STOP ALLOWING FEAR TO GET IN THE WAY OF YOUR FINANCIAL PROGRESS

 

If you need help budgeting money do yourself a favour and don’t just “try” to understand how the budgeting process works without experiencing how it will and can affect your life. This is the problem with people who think budgeting is a joke and not needed, they place negative thoughts in their mind from the start instead of motivational action words like, “I will”.

Not everyone needs a budget especially if money is not a concern for them. What I like to focus on here though is how much money they could be saving or putting towards other matters instead of spending without warning. So for example, if you spend $400 a month on groceries from a high-end grocer where you could get the exact products at a lower-priced grocery store why wouldn’t you do that? Take the extra cash you save and invest it, donate it or buy extra food to give to the food bank.

My point is that we waste money like it’s water when we can conserve it and put it to good use. You don’t care? That’s fine too but don’t cry broke when the money is gone or doesn’t support your lifestyle any longer. You can’t go back and “wish” you didn’t save more aggressively.

 

Household expenses

 

With Canadian housing costs going through the roof and four new housing rules to be implemented in October and November 2016 I believe it’s only a matter of time before interest rates go up. It’s times like this that we’re thankful that we paid off our mortgage aggressively while we can. They don’t care if you have 20% or not to put down on a mortgage so they will administer a mortgage stress test to see if you can handle increases.

Related: Four major changes to Canada Housing rules

Are you sure you can still make it financially then? Budgeting will tell you so because I can assure you that if you have a mortgage or other consumer debts you don’t want to wait around to find out.

Just yesterday alone I noticed 3 people who posted copies of their hydro bill online ranting about the high prices. Not only that but petrol prices are expected to rise in Ontario shortly to add to the crap pile we’re experiencing in Canada.

Related: Toronto area housing prices soar

The average detached house in Toronto sells for 1.3 million dollars and although you don’t have to move to Toronto this is only a sign that housing is slim and will continue to spill over into neighbouring cities in the Greater Toronto Area. That means prices will continue to rise because of supply and demand and we’ll see more building up and condo-living as a somewhat affordable option for first time home buyers.

The stress test is aimed at assuring the lender that the home buyer could still afford the mortgage if interest rates were to rise.

Other aspects of the stress test require that the home buyer will be spending no more than 39 per cent of income on home-carrying costs like mortgage payments, heat and taxes. Another measure called total debt service includes all other debt payments and the TDS ratio must not exceed 44 per cent.

 

Dear Mr. CBB,

I’m in debt, lots of debt and I want to start budgeting to save money so I can purchase my first home but am a bit tangled in a web full of information about how to budget. I grew up in a household where my mom and dad both took care of the finances and I want to experience the same once I get married.

Every week when I get paid I pay my bills, some the minimum and it never feels like I’m getting ahead.  I want to stop feeling and start knowing what I’m doing wrong and how I can overcome my fear of the budgeting process.

Do you have any tips to keep me focused on the prize?

Thanks,

Rob

 

Living on a budget

 

You don’t need to read budgeting for dummies or any other yawn-filled books to teach you the basics about the budgeting process. There are people who can’t even read yet they are financially fit. It really is simple math. What you take home minus what your expenses are = financial numbers that will either put you in the poor house, keep you in the poor house or send you down the path of financial success. This is your choice.

There are tonnes of budgeting gurus out there and apparently I’m one of them however I’m really just guy with a family using a budget. I’m not a financial advisor nor do I dish out advice other than sharing what works for us. I didn’t go wild reading budgeting books and freak myself out about the budgeting process.  That is when people back down because they feel living on a budget is overwhelming and time-consuming and like studying for an exam they don’t want to write.

But you haven’t even started budgeting yet? Don’t jump to conclusions and talk to the people who you trust to give you help with budgeting.

 

Manage finances

 

I’ve had many fans email me personal questions about the budgeting process and have successfully helped (that I know of) a few fans go from debt despair to seeing some positive results through the budgeting process. since I’m anonymous I get the feeling it’s easier talking to an ATM than it is a real teller, if you catch my drift. It’s hard for some people to tackle household expenses and then talk to someone whether family, friend or advisor about budgeting especially if they feel embarrassed about their situation.

Related: Budgeting with Mr. CBB got Us Back On Track

Our financial advisor told us that he has clients that are in so much debt that they don’t even want to know what their retirement is going to look like. When he has clients who empty their RRSP accounts to pay off debt it’s heartbreaking especially when he knows that’s not the best option. For some though, it’s the only option. It’s like they black out the future and will deal with it when they get there even though they know the outlook is not promising. Your retirement savings is not meant to be an emergency savings account.

 

We need to emphasize how budgeting is a normal way of life and not something that poor people do to get out of debt.

 

There are senior level executives who can apparently run a work budget but their own personal finances at home are rubbish. I’ve chatted to a woman who is currently collecting welfare who says people look down on her for being in the system instead of working. She’s adamant that she is 100% confident about the budgeting process and says it helps her manage the money she gets without causing added stress while raising her young son.

Just because you fit the look of someone who should know how to budget doesn’t mean that you do it well. Saying that, “The Rich Get Richer” most often means they got lucky. No where have I read that if you’re rich you must be a master at budgeting.

The stigma that is put on people who have a low-income, disability or collecting welfare isn’t fair. Not everyone is broke because they can’t manage their money. There are also people who look rich but they’re not because they have a paper trail of debt as the star of their show, life.

I don’t care if you choose to budget or not but before you give up on the budgeting process you must give it a legitimate shot at working for you.

 

Overcome Budgeting Process Fears in Four Steps

 

• Always have support or someone you can trust and ask questions to about your money
• Don’t put such high expectations on yourself when you start something new like a budget. Ease into the process and through trial and error you’ll grasp budgeting concepts and how they relate to your situation.
• Set SMART goals and reward yourself when you achieve them.  If you pay a bill off in full buy yourself a small treat to splurge on like a brownie sundae. Chocolate always makes me happy, happy!
• Believe in yourself. If that means you post positive notes to yourself on the refrigerator, then do so. Stay positive and you’ll see just how important these steps will be once you cross over into the debt free zone.

Don’t let budgeting overcome your mind with worry about failing or not being able to hurdle over any huge pitfalls because you’ll go crazy thinking about it. Create a sound plan and the budgeting process will build naturally. Over time you’ll start to track numbers more aggressively because you’ll want to know what they look like.

Our budget didn’t always start with plenty of detail, it evolved year after year as we experienced more about our financial health. You can download our budget for free as a subscriber of Canadian Budget Binder and hopefully in time you’ll see your budgeting confidence rise.

Discussion Question: What tips would you give to anyone who is experiencing financial stress over the budgeting process?

 

Where our money went in September

 

Bills. That’s where are money went this month. City Taxes were due which took the considerable chunk of change from our income. We do budget for this expense throughout the year by setting aside a monthly figure in the form of a projected expense, or an expense that we know will occur within the year but has not yet happened.

I also started back on another contract for my part-time job. This has increased the gas consumption for the vehicle but well worth the time and effort invested.

The brakes have started to pulsate in the car so in preparation of swapping over to winter tires in the next month or so I have also bought new brake pads and rotors. I will be doing the work myself to cut down costs. I think this year has been the most expensive vehicle maintenance year yet, due to the fact that our vehicle is getting on in years.

Our plan is to get our vehicle to at least 15 years with no major problems. So far, it’s never let us down and continues to run without a hitch. It pays to look after what you have. Another day off job coming up for the vehicle is changing out the automatic transmission filter and fluid.

 

Pick a budget that’s right for you

 

I’m currently offering 2 versions of our budget and the reason behind it is simple. Firstly, read the CBB blog 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 you asked me for in your emails. (See I do listen and read your comments and emails)

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.

 

Our free budget spreadsheet

 

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.

Test the budget for a few months and see how it goes. Trial and error, remember that.

 

Our family budget plan

 

How we budget our monthly expenses?

I often have fans ask me how to budget money on a low-income or they simply have a high debt load and want to kill it like my friend Tony who got rid of over $100,000 worth of debt by using a budget.

CBB fans want to know what we do in order to save so much money and the reply I give is simple>> It’s not about the money it’s about the process involved.

We are both money managers of our finances and with our relationship compatibility we have been able to get to where we are in 2016, debt free.

It doesn’t matter if you are using a cash only budget or you use your debit and credit cards, if your budget doesn’t balance you have budget issues you should check it pronto.

