After making some good gains in the past year paying off several thousand dollars in medical debt and other bills, and learning to adjust for the high price of childcare, Mark and I were — again — back to square one.
A car broke down, requiring the purchase of a new/old peppy lil number dubbed lil green. We fled ‘ol slummy and moved to a new house in Oklahoma City.
Those two events wiped out our savings.
I found this totally unnerving.
My friend Rachel over at News9 has also been thinking about personal budgeting and family finance these days. She approached me to see if I would be up for participating in a news story about what it takes to make a family budget work. She was having a hard time sourcing the story. It’s like everyone wants to front that they’re livin’ large.
Haha. Not me!
Shameless, per usual, I said yes. The story should be running this week!
As part of the report, Rachel introduced me to Erin Johnstone, a CPA who struck out on her own and created the business Vivid Numbers. Erin helps people start companies, does taxes and connects businesses with outsourced accounting services. She wants to help customers improve their quality of life.
So we’d just wiped out our savings account, and I was feeling like the queen of the utter loser club when I called Erin and delivered the grim news.
She focused the conversation on moving forward positively. She complimented us for making key choices — like not having credit cards or credit card debt and driving inexpensive cars we, not the banks, own. Her encouragement rebooted my mind. I sent her our November budget.
Here’s what she had to say:
I don’t necessarily see any items that appear out of line in your budget. There are definitely some additional items that should be added to make sure they don’t break your budget or your savings when they occur.
Yay! But what?
After a conversation and a meeting that followed, Erin gave me quite a few things to work on and helped me to prioritize.
No. 1 right now includes setting up our paychecks to deposit a greater amount into savings for items we hadn’t really considered saving for. We had just kind of gloop schlooped our one savings deduction per month for ’emergency money,’ which could mean anything, but mostly meant car stuff, appliance stuff and medical stuff.
We should also be saving for regular expenses — like buying clothes, and even gifts, she said. Then when we need clothes, or to buy gifts, we will take money out, in cash, to purchase them — hence saving more, cuz it hurts when that cold hard green slips away. Now, I run out to shop for myself and the kids or for friends when we get a break from paying for childcare (since Mark is a teacher and we employ a sitter, we get little breaks throughout the year). And I’m kinda like “FREEDOOOOOM swipe swipe swipe!”
OK – it took me a long time to get to this list because words are my friends. Here are some additional savings we’ll be setting aside going forward:
1. Auto repair-$50/month
2. Electronics upgrades-$25/month
3. Clothes/gear -Hmm…this is a toughie. For all of us, $100 – $150/ month.
5. Vacations-$50-100 per month…or more, because we’re all about experiences over stuff!
With Erin’s help, I learned that even though we’re operating on a pretty thin margin of error, we can manage to squeeze a few hundred more into a savings account with just some initial thought, math, a little paperwork and a willingness to give it a go.
What’s going to be key is nailing down that exact amount.
Automating everything I can works best for me and saves trips to the bank.
The trick will be to automate without going into financial auto-pilot.
It’ll be a challenge.
I’ll let ya know how it goes.
Have you saved per month or per paycheck for things like gifts, clothes, vacations, electronics, etc? What’s your magic number? Have you tried saving for these irregular expenses and then using cash when they come up? What’s that been like for you? What have I missed? What should I be doing? Send me a note or leave a comment!
I try to write about our effort to save, survive and thrive each Monday in the category Money Madness. Cold, hard green. Bookmark it bay-bay.
Thanks for reading, xo’s.