Does Your Budget Have a Bike Lane?

Does Your Budget Have a Bike Lane?

Budgets help direct our spending, but by nature they constrain us. While that doesn’t sound very fun, these restrictions are for a good cause. By voluntarily limiting short-term spending, we can stay out of financial trouble and work toward achieving longer-term financial goals. Though it sounds contradictory, we achieve financial freedom by choosing to limit ourselves.

In theory, if we could predict all of our expenses then we could live on the bleeding edge (paycheck to paycheck) of our income and not have to worry. In practice, it ain’t happening — at least not long-term. ‘Life’ happens to us and our budgets.

If you’ll bear with me, let’s set a scene: Picture driving along a winding, coastal road. Nice, isn’t it? You should probably picture yourself in a convertible if you aren’t already. Better. Are you smelling that salty, sea air? Mmmmm. Now, think about that road. It is made up of asphalt, lane lines, maybe a rumble strip or Bott’s dots, a bike lane, a guardrail, and sits atop a hillside or cliff leading to that beautiful beach below.

You get to safely enjoy this wonderful scenery while travelling rapidly because someone at some point decided to put some paint on the ground, and for some reason you decided to follow said paint while you drive. Would it be more scenic if the guardrail wasn’t there partially blocking your view? Probably. Would the driving be more fun or exhilarating if the lane went all the way out to the edge of that cliff? Fun for some, scary for others.

You can probably see where I’m going with this. Let’s think of this scene metaphorically in budgeting terms:

The road or asphalt is life. Hopefully nice and smooth, but likely winding with ups and downs; potholes and debris, though infrequent, are to be expected from time to time.

The lane lines, dots/markers, and rumble strips are our budgets. They guide us along the road, keep us headed in the right direction, and help us avoid danger. Sometimes if we drift beyond the line, only a small correction is needed. Sometimes when you hit that rumble strip, things get loud and uncomfortable. The same goes for our budgets.

The guardrail is your emergency fund. It’s effective at keeping you from going down a cliff, but it’s painful. If you hit it, not only will your car be damaged, but so will the guardrail; both will be in need of repair. Same with our finances. If we need to tap into our emergency funds, it probably means we’ve hit a painful point of life. Once we free ourselves from relying on it, we might have some scrapes and bruises (dinged credit score, perhaps?), and our emergency fund will be low, if not depleted (dipped into that retirement account?), and in need of replenishment. Early in your career you may be young, poor, and driving an econo-box; it won’t take much of a guardrail to keep you from going over. As you progress in a career and get older, maybe you get married and have kids; your guardrail will need to be bigger and beefier to stop that minivan fully-laden with increased financial obligations.

What is the bike lane? I would suggest that this is a buffer you should create by self-imposing constraints on your spending and generally living below your means. It augments the typical emergency fund and is used more for unexpected expenses that pop up here and there and less for the “I just lost my job” emergencies. It may include ‘savings’ you have earmarked for other goals: vacations, car fund, medical funds, etc. If it is narrow or non-existent, you are rightfully going to be white-knuckling that steering wheel and focusing on avoiding the guardrail above all else — not very fun. The wider it is, the safer you are, the less you’ll stress, and the more you can enjoy the beautiful scenery of life. If you have to swerve to avoid a pothole or boulder here and there, you’ve got extra space — no biggie!

Some might wonder where to draw the line between bike lane funds and guardrail/emergency funds or how distinct that line should be. J & J have previously given their take on answering “When is something an ’emergency’?” It is going to be different for everyone and their unique circumstances. Regardless, you won’t be able to build that buffer or widen your bike lane if you are spending every penny that comes in. Eventually, your lifestyle and budget need to blend to allow you to live on less than what you earn.

What’s so special about paint on the ground or reflective, plastic trapezoids? These simple, man-made items when appropriately placed and properly followed, allow us to safely do and see more. Similarly, we need to find man-made or artificial constraints for our budgets that will allow us the freedom to do more. Here are some I use to maintain or grow my financial “bike lane”:

  • 24 vs. 26 – I get paid every two weeks, and that means 26 pay periods in a year, yet I budget as if I get paid twice a month. That means twice a year I get a little extra. Maybe that money helps me catch up if I’ve overspent, replenishes my emergency fund, pays for a vacation, or whatever. I specifically don’t budget for it, so I can use funds where needed when it comes.
  • Frugal Months – tighten those screws every once in awhile and get back to basics. It’s sort of like hitting the reset button mid-year, and hopefully it helps you save a few hundred here or there.
  • Hidden Savings – $200 from every paycheck goes to a separate savings account that isn’t part of my regular budget. Though I know it is there, I’ll go months without thinking about it. It is always nice when I remember it, log in, and see that I’ve got a little extra I haven’t been planning on. Some are against this method, but it works for me.
  • Beef Up Your Tax Refund – Claiming fewer tax exemptions will cause you to take home less each pay period, but it will result in you learning to live off less and getting a bigger tax refund.

