A New Book

Sometimes a new chapter starts so suddenly had the big heading stating it was new chapter not been there you would have kept on going without noticing. In life these seem to be most common. Its the transition from birthday to birthday or Christmas to Christmas. Usually a big holiday or tradition brings us to think “Remember this last year when…?” It is only then that we become abruptly aware of the changes that have taken place since “when” and we panic a bit about how quickly time is passing. Sometimes, however, the opposite occurs, we become abruptly aware that nothing has changed since “when” and we panic a bit about how quickly time is passing.

Occasionally in life, changes are so large there is no missing the chapter heading, you know you are into a new chapter of life. These chapters are usually exciting moments, new beginnings. Think of the young child off to kindergarten for the first time nervous of being away from Mommy and Daddy for so long. Think of the new high school graduate now faced with the unique challenges of the “real world.” Think of weddings, the birth of children, the purchase of new car, moving, leaving an abusive or “not-a-right-fit” relationship, starting a new relationship.

Right now however, a new chapter doesn’t seem enough. There are so many new chapters occurring so quickly it appears to be time for a new book. Its incredibly overwhelming, stressful, exciting, and about a million others things I cannot find words for. I’m happy, I’m sad, I’m scared, I’m ready.

Since 2012 I have ticked a lot off the ol life to do list.

 

Bought my First Car-Check!

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Married the love of my life-check

Graduated University-Check!

Attended weddings- Check

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Grow another human with the help of my favorite human-check

Deliver that little human-Check

Fall In love with that little human-Check

Go visit other little humans after their birth-check

Lose a best Friend

lose another Best Friend

Get the Dream Career

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Buy a House

Lose Another Best Friend

And another one

Its crazy to me how hard even the good things were/are. We made the choice to rehome Bailey and Rusko (the last two) as with being two working parents of a child under the age of 1 we no longer had the time they deserved from us. My heart hurts so bad especially for Rusko. He’s been my best puppy friend for two years. He cuddled with me when I was sick or sad (he never left my side through the whole pregnancy regardless of whether I was puking or not). He played with me when I was bored. He walked with me when I needed fresh air. He watched TV with me when I needed a break. It was the hardest choice I have ever made.

I feel like I have made a post similar to this before. The point however is not to say oh look at me Im not even 25 and I have my shit together. The point is to say as the builders finish building our house, as my family shrinks from loss of fur babies, as time with my son dwindles as he sleeps most of the time I am home, change is never easy. I often lay awake at night and think about the gravity of the choices I have made in the last two years. I’ve pushed myself so hard to have these things I have left people and things I care about behind. In two weeks we move to the new house and while I am excited, I am nervous because this new book is about to start and its daunting. Its just daunting. Its like one day Im standing at high school graduation thinking wow I have no idea what to do with myself and now 7 years later Im thinking wow I muddled through this far lets keep muddling. Plans fall through. I should have graduated university a year before I did. We put an offer on a house a while back that fell through. We should have had a baby 6 months earlier.

Life is a ride that is for sure, and I’m hanging on by dear life. This many changes this quickly is overwhelming. Just as you get used to life it changes. and Im sure just as we get settled in the home and feel that we are settling into a life where the chapters seemlessly run into each other another big change will come. But thats what your twenties is all about right? Creating the path. Trudging ahead. Making the choices that will affect you for the rest of your life. Its not easy. But with my best friend and wonderful son by my side, I’m sure we will get through just fine.

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Are you ready?

Several years ago now my brother and sister in law announced they were expecting their first child. Perhaps to a complete outsider the timing would seem weird. They were living in a small one bedroom apartment in “the hood” but knowing these two people you knew that they were destined to be amazing parents and nothing else mattered. I remember distinctly one day when she was “very” pregnant asking her if she was ready. I’ll never forget her reply.

“Ready is a loaded word. We have all the necessities for the baby so in a physical sense, yes, we are ready. But am I ready to be a mom? I guess I’m about as ready as one can be. There’s never a perfect time. There are always more things that you could do. But sometimes you take the leap and you make the timing work for you rather than waiting for the right timing”

She went into labour shortly thereafter and as we all suspected was instantly a wonderful caring “textbook” mom. She and my brother have 3 children now and are amazing parents.

