Our Monthly Budget: January 2015

See how we categorize our budget and give every dollar a name.

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

Rent:  $$$$*

Utilities:  $395 (-$30)

  • Electricity:  $80
  • Gas/Heating:  $80
  • Cell Phones:  $90
  • Internet/Cable $45

Food:  $500 (+$50)

  • Groceries:  $325 (+75)
  • Eating Out:  $175 (-25)

Non-Discrectionary: $346

  • Transportation: $200
  • Life Insurance: $66
  • Aflac: $80
  • Health Insurance Premium: TBD
Personal & Clothing:  $120 (rolls over monthly) (+$12)

  • Johnny:  $60
  • Joanna:  $60

Everything Else:  $305 (-$35)

  • Pet Supplies
  • Baby Supplies
  • Dry Cleaning
  • Auto/Gas
  • Home/Personal Care
  • Entertainment
  • Medical
  • Miscellaneous

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!

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  • Reply Amy January 5, 2015 at 8:58 am

    Your budget is inspiring! We took the month of December off budgeting and I’m scared to see what the damage was…but I see a late night budgeting session in our near future. Now that football is over (at least in MI) we are considering getting rid of cable too. I’m excited to hear your thoughts on the decision.

    • Reply Johnny January 8, 2015 at 12:22 am

      December wasn’t our finest month either, so we’re glad to be back on the horse. The pulling the plug on cable decision was not an easy one, but it’s been mostly great so far. Should be a fun post.

  • Reply Becky @ RunFunDone January 5, 2015 at 9:29 am

    Way to go on getting rid of the cable! I haven’t had cable since I was 4-years-old, so I’m not sure how much you’ll miss it, but my guess is that you’ll adjust just fine!

    • Reply Johnny January 8, 2015 at 12:24 am

      I’m mostly over the withdrawal symptoms, so that’s a plus. 🙂 It’s actually been a great transition.

  • Reply Rob January 5, 2015 at 10:24 am

    Hi guys! My congratulations on getting your January 2015 budget together. I know that it’s probably not easy when you just start to live in an expensive place like New York. Not that Toronto is all that cheap but we tend to handle it ok, having lived here half our lives. We (meaning mostly me – lol) worked on and completed our January budget on January 1st – took about an hour in total. Now you have to realize that, with us being retired, life is a tad easier than it probably is these days with you folks. Like we’re not expecting a new baby anytime soon – at least my wife hasn’t floored me lately with any such exciting / scary news! 🙂 So at least I didn’t have to plan for that blessed event.

    Rather, all I did was take my December 2014 budget (to get the stable monthly ongoing incomes, expenses), look over my January 2014 actuals (to check if I needed to plan for any early year one time expenses that might be coming due), review our 2014 actual expenses for the entire year (to get the inflation trends), and from all that I was able to put together our January 2015 budget. Over the years I’ve found that approach to work out pretty well for us, thus avoiding any 2 a.m. living room pacing… 🙂

    • Reply Johnny January 8, 2015 at 12:27 am

      Once the pacing starts, it usually means I’m in “slashing mode” — no budget category is safe. I like your system of using historical month data. The app we use actually does a pretty poor job of historical tracking, so tally up a win for the pen/paper method.

  • Reply Melanie January 5, 2015 at 10:59 am

    This was helpful to read! Made me calculate my net pay, net savings, what percentage my rent accounts for, and attempt to do some year planning with vacation and take a look at what my charitable savings “should” be. Thanks for prompting thoughts!

    • Reply Johnny January 8, 2015 at 12:29 am

      Glad it gave you some food for thought. It mostly just gave us ulcers, so here’s to a quick recovery. 🙂

  • Reply Jenna January 5, 2015 at 11:13 am

    Looks great! I hope you can keep to those targets.

    We still have to do our budget for the new year. I spend my usual amount at the grocery store and not much else, so I should still be on track.

    • Reply Johnny January 8, 2015 at 12:35 am

      Sounds like you’re on it. Thumbs up.

