Since the majority of my regular readers are close family and friends (hi, mom!), most of you are already pretty well aware that Scott and I are pretty committed to sticking to our monthly budget, managing our finances well, and living within our means.
Since I finished seminary (paid in cash), and we moved out of Grandma’s basement and both became full-time contributors to society with gainful employment, we’ve spent the last year and a half tweaking and perfecting our monthly/annual budget. In 2011-2012 we followed what we like to call the Modified Dave Ramsey Plan, setting aside a healthy savings of at least 6-months worth of expenses, cutting back wherever possible on variable expenses like eating out, groceries, entertainment, etc., and snowballing all our extra cash-flow on student loans. We had no consumer debt (which Dave Ramsey really targets), so we were able to pay off one of my three student loans, and Scott’s entire education, and then we spent the last few months of 2012 beefing up our savings account in preparation for buying our first home.
Since I do the money management for our household, I usually spend an hour or so on Fridays (my regular day off, on) making sure the budget spreadsheet is up-to-date, that all the numbers are jiving, and that we’re staying on track with our monthly spending. (I also try to stay on top of it during the week, but Friday is my day to really focus on it for an extended period of time.)
So, since I’m going to be out of town next Friday, and the following week is our closing on the new house (HOORAY!), I wanted to make sure I had a good handle on January’s figures, since the next time I really have some time to focus on it will be the start of February. I made sure the ledger was as up-to-date as possible, then went back to check the numbers to see if there were any adjustments that needed to be made to our monthly numbers before we head into the second month of the year (and our first month of home ownership!).
As I looked through the figures, it just seemed like something wasn’t jiving. It felt like we should be putting more into savings than what our budget suggested. I mean, obviously our budgeted housing expenses have gone up some in anticipation of buying a house, but they didn’t go up enough to justify the dramatic drop in what was going into our savings account each month, especially taking into account the blessing of increased income this year. So, I started checking the math.
And, that’s when I discovered it.
See, we pad each of our two cash-flow checking accounts at the beginning of each year, with $100 and $200 respectively, just in case there are bills that exceed the monthly budget early in the year (for example, sometimes the gas bill is higher than budgeted during the winter months and lower than budgeted in the summer months; or if a six-month premium for an insurance bill comes due in February that is budgeted accumulatively over the year). Well, somehow when we created our budget at the start of 2013, we put that $300 of padding into the monthly budget, instead of including it as carryover from 2012 into the accounts.
Read that last sentence again.
We had put $300 of padding into the monthly budget, instead of including it as a one-time deposit.
And, just like that there’s an “extra” $300 a month that we can be putting into savings instead having it just sit in our checking accounts, causing them to grow beyond what’s needed. Seriously! $300.
Now, not every Friday budget review pays out an extra $300 a month. But, I tell you what. That $300 makes a difference–a difference in saving, a difference in making some of those home-ownership purchases we’ll need to make in the next few months, and a difference in paying down the rest of our student loans even faster.
It kind of feels like today we won the lottery, without the risk of wasting money on a ticket.