Budget Basics

The summer I finished college, I quickly got a part-time job.  Don't misunderstand, though, this was not the kind of part-time job that helped me squeak by - the first few months, as I worked my way into more hours, I was making $300-400 a month.  Talk about being broke.

By the time the winter came, I was more in the realm of $600-800 - enough to keep my car rolling and make the minimum student loan payments when they kicked in while my parents covered everything else in my life.

The next spring, I got a promotion, and started making enough to put me above the poverty line.  I knew it was time to make a budget.

There are a million people and blogs out there that will tell you how to set a budget, and I did a lot of research before making my first budget.  Two years later, my budget has changed to reflect a growing income and changing student loan payments, but the main tenets have remained the same.  A budget is personal, so my budget theory is personal.  I believe a good budget should:

• Focus first on paying for necessities: rent, groceries, utilities, transportation
• Focus second on paying off debt.  NOT minimum payments, but aggressively paying it off.
• Be envelope-based.  This means that you intentionally set aside a certain amount to spend in each category (groceries, gas, clothes, enterntainment, etc) and when you run out of money in that category, you stop spending for the month.
• Think long-term.  If you're paying insurance every six months, calculate the monthly amount and include it in your budget so you aren't spending money you'll need soon.
• Reflect your priorities.  It's more important to me to build up a "romance fund" so I can see my long-distance guy than to buy new clothes, and the amounts I put in each category reflect that.
• Be zero-sum.  The total of your spending categories should equal your income.  Every dollar should go to a category, with no extra.  If you plan out each category and have extra, recalculate.  Give yourself a little breathing room in tight categories, add to your debt pay-down plan, or put the money in your savings every month.
• Hurt a little.  If your budget doesn't pinch a little and make you think twice about purchases, then it is probably not getting you toward your long-term goals (yes, you should have long-term financial goals).

If it's your first time making a budget, it can seem kind of impossible to figure out what categories to create and how much to put in them.  To help get started, I really like Dave Ramsey's Monthly Cash Flow Plan.  It lists more than 50 categories you should think about, and it offers "optimal" percentages to help you see what's reasonable or not.  Again, my percentages don't always line up because some categories are more important than others - I don't always agree with Dave Ramsey - but it helps me be more conscious of where I might be spending too much.

Sometimes You Quit; Or, When Your Boss Cries

I have never quit a job.

Me leaving a job (with the exception of one time I was let go - the story behind which would be an entire blog) has always been inevitable because I was moving to college or home from college, a predetermined going away point that just tick-tocked closer and closer.

That changed this week.

Now, I have known my boss almost my entire life.  My brother and I went to school with her two kids.  She gave me my first job in high school.  She handed me my diploma when I walked across the stage at my high school commencement.  And while she's not exactly a friend, she has played a huge role in my life.  I appreciate the many, many things she has done to help me, especially in the last ten years, despite the fact that we often don't see things the same way.

There's a level of stilted-ness that comes about when you know your boss is trying to sell the business and that your job might not necessarily exist when that happens.  You have to watch what you say, because if the business doesn't sell, you still have to work for her, but at the same time, there are serious questions that need to be addressed.  Knowing if anyone has looked or mad an offer completely changes your timeline.  At the same time, though, you then become responsible for what you tell those below you - you need them to keep working and keep the business running, but you don't want to blindside them with a complete loss of income either.  It's a tightrope.

The tightrope is made thinner by the fact that I don't enjoy my job.  And not just because it doesn't challenge me or I don't enjoy the work, but because I have some fundamental struggles with decisions that are being made at the top and I am burned out from being on call 24 hours a day.

It is time for me to move on.  I know that, and I've felt it for a while, but I had a strange little plan of sticking out another nine months or so before really starting to look elsewhere.  Then a job opened up - not necessarily my Dream Job, but at least a dreamy one - in my desired field, with a raise and benefits.  It was a long road, but I got it.

And suddenly I had to tell my boss that I got a new job, when I hadn't even told her I was applying for one.  As I was telling her, all she could say was, "Ah, Sarah," in this keening way that reminded me of the way my dog whimpers when someone leaves without her.  "What are we going to do without you?"

I replied tongue-in-cheek and excused myself.  Only later that evening did I hear that after I left, her husband found her sitting at the desk, teary-eyed over my abandonment.  I can't say I'm surprised by this, but I wonder if maybe it isn't even more of a sign that I need to go somewhere else, that I allowed myself to become indispensable in a place where I had no desire to remain.

While she was crying, I was just happy for this chapter of my life to close.

Apps I Love: Envelopes 2

The biggest part of the last year and a half for me, since I finished college, has been getting my financial situation under control.  I put myself through private school, so I walked the stage with quite a bit of debt - almost double what the average Minnesota grad has.

Since I also finally got myself a smart phone, I decided to try out budgeting apps.  And I tried out a lot of them.  I had a general idea of what I wanted, but it was hard to get a firm idea of the important features without trial and error.  Plus I had the added difficulty of trying to figure out what features the app actually had - sometimes the descriptions in the App Store are pretty useless.

After trying a half-dozen or so budget apps, I've finally found one that I have stuck with and would recommend called Envelopes 2 by Emdentec Ltd.  As far as I know, Envelopes 2 is only available for iOS.

My basic criteria for a budget apps were:

1. Defining my own categories - I live in a small town, so I shop at Walmart a lot.  I didn't want the kind of app that automatically drops certain stores into certain categories; sometimes I get groceries at Walmart, other times I get socks.
2. The ability to "roll-over" unused funds/overspending from month to month - for big expenses, I save a little every month, and I wanted the app to reflect that.
3. No need to connect my bank accounts!
4. A free app.

The two biggest obstacles I ran into looking for my budget app were related to my third and fourth criteria.  Everyone knows that free apps are generally not full-feature.  Several free apps I tried only held so many transactions before you needed to upgrade to the paid version. (I know $0.99 or $1.99 isn't a lot of money, but I am being as frugal as possible to knock down my 50k+ debt.  Why should I pay for an app if I can find a free one or I can just do it the old school way?)  Other free apps only worked if I connected my banking info, and I'm sorry, but that's just shady to me.

In homage to the "old school way," one of the apps I tried to use for my budget was Apple's Numbers app, which is just a spreadsheet app that happens to have a budget template.  Personally, I found Numbers to be clunky and difficult to work with on my iPhone.  I think I used it for one month before I gave up.

I have lots of reasons for loving Envelopes 2:
You can have as many envelopes (categories) as you want, and they can be color-coded.
After you set up your envelopes with the specific amount per day, per week, per month, it is only two taps to fill your envelopes.
There are no passwords needed.
You can add a note right to the front of an envelope, which comes in handy if you owe someone money, and add notes to each transaction.

It rolls over the balance from month to month, as long as you don't clear the transactions.
You can empty the transactions from each envelope and start from scratch at the beginning of a new year with just a couple of taps.
Since you can personalize everything, the app is great for people who want to follow the Dave Ramsey system but would rather use a debit card than carry bunches of cash.

If you're considering trying Envelopes 2, here are two things to remember:

1. Because there are no passwords/log-ins with this app, it's pretty much centralized to your phone.  You and a spouse can't both access the same envelopes on your separate phones.
2. This app requires you to manually add transactions.  If you can't bring yourself to do that, you probably want to go find one of the apps that you have to connect to your bank accounts.

Envelopes 2 works great for me.  If you try it, let me know what you think!