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A Half Cash Budget for 2015

  January 6

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Happy New Year everyone! It’s great to have a fresh start. I appreciate all of your well wishes in my most recent post about reaching my 5 year anniversary. Hubs and I enjoyed having over two weeks off together over the holidays. He’s back at the hospital today, and I’m back at my desk, juggling writing with nap time and making soup and chasing my very mobile kids around.

In sum, life is back to its beautiful, crazy normal. πŸ™‚

Hubs and I had so much time to talk and plan over the break, and we’re excited about many of the financial goals we have for 2015. We were super exhausted with all the spending and expense that happened in 2014. We just felt like we were constantly bleeding money, sending checks to various people for healthcare and buying formula for our kids. It’s time we really reevaluated things to make sure we’re on the right track.

The Half-Cash Budget

Although we rarely buy extra things like clothes or gadgets, we find that using credit cards has made us lax or a bit lazy with our everyday spending.Β  We had an all cash budget when we lived in Grenada, West Indies for 3 years, and it was some of our most successful financial years ever.

So, we talked about going back to a cash budget a few times in 2014 but never got around to doing it. I have always been a fan of credit cards especially for racking up airline miles, which we will definitely need this year due to the hubs flying to residency interviews. However, the credit cards really make us too casual about spending. One trip to Rite Aid for wipes and we came back with wipes, my favorite chocolate that was on sale, and a treat for Julep. It’s not a problem to do that once or twice but I found so often that I lost track of things. Cash budgets really make you pay attention to what you’re doing.

So, what’s a half-cash budget?

Basically, I’m not going to make life harder on myself than I have to. My main expenses like rent and electricity and car insurance are all on automatic withdrawal. I’m not taking all that out the bank and handing my landlord a big wad of cash (although we did do this in Grenada with our all cash budget.) So, we sat down and put an asteriskΒ  next to the items we wanted to pay for in cash and everything else will be paid for with an automatic debt or a credit card (which is the case with gas because I’m going to fill up my gas to the top every time for convenience sake and again, not make things harder on myself than I have to.)

Reviewing the Budget Ahead of Time

I was really struggling with my budget last year. I made what I believed to be an ideal budget and then every month I’d add up my spending and more often than not I didn’t match things up properly. Things were just so crazy last year that I’m proud to have even tracked my spending at all, but this year I’m back to doing things correctly.

By correctly, I mean that you really should make your budget ahead of time for a few months at a time. However then you should take the time at the beginning of each month to tweak or adjust it according to what will happen that month.

For example, January 2 was my 5 year anniversary. Hubs and I wanted to have a nice date that day, so I budgeted $200 for it. We were super excited about this, seeing as we only went out 2x since the babies were born, once to the movies and once to a friend’s engagement party. So, needless to say, some couple time was long overdue. The icing on the cake was that our neighbor offered to babysit for free, which was amazing.

We sat down together and budgeted out what will happen each month through May so we know what our savings goals need to be, and we will continue to meet to discuss each month as they happen in case we forgot something or something comes up.

By doing things this way instead of having a set budget and then not factoring in random things that pop up each month, we are setting ourselves up for success.

My January Budget

So, below is my January budget ahead of time, with asterisks next to the items that have been taken out in cash. I will come back around at the end of January to report on how we did.

For anyone new to reading my budget posts, the Gremlins category is for all of those things you don’t plan for, like speeding tickets or a bill you forgot about. That way, your budget won’t get off track when the unexpected happens (because you know it always happens!)

Also, the numbers below do not represent our take home income. We don’t share those numbers, and because I am self employed, my income is quite variable anyway. The numbers below represent a nice, safe place for us, and we have an emergency fund in place should some business catastrophe happen.

So far, the grocery category is going great. We are severely cutting down in this area. More on that soon!

January budget

Are you updating your budget in 2015?

Although we rarely buy extra things like clothes or gadgets, we find that using credit cards has made us lax or a bit lazy with our everyday spending. We had an all cash budget when we lived in Grenada, West Indies for 3 years, and it was some of our most successful financial years ever http://catherinealford.com/2015/01/06/a-half-cash-budget-for-2015/

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53 responses to “A Half Cash Budget for 2015

  1. Your budget looks great! This is something we need to start doing. We’re both in the mindset of paying all the bills as they come (so wayyy early) then putting the rest in savings minus what we will need for the week. Our budget is tricky since we’re both self-employed and can’t really plan for when money will come in.

    Quick question – for help with kiddos, do you put them in daycare part time or have someone come to your house to watch them? I’m getting my little ones in something but haven’t quite decided the route I want to go!

    Thanks!! Hope you have a great day!

    1. We have a few things we do interchangeably. There is a part time day care we use that they can stay in for up to 2 hours a day and then up to 3 hours when they turn 1. I have a mothers helper come on some afternoons or at night when the hubby is on call and this amount also include a housekeeper sometimes because I consider her helping with my kids and my crazy life lol.

  2. Makes sense to me. I have a feeling doing some credit card churning has increased my spending a bit more than I’d like. I just finished churning another card for points but think I’m done for just a little while. Every time I look at your rent I cringe. It would have been so different if he would have ended up in Michigan. πŸ™

  3. Great to see that you have a plan. Thinking ahead so that you know your target is vital to your success. We have set out a budget for the whole year (simplified since we both have salaried jobs), primarily so that we can set our savings rate goal. But, each month we plan to review the plan to see if it is still realistic based on what we did in the last month plus what we expect for the coming month. Now, the challenge is to make time for it – always a bit interesting with two kiddos!

