Anatomy of a Road Trip Budget

My husband and I deeply enjoy driving. The "road trip" was somehow built into the core of our relationship, and travelling is something we've always done.

As much as I wish our road trips were always to exotic or adventurous locations, for the most part they seem to be visits back to where our siblings and parents live, or to visit friends that have been posted across the country. With gas prices increasing, we've shied away from taking a lot of trips for "us," and instead we tie our love for travel into knocking off visits to loved ones. (I know the "knocking off" part sounds unloving, but there's quite a few of them spread across cities, provinces and countries. We have to be deliberate to fit them all in.)

The financial approach to the road trip has varied a lot over the past few years, but we've seemed to develop a system we're both pleased with. Here's the steps we took last trip to keep the budget in check:

1) Apply the food budget from the days we'll be away to the trip.

Of our withdraw of $350 twice/month for food, transportation and incidentals, a good chunk will go to the grocery jar. If we will be away for five days, we will then take out the equivalent of 5 days worth of groceries and put it towards food for the trip. The same goes for gas. If we end up eating out a bit with family, or driving from person to person to person, we'll spend more away than we would at home for those 5 days worth. That extra money will come from our kitty, which is point 2.

2) Use the kitty.

We set aside a portion of each pay to a specific bank account that covers our miscellany. Basically the things that come out of it are clothing, gifts, and smaller-scale trips. One rule of the kitty is that we have a discussion before we dip into it, and we both try to keep it rare. Once it's gone, it's gone, and if the account ever got to 0 we'd be stuck with very little flex until we built it up again. So we try to make sure that doesn't happen.

3) Plan expenditures ahead of time.

The town we live in is teeny-tiny, with very little "shopping" to speak of. So whenever we go away, we generally end up picking up a thing or two we've been putting off for a trip. Those items are discussed, and a tentative number is settled on for how much we will actually be spending. Sometimes, of course, that number will be off, but for us actually sitting down and looking at a schedule of days can give us a pretty good budget idea.

4) Eat in when possible.

The easiest way to lose control of the budget is to eat out a lot. Again, with a small town, things like ethnic foods and high-end restaurants are hard to come by, so it's a big temptation when we're away. We tend to save the trips out for celebrations with friends and family. (This past trip we celebrated our 4 year wedding anniversary at the place we got married. Some things are hard to put a price on.)

Mostly, it comes down to planning, and being honest about numbers. The more you know ahead of time about where you'll be and what you'll get up to, the more firm and realistic a budget you can produce!

Ted's Guest Blog: Part 3-Balancing Paycheck to Paycheck

This blog title should maybe be changed to Recovering Canadian Shopaholic-plus Ted. I've really enjoyed seeing his insights that I learn from day-to-day down on paper and laid out. When we got married I found there were a lot of things I didn't know I didn't know, and I am pretty sure I'm not alone. I found that to learn I really had to get my hands dirty and see how the processes we put in place work out over time. It's one thing to hear "debt is bad," but it's quite another to go through the journey of paying off debt, and enjoy the satisfaction that making better choices gives. Being a grown up, and making grown up choices are not always guaranteed to go hand in hand. For me, learning was a process, slow and sometimes painful, and not one epiphany "aha" moment. Small changes over time leads to big change.

Here's Ted!

Balancing paycheck to paycheck. Ally and I got lucky that we didn't have to think about this, but I think it made it easier to stay committed to budgeting. The goal here is to have roughly the same expendatures both at mid month and at end month, so that your disposable income is reasonably close to the same each time you get paid.

First, why is this a good thing? Imagine this scenario: At mid month pay, my credit card payment is due, so I spend very little on living. Maybe I don't even take out any "clothing and gifts" or "entertainment" because I want to pay down this high interest credit card that I got in trouble with. So here comes end month, and I don't have a credit card payment due and it's time to "pay myself". So I celebrate that I have a bit of cash and to "make up" for the fact that I tightened my belt two weeks ago. And then I go out for a meal and put it on the card "Hey, I got cash and no bills, I can afford it!". Ooops.

So how do I solve it? One way Ally and I did this was by actually knowing when during the month our expenses came out. The credit card (this is where our cable and phones go) and the car payment were mid month, while insurance and utilities are an end month expense. The mortgage comes out on the 2nd and 17th (two days after paydays). And of course there's the variable (micro) cash for each 15 day period. This leads to consistent expectations of our disposable income and no temptations to spend every second paycheck because we have no bills due right away.

It also helps to have these expenses timed to be right after pay days, so there's no need to sit on cash for two weeks to just before the next payday. Worse is taking the interest penalty and being 2 or 3 days late on a bill (which is still late as far as your credit rating is concerned) or going to a loanshark for a payday loan which costs far too much. So the takeaways are: when you sign that lease and they ask you what day of the month you want the payments to come out, give it some thought. Alternatively, give some of your payees a call and ask them to switch the due dates to something more convenient for your pay cycle. It will bring balance to the... umm... month.

