Tag: budget

Budget Plan Basics: Creating A Budget to Maximize Your Income

 

In one of my first posts, 11 Steps to Achieving Financial Freedom, I mentioned how tracking my expenses was a key component in creating my budget. I knew a budget would be necessary to meet my financial goals; but I made some mistakes along the way. My first month, I only factored in my fixed expenses. As you can imagine, I was completely off on my budget and it didn’t accomplish what I had hoped.  I did some research and was able to correct the mistakes I made in my original budget. The following month was much more detailed and had me factor in items I really didn’t think about, like medical expenses. I’ve provided a basic example below so you can see how I plan my budget every month.

This Budget Plan does not factor in legal fees such as child support, alimony, etc. If you are self-employed and have to take out taxes and insurance expenses, I would suggest adding these categories to your budget. You’ll also notice I have a line item for “Entertainment” which I use for concert tickets, movies and media purchases. While I may not have a specific section for vacations, I tend to put my travel expenses into “Entertainment” as well. If you travel regularly, it may be beneficial to create a section just for your travel expenses too!  The bottom table with all the totals was created to compare my expenses to my income. If there is money left over in a month, I make an additional payment toward my “focus” debt.

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A few tips: Be sure to include expenses that may come up annually or quarterly. Last month, I completely left out my License Plate Renewal and my Quarterly Parking Permit expenses. This left me with a deficit of $231 in anticipated costs. I also didn’t include the gift I planned to give for a wedding. Boom! Now I was off on my budget by $331! I don’t care what anyone says, $331 is a large amount and can have devastating effects on your monthly payment schedule. For example, if I estimate that I have extra money, I may make a larger monthly payment than normal. If I do this while my budget is off, I run the risk of paying a bill late or not being able to pay cash for expenses I had budgeted. It is for these reasons that I am continuously adjusting my Budget Plan and make a new one monthly.  That’s also why I only make the minimum payment at the time a bill is due and make additional payments at the end of the month. This helps me to avoid budgeting issues even if I miscalculate expenses. Next week I will be posting about debt repayment methods. This will help to explain why I make payments the way that I do and elaborate on “focus” debt.

I’d love to hear if this Budget Plan works for you! Please feel free to send comments and feedback!

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Perception vs. Reality: Don’t Compromise

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“If you limit your choices only to what seems possible or reasonable, you disconnect yourself from what you truly want, and all that is left is compromise.” – Unknown

Happy Monday! My post last week was about continuously pushing forward and keeping a goal in mind. Today, I wanted to also focus on personal perception versus true possibility. The weeks when I struggle most are the times when I get in my own head and think about things in a negative manner. I find that I start to have less confidence in myself or second guess decisions I’ve made. A great example would be that I’ve been wanting to travel to the Upper Peninsula of Michigan for a while; but scheduling conflicts seemed to push that possibility farther and farther away. I was bummed because my friend’s schedules wouldn’t allow for a vacation when I wanted to go. So I told myself, “Lauren, it’s just not in the cards right now. You can go another time.” I had limited my vacation potential because others weren’t available. While I laid in bed a few days later, I asked myself, “Would it really be terrible to travel alone?” I’ve been living alone for a few months now; the thought was foreign but not overwhelming. So last week I took the plunge and chose to book my first solo vacation.

There are many cases where it’s great to travel with others. It certainly reduces the cost of your travel expenses and you always have someone to do activities with. In this case, I wanted to travel to escape my day to day life. My vision was to spend time on a beach where I could relax; but I also wanted to get out and enjoy some outdoor activities that I haven’t had a chance to do this year. The thought of traveling alone was a little scary because I’ve never done it before; but it slowly started to seem like a better idea. By traveling alone, I didn’t have to take other people’s preferences into consideration. I booked a small dated cabin (with great reviews) through Airbnb. I don’t need to stay in a glorious hotel when I plan on being outside most of the time. Plus here I walk out the door to the beach and basic necessities (silverware, plates, bedding, etc.) are included. I also knew that I wanted to explore Rocks National Lakeshore but didn’t necessarily know if I’d feel safe hiking by myself. I started looking into group tour options that I could sign up for. I found a site seeing tour where I will be participating in a 6 hour, 14 mile kayaking trip to see all the rock formations that were on my wish list. From there I’ll then take a 2 hour hike to experience the gorgeous surroundings and natural waterfalls until we reach our muster point 2 miles away. Some other activities I plan to do are group lighthouse tours and a winery tour and tasting. Since these activities are in group settings, I’ll be able to have interactions with others without feeling alone. I’ll also get the “me” time that I want while I read and write on the beach.

I have a limited travel budget since I’m trying to pay down bills so I had to do my research before booking. Since I’ll be traveling around a holiday, I found that a lot of Hotels/B&Bs were expensive (some up to $175/night). I did my research and found that this experience could be affordable even though I was on a budget. I was able to keep my costs so low because I chose activities and areas that were reasonably priced. The cabin in Escanaba is approx. 1 hour from the national park that I planned on visiting. I was able to get a lakefront cabin (sleeps 4-5) for $90/night + taxes and fees. I can literally walk out of my door to a private beach with chairs and a fire pit. After my lodging was planned, I moved on to figuring out the my activities for the trip. Kayaking and hiking were a must and there were 3 main companies that did both types of tours in a combined package. I chose a package that required me bring my own lunch, water and snacks. By packing my $4 worth of food, I’ll be saving $85 on the overall tour! Yes, this price includes all necessary gear (minus water shoes that I already have)! To my surprise, I found that the lighthouse tours near Escanaba were extremely reasonable. One tour was completely free with a reservation and the other was $3/person. $3 total for a few hours of my time? I’ll take it! I also love wine; so whenever I travel, I look for the nearest winery to get my grape time on! Get it grape time? Yes, I’m corky! Okay, I’ll stop with the wine puns. Escanaba has a popular winery in their downtown area. The amount I spend here will be determined by how much I drink. Based off their prices, I’m expecting to spend between $20-30 for about 2 hours of my time. To reduce my food costs I’ll be packing breakfast and lunch options. This will keep my meal costs super low and give me wiggle room to eat out for 2-3 nights without blowing my food budget for the month. I also need to take into consideration gas and tolls. I usually travel about 900 miles in a month and that generally costs me around $120. Since this trip will have similar mileage, I’m expecting to spend $120-140 in gas/tolls. Let’s map out these costs so we can see a grand total:

Cabin $332
Kayaking/Hiking Tour $125
Lighthouse Tour 1 $3
Lighthouse Tour 2 Free
Winery Tour/Tasting $20-30
Food/Drinks $60
Gas/Tolls $120-140

Trip Total: $535 – 565

Could this trip be way less expensive if I went with people? Hands down the answer is yes! My lodging and gas costs would be cut in at least half or more. But the point is that I have the ability to travel on my own and I didn’t let scheduling conflicts prevent me from doing something that is 100% possible without other people. I changed my mindset to think outside of how I normally think and came up with a solution to make myself happy. While the quote above doesn’t only apply to a travel scenario, it’s important to remember that you are the only person that can limit yourself. If you think it’s possible, then you will find a way to make it happen. If you truly want to do something, whether it be in your personal or professional life, you shouldn’t compromise! Reach for what you want. If people tell you you’re crazy, look at them, smile and say, “I’m not crazy, I just believe in myself.”

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