  • Reply Meli B. January 5, 2015 at 11:51 am

    I completed our 2015 budget between New Years Eve and Jan 3rd. I used a new format from http://www.moneycircles.com and adjusted it to track on a monthly as well as weekly basis. Like you I added gifts, travel/vacation and cut cable as well!

    I’m glad it’s done and gone through spousal review and update and look forward to meeting our 2015 financial goals!

    • Reply Johnny January 8, 2015 at 12:37 am

      Very cool! Tracking weekly spending never really worked out for us, but we liked the idea of breaking our month into smaller chunks.

      • Reply Meli. B. January 8, 2015 at 9:49 am

        I can see how tracking weekly can be tedious, but it’s nice to at least track by pay days, which happens to be every week, since my husband and I get paid bi-weekly and works out with our paydays alternating weekly.

  • Reply Dave January 5, 2015 at 1:06 pm

    Love reading your blog! I love a financial blog that has great writing in it. I will be getting married in May so I’m enjoying seeing how y’all adjust your finances for your life (instead of the other way around). Happy New Year!

    • Reply Johnny January 8, 2015 at 12:39 am

      Hey, thanks Dave! And congrats on the upcoming wedding! The fact that you’re already trying to figure out how to navigate the financial adjustments of marriage means you’ll do awesome. Happy, exciting 2015!

  • Reply Sarah Lunt January 5, 2015 at 3:19 pm

    Ok. NOW I’m motivated. Thanks. 🙂 My husband and I will be sitting down to make our 2015 budget soon and I’m excited about it!!

    • Reply Joanna January 8, 2015 at 12:50 am

      So happy to hear words like yours! They’re what motivate Johnny and me! Here’s to our best budgets yet in 2015!

  • Reply Michelle January 5, 2015 at 6:23 pm

    I am absolutely fascinated with your budget process. I love how you two plan and work so hard to keep within the parameters that you set.

    • Reply Joanna January 8, 2015 at 12:51 am

      There’s some weird part of both of us that really enjoys planning sessions. Now that we’re in NYC, this year’s budget will be more important than ever if we want to save!

  • Reply Ashley January 5, 2015 at 8:17 pm

    Love it! Who did you find for Internet Service? I have been debating cutting cable as well, but with Time Warner, cable is only a few dollars more than internet only.

    • Reply Joanna January 8, 2015 at 12:54 am

      We are doing Time Warner (our only option), and we looked into just doing the over the air channels, but with the cost of the box and the extra fees, we figured we’d rather keep paying our monthly Netflix subscription than just that. And we got spoiled with DVR in Utah, which would have been so much more to have out here!

      • Reply Ashley January 8, 2015 at 3:12 pm

        I know – the fees are ridiculous! I have been negotiating with them for the last 30 min, so we shall see what happens! Thanks for the response!

  • Reply Gretchen January 5, 2015 at 9:53 pm

    I’m hoping you’ll share some of your strategies to stay within that grocery budget each and every month. Here in St. Louis, it’s a struggle, so I can’t image doing it in New York!

    • Reply Joanna January 8, 2015 at 12:55 am

      We plan on it! I did a major grocery order tonight, and I wanted to cry over how much everything cost. We’ll share more soon!

  • Reply Miranda January 6, 2015 at 11:15 am

    Can’t wait to hear all about the cable cord-cutting. I’ve been considering it a lot more now that HBO is offering stand-alone. Now to get the spouse on board. Glad you guys are getting everything all squared away. January is always the toughest budget month for us too. =)

    • Reply Joanna January 8, 2015 at 12:58 am

      Isn’t it crazy/amazing all these stand-alone things that are happening now! Cable is on its way out, I swear. Johnny shared Sling TV on FB yesterday, which the husband might be interested in hearing about :). Admittedly, I do miss our DVR, but the price would have been so outrageous out here that I can live without it.

      • Reply Miranda January 8, 2015 at 10:45 am

        I just heard about Sling yesterday too! It’s quite tempting…

  • Reply Amanda January 6, 2015 at 11:58 am

    how do you keep track of your roll over categories? we have so many (a lot of our insurance gets paid once or twice a year, plus the gifts category is a nightmare). i still haven’t gotten a system that i like in place.

