Accountability and moving on

australian dollars

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So the last couple of weeks have been particularly stressful around here, but despite the emotional and physical energy spent in dealing with all the stuff of life, I learnt a few more things about myself when it comes to money.  Well, to be more specific, a few things I already knew were confirmed in the absolute, and required a very honest, unfiltered look at myself.

When life throws curveballs at me, I drop the balls I’m already carefully juggling to to be able to deal with what’s right in front of me, and invariably turn to junk food for comfort, which requires spending money, and I will find money in areas I have no business looking to fulfill this comfort.

Even though I know that this is borderline harmful for me in so many ways.  I still do it, just for the relief of a few moments of getting what I want.

And then I start feeling guilty.  And my physical symptoms worsen because of the c**p I’ve eaten.  And I get grumpy, and my family bears the brunt of it. whether it be my snappy mood or my withdrawal to try and deal with it all in my head.

Ouch.

That’s an intellectual ouch.  I wish it physically pained me to write that, but it doesn’t.  Because it’s not new information, it’s a truth I’ve known for a long time, but have never really, truly faced up to, let alone spoken it aloud.

Yesterday was one of those days, and also my youngest son’s birthday.  I had chosen to cope with yet another emotional upheaval with c**p food, and by mid-afternoon felt absolutely terrible, and limped through the rest of the evening, a version of myself that I didn’t even have the energy to feel guilty about.  Awesome birthday present for my kiddo.

So yes, I most certainly have emotional triggers when it comes to spending money I shouldn’t, and eating food I shouldn’t, and I’m tired.  Physically and figuratively, I’m so, so tired.  But today is a new day, a fresh page to keep writing this story.  And I will, as imperfect as it is.

Where to now?

So.  We’ve talked about creating the vision of your ideal financial life, and starting to take steps to work towards it.  I’ve said it before, and you’ll keep hearing it along the way, I am far from being an expert in all this, and I’m just fumbling my way through.  But I have got enough experience and knowledge to work out a rough plan of where to go next, and for me that’s been working out the most important things requiring money right now, and working out my budget.

I get paid fortnightly, as is probably the most common format here in Australia, so I work on a fortnightly budget.  Each round of two weeks has some constant spending requirements, and some that vary, depending on the time of the month.

To work out what needs to be spent where, the first thing I do is look at my list of Essentials, Helpful and Luxury.  At the moment, my income only covers the Essentials category, and for me the list looks like this:

  • Mortgage
  • Giving
  • Grocery shopping
  • Electricity
  • School fees
  • Petrol
  • Personal loan repayment
  • Credit card minimum balance
  • Home and contents insurance
  • Phones (home and mobile)
  • Council rates
  • Water supply
  • Car registration
  • Medical costs
  • Miscellaneous (a tiny amount!)

That’s it.  Right now, there is no wiggle room for anything else.  I have two jobs, one for which I’m paid a fortnightly retainer + any extra work above that amount, and the other which is casual for a set amount of hours per week.  To work my budget, I work on the absolute minimum amount of income I can receive in a fortnight, and anything extra is a bonus.  As it stands at this point in time, my income plus government family allowance *just* covers the bare minimum essential expenses. I am very grateful that I have these jobs to provide for what I need, and the last year has very much been a lesson in defining needs and wants.  Losing your job and being unemployed for 5 months can do that for you!!!

Whenever I work more hours in my main job and earn over the minimum amount, I try to put that towards some of the things in the Helpful category, but something always inevitably comes up, and as I don’t have an emergency fund, or funds for the unexpected, that’s where the money goes.  I have been very fortunate to date that I’ve (nearly) always had money when I’ve needed it, just the right amount, and the times I’ve been short I can look back and go ‘hmmmm, if I hadn’t bought that c**p food/ coffees/ insert any other things I didn’t need, I would have more $$$ for xyz that I DO need!!’.  So yep, lessons learned.

I have also learned that the best way for me to not spend money on things that I don’t need to – and to avoid filling emotional needs with food (or anything else) – is to make sure that every single dollar of income is allocated to a category (also known as creating a ‘zero budget’ and ‘giving every dollar a job’, read much better advice at Dave Ramsay and You Need A Budget) and to get rid of my income as soon as it comes in, on the things I need to spend on.  I get paid on a Wednesday evening, so I sit down and pay all the bills I can via internet banking that night, and as of today I will be doing my grocery shopping on a Thursday morning, to make sure all the grocery money is spent on groceries, and not dipped into for anything else!  I’ll go into how I plan for meals and grocery shopping later, right now I’m focusing on the ‘mechanics’ of spending my income as it needs to be.

I’m sure some of you might be asking ‘but HOW do I work out my budget?  How do I work out what I need to to spend each fortnight/month/ whatever, when my bills are all over the place?’.  Some bills/commitments will fall into your budget cycle (fortnightly/monthly), but other don’t, like the bills that come quarterly, every 6 months, annually etc.  For all the bills that fall outside of your budget cycle, work out the total annual cost required, and divide them by 12 (for monthly payments) or 26 (for fortnightly payments), depending on how often you want to include it in your budget.  You can do this with any payments that you want to split up.  For example, I have some payments that are debited directly from my account fortnightly (school fees, personal loan repayment), so I don’t have to worry about those.  Then my mortgage payment is monthly, but I divide it by two to create a fortnightly payment – the amount is still debited monthly, but the full amount is spread out over two budgets (this is in theory anyway, this month will be the first time I’ve done it!!). For my quarterly payments (council rates, electricity, water supply, car registration), I add up 12 months worth of bills, then divide that amount by 26, and allocate funds in my fortnightly budget toward that bill (again, in theory, I’ve done it in the past and have fallen off the wagon, but am back on it now!).  This way I don’t have large payments consistently in each budget that I’m struggling to pay (as has been the case for the last 12-18 months).

Once you have the amounts worked out, you can decide what method you want to use to pay them, whether it’s contacting a company and requesting a direct debit be set up, or you manually make a transfer via internet banking, or go and pay it in person with cash (do people still do that anymore?), it’s completely up to you.  I use a combination of all three, but do try to set up direct debits as often as I can, that’s what works best for me.

Now some of you will have unallocated funds after fulfilling your Essentials commitments, and even Helpful and possibly Luxury categories (well done if that’s you!!!), or you might have some other goals you want to include in your budget – don’t worry about that so much for today, we’ll come back to that next week.  Just keep your $$$ in a safe place and try not to spend them!! (Yes I know it seems a bit backward, to wait to ‘finish’ your budget, but I’m just making this up as I go!!)

Phew!!  That seems like an overload of information even for me, and I’m the one writing it!!!  There are some fantastic resources available online for all things regarding money management, budgeting being just one of them – my favourite go-to sites and goldmines of information are Money Smart (Australia), Dave Ramsey and You Need A Budget (both US).  Go here, here and here for the budgeting areas on each site (or search for ‘budgeting’), I’ll be referring to these sites throughout this journey as I have learned a lot from them, and love their very practical approaches to managing money.

This week, I’m going to set you some homework – go forth and budget!!  If you need any help, please feel free to contact me via e-mail stitchingmum at gmail dot com, or in the comments below, and I’d love to Skype with anyone if they’re game (contact me via e-mail for info)!!!

Remember, you’re not alone in this, we’ll take it all one step at a time.

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