Spending cuts and increases: Budget Update Jan 2014

bust-our-budget-budget-updateCOUNTING THE CHANGE

 

Staying on top of our end of 2013 budget spending cuts and increases are going to be critical for us in the 2014 year.

If you missed our December 2013 budget update you can go back and read about where all of our money went and how our budget has changed for 2014.

I’m pretty sure that 2014 will be full of surprises for us so we want to be prepared for the unexpected at least with money set aside for emergencies after the mortgage is paid.

With our mortgage coming due in April to the exchange rate rising we hope that we are off to a bit of a kick-start.

Hopefully in the next month or so we will meet with our financial advisor to go over our investments. We’d like to make some changes for the 2014 year and maybe even talk about if we can get a further discount for being 2 years smoke-free on our life insurance policies.

 

Spending cuts

 

Spending cuts came to us in the form of having to spend less in a particular budgeted category or having to move money in the budget to balance it out.

Either way you look at it the spending cuts from one category affected another category but that is what we needed to do to make the budget work for us in a positive way.

Have you ever been given change at the cash and just tossed it in your purse, pocket or in the cup holder of your vehicle?

Eventually that money grows the more you toss it in the bucket and just as fast as that will add up so will all the small expenses we make so we have to be diligent in keeping an eye out for those expenses.

I bet you never thought to look at it from that perspective but it’s true. It’s just that many people don’t have the patience to wait for the small change to add up to a large amount of money. The same goes with savings in the bank. I read all over Facebook how many people were going to do the 52 week savings challenge. I believe they save x amount of dollars each week starting with a small amount.

You see the small amount makes it seem like it’s a simple task and over time that small amount grows hence giving you a savings. If only people would see how simple it really is and over time you will naturally just start to save the money little by little. I often hear people say they don’t have $5.00 to save but I’m sure if you look real hard you can find it.

This is where spending cuts come in because you have to look at your finances from a realistic point of view and ask yourself what you can cut to make your life easier. It may not necessarily be what you want to do but it will help you sleep better at night. You can always fill your lack of TV with reading new books or visiting the library, going for walks or getting fit.

Sometimes spending cuts might also mean going to basic cable or no cable at all or trying to get your communications company to lower your monthly bill. Don’t give up trying to find areas to save and remember we are never entitled to anything and if you can’t afford it you can likely find someone offering it free or at a discounted price somewhere else ie: internet at the library for free.

The old saying, “you gotta do what you gotta do to survive” comes to mind and if we just did without some of the bells and whistles we’d likely get further ahead.

It’s just that many of us when we get these simple pleasures in life that do cost us a pretty penny it’s hard to let them ago until we are forced to because of lack of funds, bankruptcy or no other option because the company is cutting the service off.

I still don’t own a cell phone myself as I have no purpose for one since work provides me with one while I’m on duty but ultimately our budget numbers are up to us. If we really have to cut something out to balance the budget than we have to do it.

If you find you are bouncing money from category to category each month just to pay bills then you have to be realistic about your numbers.

If your budget is not balancing something is wrong and you must make changes or face the fact that you may never get ahead. As we all know paying the minimum balance on debt is going to take you years upon years (just read the fine print on your bill).

So, this year like everyone else we are going to say on top of our spending cuts so we can do our best to balance the budget. We had some rough months in 2013 and hope we can curb our spending and get back on track for 2014.

 

Where the money went

 

Well, January has been full of surprises for us.

We blew through lots of money in January for our dog as he’s been very ill as you already know. This is just another reason I beg all of you to think about how much a pet costs and the vet bills in case something were to happen before you take the step to purchase an animal.

We are working hard at keeping that grocery budget in check for 2014 with our Grocery Game Challenge.

If you are not involved with it join in, it’s FREE to post your shops and work with the team of players who want to stay on budget this year. We are starting our third successful year of the grocery game so don’t be shy. The rules are all posted on the blog and in every grocery game post you will find the link to the rules page.

We blew over our entertainment budget this month since it was our anniversary so we will make up for that in February by eating in. I didn’t add anything extra for these occasions in the entertainment budget since we don’t eat out often but we figured that if we did we’d just make up for it the next month if we spent over the $50 budget.

Since Valentines is around the corner we don’t normally go out for dinner as I like to cook a fancy meal for my wife so we should be well on track.