  4. I transitioned to something very similar — credit card or checks for truly fixed expenses (rent etc) and needs (like gas), but cash for the things that tend to get out of control (groceries and daily spending on random stuff like the drugstore and post office.) I also have given a line-item to “Gremlins” for months now since seeing you talk about them last spring — it’s such a great name for that category of floating stuff that isn’t exactly discretionary, but also isn’t exactly predictable.

  5. Great budget! I’ve been thinking about doing something similar. I really like how my regular expenses go directly on the credit card and want to continue that but the daily spending on things needs to get lowered and cash does that for me because I’m much more careful about handing over cash.

  6. Perfect! This is EXACTLY the motivation I needed to complete a budget because I do want to use cash but, like you said, if it is an automatic withdrawal why go with the full cash method?

  7. I completely agree with your assessment that it’s easier to spend a bit more when using credit cards. We’re trying to rack up reward points for an anniversary trip later this year and I’ve noticed several small, additional purchases. They add up!

    I really like your approach to fixing the problem. I’ve debated doing this with groceries, as that’s one of our trouble areas. I’m interested to see how it goes. Good luck!

  8. My budget is about half cash too, I just never really thought to share why. Mostly it’s out of convience for a few things and also to help me limit my spending on things I struggle with (groceries, eating out, entertainment). Thanks for sharing!

  9. I think this is a fantastic plan. I am curious about the babies’ budget. How is it so low?? I don’t have kids but I would love to read more about that. I am also going on a cash budget. I just take things a lot more seriously when I do.

    1. Well all they really need is formula right now since we cloth diaper. I stock piled formula over Christmas bc I was worried the stores would run out lol so it’s a little skewed but they aren’t taking as much now that they eat real people food too. πŸ˜‰ Getting close to that 1 year mark when we don’t have to buy it anymore!

  10. Budget looks great. We’re trying to cut down on our grocery spending (and more importantly our “eating out”). When I looked at our numbers I was spending $100 or so a week on groceries and we were still eating out 2-3 nights a week, which makes not sense and isn’t good for our budget or our waistlines.

  11. Your budget looks awesome–I’m impressed! And your half cash plan sounds like a great idea, too. I’m looking forward to hearing how it works for you and also looking forward to the grocery/food updates :)!

  12. Happy belated wedding Anniversary Cat! I’m glad you and your husband were able to celebrate it. I am looking to reduce our eating/meals when we travel as I found it a little to high in when I reveiwed our 2014 expenses. It is true that we really need to pay more attention when we use our credit card as it’s easier to spend more. I don’t spend much using cash as pretty much everything except rent/utilities is paid by credit card to maximize cc rewards.

  13. Your issue with being too casual with credit card spending is what happened to us. Everything switched when we went to a debit card and cash. We use a debit card for almost all payments but we use cash envelopes for our clothing budget. Every month each member of the family gets money put into their clothes budget envelope then we use that when needed. It’s worked out great and we are spending less overall.

  14. I am a big advocate of the cash diet in some forms. I have too many clients who love their credit card rewards yet have continual credit card balances that they can’t get down and it’s because they don’t think as much when they have the credit cards. I can’t wait to see how you do with your $0 eating out budget this month. πŸ™‚

  15. Happy anniversary! The budget looks great.

    I love the idea of a half-cash budget. Hubby and I need to switch to a credit card with better rewards to make using it less pointless, but overall we try to keep only necessary spending on there — gas, recurring bills — and spend cash elsewhere.

  16. I flipping love this idea. I wrote a post way back citing a study that showed the “savvy” credit card users (the ones who never carried a balance) were the ones prone to spend more in order to get rewards. As always, we are not so smart. πŸ™‚

    So glad you and the hubs got some time together. The downtime makes the crazy seem fun, right?

  17. Cat
    Thanks for stopping by! Half cash is a great tip, and definitely Dave Ramsey approved. And while a budget is an excellent tool to be aware of spending, Andrew Hallman, author of the Millionaire teacher says, “budgeting” can be much like a diet. So a slip can make you feel guilty. He has a lot of EXCELLENT tips and go-to’s to build wealth and stay consciously aware, without the guilt.
    Not sure how old you are, but great job on handling your money. I did not get my “sh*t” together until after my divorce – hello, wake up call!, and lets just say I’m no spring chicken. So now Im playing catch up for all those years of spending frivolously and cluelessly!
    xx
    Amanda

  18. Why are you spending $115 on cell phones? You can get a prepaid service for $20 per phone on a monthly basis with full data plans. You can often take the phones you already own as well. It’s just a sim card change.

    With the pre-paid companies you are basically getting the same services you are getting w/ the big name carriers, b/c they are just buying time on their networks. Thus when shopping for a service, you need to ask which network is being used.

    Straight forward, and you’ll save money! Hope this helps.

    1. Great comment Andrew thanks! We have definitely priced many other cheaper options. Actually our phones are pre-paid $60 each – they are just prepaid directly through At&T. The problem is that other phones are not as reliable. I have tried a cheap plan on T-mobile and it didn’t work at my house. We actually have unlocked phones just so we could try out other networks. But, I’ve spoken with two other bloggers on the phone using Republic Wireless and had calls dropped etc. We looked into it a few different times but we are so intense about safety (we’re weird like that) that we want our phones to work all the time. I have two children and if I have an emergency, I need the phone to work at all times. It’s the same reason why I drive a really safe car and why I spent a lot of money on their carseats. We go cheap on a lot of stuff but not stuff like that – it’s just how we roll. πŸ˜‰

  19. I find I’m more horrible with cash then I am my debit card not to mention I misplace it all the time. This year, I am more dedicated to tracking my spending and updating once a week so I can see progress and how I’m doing. So far, so good! They key for me is just to prep the night before so during the day I have no excuse.

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