Saturday, February 8, 2014

Adjusting the Budget

You know it happens.  Life.  Stuff.  Someone loses a job, or takes a pay cut.  You have a child.  Your car breaks down.  Expenses go up.  Kids grow up and start to eat more (a LOT more).  Your pay does not keep up (no raises, no bonuses...boy am I feeling that one).  It is important to keep up with your finances and continually review your budget.

Now, we don't really have a budget.  In years past, we've made one.  But I see our tendency when our children are very young to be too busy with life to actually make a budget.  But that doesn't mean that we don't review our finances.  I consider it to be our job to constantly think about what we can change.  In some cases, it's because we get lax - eating out more, buying prepared food more (sometimes this is temporary, due to an excessively busy life).  In some cases, it's simply because our finances don't keep up with time.

Some of the things that we have done in the last several months to adjust our budget include:

- Home improvement - we have replaced our toilet and washing machine in the last year and a half.  Now, while this isn't particularly "cheap", water saving devices in my area of the country mean rebates (to make the cost more bearable), and savings in the water bill.  If you have to replace items anyway, it can be good to think about saving money on water or electricity.

- Refinancing.  We refinanced our house in December, saving $700 a month.  Most of this was simply from resetting our payment schedule from about 25 years to 30, but we also lowered our interest rate by 0.5%. Now, why didn't we refi earlier last year when the rates were even lower?  The comps.  In real estate speak, the comps were not high enough.  This means that we did not have enough equity in our house - not 20%, so we couldn't do a standard refi.  So, despite buying our house in 2004, putting 20% down and paying off aggressively for 9 years, we STILL didn't have 20% equity.  I'll let that set in for a moment.  Sucks.  All water under the bridge at this point.

- After school care.  There are two options at my son's school.  One that goes from K-2 and one that goes from 1 to 6.  We had him in the K-2 one for at least two years.  We had put him in the same care this year because his/our friend and neighbor (who was also in it) - her younger sister started kinder.  So the idea is that all three would be together.  Well, very shortly after the school year started, he asked to switch.  We waited until after the holidays - the advantage to the more expensive care is that they are open during spring break and holiday break and that is included.  So in January, we switched.  This saves us $200 per month.

- Activities - We withdrew from soccer (he didn't like it anyway, and there's a free option at the school).  We use Netflix, hulu, and Amazon prime for TV instead of cable.  Our philosophy on sports - we like them, but we don't particularly care to be competitive and we don't like to watch them. So we don't need cable nor competitive sports.  Any sport that requires multiple days a week (for a 7 year old!) is out.  We like to play with him at the park and we'd like him to learn enough about each sport to play with his friends.

- Cooking.  I have started cooking from scratch more, mostly because my toddler is getting a bit more self-entertaining.  He's always on the mood, and after work/ school/ daycare, the first thing he wants to do is go outside and play with the kids.  I'm also trying to use up the food in the freezer.

- Vacations.  Vacations with young children are a pain.  Especially toddlers.  So, we went to visit family last year and then stopped.  Thanksgiving?  Staycation.  Christmas?  Same thing.  You know what?  A lot more relaxing than traveling.  Now, don't get me wrong.  I've priced trips to Hawaii.  I've looked into renting a camping van for a camping trip in May (the timing doesn't work out - they are closed Memorial Day, so I guess that just saved me $400!) Pre-second baby, we would probably spend $3000-$7000 a year on vacation.  I spent $600 on two weekend retreats, but otherwise, we haven't traveled since July.

- Wine - I'm really just trying to cut back to almost none, because I need to lose some weight.

- Date nights - We'd really like to start trading babysitting.  So far, though, our "date nights" are lunch time walks at work occasionally.

- Movies - my  husband enjoys going to movies.  I don't much. Most movies are him and the 7 year old, or just him.  But this week is the film festival, so we get to see some free kid's movies (today: Frozen, tomorrow: The Croods).  Last night we went to the drive in (really only worth it in the winter when the toddler is still awake), and it was $15.50 for all of us.  We took our own food.

- Books - library and Amazon prime (borrowing books or getting free books).

- Clothing - mostly for the kids - we get a lot of hand me downs, and we need to keep it organized!

Future planning:

- Childcare.  I love our childcare.  Quality providers are NOT cheap.  In my town?  Preschool is even more expensive.  I will get around this by waiting until my son is 4 to go to preschool, so it will only be one year.

- Fitness.  I love fitness!  I have been really trying to use my YMCA membership more (dang it, STILL have a hurt knee from last week's Zumba class).  I really want to trim down and get into my wetsuit so I can do the triathlon this summer again.  But man.  It's about $380 for the training group AND the triathlon. Ouch.  So I'm thinking, can I get friends together?  Or can I maybe just do my "own" triathlon at the YMCA? (Pool, bike, run?)  Or walk.  Since I can't run.

So, how have you adjusted the budget in the last year?


Nevele said...

Our income was reduced by around 60% last year. We survived it because we always live below our means.

Marcia said...

Wow, that is very impressive! I hate that your income was reduced, but it is good that you weathered it. My company had layoffs, and at the same time they cut the pay of the lowest paid employees by 10% (basically the hourly employees lost their overtime). That was awful and I personally think directors, VPs and above should have also taken a pay cut.

Biz said...

Yep, comps are crazy in our neighborhood too. We have a 2 bedroom house 1300 sq ft. on an acre lot.

We bought it for $155,000 in 2001 - paid $18,000 down and our house is only valued at $98,000 due to there being only TWO comps in the last two years in our neighborhood - one sold for $69k and the other sold for $75k.

I finally was able to do a modification through my mortgage company, even with my husband out of work and we refinanced and we save $600 a month! Woop!

So even without the second job, we could live off my salary, but I plan on stock piling the cash from the restaurant. :D

Joanne said...

We are really trying to cut down on our recreational/food expenses to try and save some money for the wedding! It's hard because we don't really go out or spend a ton of money as it is, but I definitely found this post helpful!