Inflation

Everyone is talking about all this inflation. How everything is getting more expensive, I know we are feeling it. Aren't you? Just seems like every time you turn around you're paying more and more money for the same items.

While we were making the household budget for June I started wondering how much of an impact all this inflation has really had on our family. I planned on writing a post about how much more we are spending for our basic needs. I went digging for our budget for June '07 to compare it to June '08 and was pleasantly surprised.

Over all there wasn't much change. Technically we are spending less money this month than we did a year ago. Yup, we are spending less. We also made less so that's probably why. I'm sure if we had an extra $300 this month we would be happy to find a place to spend it. But the bottom line is that our basic expenses haven't changed very much at all.

Here is the breakdown...
Mortgage - no change, actually it went down $50 when we got rid of the PMI but we have decided to continue to make the same payment and reduce our principal that much more.
Homeowners Association - increase of $9
Cable - down $3. This one surprised me. I don't think we have gotten rid of anything, I can't remember.
Electric - no change. We are on the plan where you pay the same every month, but they didn't make an adjustment this year at all.
Car and life insurance - down $9.
Cell phones - increase of $3
Car payments - no change
IRA contributions - no change
City - increase of $7
Medical- increase of $25. We have two monthly prescriptions that we didn't have last year.
Groceries - no change. I do spend more time shopping sales and using coupons though.
Gas - increase of $40 and we still think we may need to add a little more later in the month, even with my husband picking up an extra person in the car pool.
Backyard landscaping - increase of $165. We hadn't landscaped the back yard last year.
Pocket money - no change
Other stuff - down $360.

Pretty surprising. The only thing that changed significantly was gas, which I was expecting. There were some one time expenses last year like swimming lessons, a camera, and a surround sound system we needed for our new tv. But this year we had to replace my retainer that I stepped on and broke, had to do some maintenance on our hot tub, and we have a wedding to go to. But over all actual outlay decreased, which is pretty cool.

I'm not saying that there isn't inflation, but my feelings about our budget don't match our reality. I feel pinched, strained, and pessimistic. But it seems that it's more from listening to the news than from our actual situation. Pretty interesting.

pic by: keepin' on

Time of Use

The summer in Phoenix is brutal. This is our expensive time as far as utilities are concerned. I know in other places it’s the winter that is the expensive season, but not around here. With the air conditioner running pretty much constantly to keep the house at a reasonable temperature it gets expensive quick. See the pic? It's 114 in the shade, at 6:00pm.

Our electric company has a time of use plan that we could sign up for. It provides cheaper electricity during off peak hours, and more expensive electricity during peak hours. They advertise that it will lower our electric bills, which can get as high as $280 a month. During the summer (May 1 through Oct 31) the peak hours are weekdays from 1pm to 8pm. We would pay an average of 18 cents per kWh on the time of use plan vs. an average of 10 cents per kWh on the regular plan. During off peak times we would pay just under 6 cents per kWh on the time of use plan vs. just under 10 cents on the regular plan. There is also a $3 monthly fee to be on the time of use plan.

This is a great plan if you work during the day. I’m kinda temped to give it a try anyways. But I don’t know if it will work for us. Since I’m home all day we keep the air on all the time. Granted we do the laundry, cook, run the dishwasher, watch the most tv, and have the lights on during off peak times. I’m just not sure that is enough to combat the 7 hours of the air running at the expensive rate.

What do you guys think?

Pic by: Foxicat

The evolution of a budget

For the first five years of my adult life I worked for tips. Which meant three things:

• I got paid daily
• I got paid in cash
• I never knew how much I was going to make.

Having a budget was entirely necessary. It’s pretty easy to overspend when your pockets are lined with cash after each shift. I got into the habit of writing down my days tips on the calendar each day when I got home from work. At least that way knew how much I was making. I also took $6 out of my tips each day and put it into savings. After that, I really made use of the envelope system. Although I didn’t know there was a name for it at the time. I did get a small weekly paycheck. I would save those up each month and deposit them all at once. It was enough to pay my rent.

At age 23 I got a new job and was no longer working for tips. Getting paid every other week by check was new to me. So, I needed a new kind of budget. I listed my expenses in a word document and allotted my income accordingly. I stuck to my original plan of holding my paychecks until the end of the month. At the end of the month, when I knew exactly how much I had made, I would fill in the upcoming month’s budget. When a bill was paid I would put the payment info into the budget. If it was a fund rather than a set amount, such as discretionary income, I used receipts to keep track of my spending and at the end of the day I would make a note of how much I had left in that category.

Then I met my husband. He upgraded my clunky word document into a nice organized Excel spreadsheet. This is the way to go. The budget is still basically the same. We sit down together each month and plan the budget for the upcoming month. We keep our receipts and use them to track our spending. We’ve recently started using Bruce the tax guy’s suggestion of organizing your receipts in envelopes for tax purposes. It works out nicely. My favorite part of our budget is that we both have our input. We each know exactly what our goals are and where our money is going. To me, just that alone is worth the effort it takes to have, and stick to, a budget.

How much are memories worth?

I want to get some professional pictures taken of my son. He turned two about two months ago and I feel guilty that I haven’t taken him. I’ve succumbed to the sales pitches of what it means to be a good mom. I’m not a fit parent unless I have a picture of my kid standing next to a big plastic number 2. It sounds stupid, I know. But gosh darn, they are just so cute!

I’ve had a coupon stuck to my fridge for the past three months for no sitting fee and various other savings. I just can’t seem to justify spending the money. It’s not like I don’t have a gazillion other pictures of him. We even had to buy an external hard drive just to keep them all on the computer. But still, I want professional pictures taken of him at each birthday.

Part of my guilt is that I have them of my daughter. I faithfully took her every year, even when I was only making $7,000 annually. That means I spent almost a week’s pay to get her pictures taken. And now I can’t find the money, even though it’s now a small fraction of a week’s pay. Oh the guilt!

I had decided I wasn’t going to take him. The coupon expires at the end of March and I don’t have the money. So I thought it was finished. But then the guilt came back over me. I thought about how if I don’t do it now I will lose this chance forever. So, I took him to get his haircut so he looks nice for his photo shoot today.

I feel good about taking him. I decided I would rather regret spending the money than regret not getting the pictures taken. I can always earn more money but I will never again be able to have pictures taken of my two-year old little boy.

Stretching vs. Saving

We all say things like “I saved $10 on these shoes.” But everyone knows we didn’t really “save” any money. At the end of the month we won’t have an extra $10. What we should say instead is “I stretched $10.00 on these shoes.” That explains what really happened.

The idea isn’t that we actually saved any money. What we did was stretch our money. We took that $10 and used it to buy something else. Stretching enables us to meet our needs with less money. I don’t have money left over from stretching because I used it to improve my lifestyle instead. Our budget is uncomfortably tight right now. This weekend I found a way to stretch about $20 a month at our favorite restaurant. I’m excited about this because it will mean we get to go out to eat an extra time. I’m not going to fool myself into thinking we will actually save any of that money.