Budgeting Baby Steps: Adaptation

While not a Baby Step in itself, adaptation is a key factor in the success of your budget. Not only in adapting to inflatation, errors in estimations, unexpected blow outs on certain bills (no, kids YouTube is not free on the mobile phone!), but also for its application in real life.

Only a week in and I am ready to make some changes!

From BabyStep 1, where I learnt to manage my everyday living through a Cash Envelope Budget, I've already seen ways to simplify this.  The Speech therapy issue has been nagging me, I hate having that cash there for a month, and now that I will have to rely on Medicare rebates after paying the full amount, it just seems easier to go to EFTPOS to do this - that way the rebate can be deposited into the same place as the payment came out without affecting my cash flow.  So speech is now part of my Bills Account. 

From BabyStep 2, I mentioned that getting the Bills account to balance after the big bills is the hardest part and even with the complex spreadsheeting I wasn't really confident with my Cashflow.  This account I would eventually like to running a month in advance but I've been ignoring one glaringly obvious glitch in the system.  While most of my bills are monthly, a couple are fortnightly, and a few are quarterly.  I will no doubt end up with some yearly ones in there too.  The thing is, I'm trying to meld three different time zones into the one account.  I want to keep it simple, but I do need to find some way, at least until I get a full quarter saving for each of my quarterly bills, to account for the fact that while a bill may be quarterly, I only have a few weeks to save for it!  I think the simplest way to do that is to just go back to where I calculated the monthly and fortnightly amounts for my bills and re-do my quarterlys to reflect the time left to pay them, rather then the full quarter.  It means I will have to readjust  when I pay the next bill for each of them but it's hardly a drama.

I think I am beginning to understand that my Babysteps are going to become a repeating system of checks on my budget to manage and improve my finances.  Well, at least the first few which focus on the budget!

I'm also really becoming acutely aware that I need to quickly implement a savings aspect to my budget.  DH announced we need a new Frypan, DS1 requires non-subsidised medicine, and Mum invited us down for a weekend.  Not to mention birthdays coming up, and my anniversery, and Christmas.  And to top it all off, the Dryer started pouring out smoke!  So yes, a savings account is next on the plan!

UPDATE:  I went ahead with implementing these changes but when I put pen to paper (or mouse to spreadsheet in this case), it just didn't work.  I've decided to total my Cashflow at the end of each pay period (a running total would be better but too much hassle and too messy to put in) or before each transfer into the account.  That way I can check for any negative balances.  Electricity is my biggest bill and is at the end of the three month budget so that should work out.  It's not perfect, but it will work out!

Day 19 & 20: Slowing Down!

  I'm losing momentum a little here, but I am confident the basics are there and it is purely a sense of perfectionism that is telling me I'm not keeping up!  Keeping up with what?  No-one said the 31 Babysteps HAD to be done consecutively, or that I even had to blog everyday about it.  I'm moving toward my goal, and the slower the better!  The better I build this foundation the stronger it will be!

DAY 19

I've been making my bed each morning, decluttered a little in my closet, and for Day 19 we got to read one of the classic Flaylady emails... The one about staying in a gorgeous sounding B&B, which is, of course, their home.  I guess the premise is that housework isn't so much a chore, but an opportunity to pamper yourself with a freshly made bed, or your family with a set table and home cooked meal and fun planned weekend instead the mad rush cleaning catch up session which always seems to involve yelling at someone!  Who would think of a chore as a way to spoil yourself?  But seriously, nothing beats a made bed with a sprinkle of talc between the sheets and some fluffed up pillows!  And I do love being my own cleaning fairy so I wake up to a clean kitchen so I can make lunches and cook breakfast!

I guess it all comes down to attitude, and while I'm not quite at the 'Blessing my family" stage, I am willing to acknowledge that life is easier and better for everyone (including myself) when I do just a few basic bits of housework and take a little pride in my work!