Learning how to be your own money manager is important because no one else will care about your money more than YOU!.

We don’t always save as much money as we would like every month but most importantly we are not going into debt but only because we are budgeting our money. In fact we are currently debt-free including the mortgage which means all we pay for is our monthly bills and expenses.

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’ve made up for it or we learned from our mistakes just like we should. Budget failure only occurs when you give up on your budget which should not happen as long as you truly want to reach your goals.

We didn’t always earn the income we do today but made do with what we were earning so we didn’t go into debt. That my friends is called “living below your means”. The only science to becoming rich!

Sometimes fans email and ask me if living on a budget in Canada is any different from living and budgeting 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 spreadsheet to meet all of my needs however the budget needs to be reviewed monthly.

Below are links to the budgeting series which I wrote while designing our excel budget spreadsheet which will give you an idea just how we designed our budget.

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 or numbers nerd.

 

Learn how to budget with Mr.CBB

 

Our Budgeting Series

Do you want to learn to budget like we do?

We explain everything we do and more in this mini-series below all about budgeting.

Please take the time to read through our budgeting series plus read Budgeting in the New Year. I hope the information will help stop you from making common budgeting mistakes that I hear of often and that you take something away from the information and apply it to your financial situation.

If you have any questions about what we do with our budget money tracker feel free to email me.

1. How We Designed Our Budget Step 1– Gathering All the information
2. How We Designed Our Budget Step 2– Budget 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 percentages September 2016

 

Our savings of 35.82% includes savings and investments and emergency savings for this month. If you include the projected expenses savings, we actually saved 55.75% of our income. That’s $5363.67 going into savings or investments of some description or another.

The monthly totals comes to 100% which shows that we spent our income this month and used the rest as emergency savings.

The other categories were well within the defined percentage limits. Our projected expenses this month is at 19.93%.

 

Budget percentages month by month

 

 

Breaking down expenses

 

This is simply a breakdown of our expenses which has helped us to understand where all of our money goes. Since May 2014 we have been mortgage free so much of our money will be directed at savings, investments and renovations.

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 our situations are all unique.

Although I encourage your comments and love to hear what you have to say about our budget categories and expenses please don’t tell us to donate our money to charities because we have too much or are fortunate. We are hardly out of the clear with finances for the rest of our lives and have worked and sacrificed to get where we are. We do plan to enjoy the money we’ve saved now since we haven’t over the years with our son.

What we do with our “extra cash” is our business and although we do donate to a charity we won’t be putting it on display for the world to see as it defeats the purpose in my eyes. It is part of the budget as you see it. I hope that clears that up for those of you who had concerns about our extra money.

Almost 9 years ago I started working in Canada making a bit over minimum wage and have since moved up the ladder. I’m now working very hard to secure my dream job with one foot in the door. We aren’t all lucky but if you do the best you can at least you can look back and say you gave it a shot.

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 Budgeted Total: $5093.64
5. Monthly Net Income Total: $9620.94
6. (Check out our Ultimate Grocery Guide to see where our grocery money goes)
7. Projected Expenses: These are expenses we know we will pay for throughout the year = $1917.68
8. Total Expenses Actually Paid Out: $5510.37
9. Total Expenses Actually Paid Out: Calculated is $9620.94 (total net monthly income) – $1,917.68 (projected expenses) – $2192.89 (emergency savings) = $5510.37
10. Actual Cash Savings going into Emergency Savings: Calculated is $9620.94 (total monthly net income) – $5510.37 (actual expenses paid out for the month) – $1917.68 (projected expenses) = $2192.89

 

How to save for future expenses

 

What are Projected Expenses? – We project expenses throughout the year so we have the money saved. PE= A projected expense is money 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. So this means the numbers go up and down in the projected expenses account based on what we need to pay for that we saved for in the account over time.

The only thing you need to do is track your projected expenses each month manually as I can’t customize that for you in the excel budget spreadsheet as I don’t know what you will use for projected expenses.

For now we will have to manually track which means month after month we add up what we save in each projected expense category and minus what we spend so we know how much we have and what is left in each category. I have updated our personal excel budget spreadsheet for 2016.