We’ve also spent a bit more on the vehicle insurance and home insurance however that is only because our premiums crossed paths during the winter vehicle swap. The actual monthly total is lower around $250 I believe and the refund should be in our account this month. I’ll have an accurate figure for February.

 

Get your free budget

 

I’m currently offering 2 versions of my budget and the reason behind it is simple. Firstly, read the disclaimer because what you do with it is your own business so if you mess it up you need to sort that out.

I have not closed off any cells so you can make all the changes you like to the budget to reflect your lifestyle which is what the fans wanted.

Although I would love to help every single fan with their budget I am unable to do so but I am always willing to answer any emails you send me so don’t be shy.

This was after all meant to be our personal budget and although I would love to customize it for every fan that wants to use it but, I’m afraid I cannot.

I’m not selling this budget or hope to make any money from it so enjoy this free budget and I hope that it works for you as much as it does for us.

 

Canadian Budget Binder Budget Spreadsheet

 

Canadian Budget Binder Spreadsheet Screen shot

You can download the free budget spreadsheets here.

  • Budget 1– You can use the pre-existing categories or you can use your own if you wish and you have the option to use projected expenses or not. Please read all notes left around the budget for tips.
  • Budget 2-Everything is pre-set so you have to use the pre-defined categories but this budget will generate year-end budget figures where the other one won’t but you must use the categories already in this budget. If you change anything you will mess up the formulas and year-end figures. Please read all notes left around the budget for tips.

I’m always open to feedback but be polite as you don’t want to hurt my feelings :)

Get started and don’t procrastinate. Test it out for a month and see how it goes.

There is never any harm in trying something new in life. You either love it or hate it, that is a fact with anything.

What type of budget do you use?

 

Our  budget plan

 

How we budget our monthly expenses

I often have fans ask me how to budget money and what we do in order to save so much money but the reply is that it’s not about the money it’s about the process involved. We don’t always save as much money as we would like every month but most importantly we are not going into debt because we are budgeting our money.

One of the most important things we did for our personal finances was that we never let the budget deter us from reaching our goals. Sure we’ve had crap months but we made up for it or we learned from our mistakes just like anyone else would.

Budget failure only occurs when you give up on the budget which should not happen as long as you give 100% into making sure you reach your goals. Sometimes fans email and ask me if living on a budget in Canada is any different from living in other countries. To be honest I’m going to say, probably not. If I still lived in the UK I could use this exact budget to meet all of my needs. Below are links to the budgeting series which I wrote while designing our spreadsheet.

I’m not a financial planner/advisor so I can’t tell you how you should budget but I can show you how we budget. I’m just a regular guy just like everyone else; some might call me a budget nerd. Please take the time to read through the budgeting series and I hope you take something away from the information.

  1. How We Designed Our Budget Step 1 Gathering All the information
  2. How We Designed Our Budget Step 2– Categories
  3. How We Designed Our Budget Step 3– Tracking Receipts
  4. How We Designed Our Budget Step 4- Note-taking
  5. How We Designed Our Budget Step 5– 5S Organization
  6. How We Designed Our Budget Step 6– Who Does What and When?
  7. How We Designed Our Budget Step 7– Balancing Our Budget
  8. How We Designed Our Budget Step 8– Knowing our Coupon Savings
  9. How We Designed Our Budget Step 9– Reading Our Bills
  10. How We Designed Our Budget Step 10 Projected Expenses

 

Budget changes

 

All the budget changes we made in December 2014 for the 2014 budget have been implemented. If we change anything along the way like removing the pet budget starting in February we will let you know right here.

 

Budget percentages January

 

January 2014 Household budget percentages

Our savings of 33.73% includes savings and investments. Our projected expenses this month is at 20.82% which now includes some increases due to overspends explained in the 2013 year in review. The total January 2014 Household Budget Percentages to 100.00%. This was a five-week month based on the amount of Fridays available that expenses go out and income is paid in to the bank.

 

Budget percentages month by month

 

year to date percentages 2014

Expenses breakdown

 

This is simply a breakdown of our expenses which has helped us to understand where all of our money goes. I appreciate that you enjoy this budget update each month but I do hope you view this as an educational tool rather than comparing your own financial numbers as we are all unique.

Sometimes we wish we had more money to budget with but understand that we only have what we earn and if we want more, we need to earn more. Spending less than we earn and budgeting our money has been the easiest way for us to pay down debt and save money.

