Project 2020 - February 2020 Review | Making Significant Strides
Still not at my goal - but this month, I only went over my budget by 9.61%! That’s huge. I spent $3,781.44 compared to my goal of $3,450. This is a decrease of 39% YOY (spent $6.2K last February) and 42% MOM (spent $6.5K last month - see full review here). That’s the good. Now, here’s the bad. Having kids is expensive - we are now absorbing $1400 extra in childcare costs each month, and my base salary went down when I accepted this new job (my total comp went up 10% but the variable component only gets paid out every quarter which will be a new adventure for me on the budgeting front). So, what I’m saying is that I need to cut my overall budget to account for these new changes.
First though, I want to review what went well this month:
I cut my clothes/other random crap spending to $12 this month (budgeted $250)
I kept groceries within my $750 budget (came in right at $739 - even with family in town at the end of the month)
Kids came in under budget at $273 ($300 allotted for the month) and I managed to buy both the older boys new helmets for their bikes with that money in addition to all the normal things
Personal care came in at $0 this month!!! Down from $700+ last month - this is amazing and a huge testament that paying attention to things allows you to change them
Now, for the things that went a little off course:
I overspent by nearly $150 on Food/Entertainment ($397 compared to $250 budget) - Renato’s birthday was this month and I spent over $100 on our date night for his birthday. I had planned on going to dinner somewhere that we had a gift card, but he wanted to do something else. Judah’s birthday is coming up this month, so I just have to be careful on this front.
I overspent on healthcare by $573!!! ($673 compared to $100 budgeted) - I rented the hospital grade breast pump for 6 more months which cost $450 and also paid the yearly fee for both Judah and Levi for our pediatrician which was $199. Both of those are one time fees so this should go down next month.
I overspent on household goods by $450 ($550 compared to $100 budgeted) - we are refinancing our home (which will save us $300 per month - yay!) and the $550 was our deposit on that new loan. This is an investment on a longer term savings
I overspent on subscriptions by $130 ($384 compared to $250 budgeted) - I’m still getting charged for our JCC subscription and I paid my final month of Verizon so this should come down by $180 in subsequent months. Should go down by $78 this next month and then an additional $105 in April when the JCC comes off.
So here’s the rub. My two paychecks each month (after health insurance and 401K savings) come in at about $2,500 each. Each quarter I have a commission component of around $10K ($7K after taxes), but I don’t want to budget for this since it could technically not happen and also because it’s hard to budget for something that shows up so infrequently.
I put $2,500 each month into my joint account with my husband - this covers our mortgage, childcare, insurance, internet, utilities etc (he also puts in $2,500 each month), and then we also put in any monetary gifts we get from family throughout the year into this same account. That means that in reality, on a monthly basis, I have $2,500 to spend on monthly needs and also to pay down my debt. With that in mind, I need to trim down my “goal” budget pretty significantly. I would like to be putting about $1,000 towards debt - which means that my actual monthly budget needs to be pretty close to $1,500 all in. That’s a $2,000 cut compared to my old ideal budget, and it’s also a 84% decrease compared to my average budget last year per month (which was WAY too high at $9,800). So, how am I going to do this?
Going through the categories that I have in my budget I’m going to basically have to slash things across the board for now:
Charity —> going from $50 per month to $0
Food/Entertainment —> going from $250 per month to $150
Gifts —> going from $100 per month to $50 (this is going to be tough in March - it’s my son’s birthday and my best friend’s birthday)
Groceries —> going from $750 per month to $500 (this one is going to be hard!)
Healthcare —> going from $100 per month to $50 (this has been way over the past two months, but I’m hoping I can get it in line)
Household Goods —> going from $100 per month to $50 (this is usually just our pest control which only happens once a quarter, so I’m hoping this is an easy win)
Investment —> going from $600 per month to $0 - for now. This is an important one, but it’s more important to get out of debt first
Kids —> going from $300 per month to $150
Personal Care —> going from $400 per month to $50 - have to try to skimp on this as much as possible in the coming months while I mitigate the debt I’m in
Subscriptions —> going from $250 per month to $150
I will probably miss the mark on this by A LOT in March. I know I’m already off in the gifts category. I bought my best friend flowers for her birthday to be delivered to her school and they were more than my entire gift budget for the month. That being said, I’m going to give Judah only things that he needs for his birthday - new shoes and new underwear - since his grandparents will shower him with gifts. Food and entertainment will also be a bit out of whack since my brother was here at the beginning of the month and I covered a couple of meals for everyone. But I can’t let this missteps at the beginning of the month derail me for the rest of it. I can and will get back on track and I’ll have to do it with some creative meal planning, waiting to buy things in subsequent months, and probably continuing to use some savings to pay down debt in the meantime.
The silver lining is that I do have savings to fall back on. I have plenty built up and can use it to cover my overages as I adjust to this new lifestyle. I don’t want to do that forever, but I will feel pretty good if I can cut my expenses this month by another $500-$1000. If I get in under $2,500 in expenses for this month I will feel great about it. And then I’ll focus on trimming even further for the next month. So realistically I would say that my goal is to spend $2,500 this month and then ramp that down further in April and May. At the end of April I should also get my first bonus from this new job, and we should be able to save on one mortgage payment since we’re refinancing our home and it should close then.
I feel really good about the progress I’ve made so far - February was the lowest I’ve spent in a month in over 14 months. I will continue to push on this front and I will hit my goal of paying off all my debt, getting to a positive savings rate for each month, and freeing myself from the worry of constantly spending more than I earn.