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11/10/2014

Budgeting is like magic — goals we’ve accomplished

When we applied for Project Money we identified 15 goals we wanted to accomplish.  Let’s just say, there was a lot to fix in our lives.  The past 6 months have been transformative.  If you’ve been reading our blog and feel like you have a lot to fix, you can do this too.  Start small — that’s what we did.  Last March we got 3 sheets of paper and started tracking our spending.  Look where we are now on our first 7 goals:

#1  Learn how to budget:  We started by tracking our spending.  Then we set financial goals (like paying off the car loan in 1.5 years) and did the math on how much we’d have to save a month to meet our goals.  We set up automatic transfers to our new sub accounts so we are on track saving for our future expenses.  We track our numbers using a budget app, and the budget worksheet from the Summit website (To download, go to the “Calculators and Worksheets” page and scroll down to the “Financial Worksheets” tab.  Click on “Budget Worksheet.”)

#2  Pay down our car loan:  We started at $14,834 and paying $600/month.  Without Project Money, we would be at $11,234.  We refinanced and pulled out our remaining flex account money to get our current balance down to $8,202.

#3  Rebuild our savings:  We are 19% of the way to our $15K goal.  Last December after we paid for Christmas, our $13K biannual tuition bill, and annual insurance premiums there wasn’t much left in our piggy bank.  This December we will pay $6990 in tuition, and still have $14K saved for our June tuition bill.  Plus we’ll have over $5K saved in sub accounts for future expenses (oil changes, summer babysitter, clothes, haircuts, gifts, tax accountant, etc) and over $2K in emergency savings.  

#4  Re-evaluate retirement savings:  This is a big TO-DO on our list.  

#5  Establish a meal plan/budget:  our meal “plan” is still a bit random, but we are eating healthier.  We’ve cut our grocery costs, stopped eating out, and have been packing lunches for work.  Before Project Money we averaged $940/month on groceries and restaurants.  Now it is more like $510.   

#6  Prioritize home repairs and establish dedicated saving account for repairs:  we live in an old house that seems to be constantly breaking.  We haven’t prioritized our repairs yet, because there are just so many on the list.  We did start a sub account, and we’ve been saving $40 a month for repairs.  We are saving $83 a month for a new dishwasher (our current one is at least 17 years old).

#7  Start 529 education accounts for the kids:  In August we transferred the money from the kids’ CD accounts to new Edvest 529s.  We automatically deposit $50 into each account monthly.  It took only 30 minutes to open the accounts online.  In four months Ellie’s account has accrued $79 in increased value.  

Takeaway for the Week

What is more important than we realized:  we never realized how much of our monthly spending was on incidentals.  Tracking your spending will help you find some obvious things you can change about your own spending.  

What is easier than we thought:  not spending.  We buy gas, food, gifts, kid supplies, and not much else.  Switching from plastic to cash/debit for purchases has been very helpful. 

And, check out our November video on teaching kids about money.

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