Thursday, December 29, 2011

2011: Managing Finances

2011 presented a whole new ball game in terms of managing our finances.

The first step was buying our house. Going through the mortgage process really brings to light all of your finances. We had a fantastic loan officer who really looked into our situation so we could qualify for a sizable mortgage with just my income (since Dylan didn't have a job when we started the mortgage process), and with Dylan being on the loan even though he didn't have a credit score at the time. The biggest piece is the debt to income ratio. Now we have our mortgage obviously and since qualifying for our mortgage our income has almost doubled.

Now we haven't been rolling in dough since we also decided to get married and as I mentioned that cost a pretty penny. In fact, the last couple thousand went on my credit card and for the first time I didn't pay down my entire credit card for the month. Then a couple other bigger things went on there (those rewards points keep you using that card!), and we put our gas on there and so we have been in a position where we just haven''t quite been able to pay it down every month. But based on our budget, which I will get to in a minute, we should be all set in February, barring any unusual circumstances.

That is the other thing we have started recently, a budget. We talked about it awhile back, but just never quite got there since I got a new job, Dylan got a new position, then it took a bit for my benefits to kick in so I could know what my actual normal paycheck amount was going to be.

Essentially each month is broken out with the days of the month along the left side and all of the various income/expense items listed a long the top.

                   | Beg. Bank Bal | Rachel Pay #1 | Dylan pay #1| Mortgage |   Car    | CenturyLink |TOTAL
12/1/11                   XXXX                                                         (XXXX)  (XXX)                         XXX
12/2/11                                                                                                                                            XXX
12/3/11                                                                                                                              (XXX)   XXX
12/4/11                                                                                                                                            XXX
12/5/11                                                                    XXX                                                               XXX
TOTAL                                                                                                                                            XXX

Then the final balance at the end is carried over to the next month. The major expenses we have are due on the 1st of the month but my paycheck on the last day of the month doesn't quite cover them all, so I have a calculation that show me how much I really have available at the end of the month knowing the amount that needs to be paid right away.

I have all of our income listed out, and each of our bills and payments we make. We do not at the moment have a budgeted amount for food, spending etc. With it being Christmas that was just unrealistic and right now Dylan pays for the majority of our food. Since he got his job at our mortgage company, half of his paycheck gets direct deposited into my account, which is the household account, which I will add him to at the beginning of next year.  He keeps half of his income for "himself" which has meant he buys groceries while I work to finish paying off our credit card. Once that is done, the goal is really for his account to just be a savings account for us and some extra spending money for him.

I also have a miscellaneous column at the far right that is for the spending I do, like buying food, movies, etc. I go to my bank account every couple days and update this column so that I really am right on track with my spreadsheet. 

I have a "Total" page that pulls in the bank balance at the end of each month, then adjusts that amount for the bills due on the first so that I can see how much I would expect to have at the end of each month.

All in all, it really has been helpful to have an idea of what money goes where all laid out in front of me and to see where we can be in a couple months.

It has been quite a year in terms of changing how I look at finances. From having more bills to having immediate debt to deal with, I have experienced a lot. With some house projects and baby planning on the plate for next year, I am glad I have started the budgeting process now.

1 comment:

  1. Budgeting has really saved us from fighting about money. We did one right before we had the baby, which was super helpful. If it's not in the budget, it doesn't happen. Also helped curb random spending that really adds up!


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