Her words have always stuck with me though. There is never a perfect time for anything. It’s about taking what life gives you and making it work. It’s about taking leaps and trying new things when others would cowar away. How many times have you heard people say it’s just not the right time? I’d love to go to grad school, but it’s not a good time to move away. One day we will get married we love each other very much but financially it’s just not the right time. We’d love to have a baby but it’s just not the right time. I’ve always wanted to be a ____ but its just not the right time to be starting a new job right now.

So I guess you have to decide who you want to be. Do you want to take a chance that life might pass you by while you are righting for the “right” time or are you willing to take a jump, realizing things aren’t perfect and never will be, and make the timing work for you.

I say all this because I am about to make a jump I never thought I would. I am leaving my beautiful, perfect son in 8 days to go back to work. As you know if you have been following this blog, my dream is to be a probation officer and in 8 days that dream is going to come true.  This has been the hardest choice I have ever made in my life. I have been so blessed with this amazing son and thanks to being a working Canadian citizen, was blessed with the ability to be paid to stay home with him for now. I’m choosing to leave “free money” (and lots of it). I’m choosing to leave my son with a friend during the day when he is only 4 months old (and still breastfeeding and not sleeping through the night!). I am making the choice to leave my care free days, naps, and pjs behind. Why? Because there is never a good time.  This choice means that my family will have financial security. It ensures a strong future for Jacob. This choice means we can purchase a home. This choice means that unlike so many people I know I won’t simply have a job, I’ll have a career, and not only that, I will have “the” career, the one that I have dreamt of and worked my ass off for.  Its true what they say, good things don’t come to people who wait, good things come to people who work their asses off and don’t give up.

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I always feared that as a SAHM I would lose my sense of self. Sure for the 5 years Id have Jacob before he goes to school I would have an amazing role. But what am I left with when the children are in school? I would be a mom with no kids to mother 8 hours a day 5 days a week and homemaking is not my strong suite. Before they go to school I would get to help my children grow and develop. My hubby and I would be the only ones that were teaching him to walk and talk. We would teach him his ABCs and how to say please and thank you. We’d get to share everything with him preparing him day by day to be ready for school.  Looking into his beautiful blue eyes and knowing that I am now trusting this care to someone else breaks my heart.  I know I can still do these things, and will still need to. I am still going to be able to take him to the spray parks this summer and take him camping. I’m still going to work with him to help him crawl, and walk and talk. I’m still going to help him learn his animals and colors and get to listen to him in the back seat of the car excitedly point out yet another truck. But its different. I’m terrified to lose that time with him. In fact, thinking about it almost has me in tears and I have been fighting them back for the last week since I made the choice to go back to work. I don’t know how I am going to say goodbye to perfect smiling face every day. I realize now the joy there is in “just being a mother” and how amazing that calling really is. I am so blessed to have had these four months at home with him to “Just” be his mother, to “Just” be a wife, to “Just” be the family chef and to “Just” be the family maid. The house has never been cleaner, the meals have never been healthier (no more quick processed fast foods) and I have truly never in my life been happier.  Of course I wish I had more time.

But it all comes down to timing. Everything always does. I was prepared to leave him at a year, so leaving him now seems like a cruel and unusual joke. But sometimes you need to take the leap and hubby and I have discussed it in detail and we believe that taking this leap is the best move for our family. Am I ready to leave him? Absolutely not. Am I ready to start my dream career? The thing I have been gearing myself towards and working my ass for for the last 5 years? Yes. I know I can be successful in this role. I know that if I have to go back to work this is where I want to be.  I know that there are literally hundreds of other people out there fighting to get this position that I have been offered. I am replaceable. If I don’t take this position who knows when or if it will ever come up again?

