How to get what you want: Budget

I'm not a very talented person. I'm not particularly good at any sports. I have cooking disasters. My crocheting is uneven, I can't paint.
What I can do is fiscally manage my household. This might not seem like a huge skill but considering just two years ago 150 000 Canadians filed for Bankruptcy & considering the typical 'borrower' owes $114,000.00 I'd say we've got something big on our hands.

I haven't reached all of my financial goals in life, but I think I am on my way. I think I am on my way because of discipline, hard work, sacrifices, time management, determination & money management skills. That's the long & short of it. No magical formula & no overnight success.

By far the strangest thing I've learned in the last five years (when I started to become financially responsible) is to not save to much.
This goes against everything that everyone has ever told me which is to save, save save.
Being a young couple with a mortgage throws that theory in the crapper. Thousands of dollars in the bank doesn't buy you a shorter mortgage. It doesn't buy you investments, equity & life experience. That's why I agree that you should have some savings or a 'spare' or 'emergency' fund, but profit or money that isn't eaten up by existing expenses should be put towards principal payments, travel, renovations or other investments.

Without further ado, here is my monthly household budget:

Mortgage: $748.51   Principal Payments: $240.00   Jets tickets: $200.00   50/50: $20.00   Hydro: $150.00 Water bill: $30.00   Property taxes: $80.00   Fresh bins: $161.00   Food: $350.00   Animal maintenance: $30.00   Toiletries: $20.00   Meds: $28.00   Cell phones: $120.00   TV, internet & movies: $85.00   Make-up: $25.00   Bus pass/tickets: $100.00   Restaurants: $250.00   Cab fares: $25.00   Clothes: $50.00   Hair: $35.00   Gym: $45.00   House insurance: $110.00   Gifts: $30.00   Donations: $36.00   Sport leagues: $25.00   other entertainment: $100.00 = $3093.51

Hewwwph.Christ that makes me anxious just thinking about it.

My budget is suited to me & does NOT include credit card debt payments, car payments, car insurance, car repairs, gas/parking.

For those interested in creating a similar budget, here is my best advice:

-Know what you make.
Use information from your T4 or end of year pay cheque to get your pay info as accurate as possible. Alternatively you'd just have to snip 33-34% off your wage to calculate your net pay (minus charitable deductions, ecopasses, health plan etc). If you work off commissions or have fluctuating hours, use high & low pay cheques to make a median income

-Pay off debt first & foremost, but don't over-exert yourself.
Mr. Ford & I paid for our wedding & scrimped & pinched to do without new clothes, shoes & entertainment & it worked...to an extent. You need to expect that you will say yes to an old friend wanting to meet for dinner, to going out for a coffee with a coworker. Don't eliminate unnecessaries completely, just reduce them.

-Buy a house!
Now that I have one I curse all those years (2) of rent that went down the drain.
My mentality was that I wanted to save up for a big down payment so my monthly mortgage payments would be lower. Not a good idea. Not in this market anyway. In two years of just owning my house the government (not knowing any of the renovations & upgrades we'd done) increased it's market value $60,000.00. There'd be no way I could have saved 60 grand in two years. The sooner you buy a house the sooner you build equity.

-Contingency plans
And I don't mean just have 10 grand set aside sitting around waiting for your roof to collapse, that would go against my initial observation that money sitting around doesn't really help you. What I encourage is to have an escape plan in case your furnace DOES conk out. For me, that's removing money that I have allocated to travelling & renovations as these are two things that I want but could survive without. More on that later.

-Over budget & be pleasantly surprised
The goal is to get your consistent numbers (mortgage, gym fee, insurance) as close to the numbers on the bill as possible but when it comes to things like food, clothes & entertainment, this might not always be possible. Be more generous in your allocations to these reserves & be pleasantly surprised when you had more money coming in & staying in than expected.

-Consider payment plans
This was a point I mulled over for a while.
As an example, my Hydro bill changes drastically from winter to summer. When I made my budget I took the highest bill I had & the lowest & calculated the average to put down as my monthly Hydro funding.
This can tend to make me depressed in the dead of January when I've only reserved $150.00 & the bill is $200.00. Hydro has a plan for this where they charge you a flat monthly rate which they overbudget for, & you usually get some money back at the end of the year. City of Winnipeg Municipal taxes has a similar plan. The downside to these plans for me is that I don't see exactly what we are using that month & hence I can't correct it if there's a reason for a big inflation. I wouldn't have had the brilliant idea of turning the heat down to 18 degrees when nobody is home & forcing the cats to cuddle if I hadn't seen a mortifyingly high bill!

-Principal payments
Banks will allow you to pay a certain amount of interest free money on top of your mortgage payments each year. This is brilliant. The arrangement I have with my bank is to pay the minimum amount they will allow on my mortgage & then make principal payments of up to 20% the value of the mortgage every year.

-Have a plan for income tax season
Just as simple as that. Doesn't matter how you do it just make sure you never have to get caught paying. Pay attention to anything you pay for that can be written off as a business aid, make donations, RRSP, pay extra taxes, whatever!

-Revise, revise, revise
The more things change in your life, the more your budget should be altered, even if its just in a single category. That means whenever you get a new job, a new insurance plan, health plan, move etc, etc.

And finally...plan to do more than break even.
Without revealing to you what Mr. Ford & I make, I can tell you that all income tax & expenses considered, we SHOULD be winding up with an extra $1567.00 a month, give or take. That works out to almost $19,000.00 a year. Make it a goal to not spend every last cent on the things that you allow yourself in your monthly budget. Use your spare money to invest in a goal and/or something you want.
For us, that's $14,000.00 a year in renos & $5,000.00 for travelling (you should see how far I can make $5,000.00 go in a third world country).

I hope I don't sound psychotic. By the way, here's Lou, being herself: