I decided to look into Gail Vaz-Oxlade’s book “Debt Free Forever” as recommended by ML from Saving Without Scrimping. I was curious to see if it would provide me with some insight to my dilemma of feeling like I don’t have enough. One of the exercises proved to be pretty eye-opening. In the beginning of book, she asks you list all your expenses and all of your income for the last six months to see discrepancies. I figured that there would be with my finances given that I know we have been over spending on food. Here’s what I discovered.
Over the last six months, we have spent less than we made! Yay. According to mint.com and my trusty excel spreadsheets, we have saved $758.88 more than we have spent. Not a huge amount, but I was happy to see a positive number. However, when I subtracted the average spending we have done over six months from our average monthly income, it revealed that we are spending a lot more than we make a month! I am still trying to figure out how to calculate what percent more we are spending a month. I keep getting 72% more, but there is no way that’s correct. I think. Maybe it is! Yikes. Here’s a summary of how much we were over on average each month by category:
|Budget Category||Over budget by:|
|Gym – mint.com categories: Health (Medical) & Fitness||-$343.76|
|Auto & Transport||-$287.90|
|Food & Dining||-$262.16|
|Financial (IRAs/College Funds)||-$226.71|
|Other – this includes the mint.com categories: Shopping/Personal Care/Entertainment/Taxes/Other||-$18.35|
|Bills & Utilities||-$2.84|
This is doesn’t include random cash withdrawal throughout the month. On average, we used $774.83 in cash on who knows what! And no, I don’t have a “cash” budget line. What does this tell me? We are living above our means in a way and are definitely overspending. What a mess. It is amazing what you discover when you really start examining your finances!
You are probably wondering how we are not up to our eyeballs in debt to make up the difference. After examining the numbers for a while, I remembered that my husband gets quarterly bonuses throughout the year. These bonus are not factored into our monthly budget; the only expense budget to pay with his bonuses is our car insurance. Since they are not guaranteed, we pretty much earmark them for items we can do without if he doesn’t receive them (travel, vacations and home maintenance). Or so that is what I thought we are doing. After examine this, we probably are subconsciously relying on these bonus to supplement our overspending. (It probably not a coincidence that I am feeling “poor” as his last bonus was in April and he is possibly due to get another one in July.)
I also can blame credit cards for our overspending. We use our credit card for all our daily expenses to take advantage of cash rewards. Usually I move funds from our checking account to pay off the credit card on a daily basis. For most days, there’s enough to pay off the entire balance. Towards the end of the month, sometimes there’s not enough. It’s not comfortable but it usually works out because we have been lucky to have the buffer of my husband’s bonuses. This is definitely not an ideal way to handle our finances! Like my food post, I am realizing this “CFO mom” needs to really find a better way of doing this! What do I do with this new knowledge? I really hate using cash only! I am too busy (maybe too lazy if I am being honest) to manually track each dollar. Maybe I just need to suck it up and do a cash only month. It was painful to just write that! Don’t make me do it!
Is it necessarily a bad thing that our monthly spending doesn’t match our income? I never carry a balance on my credit card for long enough that I have to pay interest. I have an emergency fund and I’m slowly working on paying off my house. If it is all kind of working out, what’s the harm? Maybe I just pretend I never headed down this rabbit hole! I’m very curious about what you think!