    • Reply Joanna January 8, 2015 at 1:01 am

      It can get super overwhelming! The budgeting app we use has a “rollover” option for each category, which has really helped simplify it for us. We enter a total amount for the year, and then it divides it into 12 months. If we don’t use up the allotted amount one month, it rolls over into the next month. This is our first year trying it, so I’m hoping it works well!

  • Reply Amber January 16, 2015 at 5:22 pm

    I am noticing things in your budget I should have included in mine. 🙂 I like how you indicate your roll over items. I feel like I have too many potentially up in the air rolling over categories. I tried to sort of follow your itemization (but with my numbers, obviously) and redid my budget a bit. I’ll do that for a month and see how it goes.

    Thanks for writing everything with such detail. It makes the whole process seem more logical when I see it spelled out like this. 🙂

    • Reply Joanna January 19, 2015 at 9:22 am

      Totally. We didn’t always have rollover items, and it would drive me crazy trying to keep track of those categories. Good luck with your 2015 budget! We’ll be reassessing at the end of this month, too, once we’ve done a full month of budgeting in the city.

  • Reply Rachel Lee January 18, 2015 at 9:58 pm

    I have a bad habit of making a LOT of little budget plans, it’s extremely random and I find them on little scraps of paper everywhere, with amounts that vary on each one for each category…I can’t seem to get it all in one and keep up with it conveniently. Any suggestions?
    Also, I am new to reading your blog, I searched to see if you had written one about budgeting for Holidays and didn’t see one.
    Any holiday I run into (Birthdays, Christmas, Thanksgiving…) I end up completely blowing whatever budget I made for myself 🙁 I just wondered if you have ever ran into that issue?
    Thank you for sharing your experiences!

    • Reply Joanna January 19, 2015 at 9:30 am

      Johnny and I keep it on our phones in a budgeting app, but if you’d prefer writing it down, maybe a little notebook in your purse would help keep it all written in one place.

      Holidays are tough… Johnny and I go through all of the holidays at the beginning of the year and budget out gifts, which helps a lot. As far as other expenses that come with holidays (decorations, food), we typically talk about it at the beginning of the month and try to set out realistic expectations. Just thinking it through in advance has been helpful to us so that we’re not making any impulse buys when the holiday approaches. Hope that helps!

  • Reply John January 19, 2015 at 11:19 pm

    I have been using an Excel spreadsheet for budgeting since 2009. It is essentially the Pear Budget spreadsheet you can find online for free, but over the years I have added my own sheets – I am geeky that way! Take a peek at that – it handles the historical tracking well via an analysis tab. My other favorite Excel tool is called loancalc.xls and it is harder to find. It is a fairly simple amortization tool, but it allows you to enter “extra payments” in any amount at any time to your mortgage amortization. It is a great “what if?” tool to find out how many months you can knock off my mortgage if you pay $100 extra this month, or if I apply that little holiday bonus toward my mortgage.

    • Reply Joanna January 22, 2015 at 10:24 pm

      That’s great. It sounds like you’ve found a system that’s working very well for your family! Johnny uses Excel for our net worth tracking — he’s geeky that way too! 😉

  • Reply Clayton January 22, 2015 at 9:18 am

    Thanks for sharing your tips with us. My wife and I are going to try to sit down and make a budget soon. We both have savings plans through work that are either automatically deducted from our paycheck (her 401(k)), or are deducted from my bank account later in the month (my Roth IRA). The same amount of money gets deducted each month.

    Do we budget for this? Or do we simply reduce our income by this amount since we know that this will be a recurring monthly expense?

    Thank you for your help!

    • Reply Joanna January 22, 2015 at 10:29 pm

      It’s totally up to you, but when money is taken out of our paychecks before we even see it, Johnny and I tend to just reduce our income by that amount. It helps simplify how much money we really have to work with each month. We do, however, take that extra savings into account when we track our net worth (which we wrote about here: http://www.ourfreakingbudget.com/how-to-track-your-net-worth/), just to keep a big-picture perspective somewhere. Way to go on taking advantage of the 401k and Roth! You won’t miss that money, and it’s making you more money — a win-win!

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