  1. Chequing– This is the bank account where all of our debt gets paid from.
  2. Emergency Savings Account– This is a high-interest savings account.
  3. Regular Savings Account– This is a savings account that holds our projected expenses.
  4. Monthly Budget Total: $5325.51
  5. Monthly Net Income Total$8935.20
  6. Total Coupons Used: includes every discount attained during the month = $62.14
  7. Projected Expenses: These are expenses we know we will pay for throughout the year = $1860.68
  8. Total Expenses Actually Paid Out$4869.35
  9. Total Expenses Actually Paid Out: Calculated is $8935.20 (total net monthly income) – ($2205.17 (cash savings) + $1860.68 (projected expenses)) = $7384.49
  10. Actual Cash Savings Going Into Emergency Savings: Calculated is $8935.20 (total monthly net income) – ($4869.35 (actual expenses paid out for the month) + $1860.68 (projected expenses)) = $2205.17

 

Saving money

 

What are Projected Expenses? – We project expenses throughout the year so we have the money saved.

PE= A projected expense is money which is automatically saved each month so it is ready when the bill comes in or when you need it as in the example below. We review our projected expenses at the beginning of the year to set up our yearly budget and adjust as we go along if a new projected expense arises and needs to be added to the budget. Sometimes we remove a projected expense as well so it’s very important to keep an eye on your expenses.

This has happened on many occasions but it’s bound to happen as we can’t predict everything we have to pay for over the course of the year. The important part for us is that we are saving for these expenses and we no longer have to stress about taking money from our savings to pay for them. To learn more about projected expenses read Step 10 in my budgeting series.

When we spend the money in a projected expense category we move that money to our chequing account in order to pay for that incoming expense. We pay money into the projected expenses account continually throughout the year even when bills come due as it’s revolving so as one bill gets paid the money continues to come in from the other categories all year-long. So the $1189.14 gets paid into the projected expense account every month no matter what. It seems to be easier to track our money this way but you can do what works best for you.

 

Projected expense example

 

If for example our clothing category was a projected expense we have a budget of $50 per month for the two of us. If we spend $30 on clothes for the month that means we need to pull $30 from the projected expenses account to pay for this expense or we move only $20 to projected expenses for the month and leave the $30 in your chequing account.

It’s up to you how you do it as I mentioned above. I’m hoping to put together a projected expenses spreadsheet to track the expenses all year-long otherwise you need to do that to make sure you don’t overspend what you haven’t saved or will save over the course of the year.

It’s a fairly easy process and becomes a lifestyle change for your finances but the most important part is that the money is available and saved, which means potentially less stress. This means we should have $600.00 per year for clothing to spend.

We have to track that expense as we spend it manually but hopefully for our 2014 budget I can incorporate that into our spreadsheet so it tallies the numbers up as we go along. That way we will be able to know exactly what we’ve spent as an ongoing total.

 

Budget for January 2014

 

Budgeted Jan 2014

 

If it is highlighted in blue that means it is a projected expense of ours. You will also see our budget does not include the emergency savings as this is factored in at the end.

 

Actual budget expenses for January 2014

 

actual budget Jan 2014

 You will notice we didn’t put the amount going to emergency savings as we have in the past into the actual budget which was a total of $2205.17.

 

January 2014 goals

 

  • NEW! Reach 1400 Pinterest Followers- PASS (1543)
  • Get organized with blog activities- Somewhat PASS (still working on it)
  • Learn more about affiliate marketing and blog advertising- Work in progress
  • Complete and search out more freelance work – FAIL
  • Read more in my personal finance book- Huge FAIL
  • Reach 6375 Facebook Fans- FAIL ( I don’t really hold contests etc and I find the numbers go up and down and more traffic is coming from Pinterest out of any social media by a long shot)
  • Reach 2400 Twitter Followers- PASS (2468)
  • Reach 1240 Blog Followers- FAIL almost there…. 🙂
  • NEW! Make a pin for my universal weight machine- PASS
  • Continue with bathroom renovations- PASS
  • Start laying flooring in living room and dining room- FAIL but soon

 

February 2014 goals

 

Sometimes I think I am being too optimistic about by numbers but if I don’t reach them I try harder the next month. Stay positive and that’s all you can do apart from bringing the best you can for your readers. Not much has changed in terms of my goals for February as I have some big tasks that I need to keep on tackling.

