Category Archives: Budgets

A Mind Shift

Before I submitted the offer and knew exactly how much the place would cost, I realized a mind shift was taking place.

Although I make decent living and have relatively low debt (student loans only), I wanted to make sure that I wasn’t spending a bulk of my income on the mortgage and association fees. So, unlike most people, I told my mortgage officer to put me for whatever will result in a similar monthly mortgage + HOA + tax & fees as much as possible after putting 10% down. Despite my mortgage officer telling me that I could qualify for $50k more than the number we were working with, that was my comfort zone.

But that 10% down number really impacted me. I started to view an extra $1,000 to equate to another $10,000 in property value. Even when I was dealing with much smaller amount, say $30 to take dessert and wine to a dinner gathering, I would think of that as $300, which was equivalent to 1 month HOA fees. $5 for lunch would be equivalent to $50, which is about my monthly electric bill. So on and so forth.

It isn’t exactly the same as compounding, but the power of money over time and what it allows you to do is the same.

Now that I have a hard number to hit rather than an elusive 10% down up to a certain amount, that 10% mind shift doesn’t really make much sense. But I try to think back to this mind shift each time I find myself enticed by desserts, take outs, and pretty baubles.

What are some of your money mind shifts that has helped you save? I would love to hear!

Love,

C

 

New Budget for July

It was only 2 weeks ago that I created a budget and 5 days ago that I shared it with the readers. As you know, I have started the house search process, which has thrown a wrench into that budget plans. To save money for home improvement projects and possibly the down payment (I figure I have been approved for what I’ve been approved, unless I need to get a reapproval in 2.5 months because I still haven’t made a purchase yet), I need to be more aggressive.

Here is the comparison of my June and July budget:

As you can see, rent, utilities, cell phone, internet, netflix, and car insurance are all fixed spending that I cannot control. I am hoping to reduce the electric bill next month with some new surge protectors that are supposed to reduce energy vampire effects, but I’d rather be safe by over budgeting. Most of the variable expenses have been reduced in budget.

Transportation: I am hoping that this will be lower but there are some talks of me being assigned a client engagement out in the suburbs, which would require the budget to be at this level, if not higher. Until I know for sure, I am not changing this budget.

Groceries/Food: I am hoping that I would be able to make this drastic reduction by relying on my current stockpiles and enjoying the produce from my garden. Based on how it goes in July, I may try to reduce it further to $100/month in August.

House fund: These are the items I end up purchasing for the house, such as energy saving surge protectors and printer ink. Since I am out of printer ink, this is where this budget will most likely go.

Hobbies: My new hobby will be to read my existing magazine subscriptions and to get ideas of home remodels/decorating.

Spending Money: This is the area that I am most nervous about. In order to stick with the budget I will need to make sure to bring lunch every day, limit outings with friends, and eliminate shopping altogether.

Oopsies: This is my buffer budget in case I receive a parking ticket, lose money (like I did this weekend), etc. It has the potential to become a slush fund so keeping it limited will help me stay on course.

I have more thoughts on this but this post is getting to be long, so I will share that another time. I hope you all have had a fantastic weekend!

Love,

C

When my mind starts wandering…

… boy does it wander.

The post that was published yesterday was actually written a week ago. Since I put that budget together, a few things have changed. I have found out that $150 for Personal Spending was too low and upped it to $300. That wasn’t so hard…

But that high rental cost really bothered me. I kept on thinking about it. Then the toilet leaked. This is the second time in the last 6 months that it has happened. The condo was built 10 years ago and 10 years is about the time when the appliances begin to fall apart. The landlord pays for the plumber but it always means some damage (however small) to my items and annoyance of working from home to meet with the plumber, etc.

That made me begin to wonder if it was worth it. Out of pure curiosity, I started to look at the condos available for sale in my neighborhood. I saw units that were nicer than mine obtainable with monthly mortgages less than my current rent. Then I became obsessed.

I always wanted to own some rental properties in my investment portfolio. Since there are numerous tax breaks for your primary residence, I always thought I’d live in a property for two years, make whatever changes needed to increase the value, then rent it out. I thought that I’d begin looking maybe in a year or two, but the real estate market in Chicago finally seems to be picking up and I am expecting the prices to start to rise.

Conclusion? Now I am shopping for my very first property. I have been preapproved by a bank, have started to work with a realtor, and have identified target neighborhoods. The assumptions the mortgage lender and I used is to keep my monthly mortgage+tax+insurance the close as possible to my rent. Now the tough part is waiting for the “perfect” property for me to become available and not get caught up in the outside activities (investors snatching up properties before I have a chance) and let that rush me into something that is not “perfect”.

This also means I need to redo my budget ASAP. Even though the mortgage preapproval was very favorable, I want to have enough cash to make any updates, especially if I end up purchasing a fixer upper (preferred).  I already have taken some actions to reduce the future expenditures and to increase income, which will all hopefully increase my savings. I will share some of those activities with you tomorrow.

Love,

C

Budget #1 — Spending

I think the common debate for any pf blogger is to determine whether to provide the $ figure of their monthly budget or to provide a %.  It seems that the trend is if you are anonymous then you provide a $ figure; if you blog under your name you provide a % so those who know you all of a sudden do not have information to your income information.

I am not really comfortable with either options. I plan on remaining anonymous but I also don’t want to see judgments from folks based on my earnings.  So, I will provide a mix… I plan on providing a $ for the expenditures and the various savings buckets in % with the remaining money.

So below is what has been set up for my spending budget:

  • Rent (Fixed): I know this is probably on the higher end for all readers out there aside from those in NYC. I have a 750 sq ft condo with a covered parking space in a relatively nice area. I know that I could get a lot more square footage for less money elsewhere, but I like the quietness of the neighborhood and that its close proximity to downtown means I usually walk to client sites.
  • Electric + Gas (Variable): I had originally budgeted $25 because that was the total that I was told to expect by my landlord. I am a bit disappointed by the high number and am looking into ways to at least reduce the electric bill.  My fondness for hot baths and showers as well as cooking (gas stove) probably will make reducing the gas bill improbable.
  • TMobile (F): The entire bill is actually just shy of $100 but, since I also use my personal cell as my work phone, my company reimburses me for 50% of my cost. I have an unlimited plan so the only overage I am charged is for international texts from my friends.
  • Internet (F): I use Clearwire and have decided to rent the modem each month rather than paying for it. I may decide to go with AT&T in the future.
  • Netflix (F): Basic cable is included with my rent but I still watch most of my TV shows through Netflix, streamed through Roku.
  • Health insurance (F): It’s a bit on the high end and I am searching to see if there are cheaper options available.
  • Gas/Transportation (V): This is probably much higher than I really use in a month but budgeted high just in case I receive a work engagement for a client in the suburbs, since the drive within 20 mi is not reimbursed.
  • Groceries/Food (V): I actually have a freezer full of food plus a fully stocked pantry and a produce garden. I can probably spend only $100 a month if I really wanted to reduce my expenses, but I like the safety of having stock pile, just in case. I also do couponing off and on, which requires some cash each week.

There you have it. Do you have any feedback or recommendations? Something that has worked for you to reduce cost that might be applicable to my situation? I would love to hear what you think.

Love,

C