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Re-Finding the Balance Between Saving, Investing, and Fun

For the past year, we really haven’t been able to stick to a specific plan for saving, investing, and putting aside money for fun.  From April through October 2012, we were stashing away as much cash as possible just to close on our new house that was being built.  From October through December 2012, we were rebuilding cash reserves and making an attack plan to pay off our rent house mortgage.  And from January to early April 2013, we were redirecting all extra money towards that mortgage which is now paid off.  So, for the first time in a year, we could really use a plan that isn’t all-or-nothing.

The New Plan

Mr. BFS really misses the balance that we had up until this time last year between paying our bills, saving for our future, and budgeting in the fun stuff .  He wants to get back on track.  I agreed that it was time to step back and breathe a little.  So here is our new spending and savings plan…

Step One – Cover the Stuff in Our Budget

Here is our current budget of necessary expenses, chosen luxuries, and the new-to-us car savings goal that we need to be able to cover every month no matter what…

  • Income Taxes – $2500
  • New-to-Us Car Fund – $500
  • Home Mortgage – $990
  • Home Insurance/Property Taxes/HOA – $750
  • Rent House Home Insurance/Property Taxes – $275
  • Health Insurance – $360
  • Life Insurance – $30
  • Car Insurance – $55
  • Electricity – $175
  • Water – $60
  • Natural Gas – $40
  • Gasoline – $150
  • Eating Out – $250
  • Groceries – $250
  • Sprint – $150
  • Cable/Internet (DSL) – $120
  • Medicines – $20
  • Toll Roads – $25
  • Housekeeping – $175 (average over the year)
  • Lawn – $80 (average over the year)
  • Miscellaneous – $200
  • Cash – $100
  • Total Expenses = $7255

Then comes the fun part.  :-D  We bring in about $8000 a month from the business and at least $2000 from rent house and reffing income that Mr. BFS brings in.  So, in a normal month, it looks like we’ll have about $3000 extra to leverage how we wish.  Here is what we came up with.

Percentage Breakdown

Here is how we are allocating the monthly extra until our 2013 Roth IRA’s are taken care of:

  • Roth IRA’s – 60%
  • Emergency Fund – 10%
  • Rental Property Maintenance Fund – 10%
  • Mortgage Payoff – 10%
  • Vacation Account – 5%
  • Fun Money Accounts – 5%

Long Term Plans

We aren’t 100% on all of our long-term plans, but we do know we want to be financially independent as soon as possible.  That mostly means that we want to work towards complete debt freedom and funneling more into our retirement planning.  With that in mind, when the Roth IRA’s are fully funded, we will be opening a SEP IRA and Mr. BFS will start investing in some of our favorite stocks again.  In fact, we may end up doing it this way every year – fully fund all of the Roth IRA’s and then move on to putting as much into the SEP IRA and stocks as we realistically can while still having fun with 10-20% of the extra too.

Anyway, thanks for reading along as we figure stuff out.  How have you been doing?  Anything you want to just let out?

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13 comments to Re-Finding the Balance Between Saving, Investing, and Fun

  • Not much fun for me until the baby comes. Fun stuff isn’t fun when you’re miserable!

  • retired

    @ Jenny, find good books to read online or at the library. Walk with someone. Research and think about introducing power foods to your and your spouse’s diet now, so you can teach the young one a healther way of life. Get back at laa those people who offer you unsolicited advice by goig to their blogs, websites, or parties and looking happy, pleased, and worry free. Lie and say this has been a breeze and your not sure why they had so many pregnancy problems. Even while waiting for that dream baby, you can find other things that need doing and can be done, if not , smile anyway. You will feel so much better. Congratulations on being a mother-to-be!
    Crystal, sounds like you make plans and goals and are achieving them; one step at a time. Bravo. I am still working on becoming a gardener, lol. I am reading up on vertical gardening and thinking about turning my paid for home into a paradise. Trying to keep busy and quit looking for a dream farm, just start making one as much as is allowed, right here. Personally, I would like to get a few codes changed so I could use my own backyard the way I want to, as long as I cause no harm to others (including their house values).
    We will be getting our ducks in a row and worry about re-locating when it isn’t all the rage. Maybe we can go on a world vacation if I get everything thriving. We have some auto watering systems lined up …. who knows. Hope everyone is having a better week. Wishing closure and recovery to the world in general!

  • Y’all are doing a great job re-prioritizing your goals! Way to go!

  • Reffing income sounds like a great side income. How did Mr. BFS get involved? Thanks for sharing your great mutual work!

  • @Jenny, yuck, I understand. When I feel bad, I read or zone out on movies…sometimes in a hot or cold shower or bath depending on the issue. Would that work? Anyway, congrats for the baby on the way!

    @retired, hope you find the farm perfect for you!

    @SavvyFinancialLatina, thank you!

    @Mike, Mr. BFS was a intramurals official in college and found out about the local organization for sports officials (TASO). He started out as a basketball ref about 10 years ago but moved to other sports a few years later. He now does varsity football and highschool softball. You should totally go online and see if there is a sports officials org in your area. :-)

  • Our new house has been keeping us busy :) Sounds like your budget will work out well for you guys! Just make sure your SEP doesn’t go over the mandated percent (I think 25%) of your profit :)

  • I love that you’re using a percentage-based savings plan! I love knowing ahead of time where additional income will go. If you had a slow month for your business would you pull money from the EF or do you have a separate smoothing account?

  • @Lance, good point. I doubt it will be an issue since we just won’t have that much extra, lol.

    @Emily, we have a “Blog Income” account that we pay ourselves out of biweekly ($4000 per paycheck – $2750 to checking and $1250 to a “Tax” account that builds up so we can send in our estimated taxes correctly). All of our online income gets withdrawn from Paypal and placed in the “Blog Income” account, so during great months, it builds up, during normal months it ends up being the same, and if we have super slow months, it is padded enough to handle it for a few months at least.

  • Building a house and paying off another are pretty good reasons to be focused on one prize. Glad you have some room to spread things out a bit again. It is supposed to be eventually about the fun stuff, right?

  • When reading through your expenses I was going to comment on how some of them seem pretty high, but then noticed your income…WOW! Haha, with that kind of money coming in, you shouldn’t have much to worry about.

    Do you have a post where you talk about your income more thoroughly?

  • You guys are doing so great. I’m curious if you’ve ever done a post about doing taxes when you’re self-employed? I’ve recently started doing some freelancing and I know I need to start setting aside income for taxes and paying quarterly.

  • It’s difficult to stick to a plan when things are in upheaval! Looks like a good balance.

  • […] padding.  But our main way of combatting the need to find “real jobs” again is to take regular looks at our monthly expenses and make sure we know what we can cut if necessary.  We just paid off our rent house about a month […]