  • NEW! Reach 1600 Pinterest Followers
  • Get organized with blog activities
  • Learn more about affiliate marketing and blog advertising
  • Complete and search out more freelance work
  • Read more in my personal finance book
  • Reach 6375 Facebook Fans (2014 goal is to hit 10,000) Let’s do this!!
  • Reach 2500 Twitter Followers
  • Reach 1240 Blog Followers
  • Continue with bathroom renovations
  • Start laying flooring in living room and dining room

 

Budget updates month by month

 

In case you missed our budget updates from the start of the year I will list them all here each month.

That’s all for this month check back at the beginning of March 2014 to review our February 2014 budget to see how we made out with the new figures and if any changes were made.

 

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Mr. CBB
Mr. CBB was born and raised in the United Kingdom who then moved to Canada where he is a permanent resident. He recently became a father to a very busy toddler who allows him to be a kid at heart. He bought his first house at the age of 21 after University and his second at the age of 24. Both Mr.CBB and his wife are Debt and Mortgage Free and they did it all in under 5 years using a Budget. Canadian Budget Binder is a place where he shares their financial experiences with his readers and hopes to learn about theirs. Welcome to CBB!
Mr. CBB
Mr. CBB

Comments

  1. Thanks for the free budget spreadsheets Mr. CBB! I know all too well about pet expenses. We had to pay $9,000 for emergency surgery one time. That was very unexpected and very costly.

    • Wow, you need to blog about that one! That’s much more than we paid but it’s something that many pet owners don’t think about in advance and putting their pet down is the only option. I look at pets like humans and I certainly would do everything I could to help a loved one survive. Cheers mate.

  2. Are you trying to get cash together for April when your mortgage becomes due? I can’t wait to see if you select a short or long term mortgage. I am very fearful of rising interest rates and I would be tempted to lock in to something very long even if I had to accept a slightly higher interest rate.

    I use a zero budget. All the money is allocated before the cheque even arrives and I just leave a little bit for myself to spend on food, gas and whatever else pops up.

    • Hi Jane,
      I will be posting our Net Worth Update on Wed and you will see where all of our money is. No, we already have the cash to pay the mortgage in full. 🙂

  3. Mark Ross says:

    Nice looking budget spreadsheets Mr. CBB. I will definitely take a look on those, and maybe I could use it someday. The time when I don’t only have to budget on my transporation and food expenses as a student.
    I really envy your site’s progress, I just wish my website could reach what you’ve been able to achieve with CBB. Good luck on your goals by the way! 🙂

    • Thanks Mark,
      We’ve used the budget for a few years now and it’s evolved, trust me. The good thing is that we continue to use it so we know where our money is going which is a personal choice of ours. The blog is starting it’s third year now so it’s taken some time to grow. 🙂

  4. Christine Weadick says:

    Things are looking good at your house! Poor Poochie…:( …Give him a pat for me… I’m slowly working on the budget, the older boy finally got clearance for CPP-D so there is that money coming in. We still need to talk to the lady for ODSP for him too, that means driving out of town and the weather factors there. He now pays for his own smokes and meds for depression which does help us. The younger boy is still trying to get something but it isn’t easy at the best of times, much less now but he is trying. There is a new plant opening in town and he has his name in, call backs are supposed to be starting in the next week or two… If he gets in there the next question will be his room and board. Do we charge him a flat amount per month or do we hand him a couple of the larger bills (Rogers comes to mind as one) so he can pay those for himself. Get a little taste of bill paying.
    As things stand right now we don’t have nearly as many trips into London as we have had in the past (Yea!!!) so there is less money needed for gas in the truck and for parking. Parking fees at the hospital can be rough to say the least. Toronto maxes out at $20.00, London max is $12.00 and Stratford flat rate is $5.00. We can claim Toronto and London parking fees and mileage on income tax but we still have to pay them upfront. Ouch….
    I will be working on the budget every chance I can, now that the older boy has things set up for me and see where I get with the work in progress….

  5. Hope you had a lovely anniversary! When it is cold I almost never feel like going out. Now we are in Miami so it is party time and I want to go out all the time. Receipts are piling, I am trying to keep them all to see how much in total but so far it is scary haha. Thankfully it is not a usual month.

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