Okay, 2015 can officially start… NOW. We’ve got a budget in place so we’re ready, only 5 days late or so. To be fair, we technically got our budget all squared away on January 2nd. But writing about it today makes it feel so much more legit. Our January budget is by far the mother of all the monthly budgets.
Here’s a brief summary of our budget planning session. First, we had to look at 2014’s budget and see where there was too much and too little allocated. Then we ate some Starbursts. Then we had to agree on a savings goal. With that goal in mind, we then looked at our non-discretionary categories (rent, tithing, utilities, insurance, etc.) and set those, since we already know those numbers and there’s very little wiggle room. Then we ate some Swedish Fish. Then came the discretionary spending, which includes food (grocery and eating out), vacation, and our secret weapon, the Everything Else category. And since it’s the beginning of the year, it meant recalculating all of the individual categories that make up the Everything Else pool. Finally, we had to deliberate and adjust numbers here and there to make sure our savings goal wasn’t affected.
It took hours. There were lots of incorrect mental calculations followed by one of us pulling up the calculator on our phone. By 2 a.m., Johnny was actually pacing our living room. It was weird. But we’re super motivated now that we have it done.
And now this is the part where we share our hours of talking, miscalculating and recalculating, and budget entering with all of you! I’ll include last year’s budget change to help reflect the changes this year. So here you have it — the OFB January 2015 budget:
January 2015 Budget
Utilities: $395 (-$30)
Food: $500 (+$50)
|Personal & Clothing: $120 (rolls over monthly) (+$12)
Everything Else: $305 (-$35)
Gifts: $145 (rolls over monthly)
Vacations: $200 (rolls over monthly)
Total Expenses (minus rent): $2011 (+$688)
Church/Charitable Donations: 10% of gross income
Savings: at least 25% (-15%) of net income, but planning on enough side income to have saved 50% at the end of the year
And now for a few explanations…
Why did you exclude your rent?
Living in NYC, our rent is a bit of an anomaly (major understatement) compared to our peers in the rest of the US of A. To give you an idea, it’s more than twice what we were paying in Utah. Yeahhh. But that just means the rest of our budget will be that much more essential this year.
Why is your budget so much more this year?
Well, it isn’t really (excluding rent). But this year we’ve included our yearly expenses as part of our monthly budget. That includes vacation and gifts (for ourselves, Sally, and all of our relatives for all holidays and birthdays), which in the past has been separate from our monthly budget. Read below for how those categories work.
Why do some of the categories roll over?
These are categories that we have for the whole year and that won’t be consistent from month to month. Our Personal, Clothing, Gifts, and Vacations is for all of 2015. What’s listed is the total we’re allotted, divided by 12. For vacations this year, for instance, we’re planning to spend $2400 (down from $4000 last year since newborns and big vacations don’t jive). But divided up, it only shows as $200/month. Make sense?
How does the Everything Else category work?
Well, to keep our budget from feeling too tedious, we stick some of our discretionary spending into a lump sum category. We can spend different amounts in those subcategories from month to month (more on Dry Cleaning this month, more on Baby Supplies the next) as long as we keep the total number under $305. It allows for flexibility and works better with our unpredictable lives. Still want more info? We did an entire post on it here so have at it.
A few other things worth noting:
- I brought our food budget up $50 because groceries are more expensive out here. Even still, it’s going to take major planning on my part to stay within that budget.
- This time last year, we listed that we’d be saving 40% of our net income. This year everything included, we’re at 25% net savings for the year, both because I no longer work full time and because of the increase in our cost of living. But with our side income from blogging, freelance writing/design, etc., we’re (hopefully) planning on that number being closer to 50%, which we’ll discuss sometime in the near future.
- We no longer have car insurance or gas to worry about, but our transportation will be about $200 — to take the subway/bus everywhere! It also allows for one or two cab ride splurges a month, like when I go into labor or something!
- Finally, after 7 and a half years of marriage, two college degrees, one and half children, and $20k in student loans paid off, we’ve cut the cord on cable. No more live TV for us! We’ll do a more in-depth post on this later. But in short, it didn’t fit our NYC budget, it cut down on our productivity, and we’ve found other (less expensive) ways to stay up to date on our favorite shows. This was a MONUMENTAL decision for us, as shown by this post. But it’s done, and we haven’t regretted it (yet).
And that’s our January budget, with every little detail we could think of! Have you gotten your January budget squared away? There’s still time to start 2015 off right!