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: |
| Home | -$1,649.79 |
| Kids | -$792.99 |
| 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!
The C.F.O. Mom Blog 
I’ve totally been there in that place where my monthly spending doesn’t match my income. It was frustrating because my budget always felt completely out of whack, but then I discovered YNAB (You Need a Budget). Have you heard of it? Oh my…in my opinion it’s the absolute best budgeting software (and philosophy) around – and I’m not getting paid to say that! YNAB has seriously transformed my finances by helping me curb my spending and by making me incredibly aware of my spending. The biggest thing it did for me was help me focus on spending only the money I had for the month so no longer was I projecting my expenses for the month and then hoping I have enough left over at the end to cover it all. I would get paid and then assign a job to each of those dollars until I got paid again. And as I did this week after week I began building up a buffer for certain categories so that when the water bill came or a car repair popped up, I had money sitting there ready to use. And with YNAB it’s like you’re using cash because you can always see how much money is in each category. It teaches you that if you don’t have money for something you don’t buy it. Or if you need to buy that item you can simply switch your funds around to roll with the punches. All in all, it really pushes you to not overspend. Gone are the days of forecasting yearly earnings and the dividing those by 12 to get my monthly budget income. I budget what I have in my account at the time and that’s it. As for credit cards, it treats them as cash so anything you put on the card is already spoken for in your checking account. I love the way they handle credit cards. Anywho, I could talk for hours about this! If any of this sounds interesting or helpful you should check it out. They have a free 34 day trial. After that I think it’s like $65 per year.
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I’ve received so many recommendations for YNAB. I tried the monthly trial but I couldn’t seem to get it to a point that it was more helpful than confusing. Lol. How long did it take you to really feel comfortable with it?
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A few months I think, but I also watched a lot of their training videos and talked about it with friends.
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First of all you need a big hug!
That was the worst part of the book for me. I did move to cash for a bit, then I began transferring weekly amounts to my debit card, now I’m back to using my credit card on a full time basis.
During the debit phase I only used the credit card for big, budgeted purposes so I got my rewards. I found it too difficult to resist temptation when I had the credit card with me otherwise. I had to take that journey as I was in a terrible relationship with my credit card.
I haven’t used YNAB but the benefit I saw of that system is exactly what Ernie mentioned, you can use your credit card like cash. This would allow you to track while still getting points.
The big benefit is those bonuses will now truly go to extras. Would setting a goal for the bonuses help e.g. bonuses would help.go on a family vacation?
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YNAB note: I also used their philosophy to improve my relationship with my money. Happy exploring!
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