Type of Life You Want – Budgeting

This is a continuation of a four-part series titled: Type of Life you Want, where I’ve previously spoken about receiving a Financial Education and Getting out of Debt. This is not a post about Kink, but about how living the life you want takes a conscious effort.

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There are two types of people in the world, those that budget and those that see it as a time-consuming waste of time. I am the former, although Mister K is the latter. For that reason alone, I handle the finances, an odd twist to our D/s dynamic, where he usually is very much the lead. Some days it’s easy, and others it is most definitely tough. But for us, it has been worth it. Our budget is less restrictive now that we’re almost completely out of debt, with the house paid for as well as our cars. We could potentially give it up completely, except for that small thing that is truly quite large: Retirement.

Our journey started when we decided to sell our houses and all our other possessions (read Getting out of Debt for more about that). Without a budget, getting out of debt would have been impossible. It is not an easy thing if it’s new to you, as it was to me at that time. Yes, I knew the fundamentals of budgeting but had not truly ever put it into practice. But just like everything else in life; practice makes perfect.

The Truth in Black and White

To fully get accustomed to budgeting, it took a bit of forethought as well as gathering a good idea of how we were currently spending. I needed to know where all of our money was going. What were we spending on food, bills, clothing? What are we using for recreation, leisure, and silly things like to-go coffees and weekly lunches? After writing it all out, I was amazed to see where it all so easily went and easily figured out why we were so deep in the hole.

Most of our cash was going to things we didn’t even think about. A dollar here, a few there. A donation to this, lottery tickets, etc. Once it was all accounted for, I would say 30% of our monthly income was going to unrealistic, unaccounted for purchases. I, by myself, was spending $100/month on take-out lunches. Something I could have easily made at home and did start doing, but it took the numbers in black and white to see the problem.

Decide, Divide and Repeat

Going back to my lessons from high school we decided on a 30/30/30/10 budget. 30 percent for housing, utilities, and property taxes. 30% for transportation, insurance, and other monthly expenditures, like clothing for the ever-growing children. Another 30% was planned for food and recreation, where we took half of our recreation fund to save for travel. And lastly, 10% for emergencies.

Emergencies

This is the most important aspect of budgeting, being prepared for the unexpected. Our emergency fund has saved our butts more than once, and I’m sure will once or twice again. Saving for emergencies is different than saving for rainy days. It’s being prepared for the things that can go wrong that you pray, and hope will not. A hot water tank repair, a new furnace or roof. Brakes for the car, or a last-minute decision to send your kids to a music academy. It’s for those moments that seem impossible and would be, without it. Do not spend this money! Ever! And if you have to, replace it as soon as possible. It is the first thing we put away every month.

Housing

Next is housing. Where you live can greatly influence how much you need to spend on housing, but it’s a good idea to go with the 30% of your income rule. Understandably in some cities in North America, 30% means you need to make over $6000 a month. Something unattainable for most, so be aware of how you can juggle this expense will help too. For us, we live relatively cheaply. Our house is now paid but we still have rent for the land our home is on and the gas and electricity. Also, we own a property, so we have to include taxes into our calculations each month. That way when it’s due at the beginning of the year, we have it on hand and we don’t feel like we’re doling out a bunch of cash (which we are, but we’re prepared).

Monthly Living Costs

Next is monthly expenditures. In this, we include our Christmas fund, retirement savings, automotive costs, insurance, and any other bills, such as clothing and shoes. 5% of all this money is put aside for lessons. Self-improvement is important to us and our children’s future, so we plan for that. We do also have a fund set aside for our kids for when they leave home. It can be used for education or the down payment on a house but personally, I hope they use it to travel. The best education you can give yourself is seeing the world with your own eyes.

With the self-improvement money (which adds up quite fast), Mister K and I have taken cooking lessons, dance lessons, and a pottery class. I have independently taken classes in foraging (a passion of mine), weaving (yeah, like baskets made from grass), and even tantric yoga (so fun and worth every cent). Mister K isn’t much of a class taker but has chosen to take a few. Recently he’s decided to go for a journeyman ticket, so that money has come in handy once more.

Food and Recreation

Then we have food and recreation. Our food budgeting makes the whole thing a bit more complicated. Each week I make a meal plan (with alternatives because some days you just don’t want what you have planned) and I budget from there. Making most things from scratch saves us a lot of money as does growing much of our food. In the summer and fall, we often trade with other home growers to get what we need for the winter. Sometimes it lasts until spring, others it doesn’t. But we plan for it not to, just in case.

From this 30%, we also include recreation. Things like dining out, movie nights, concert tickets, etc. and then half of that is saved for travel. This gives us a fund for the things we are truly passionate about, seeing the world. I have seen quite a bit but not nearly enough. Mister K has only left Canada once, and it came as a reward for getting our debt below $10000. My kids want to see everything and have the dream to set foot in each of the oceans, so we look forward to driving across Canada next year (I haven’t told them how cold the Atlantic is yet. They’ll figure it out).

The leftovers

Yes, some months there is money left over. We put all of this into a rainy-day fund. It’s not for travel or bills or anything else we have already budgeted for. It is strictly for playing hooky, taking a spur of the moment day trip, or a visit to the zoo. It is for days when you just need a change. Being homeschoolers, this keeps us sane (although the last year has put a damper on this). Having fun is just as important as making sure everything is taken care of. Like the old English proverb says, “All work and no play, makes Jack a dull boy.”

Finding a system that works

When we first started, we used an envelope system. All the accounted for funds were drafted from the bank and put into their respective envelopes. This quickly became the bane of our existence because we had to remember to grab the cash before we went to do the shopping. So, now I have accounts for each part of our budgeting, connected and accessible on one card. Everything is paid online, and that makes it easier to keep track because there is no need for keeping receipts like we used to. The only downfall is we do pay financial fees for using the bank services, something I haven’t been able to find a way around, so instead, we budget for it.

How credit plays a Role

We don’t believe in using credit unless it’s an absolute must, with a bit of an exception; our line of credit. This is used for big purchases that are too large for a credit card (like Mister K’s tools when he had an unexpected career change) and then is paid off using our savings. And we also have a credit card that we use for all our small purchases and groceries each month. It has a limit of $1000 and we pay it in full twice each month. That tells the banks that we’re making double payments (in a way we are) and therefore our credit rating is in the high 800’s. We don’t use it if we can help it, although the bank really wants us to.

Because most big purchases can’t be bought without a credit check, this allows us to have what the bank requires, and then we can easily pay for what we want in cash, like our two cars, or Mister K’s tuition.

For Richer or Poorer

Budgeting has changed our lives dramatically, but it hasn’t always been a blessing. We went from a lifestyle of spending what we wanted when we wanted, to having to think consciously about every transaction. It did get easier though and now we ask how we’re able to get something instead of where we’ll take the money from. Long gone are the days where we think, “I wish” or “If I could afford to…” Instead, we look at the numbers and decide how we will make it work.

We have the ability to be the one’s in charge of our lives and this gives us autonomy that most will never be gifted. We aren’t wealthy by any means, living off of half of what most people make. But we are rich in all the ways that matter, and none of those are based on money.

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This is part 3 of May More’s ad hoc meme #Lifematters #Money Matters. Next week is open for topics of our choosing, and I think I’ll talk about ways that everyone can save money. See you then!

For more of MrsK’s life, see About MrsK, Meant to Be, or Dynamic Data.