Our Budget Isn’t Working! What to Do?

by mzumtaylor on April 23, 2012

in Goals,Life Lessons Learned,Personal Finance,Saving

I’ve been increasingly frustrated by our budget these last few months, and I’ve been at a loss for what to do about it. Nothing’s inherently wrong with our budget, except that we seem to have plateaued. We’ve done really well the last twelve months, paying down our last credit card and saving a bit on the side. And this year we sat down and talked about our finances and where we wanted to go next, having that important conversation that every couple should have at least once a year.

But since making all those grand decisions, our forward progress has halted. It makes some sense. One of the things we decided when we sat down and talked about money in January was that we wanted to start using our “Home Repair” savings account to make some improvements. (Notably the blue wall, the kitchen shelf, and–most recently–the container garden [update coming soon].) So that wiped out some of our savings. And we had a friend visit in March, which we didn’t plan or budget well for (despite knowing about it well in advance).

All through April, I’ve been frustrated at our lack of progress. I’ve been taking a look at our budget every few days, hoping that some brilliant solution will come to me, but I keep thinking myself in circles. Not good.

The Issues

Aside from spending our savings on home repairs (planned) and visiting friends (a bit unplanned), there were a few other snags…

The Credit Card

We got that Capital One Venture Card and immediately used it to pay for plane tickets to Michigan in May.

I’ve been doing an excellent job of paying of each purchase pretty immediately (it’s actually made my life as our family’s CFO easier, but more on that at a later date), but we haven’t quite been able to pull together enough to pay off those plane tickets, despite my plan.

We haven’t been hit with interest yet, and it won’t be very much (we’re set to pay off the rest of the ticket balance by the middle of next month) interest, but it’s still frustrating.

The Tires

Our Emergency Fund took a hit when Ben found out that he needed new tires for his car. And because of how much he drives and the fact that one of the rear tires was out of balance, he needed not two new tires, but four. *sighs*

Which is part of the reason why the tickets have not been paid off on the Venture card. We used our Emergency Fund to pay for the tires (that’s what it’s for, after all), but then had to spend ticket pay-off money to rebuild the Emergency Fund. I’m happy to report that our Emergency Fund is now back to “full” (Beginner Level: $1,000).

With our savings depleted for various reasons, the plane ticket charge weighing on my mind, and all our money being temporarily diverted to rebuild our Emergency Fund, it’s no wonder I’ve been frustrated.

The Tipping Point

The other evening I was being pissy for “no reason.” Ben was being surprisingly tolerant of my dark mood, and asked me what was wrong. All of the above frustrations came out, and then we had a very productive and helpful conversation about what we could do about it.

(Side note: The biggest take-away from that conversation: I would do well to remember that I have a partner in this, and that if I get stuck or frustrated I can go to him for help.)

The Problem? Too Many “Buckets”

We’re saving for too many things. We have a little money ($20-$40) going to each of our savings goals each month, which means that the now-depleted buckets are not refilling as quickly as I would like them too.

It’s funny because I wrote a post a few months ago about how focused saving is key.

But, I wasn’t ready to commit. At the end of that post I wrote:

I don’t like the idea of stopping our long-term savings for the short-term savings, so what I plan to do is continue saving a small amount toward each of our long-term goals ($20-$40) each month. Doing so might mean that we won’t save as much toward our bigger goals, but I’m okay with that.

It turns out that decision is part of what was causing my frustration with our current budget. Who’d have though?

What We’re Going to Do About It

  • Stop saving into five different buckets (Emergency Fund, House Down payment, Home Improvement/Repair, Miscellaneous, Puppy), and just have one bucket: Our Next Goal
  • Pay off the plane tickets before we do anything else
  • Once plane tickets are paid off, pay off Subaru
  • Once Subaru is paid off, save for me going back to school
  • Figure out the next step when we get to this point

Our New Saving Plan

The “Misc. Saving” has $5 going into it only to keep from having to re-setup the automatic transfer process when we’re doing paying off the Subaru. I set up an automatic transfer into my 529 account for $35 and it, too, will be harder to re-setup later, so I just left it. That leaves us with $200 a month for paying down debt, and, eventually, saving for Our Next Goal. Plus any windfalls that might come our way.

We’ll see how this plan works, but I know I feel better about it.

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