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The end of the year is fast approaching and that means it's time to look at our finances. Since Couple Money was started three years ago, there have been a lot of changes with our financial system.
We've changed jobs, moved to another state, bought a house, and became parents. While we've done a pretty good job with keeping our expenses manageable, there is room for improvement.
2013 Family Budget
Today I want to look at our budget line by line, seeing where we can work on optimizing our biggest expenses.
The first step to adjusting and updating our budget is going back to our income and expenses for 2012, looking at the must-have, the wants, and the irregular bills that we need to account for.
I went ahead used Mint to sort through all of our transactions and if I need clarification on certain expenses, I verified it with our joint checking account's bill pay center.
I think being free and easy are the biggest reasons we use Mint. It’s easy for us as the data from our joint account are automatically pulled and Mint organizes it for us.
Let's start off with the biggest spending category – our housing. Right now are housing expenses are:
- Home Association Fees
I recently wrote about our housing bills and how they've changed. We're happy that our utilities have decreased about 10% in the last year, but we're not too happy to see the home association fees go up. At the next HOA meeting this week we'll find out if the fees are raised again for 2013.
For 2012, our electric averaged about $75/month and a median of around $65. During the summer we were running the air conditioning quite a bit.
Starting now and continuing for 2013, we'll be looking at lowering our heating bills for this winter and decreasing our energy costs in the summer.
For one thing that means checking for any drafts around the house to and then weatherstrip and caulk any leaks. The Edison Electric Institute estimates that getting leaks fixed around the doors and windows could lower heating energy needs by 10%-15%.
As for the mortgage, we have to wait a bit for a refinance to work for us. We'd still have to pay PMI would lengthen the break even point and may extend it further than we'd like. However if a streamline finance becomes available, we may be able to get a lower rate on our mortgage.
Food and Eating Out
The next biggest expense with our money budget is food which includes groceries and eating out. Right now for 2012 we're averaging about $517/month. Looking at some of most expensive months, it looks like summer time is when we go overboard (with the exception of last January's huge numbers).
While that amount is lower than the average food costs for a family, I know we can do better. Now that our weekly produce deliveries have wrapped up for this season and won't probably start again until April, we'll be doing more runs to the grocery store.
We'll also be putting our Costco membership to good use by taking advantage of deals for staples. The goal for 2013 is to get our monthly average to around $400/month total.
As for eating out, we don't have any plans to eliminate visiting restaurants, but instead we'll be more selective. To keep on target, I went ahead and created some alerts with Mint. All we had to do to get it set up was:
- Set up a monthly budget for our food expenses in different categories.
- Have Mint track the expenses and alert us through email if we’re close to our spending limits.
It took about 5 minutes to get that set up and ready to go. by the way, I separated our food budget for a couple of reasons:
- I wanted to make sure we knew where the food money was actually going. Paying more to eat better at home is alright in our book. Paying more to eat out because we were too busy to cook? Not so good.
- I also wanted to use Mint's ability to rollover balances. So if we allocated $100/month for restaurants, but one month we only spent $50, then $50 could get used another month. This actually reflects our spending habits as some months we take trips or we take friends out for dinner and spend a bit more.
As for our monthly net worth reviews, I'll also be sharing the grocery and eating out amounts, so you can keep tabs on whether we're doing well or not.
This has been a quiet budget drain this year. While we haven't busted the monthly budget with these purchases, I think we can significantly cut down on expenses here with better planning.
Some of the expenses are related to our
baby girl toddler, our cat, books, DVDs, and some of it is related to small house projects and shopping like storage shelves, and tools.
I created a House Projects and House Shopping List on Google Drive that shared with my husband. This will help us to stay on top of items we'd like to get and give us a way to track prices for them.
Spur of the moment shopping lead to bloated buys and it upped our grocery bills quite a bit. My goals is make sure we get some good deals with our purchases.
I also created the list online because it's hard to Mint to track everything in this category. Many times we make purchases from stores that we also use to shop for groceries (like Walmart or Costco) or electronics and baby supplies (like Amazon).
The balance right now for the student loan feels like it is barely budging. About 2/3 of the scheduled payments we make go towards interest. We decided to make a change; the extra mortgage payments we have been making regularly are now going to reallocated to help pay down the student loan. It'll all be automated through our joint checking account's bill pay feature to make sure we stay on track. That means we'll be making at least double payments throughout the year (though we'll be shooting for more).
In addition, I'll be working on developing another income stream to solely dedicated to paying down the student loan balance further.
Thoughts on Creating an Unstoppable Budget for 2013
I'd love to get your thoughts on building a sustainable budget that can help us optimize our income and expenses.
What has gone well this year with your finances? What do you want to improve? What is on your budget to do list for 2013?