DAY 20

It's time to add laundry to the routine, in the morning and at night.  I like how my dishwasher works, with turning it on in at night and emptying in the morning, but with the washing machine I'm going to attempt to fill it each night, get Dave to turn it on when he wakes up, and then hang it out just before I take the kids to school.  Then I can bring in, fold and put away (or iron) in the afternoon.  Perfectionism aside, I just need to check on my laundry morning and night and make sure something is happening with it.  I randomly have to wash sheets too which could easily throw off any attempt at perfection!

It's kind of coincidental that the dryer chose this week to blow up - well, it didn't blow up, it started smoking.  DH and myself pulled the back off and de-fluffed it and it ran okay without clothes, but I think I will leave it outside for now and maybe even get rid of it.  A dryer isn't a necessity at the moment and it's not worth the repair money for a poorly designed one that blows fluff everywhere!

I also think its time to de-clutter my routine.  I'm not sure if I like using an app even, I can't quite pin down what it is, but my routines are getting automatic and having to tick off a checklist is more annoying then helpful.  But that might be ego thinking I'm better then the system!  Anyway, I need to update my routines with laundry check so I might write a copy of it on a post it note to stick around the house.

Day 18: The 11 Commandments

My sink is still shiny!  Okay, so there is a little bit of a photoshop effect helping it along, but doesn't it looked look blessed by angels?  It really captures just how much that shiney sink has blessed me!

Even in my worst week (yes, the ladies know what I'm talking about!) I have still managed to get through with a positive spin on everyday.

DH is helping. He cooks most nights anyway, but because the kitchen is clean when he starts, the job is that much easier.  I've also been helping out with chopping veggies, and even taking over once or twice a week.  He's been washing up the stuff that doesn't fit in the dishwasher on the days that I don't do it!  I often come out to do it to find it's already done!  That way the dishes are dry by the time I'm ready to shine my sink!

Once again I skipped the 'get out clothes ready for tomorrow' because it was too much of a task to find anything in my hideous mess of a closet!  I really felt it this morning as I had to tackle that hideous mess in my pre-coffee haze! Same excuse again tonight so I guess it is time to tackle the folding and putting away of the laundry.  I have inadvertently jumped ahead and have automatically been doing the load-a-day thing.. Not perfectly, but we go through so much washing here I kind of have to!

Oh yeah, the new thing for today was to check out the 11 commandments.  (I will link that eventually!) which are kinda right on the money! I guess I need to start a real life Control Journal - maybe using that huge pile of folders and stationary I found, so I can start collating some of these things!  The Morning Musings (often repeated) are usually good, but a few really resonate with me and I'd like to have them around!

Last item today on my routine is to go to bed at a reasonable hour.. It's nearly 10pm so I'd better tune into my meditation and go to sleep!

Sweet dreams!

Day 16 & 17: Definitely NOT Perfect

I have a swollen lump on the back of my head, probably a lymph node as I didn't hit my head that I can remember!  I've a mild headache over the weekend and a major case of CBFed. I haven't blogged my Flylady Babysteps in three days but I learnt a few things in that time..

1. Some of my habits are now ingrained.. Shining my sink and emptying my dishwasher in the morning!  The 'get dressed to your shoes' is getting there, but a little later in my routine on the weekend - coffee first!  The HotSpot thing is working for me too, because it is linked to my sink (as my hotspots at the moment are places where dirty dishes seems to collect! ).  Decluttering sort of happened in that I gave myself an extra job to do, no timer though, and the 5min room rescue was forgotten.  Getting my clothes out seems to be the first thing to go.. And I know why!  My closet is a disaster!

2.  I don't have to do things perfectly.  I was stressing about getting blogs perfect - triple checking the fly baby web site to make sure I doing it properly.  On Friday I figured I wouldn't blog because it wouldn't be perfect - I had made my bed and done my routine - I was just tired.  So I am giving my permission to join days, even if they aren't on the weekend!