Simplicity

I've had a recurring theme of simple vs. complex coming up in my life. Most of it is showing itself in work, and I'm finding a new passion for being concise, to the point, and straightforward, without, hopefully, losing flexibility. I think that goal is completely transferrable when making future financial plans.

In a lot of cases, structure is good, and detailed planning is necessary. For friends that I know I working towards paying off debt, they've found a lot of guidance and help from Dave Ramsey Financial Peace University. His detailed, step by step process is outlined here: http://www.daveramsey.com/new/baby-steps/

Detail is good when implementing a budget, you don't want to overlook or miss things. I think where simple becomes really important is in the planned spending aspect of a budget. It's so easy to become all over the place in where you want to spend, with a list of 10 projects on the go and buying goals that will take a decade to complete. Now, I have learned over the past few years that goals are good, and planning is good, but I think sometimes we can get so caught up in "what's next" without leaving any flexibility. If I have my next $30,000 in expenditures planned, then where's the room for generosity? Where's the option of spontaneity or changed circumstances?

I just can't seem to get out of my head how complex modern life has become. All the busyness, and all the planning can make for some over structured schedules and stressed out families. If I pile 40 things into my week, and can't achieve them all (because the list was unrealistic to begin with) then I know a lot of women, not just myself, that would beat themselves up for not being able to "do it all." In direct response that pressure I've felt in myself, I've felt a calling back to simple. I have goals, I have schedules, I have guidelines, but I have the option to say, "that's too much" or even, "let's wait, and sit on it, and see." Forward momentum makes us feel like we are accomplishing, but sometimes so much is learned and gained from RESTING instead of moving.

Making the System Work for You

This is us the weekend we decided to change the way we look at our family's finances. Yeah, I wasn't that thrilled during the actual conversation. Trust me.

So, you've made the decision to clean up your finances, to get organized and in control. It's a little intimidating making that commitment, not knowing exactly what's ahead, and how things will work out. When you're in that starting point, the safest way to stay on track is to make things as simple for yourself as possible. If you're using the magic jars, the best way to begin is with the tried and true method. From Gail's website and interactive budget you know that your variable, or "life" spending, should be about 25% of your net income. (The budget is posted a couple months back) The jars that Gail has assigned are Food, Transportation, Entertainment, Clothing and Gifts, and Other. If you're just beginning, it's best to start with these divisions.

Once you've gotten the hang of spending with cash, and only withdrawing from the bank machine once a week, you get to play with the system to make it work best for YOUR family. It's your money, and every family is going to have their own quirks and needs. The basic starting point is pretty universal, and as you go it can be tweaked to work better for you. If you are making changes to the basic standard though there are some guidelines I'd suggest.

1) Only make 1 change at a time. If you decide you want to change the withdraw schedule, AND the number of jars, AND the amount you're taking out it will be too much to deal with all at once. Prioritize which changes are the most important to make and start there.

2) Keep the number of divisions between 5-7 jars. The more divisions you have, the harder it is to track exactly where your money is going. If you keep it simple you make less work for yourself.

3) Don't make a change without your spouses input. When we decided to change our withdraw schedule from weekly to semi-monthly (Based on Ted's pay) it took 2 or 3 discussions for me to warm up to it. Considering I'm the one that is in charge of day-to-day spending I needed to be on board. It's worked out for the best for both of us, but it took some practice for me to think of a budget for 15 days as opposed to 7.

4) Review what's working, and CELEBRATE it. Be proud of the work you've put into managing your money. For a lot of people it doesn't come naturally and it's not easy. Don't beat yourself up over slip ups, but don't dismiss them either. Try to figure out what needs fixing and fix it.

5) Keep it about the team. I was not eager to start, I hated talking about our finances, and I didn't want to fix what needed fixing. It was only after I realized how much BETTER I felt talking about things that I wanted to make changes and make things better. Without a spouse that was encouraging and kind I don't know if I would've done what I needed to do. Making taking control of your finances a together thing will bring you more understanding of your spouse and increase your chances of success.

Our Grocery List

I've had a couple requests for a template of our shopping list/meal plan. On this list are foods we generally buy, some we get once every few months as a treat (bologna, appetizers) some are staples in our household. (SB chicken breast, bananas, cheese)

I tried very hard to get a copy of the file onto this post and it didn't work for me-so if you have the desire to make your own or edit mine let me know and I will send you the excel file!

Monthly Money Meetings

Sometimes in our family we get into a negative routine where we only discuss money when one of us has an issue with it. Hubby thinks we're not saving enough. I think we're not living enough. Our priorities get out of sync. We'll then sit down and discuss our finances. Usually in this situation one of us is starting in a bit of a funk, and while we don't let the discussion end until we're on a positive note, it's sometimes a painful road to get there.