We pay money into the projected expenses account continually throughout the year even when bills come due as its revolving so as one bill gets paid the money continues to come in from the other categories all year-long. This ensures that money is always available. It may not always be enough but having something ready is better than having nothing at all and having to use credit.

So the $1917.68 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.

Sample Projected Expense

If our clothing category was a projected expense we would 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. My plan is to create a projected expenses spreadsheet to track the expenses all year-long otherwise you need to do it manually which we currently do in order to make sure we don’t overspend what we 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 2015 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.

(Note: I am working on this but slowly as I wasn’t anticipating all the extra hours with my second job)

 

Budget Results

 

Time for the juicy category numbers and to see how we made out with our monthly budget. Below you will see two tables, one is our monthly budget and the other is our actual budget for the month of July 2016. This budget represents 2 adults and a toddler plus our investments.

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

 

Budget for September 2016

 

 

Actual budget expenses for September 2016

 

 

September 2016 Goals

 

Here are my October 2016 goals along with whether I completed tasks from September or not.

• Call around to lawyers to talk about getting a Will written up- Nope big fail again.
  
• Finish sanding and stain our sons kitchen table and chairs – Fail. We’ve decided to just give it away as we have enough kiddie furniture.
  
• Start revamping old blog posts (2 a month)- I completed 1 in September.
  Finish the master bathroom shower- Fail, however the wife and I started talking about getting it done as we’ve bought more renovation materials. My goal is Jan/Feb as I may be off work then so I can start this project up again and finish it.
  
• Pick out new tiles for bathroom and accessories (mirror, towel bar holder etc.)- Pass We picked out tiles and accessories.
  
• Buy a new blind for the garage- Fail It’s just not a huge priority but it’s hanging on. I’ll get there.
  
• Finish the walls in the baby room- We moved almost all of his toys to his room to eliminate distraction for him. Now we need to either sell or giveaway what he doesn’t need or use and finish the room.
  
• Write down what we want in our new kitchen- We may end up targeting the basement first. We’re still talking about this.
  
• Start looking at pricing for a new insulated garage door- Fail
  
• Buy a pressure washer- Fail but I’m looking and waiting for the one I want to go on sale.
• Start researching vacation spots for 2017- Looks like we may go to Spain and England.
  
• Hang paintings and wrought iron decor on the walls- Fail 
  
• We will be making basil pucks for the winter staring in September.- We won’t be making basil pucks this year as we didn’t have enough basil.. My wife and I used up lots in our recipes this summer that didn’t leave us enough even though both planters were filled.
• Sand and protect the deck for the year- We will be adding a pergola to the deck so I’m going to be working on this for the rest of the summer. I’m in the planning stages now and am hoping to buy the materials from Home Depot in August. I accomplished nothing on the deck in September. This may end up a project for next summer.
  
• Purge our clothes little by little– We managed to give away 1 large box of clothes in September.
  
• Clean out the entire garage- I cleaned the garage in August and it’s a mess again. I’ll work on sorting this out in October.
• Tidy up the office (or else)- Pass I did a bit of cleaning up and will work on this again in October.
  
• Order new plugs and leads and replace them for the vehicle in August– Pass
• Fix the strapping on our second-hand 3 seat swing– PASS I have pictures too and hopefully will put together a post on how I did it.
• Dusted the ceiling fan which is about 25 feet up in the ceiling as well all of my travel decor- Pass
• Clean out the vehicle inside and out-
• Swap over the winter tires-
• Put on new brakes-
• Change transmission fluid-
• Get the van undercoated-
• Take a look at the Christmas lights– Looks like I will either be buying new lights or just leaving a few bulbs that are out and not worry about it. Damn things are pricey too.
• Start Fall tidying up outside- We both started this in August and September. We don’t have much to do now just bring in a few bits from the back garden and more tidying up of the dead plants and other weeds.
  
• Fix the leaking bathtub faucet-

 

Budget updates month by month

 

In case you missed our budget updates and want to do a quick search I’ve compiled them all on one handy page: monthly budgets. For the 2016 Year I will also keep track of each month below and update the monthly budgets page.

• December 2015
• January 2016
• February 2016
• March 2016
• April 2016
• May 2016
• June 2016
• July 2016
• August 2016

That’s all for this month check back at the beginning of November 2016 to see how we made out with our October 2016 budget.

Happy Budgeting CBB’ers!

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