Alone each one might not result in huge savings, but altogether they result in a meaningful amount for our family.

Thanks for coming along for the ride.

What do you do to ensure you live on less than you earn? Do you have a bike lane in your finances?

Making Money As a Stay-at-Home Mom

Making Money from Home

When TJ and I started our budget, I had a hard time accounting for every single purchased item. Coming home from a shopping trip started to feel like an interrogation, even though I’m sure TJ didn’t mean it that way. “What did you buy? How much was it? Did you use a coupon? Can I see? Do we really need a Tiffany blue casserole dish?” (Answer: yes, always.) I felt like I was suddenly on an episode of Law & Order every time I bought groceries. After an open and honest discussion about my feelings one day where I definitely didn’t raise my voice or cry hysterically, we created my own small account where a certain amount of money was deposited every month that was not accounted for on the budget. TJ has lovingly dubbed it “Ashley’s special money.”

My special money was really nice. I could spend a little cash each month on whatever I wanted, and TJ couldn’t say a thing about it. That giant 36-pack of Diet Coke from Costco was all mine at last, no questions asked. The thing is, while I liked having my special money, I didn’t like how quickly it ran out each month. TJ and I had agreed once I became a stay-at-home mom that anything extra I earned on my own could be added to my special money account free and clear. We still had our budgeted amounts for date nights, entertainment, and eating out, but because we were saving for a home at the time, those amounts were pretty much only high enough to warrant some Del Taco and a Redbox. (And even then, we used that “DVDONME” promo code with every credit card we owned, which as you know by now equaled many free movies for the Nicholes fam. TJ never really recovered when that promo code stopped working…) I began scheming for ways to boost my fun money funds.

I think it’s safe to say most stay-at-home moms wouldn’t say no to some extra cash each month. Maybe it’s out of necessity for your budget, maybe you’re like me and just want a little more freedom with your spending. Personally, in addition to not loving the straitjacketed feeling our budget gave me, I really missed working. I noticed the part of my brain that used to function as an educated adult was shrinking like a prune the more I watched Baby Einstein and jiggled keys in front of my kids’ faces. I love being a mom, but I wanted to find a way to exercise that part of my brain each day as well.

I had a master’s degree where the coursework had involved a lot of writing, not to mention all my undergraduate years writing term papers and creative essays (I took a course devoted exclusively to science fiction in college — nerd alert). Why not try my hand at writing? I started with and wrote for $0.015 pennies per word. It almost started as a joke between me and TJ. “Hey Ash, wanna write an article real quick so we can order a pizza tonight?” But after just a few months of doing that on the side, I had a not-so-shabby stash of cash to add to my special money account. Then one day I helped my husband write his end-of-year work review, which caught the attention of one of his coworkers. He ended up hiring me as a content writer for his web developing side business. After that, I opened up my own business account and had a decent amount of money coming in each year, all on my own time and from home.

In addition to writing on the side, I’ve tutored students in every grade in subjects ranging from language arts to algebra. Tutoring is an awesome way to make some extra money, and tutoring can command a high rate when you’re decent at it. I love working with kids anyway, so it’s a total no-brainer to pick up those jobs every now and again. Plus it gives me an excuse to talk about all things teeny-bopper without being mocked. Harry Potter and Divergent and One Direction? Squee!

Perhaps my favorite way to earn some side cash, though, is by going to garage sales and thrift stores. Why, you may ask, would I publicly wear a fanny pack stuffed with cash and drive around to 20 different neighborhoods on a Saturday morning? Other than to look cool, I find hidden gems and sell them online. There are many different platforms to sell used items, like yard sale Facebook groups, OfferUp, Craigslist, or eBay. Some charge a small fee, but it’s amazing the extra money you could make on an otherwise uneventful Saturday. I’ve picked up things like GPS watches, textbooks, Lego sets, and video games, all for just a buck or two each, and turned around and sold them all online for hundreds of dollars. It’s a pretty awesome way to quickly and easily pad that special money account.

Extra money gives me the freedom to get special gifts for my family, take friends out to eat, or buy that Sephora makeup I’ve been dying to have, all without any guilt that I’m robbing our kids’ college funds or 401k potential. I have a lot of fun with all my little side endeavors, too. Otherwise, quite frankly, I wouldn’t be doing it.

If you’re wanting to earn some extra money on the side, whether or not you’re a stay-at-home mom, I’d suggest tapping into the earning potential of your natural talents. What are you good at? What did you study in school? What skills and knowledge do you possess that others don’t and would pay money for? You may be surprised at what comes to mind.

Do you earn income from home, and if so, how’s it working for your budget?

Boosting My Tax Refund… On Purpose

Maximizing My Tax Return

Back in May 2012, I quit my first ‘real’ job, and I started working at my current company on the last day of July. During those two summer months at home, we were blessed with the delivery of our first child. Once I returned to work, I was greeted with…

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