Wednesday, May 25, 2016

Yap Yap Dogs

A Journey to Retirement  starts like any other journey, with a single step. In my next few posts, I plan to catch the reader up to speed of where my journey has started.

Probably once of the most crucial initial steps is creating and sticking to a budget. A budget is basically a set of rules for your money to obey, and without a plan you'll start to wonder where you money went. 

Money is like a little yap-yap dog that goes crazy if unattended and untrained. Before you know it, you are spending $300+ a month on eating out, you buy 10 pairs of new Nike shoes cause they were "on Sale" and $500 a month on a new car that has lost its new car smell. If you can't make your money work for you, that little yap-yap dog will eat you alive.

Don't let those beady little eyes fool you...he's a killing machine!

I found this out the hard way, going over $5,000 in credit card debt, and nearly $10,000 in student loans. I don't know what clicked, but I made a decision to free myself from the bondage of debt. I bought whatever I wanted, and it felt good. But the feeling didn't last, and I quickly felt the weight of my decision. Buying what I wanted, in the moment I wanted it wasn't freedom; it was addiction. I wanted to use my money to work for me, and not to work for my money. 

Fast forward a few years, and here I am: a budget lover.  I know where my money is going, what it is doing, and how often it misbehaves. I have put my yap-yap dog through training school, and it is beginning to behave. Below you will see my monthly budget. 

Monthly Budget

·         Home: Mortgage & Rent---------------------------------$1,217
Business Services: Rental Property Expenses-----$1,250
Gifts & Donations: Tithing-------------------------------$460
Food & Dining: Groceries-------------------------------$350 
 Bills & Utilities: Utilities (Gas, Power, Water)--------$254
Home: Home Improvement-----------------------------$100
Auto & Transport: Service & Parts--------------------$100
Travel: Vacation------------------------------------------$100
Auto & Transport: Gas & Fuel-------------------------$80
Bills & Utilities: Mobile Phone--------------------------$80
·         Shopping--------------------------------------------------$75

·         Gifts & Donations: Christmas Gifts-------------------$67

·         Kids: Babysitter & Daycare----------------------------$60

·         Bills & Utilities: Internet---------------------------------$50

·         Food & Dining: Restaurants--------------------------$50
·         Misc Expenses: Shelly Money------------------------$50
·         Misc Expenses: Matt Money--------------------------$50

·         Auto & Transport: Auto Insurance-------------------$46

·         Entertainment: Family fun-----------------------------$45

·         Entertainment: Date Night-----------------------------$45
·          Kids: Baby Supplies------------------------------------$40
·         Auto & Transport: Car - Other------------------------$35
·         Gifts & Donations: Gift - Other------------------------$26
·         Gifts & Donations: Birthday Gifts---------------------$20
·         Health & Fitness: Medical------------------------------$15
·         Food & Dining: Shelly's Food-------------------------$5
·         Food & Dining: Matt's Food---------------------------$5
·         Entertainment: Music-----------------------------------$4
·      Everything Else------------------------------------------ $71

    Total                                    $4,750

      Savings Goals
·         Savings -------------------------------------------------- $800
·         3 Month Emergency Fund-----------------------------$250
·         2nd Rental----------------------------------------------- $250
·         School Loans ------------------------------------------  $137

Goal Total                                                 $1,437

Grand Total                                               $6,187

Generally, I earn ~$3,437 after tax income. My wife earns around $1,250 a month working part time, and our rental provides $1,500 a month. That totals to $6,187. Now, some months run a little lean (say my wife doesn't have as much work as normal) or a little rich (three paydays happen in a single month) but it all averages out. Any unplanned income goes straight into Savings. Examples of this are tax rebates, bonuses, and so on.

We continually make adjustments on our budget. For example, I had budgeted $40 per month for natural gas (show here as part of the total utilities budget) and after 4 months, I realized that would be far too low. So we bumped it up to 65 and took the 25 from another category, Everything else. A good budget takes time to work out the kinks.

We track our spending with I don't have any affiliation with Mint, Intuit, or any of its subsidiaries, and to be frank, I don't care if you use it. It just makes tracking your money a lot easier. You could also try, You Need a Budget (YNAB) or a host of other similar aggregate financial trackers. 

Once you are tracking all your spending, you start to see weak spots; places you can target to make the most improvement. I noticed I was $200-300 a month in fast food. Once I noticed this, I was much more motivated to eat at home, and plan meals ahead of time. But until you start tracking your money's movements, you won't know where to attack.

How about you, reader? How do you track your spending? Have you seen any benefits from keeping your Yap-yap dog in line?

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