Getting disciplined about money

Now that I’m forty-something, it’s time to get religion about money management. I’ve read lots of great blogs and posts about frugal living.  I don’t think I can pass my goals off as frugal living, but I do have to get smarter.

What I mean is, I can’t see myself using a half a dryer sheet or making my own cleaning products.  For those who do – I think that’s awesome, really I do.  My Mother was a single parent too. She earned a lot less at her three or four part-time jobs, got no child support, and we lived without trappings. I can’t say the same. My kids have a Wii, a computer, cable TV, iPods, plus the essentials like warm boots and coats and mitts.  Whether or not they choose to wear them is a different matter entirely.

Truthfully, I make a pretty good living and I live in a nice neighbourhood in a brutally expensive city. There’s nobody else contributing to the family income, except for a bit of child support from my ex-husband.  I’m lucky enough to have a cool full-time gig, plus I have a very little part-time job. I have two daughters, a cat, a massive mortgage and a line of credit. I feel like I’m always struggling to get ahead of the debt, instead the debt is getting ahead of me.

When my ex and I parted, I got a line of credit. It has never been at zero.  A few years ago I thought I could pay it off, but I didn’t. Now, it’s about four times as big as it was then.  Yes, lots of stuff happened that caused it to get there.  Some ‘stuff” is more legitimate than other ‘stuff’. Why dwell on the past?

My over-arching goals are to pay off the line of credit by the last day of 2010, as well as start saving for emergencies, retirement, and that two to three months income we’re all supposed to have tucked somewhere.  I’d like to do it without feeling like I’m a cheapskate, or obsessive compulsive about money management. I’m not a stupid person, but there is a lot I can learn.

Over the years, I’ve spent a lot of time creating budgets using Excel, and watching the money. Note, I didn’t say managing the money.  Not that I’m trying to paint myself as a terrible money manager, I’m really not.  But I have debt, and I’ve owned up to the fact that I’m in debt because my long-term planning and even short-term planning wasn’t up to par.  If I had emergency savings, or hell, any savings, I wouldn’t have debt.

The 2010 budget is still on Excel, but it has one thing my budgets in the last five years didn’t have:  a column for budget AND a column for actuals.  Before I just over-wrote the actuals over the budget. No wonder it didn’t work. You can’t get a solid idea about where you overspent when you do it this way!

According to the budget, here’s where my net income will go this year:

  • A whopping 54% goes toward housing (mortgage, taxes, insurance, basic utilities like heat and hydro)
  • 3%  to transportation (I don’t own a car, and I’m trying to keep it that way)
  • 6% toward post-secondary savings for the kids
  • 5% for medical expenses (nope, not covered)
  • 6.5% for groceries (that means eating in, not out)
  • 5% for home maintenance and decor
  • Finally, 12% for debt repayment in order to wipe out the line of credit

The rest is tied up in smaller line items like cable, dining out, clothing, gifts, veterinary care, charitable giving, entertainment, etc.

My money hero, Gail Vaz-Oxlade, notes that no more than 35% of your net income should go toward housing. She does, however, suggest that you can move money around between categories, depending on your situation and your priorities. She also suggests that no more than 15% should go toward transportation.  I’m way under that!

Hope you can join in my journey, and share yours with me!


One response to this post.

  1. Good Luck to you! I’m less than 2 months into my own plan of getting out of debt and IT IS HARD. I’m not even a “big spender” – it was just bad planning (and no budgeting) on my part. I’m hoping this time my plan works!


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