3.  I can take a day off!  That's right, I can totally skip a day of Flylady Babysteps (are add an extra depending on how you look at it!).  I can even skip a few days blogging and allow myself time to get a habit ingrained if I am having trouble with it.  New stuff is only introduced into the every few days anyways... We are meant to give it time and an extra day isn't going to de-rail me!  So what if my 31 days of BabySteps turns into 37days?  Or even 51 days!

I feel better with that out of my system!

As I said, the one thing I am struggling with is getting my clothes out ready for the next day - partly because DH goes to bed promptly at 8:30pm, and party because my clothes are in baskets, suitcases, and in piles on the floor - the result of a combined 'organising clutter' session, seasonal change, and going away for a weekend.  Conveniently, I noticed this weeks zone is the Master Bedroom so I have no excuse not to start hitting this room!

My 15mins will be spent throwing my clean clothes into baskets/suitcases/closet - anywhere but on the floor, and to start a 'a give away' pile and a 'too small but keep' pile ( I'm not ready to let go yet!).  Whatever I get done in 15mins is enough!

My 5 min room rescue will be clearing the floors of dirty laundry and rubbish so I can vacuum.

That is it - nothing more, nothing less!

My bed is already made, a habit we added last week, and today's new habit is to go to bed at a reasonable time... See, perfectly aligned with the zones!  A clean bedroom and made up bed will make the sleep thing a lot easier!

As for sleep, I'm usually pretty bad at it and the nicotine patches aren't helping.  I want to be asleep by 10:30 so it's everything off and resting by 10pm.  I've set my alarm for a 6:30 wake-up so that is 8hrs sleep and hopefully a little more as I get into routine!  I've get some sleep supplements (magnesium based), a meditation on my phone, and an alarm set to start getting ready for bed!  I'm looking forward to catching some zzzzs!

Budgeting Baby step 2: Taking control!

For the last two weeks, I've worked on controlling my direct spending.  A working cash budget is the shiney sink of my finances and it has given me some control!  I have a starting point!

I had some spare time today, a few hours, so I hit the next part of budget... The Bills!

BabyStep 2: Get Current!

This was a three pronged project for me - my bills are set up in two categories, one for our rental property, and one for household bills, and the final part was putting it together into a total budget.  I also did the whole spreadsheet thing just for fun - and really, some kind of accounting software or excel budgeting sheet is really very helpful!

The basic idea is to have an account for the e- based bill payments only, this should be all your non-cash payments aside form credit cards and savings account transfers (even payments into super or mutual funds can go into the Bills Account).  I've used the account our Family Tax gets paid into, and then I can transfer the extra amount from DHs wage. I've tried to go with what requires the minimum amount of change as it is quite the task to open a new account and change the account details for all our direct debits.  My main goal here was a separate Bills Account as an 'envelope', so we now have a two envelopes: Cash and Bills.

I listed the bills we pay through the bank, from rent to insurance to mobile phones... The lot!  I had to check my bank account for the amounts for set monthly bills and used my previous bills to estimate the variable ones. Adding them all up, I worked out the total fortnightly amount I need to cover my bills.

Here comes the spreadsheet madness:  I did a cash flow from now until December, and another from January to June next year.  This was tedious and time consuming but will allow me to track my spending against my budget so I can make sure I have the money in the account to cover the bills in real time (and remember I did this for both my rental house bills and household bills!).

The hard part is this first couple of months - to get the account working in balance.  There is one or two months out of the 6mth cycle when the large bills come out, and if the account isn't in balance, you get a negative monthly total for those months.  Because I've started with overdue bills, and big bills about to hit, every month was out of balance!  I found the largest negative month and saw the big bill came out of the first pay period so I worked out the total balance at the end of that pay period.. And that was my starting amount for getting the account in balance.  I randomly added it at the start of the budget and made sure I no longer had any negative balances!  I made a payment plan for one of my overdue bills to help with cash flow the first few weeks as well.

