Why It’s Time to Rework the Budget

by Kay Lynn

CSU's Budget Crisis

I spent some time yesterday reworking our monthly budget.  It was no longer possible to stay in budget for some of the categories.  Even though adjustments are made each month, it got to the point I needed to redo the template.

There’s another reason driving the new budget which I’ll share with you a little later.

Higher Prices

Can you believe how high gasoline prices shot up this month?  They’ve gone up an average of 36 cents a gallon here in the past two weeks.  With gas rapidly approaching, and in some cases, exceeding, $4 a gallon I needed to increase this category to $220 a month.

Grocery prices have also been gradually creeping up.  Not just our food, but the dog and cat foods as well.  That meant upping the grocery category budget.  It’s now at $600 a month. That might seem high for two people but it’s us plus two pets and includes all household items; not just food.

Our internet service provider upped the bill $3 this month.  We don’t recall getting any notice, just a new number on the monthly statement.  I will be looking at making a change here to a lower cost option.

Last but not least, a promotion ended for our Dish contract, so that bill went up $20 a month.  Was it ever going to end?

Goodbye Sallie Mae

The big reason I needed to redo the budget was because I won’t be making debt payments anymore.  Yep, Sallie Mae is getting paid off this week after many, many years.

We still have a mortgage payment but it’s only $514 a month which is a bargain house payment in this part of the country.  At this point, we’re not focusing on paying off the mortgage.  There are other plans for the money which you’ll hear about next week when I can really say, “I’m Debt-free!”.

Although I’m complaining a bit about higher prices, I feel fortunate that it’s not a hardship to make these adjustments.  I feel sorry for someone who might not be able to allocate more money to any budget category because it just isn’t there.

Have you had to redo your budget this year?  If so, what was the reason?

photo by coolmikeol

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Jai Catalano February 20, 2012 at 6:09 am

I want to go say good bye to FM. Where do you guys live? I live in NYC and have a house in NJ. We don’t live there because it’s just not safe and what we both want for the family. I don’t have to pull much out to keep it afloat but selling it would be TOUGH…

Kay Lynn February 20, 2012 at 12:30 pm

We live in San Diego. Our house payment is only that low because we put down $350K from selling our previous home.

Michelle February 20, 2012 at 6:23 am

We’ll have to redo our budget when I get a raise this summer and when my student loans become due. It’ll be a nice revision though! I can’t wait to wipe out that debt.

Kay Lynn February 20, 2012 at 12:31 pm

I’m sure you’ll do it much faster than me. I just let it hang around way too long because the monthly payment wasn’t big.

Jackie February 20, 2012 at 7:48 am

That’s great about Sallie Mae! (Can I convince you to write a guest post about it for my site?)

I rarely buy gas (like once every 3 weeks or so) so to me it always seems like gas prices are jumping around like crazy. I do see an upward trend though!

Kay Lynn February 20, 2012 at 12:33 pm

Hi Jackie, I did promise Brad at Enemy of Debt a post about becoming debt-free. If I can vary the content, I’ll do two!

I fill up about every 10-14 days; depending on what we do on the weekend. It’s been crazy!

Jackie February 27, 2012 at 7:37 pm

Here’s hoping, because you can never have too many debt free posts!

Money Beagle February 20, 2012 at 8:25 am

Definitely had to re-work the budget going into 2012. The good thing for us is that I had been over-estimating the monthly average on our gas bill, so even though we had many of the same nickel and dime type increases, we were largely able to cover it by cutting back the gas fund a little bit, as that had built up quite a balance. And the mild winter has definitely helped ensure that wouldn’t come back to bite us in any way.

Kay Lynn February 20, 2012 at 12:35 pm

Money Beagle, I was overestimating some categories but put the extra towards debt payment at the end of the month. The mild weather has definitely helped with our power bills — much lower than last winter.

krantcents February 20, 2012 at 8:32 am

I haven’t done it yet! I will as soon as I establish a run rate. This year may be the year to get new or newer cars. In both cases, I need to make some changes.

Kay Lynn February 20, 2012 at 12:35 pm

Krantcents, what do you mean by a run rate?

Paul @ The Frugal Toad February 20, 2012 at 1:06 pm

Gas price of $4! Wow, I just checked my GasBuddy app and Costco in Phoenix is at $3.45. When I notice prices going up I automatically try to cut back spending to account for it.

Kay Lynn February 20, 2012 at 7:14 pm

The closest gas station to us is $4.07; Arco is $3.95 but all the rest around there are over $4.

Dannielle @ Odd Cents February 20, 2012 at 3:50 pm

Yes. I had to redo my budget, so that I could get some steady savings going. This year I have a savings goal, that I intend on reaching!!