My friend told me that her and her husband have monthly money meetings, where they sit down and discuss the month they've had and look forward to what's in the future. I immediately asked myself why on earth we didn't think to implement this for ourselves. I was struck with how positive it would be preparing for this discussion, coming together as a team to reconstitute what our family's long and short term goals are. Everyone wants to live debt free, but it's something so much easier said than done. Taking the time to sit down month to month and say "this is what we need to do this month to be on our way financially" will help make it possible.

I presented this idea to Ted, and we both agreed it's something we want to do. Our family having a monthly financial meeting means we will plan better. We'll have a forum in which to defend our positions, convince the other person, and listen to the other side of the coin. In the old method of a heated discussion, I would turn to my spouse and say "We never do anything fun, I want us to travel more." In the new forum, I get to say, "Here is some flex in our budget, or here is what I'm willing to cut for X amount of months in order to pay for a vacation as a family." We'll have a chance to reaffirm what we are working towards, and re-evaluate our priorities moving forwards.

First meeting will be in our new home-I'll be sure to update how it went and what we covered.

Prioritizing Spending

Ted and I were in a wedding together last August. It was in Ottawa, and seeing as we live in New Brunswick, we had a lot of time to talk on the way there as well as the way back. I'd say this drive was a pretty pivotal point in terms of our relationship and how we see finances. It was after this drive that we implemented a weekly spending budget, and set up our allowance jars.



Weddings are expensive. We had spent quite a bit on the clothes, meals, getting there and all those other incidentals that add up. On the way back we got on the topic of saving for a house, and how we were going to have to change some habits to put save the kind of down payment we both wanted to make. Inside I was cringing at the though of tightening our belts, and on the outside I was...well pretty obviously upset too. My fear was that we were going to put our life into saving, and not LIVE in the time between then and buying a house.

When Ted puts his head into something, he goes for it very intently. He gives it 100%. I was afraid that saving would become all he was focused on, that numbers in the bank account would be put ahead of having new experiences, of doing things as a couple, and making memories together. But, I know myself, and if I were left handle our family finances alone I would swing too far the other way, and put most of our focus on living, rather than looking ahead to the future. I guess that's where a team mentality comes in. The next week we sat down together, multiple times, and worked out our incomes and expenses. We cut out a couple of things that I struggled to let go of, like a trip to Ontario after our son was born, but Ted gave some ground as well, and let us keep our babymoon before our son was born, and our trip to see my Mom after he was. Letting go of that Ontario trip was so hard for me at the time, but it worked out so well, my brother and sister in law and his parents came to see us at our home instead, and we didn't have to worry about packing up a one and a half year old and travelling with him.

We set aside a large chunk of our variable budget towards house savings, and that sacrifice means that we will have a manageable mortgage payment each month, and therefore we'll be able to have experiences when we are in our house. We were able to look at houses that were a little higher priced, and ended up finding the perfect house for us, the house that was meant to be OUR house. Compromising then meant having more later.

The lesson that I took out from all our struggle to find balance is that delayed gratification really does pay off. The things sacrificed by us, like dinners out, new clothes, and trips, means that our quality of life will be higher going forward. I still need to remind myself often, that we can find things at home for free to enjoy, that stuff is just stuff, and things don't make me happy. I still need to remind Ted that sometimes we have to let loose a little, to make the decision together that we will spoil ourselves, that saving will always be there, but experiences as a family at this stage won't be. It's a work in progress.

Organizing Meals

In our household, I've found the way we spend money on what we put into our mouths reflects how we spend in other aspects of our lives. When we first got married, our meals were rushed, disorganized, and not planned out. As we got settled into our daily routines of marriage, I decided I really wanted to make a plan for our suppers. I hoped that if I invested a little bit more time into what we ate, I'd lose at least a little of the stress associated.
I was so pleased to find that is EXACTLY the way it worked out. I went from getting home after work and immediately stressing about what was for dinner, to knowing what we were going to make, what goes into it, and having all the ingredients needed on hand. Of course, exceptions were made, when I was pregnant I was an extremely moody eater, and had sudden aversions to foods I previously enjoyed (bacon), but for the most part, I find a meal plan pretty easy to stick to.
When you're planning your meals at the beginning of each week, that means your grocery shops will be planned. Which means you know pretty much exactly what you're going to spend. This change virtually eliminated impulse shopping for us. If it's not on the list, we don't buy it, and if we left it off the list, it was probably for a good reason. We don't just shop smarter, we shop HEALTHIER now, and we generally only shop once a week.
Ted, being Ted, took things up a notch and made me an excel spreadsheet of all the foods we usually buy, divided into sections of the grocery store, with the days of the week typed out at the bottom. I can write down lunches and dinners for the whole week, then after our shop post the whole thing on the fridge. Things like cookies, baked goods, and pizza pockets don't exist on the spreadsheet, so they don't make it into the cart.

I found that being organized with making a meal plan and a grocery list was a first step to financial organization. It's a small and really important way of being responsible with the things you've been entrusted with. It was a great lesson that sometimes one small change can lead to a whole bunch of other small changes, that turn into a bigger picture kind of change.