The final stage is putting it all together.  As other sources of income are accounted for under either bills (family tax gets paid directly to bills account), or the rental bills (rental income gets paid directly to that account), that leaves DHs wage, deposited into his personal account, as the only other regular income.  It certainly helps to have your bank accounts working for your budget!  I need to plan how that money is being spent and make sure the right amounts go to the right places!  Yes, I am telling my money what to do, not the other way around!

Thanks to my accounts/ envelopes, that's pretty easy: Cash; Bills; Rental Bills; Credit Card Payments.

I'm not counting the credit Card Payments as an envelope yet, but we do have to account for them to work out our 'excess'.  My total minimum payments are $225 a month (we paid cash for our car due to receiving an inheritance) - I am very grateful to be sorting this out out now, before it gets worse!

I know, there is no savings!  Not yet, anyway!  Our main focus is to get current!  Minimum payments on the credit cards and no savings until the bills account is current.  I did up a cash flow for this account until the end of the year, and for the first six months of next year.

Based on DHs estimated income we have money left over after minimum payments on everything.  All those excess funds will be diverted into the Bills Account until it is up to date, which should only take us a month!  Using the amount I calculated I needed to get my bills account in balance, I increased the amount transferred for the correct number of payments.. Only one will require the full excess amount, the second only requires about half of it!

I will still have to check the cash flow in the bills account each pay period until I know it's working well, then a monthly check to see if bills were above or below budget is all that is required.  

action plan...

I will need to cancel the current credit card payments and switch them to monthly minimum payments.  I can set these up before hand and modify the amounts on the day.  I have most bills set on direct debit but will check all of them, there are two I will have to change the account numbers for, and then make note of the big bills that I will have to set the payment up for as they come in.

For the next two pay periods I will adjust the income in DHs Pay Account and work out the maximum amount I can transfer to the Bills Account until we are 'current' and I can set up a regular amount.  And then do the same for my Rental Bills Account.  It should take a maximum of six weeks!

Issues...

During this process I noticed that some of bills were probably excessive!  Although we had 'excess' after Cash, Bills, Rental Bills, and Credit Card payments were made, it wasn't a spectacular amount and I suspect that when I try to add in even short term savings, we will go over budget.  I am sure that there are many who would find themselves over budget at this stage just from credit card debt!

Options for making your budget fit:

1. Cut your expenses!

As it will take a while to 'get current', I will help the process along by setting aside some time each week to cut something from the budget.  We're already watching the electricity usage, and I've increased the excess on the insurance (some of our details were also incorrect and resulted in a lower monthly premium once they were corrected as well) so those payments are down as well.

2. Increase your income!

I'm applying for a a scholarship for next year and will take on casual work when I can, and DH is always picking up overtime when he can!  Our income is getting larger, beyond just indexed growth, and once I get my PhD my earning potential increases even more!

3. Sell something!

The advice I most often see is 'sell the second car'... This is great if you have a second car with a loan on it.. selling will cut your expenses and, if you're lucky, give you a little cash!  We are already pretty thin when it comes to possessions, but I am planning on a garage sale/give-away to help de-clutter!  It won't add much to the budget but it will give me piece of mind and less stuff to look after!

Summary...

That was a very long winded way of saying 'consolidate your bills into one account, work out how much you need to cover the bills each pay period, and pay extra until your up-to-date!'.  It was important to mention that up-to-date also means having enough extra in the account so that you can cover the big yearly (or in my case, half yearly) bills with just your regular payment amount!

Notes..

This post may never end!  At this stage, I haven't included any lump sum payments, like Tax Returns, School Kids Bonus, etc into the budget.  As these payments tend to be variable, sometimes disappear, or rules are changed, and because they are not 'regular income', I've decided to use these as bonus' to add to savings or pay off debts as they come around.