Kay Lynn February 20, 2012 at 7:13 pm

Dannielle, good luck with your savings goal.

Marissa @ Thirtys Six Months February 20, 2012 at 9:59 pm

First of all- Congrats!

And second- I had to look up what Sallie Mae was. We don’t have that in Canada.

Kay Lynn February 21, 2012 at 5:53 am

Marissa, sorry I didn’t explain what Sallie Mae was; thanks for reminding me that other countries don’t have the same financial institutions and terms.

SB @ One Cent At A Time February 21, 2012 at 4:50 am

My yearly budget remains mostly unchanged but the monthly budget takes hit more than once in a month. Small adjustments in budget are needed anyway.

Kay Lynn February 21, 2012 at 5:54 am

SB, yes there is fluctuation month to month. I am so excited to be making such a big change in the budget.

Hack @ Smart Money Hacks February 21, 2012 at 5:30 am

Congrats on being done with Sallie Mae! We didn’t make too many adjustments to our budget this year, but may revisit it around June.

Hank February 21, 2012 at 5:44 am

It definitely makes sense to relook at your budget every so often. The same can be said for your investments too. You should definitely set aside time to revisit them both.

Newlyweds on a Budget February 21, 2012 at 12:40 pm

I can’t wait to meet you in person!

That is sooo exciting about your budget! I don’t really consider the mortgage debt either.

Wealth Artisan February 21, 2012 at 5:57 pm

Congratulations on ridding yourself of Sallie Mae!
Your new budget seems completely reasonable, and I wish you all the best in maintaining it! I’m sure you’ll do great!

Mayor of Humbleville February 21, 2012 at 6:04 pm

Greetings Kay Lynn!
Congrats! We had to do a little editing to our budget as well, but I think the real challenge will be sticking to it!
Humbly Yours,
The Mayor

Kris @ Everyday Tips February 21, 2012 at 6:44 pm

My budget is ever-evolving. These kids are eating me out of house and home, and they also have these school trips that seem to pop up! Then, we had some unexpected medical expenses that exceeded my original budget. So, either I am a really bad planner, or my life is just too crazy right now. Regardless, I need to sit down and figure things out soon.

Great job on the low mortgage payment by the way!

Dustin @ Financial Knowledge February 24, 2012 at 6:54 pm

I cannot wait to pay Sallie off. She has been a burden on my finances for most of my adult life. I really wish that some guidance counselor, or my parents, would have sat me down and told me how much I was going regret borrowing as much money as possible.

The cold beverages weren’t that good!

Jennifer April 6, 2012 at 11:16 am

Wow! I live in San Diego, I am a single woman, and I am just now jumping into the real estate market. I am buying an entry level 1 bedroom condo and my mortgage with taxes and HOA is $1015 a month. I don’t have a college degree, but I do have some college and 10 years working experience ( 6 years in a mid-senior level profession) I don’t have kids or pets and just trying to save and be debt free, trying not to take vacations, and would like to pay off my mortgage in 10 years ($125,000)

If anyone can give me advice on what I could do better with budgeting or give me a different perspective. What would you do differently at my age?

28 Year Old – Single Female
Gross Income: $3937/mo
My Net Income: $2739/mo

High Deductible Health Insurance (Deductible of $1500) Cost $750/mo that company gives me $750/year into a savings account
I have $1500 in my HSA Account

Contribution to 401k w/Company Match – $295/mo or $3540/year
Total of $2845 in my 401k – So far a personalized return on 8.93%

My Bills/Budget:
Car: $480 (Lease – Get a new car every 3 years, never pay for maintenance, its included in the lease)
Car Insurance: $125
Gas: $100 (I work from home, so I only pay for gas for errands and lea sure)
Mortgage: $1015 (Includes taxes and HOA)
Credit Card Payment: $300 (Balance $3500 – 0% Interest)- Paid Off This Year
Food: $260 ($65 Week)
Total Expenses: $2300 / Month

Emergency Fund: $12,000

Internet, cell phone, gym membership is paid by the employer.

As you can see I am living paycheck to paycheck, and any extra money I have after my budget I pocket in my emergency fund or let it sit in my checking in case I go over.

I am about to switch to a new industry and my salary will increase to
$5416 Gross / $3900 Net… medical premiums are paid in full, and they do match 401k.

I will have an extra $1600/mo… any suggestions on what I should do?! Should I increase my 401k contribution?! Pay off more of my mortgage each month?! Keep stashing away the money so I have more liquid?!

I am not very good with the stock market, it was a big loser for me…

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