Since writing about My Hybrid budget in week 1 a lot has changed. I decided to do things a little differently in the next month. Not because it didn’t work but because we felt very restricted and under pressure financially during the last couple of weeks in January. My goal for February is to continue our path to financial stability but also to ease the pressure throughout the month! January is always an expensive month for us from the start as our oldest sons birthday falls on New Year’s Day!
Last month I managed to pay a whopping 3.3 percent off our total debt of £17.5k! So we did have some small wins. All our bills were paid on time (just about, I will explain more later in this article) and we had food in the cupboards (most of the time). At the end of our month I sat and did the monthly reflect and review and looked at how I can tweak and perfect the budget to make next month better. I am aware that there are still a few days left of January but we are done spending money this month and won’t receive more income until the 1st of Feb so I was able to ‘close out’ the budget.
So how did January go? Well …it felt as if it was 700 days long? But, doesn’t it always? 🤣
I started by organising all of the bills and expenses and wrote all the dates on a family planner calendar on the wall. This helps me as a reminder to keep our finances at the forefront of my mind. I also began to put my budget binder together with all of the pretty trackers that I have.
I decided to have three different blank calendars in my budget binder. One for bill dates, one for debt payments and one for savings payment dates. Yes we are on our debt free journey but I believe we can try and do both despite having a limited income. I don’t want to spend the next months or years paying off debt and not have any money saved to show for it at the end. We want to be able to celebrate being debt free in a way that we see fit!
I am currently designing my own planner pages and calendars but for now I’m using others which have been great. I hope to be able to share those soon!
I started with the bill calendar and put each bill date on. I then decided to add our payment dates and colour code them. We get paid monthly and weekly so this got a little tricky but I managed it in the end. I then moved to the debt payment calendar and went through all of my paperwork. I had written down payment details and set up minimum payments that hadn’t been set up. I worked out that paying just £1 a week to most of them until I reach them in our Debt Payoff plan would be slowly chipping away at them. I can’t say that this is a Debt Snowball as we didn’t pay extras towards debt (we had none spare this month) but I managed to set up minimum payments at different amounts for each of our debts. Making ones with interest (like our credit cards) the priority.
I finally moved onto the savings calendar and after looking at our income minus expenses and then debt payments we had a small amount left each week to put away. I decided to divide this up. I’m trying to build an account cushion (so that we never go overdrawn again) and our first emergency fund. I also wanted to start putting £5 per week into an ISA for a future Nest Egg (because every little helps right?)
It all went smoothly in week one and all payments were made. But… when we reached week two and all expenses went out we found that we had no excess money for day to day things like bread and milk! Immediately I knew one of our weekly debt payments needed to be sacrificed for the rest of the month and this had to be the larger credit card balance ( a payment had already been made that was more than the minimum) but we needed a little excess each week to survive and to cover one of the bills I had missed. (It was on the budget and I knew we had to pay it, we just didn’t have enough to cover it at first) I also had to dip in to our very small cushion and the emergency fund a couple of times! Another thing we did was go through our house and list some items that we didn’t need or want anymore to make some quick cash to put on the electric and top up the food shopping. So things needed to be reviewed and tweaked for the following month.
When reflecting and reviewing I looked at all of our expenses ( I had been logging into my banking every few days and tracking them). I put them in to the correct categories that I had made and colour coded them on my expense tracking log to make it easier for the end of month review. (I will go into detail about this on another post).
From then I knew that we had paid a good amount to our debt despite having to sacrifice one of the regular weekly payments that I had originally planned. Moving on, I decided to break February up into the weeks when I set up February’s budget.
When we get our monthly payments we never know what it will actually be until around the 27nth of the month. But, when we get our weekly payments they are fixed amounts. Week one of each month is always the most expensive too because of bill dates etc.
I have a Starling account so this gives me the option to create different pots. I leave week one in the main account and set up a pot for weeks 2,3,4 and 5 and label them accordingly. I know…not every month has five weeks but it’s there for when those months arrive. I also set up an EXCESS pot for money that we need to carry over into the next month.
After dividing up the income for February to each week. I then looked at each week on the calendar and wrote down each bill due, debt payments due and saving due date for that week. This gave me the amounts that I need to place in each pot. I did originally divide it equally but this wouldn’t work as in week one we have more to pay out so I moved some of the excess from week two forward to week one.
Next month I hope to begin introducing our sinking funds and will explain more on this in another post. But, this will be decided on my monthly reflection. I did introduce a new type of emergency fund for February. My GTEF – GO TO EMERGENCY FUND. This is a small amount of £100 in a cash envelope for things that pop up unexpectedly day to day (like needing bread, milk and more nappies for the little one!) I broke the stuffing expense in to each week of February. So £25 a week goes into our GTEF Envelope. I am also designing my own Cash Envelopes for things like this.
Are you looking to gain more control of your finances? What things have you done this month to work towards a better future?