the country, and purchase a new one (with 20% down this time!)
    3. Save up enough money to put at least half down on an SUV for me!

    Reply

  20. My biggest goal is to develop and then actually use an annual budget…we’ve been talking about it but have never really done it with much detail.

    Reply

    • I takes some getting used to. Sit down and write it, it’s always the first step! And don’t worry, the first three months, no one follows it to the penny, you just do your best and accept that you will have to adjust!

      Reply

  23. My major financial goal for 2015 is to pare down expenses and meet my frugal budget every single month. I’ve already made mighty cuts, and this may mean searching for income generating opportunities. But I do need to have fit finances in 2015! Thank you!

    Reply

  26. Dani I could relate – I did Dave Ramsey early last year and I made huge strides and progress – and many new habits adopted – i I even got the budget down to paper goods ( aka aluminum foil ) – by October all the receipts were bugging me and tracking or lack there of and the mental clutter of knowing I still had to enter them somehow drove me batty- i got sidetracked – so over the last few days I’ve been listening to people call into the show about how they became debt free – I could never get the first $1000 funded as it would go to surprise expenses – so my goal is to go back to a written weekly and monthly budget and know where the dollars are going , adopt a simple way of tracking expenses and tossing receipts – simplify – streamline – and “zip it up” concurrently with getting selling things to pay off debt

    Reply

    • It’s very easy to get distracted by the mechanics of it all. That was one of my biggest hangups and something I learned to deal with during my coaching with Briana. Those surprise expenses and the mechanics would get me in a tizzy and it would be hard to follow through! I’ve worked hard at simplifying our system so I can really work on the actual money part. Come join the FB group so we can cheer you on as you get down to business with your money!

      Reply

  32. There is an $89,000 debt elephant in my room, that I need to start eating one bite at a time. So my goal for 2015 is to pay off (bite off) $35,000 of that elephant.

    Reply

  38. What’s your biggest financial goal in 2015?

    To start managing my dining out expenses better by creating a weekly meal plan and cooking at home.

    Thanks!

    Reply

  41. My biggest financial goal is to track my spending better and to keep ahead on my tax stuff. Since I’m getting married and we’ll be starting our marriage out dent free, it’ll be nice to get everything organized as a couple.

    Reply

  46. I don’t really have any financial goals since my husband is fabulous at money management. I feel very lucky to have him. The only debt we have is our house.

    Reply

  48. Dani, I signed up for your newsletter! My blog is about living tiny…so basically simplifying life by getting rid of debt, clutter, time-wasters, negativity, etc. I hope to connect with you more in the future! 🙂

    Reply

  52. My biggest financial goal this year is, to be debt free and to finish the payment for our new home! Will follow your tips and advice! Thanks!

    Reply

  53. I think my biggest financial goal for 2015 is increasing my income from my blogging, VA, and essential oils business so that I can get a better grasp on when I can quit the day job. We have a 5 year plan right now but that doesn’t include those income streams (because they’re still too new and variable for me to feel confident enough to add them to the snowball spreadsheet). So 2015 will be a good learning year for us!

    Reply

    • I’m working on evening out and strengthening my income streams, too. We have a 5 year or so plan of retiring my husband, so I totally get where you’re coming from!

      Reply

  55. Hello from the Day Designer group! My biggest financial goal this year is KNOWING where our money is going and allocating it properly– we downloaded the free trial of YNAB and two days in, it’s already helping! We had plans to go to Target (you know how that can go…….), but before we left, we wrote down what we needed and categorized it. We actually stuck to our list and didn’t buy any extras! I was so proud of us 🙂

    Reply

    • Way to go, Faye! It’s amazing how quick that helps. I know my hubby likes being able to quickly see how much is in the virtual envelopes of YNAB when he’s running errands for me. Keeps him accountable to the list!

      Reply

  58. We have a few financial goals for the year we want to:

    1. Track every penny we spend this year
    2. Pay down the student loans
    3. Start saving for a future house purchase.

    Reply

  59. My husband and I need to update our wills, and I have money in savings accounts that needs to be better-invested.

    Reply

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