I have already been hassled by a few people that I have told. How on earth could I think about leaving my baby? How incredibly selfish of me. But I don’t see it as selfish. I think that in our very personal situation choosing to stay at home with him is much more selfish. He is going to be just fine without me, I’ll have him 2 days a week, hubby will have him 2 days a week and loved ones will have him the other 3. I’ll see him every morning and every evening. I’ll still get to give him a bath and snuggle up with him and read him a good night story. We will still get to have those nights where at 3am he finds himself in bed with Hubby and I and get to cuddle him and sleep smelling that amazing baby smell while he nuzzles in and holds my hand. I will still get to be there for him. and I will still get to be his mom. We are keeping him out of daycare. I am going to pump at work and he can still have all the benefits of breast milk.  He is still going to be loved regardless of whether he is with me 24/7 or not.  He is going to know is that his Mom loves him so much that she decided not be selfish and stay home when this amazing opportunity came up. We are going to be financially secure. We are going to be able to take him to Disneyland, Mexico, Europe. We are going to be able to put him in after school programs and give him a good home. And we are going to be able to give him our time because by taking this job neither hubby nor I will ever need to work 2 jobs again. When we are home we are home. We don’t need to bring work home with us ever. We will be able to give him our undivided time and attention. What is 8 months in the grand scheme of things? Nothing. Nothing at all when it leads to something so much better.

I’m scared. I’m sad. I’m happy. I’m nervous. I’m a giant ball of emotion. But I know perfect timing doesn’t exist. I know how important it is to just take the jump and make the timing work for you.

So how about you? Are you willing to take the jump when opportunity comes knocking? Or are you sitting back waiting for the perfect time that may never come?

Spending Analysis revisted

Wow! It is hard to blog with a baby! Sure I have tons of time…but it is so hard to type with only one hand! Sorry I have been MIA for a while I am really going to try and get back into this.

So after talking about doing a spending analysis a while back…uhhh I think August….so maybe more than a while back…. I had A LOT of questions. Texts from friends, e-mails, phone calls you name it. That’s what happens when I post without editing/re-reading what I write. So lets try again.

If you want to gain control of your finances you MUST put in the work to do a spending analysis! This is not negotiable. If you skip this step you are not serious about controlling your money. End of story. If you want to know why read my previous post on the topic as I go quite in depth on it.

Instead, on this post, I will explain how to do a spending analysis in better, easier, step by step writing.

Ready? Its a lot of work! Lets do it.

STEP ONE:
Gather all of your bank & credit card statements, loan statements etc. for the last SIX months!
If you are one of those people who throws your bills in a pile somewhere and doesn’t file them or really  look at them you miswell grab all your bills too and get organized. So today is November 10, if I was doing this today I would gather all my statements from May-October. You can do this online but I find it much easier to have hard copies.

Question: Where do I get my bank statements?
Answer: I hope you are using online banking….go print them off.

Question: Why 6 months?
Answer: It is the best way to get an ACCURATE look at your spending. Things crop up “out of the blue” such as oil changes, car repairs, house repairs, road trips etc. By doing this for 6 months you are more likely to catch those one off expenses so you can plan for them

STEP TWO:
Separate the statements into piles by month (include your bills if you don’t have those organized…seriously two birds with one stone)

STEP THREE:
Grab a some sheets of paper and a pen/pencil and a calculator. 
(you may want to grab something to drink/munch on at this stage too. I’m partial to a glass of red wine and a brownie myself).

STEP FOUR:
Grab the pile for the first month and start at the top. Here is an example of my credit card statement from September.  I am using September as an example, you will want to start in May or whatever month comes first in your pile.

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(Keep in mind this statement is from a few days before going into labour…I was WAY off budget eating like crap)

So the first two things on the statement are McDonalds and Tim Hortons. I am going to write down “Fast Food/Restaurants” then write McDonalds–5.13 Tim Hortons–9.53. The next thing is HMV, this was for a gift so I will write down “Gifts” HMV–6.29. Then we see Lans Asian Grill (which if you live in Edmonton and haven’t been my gosh you need to go today! It is AMAZING food for really good prices and the owners are the nicest people you will ever meet).  So now under the line saying Tim Hortons-9.53 I will write Lans 32.30. Keep adding categories as they make sense to you. Here is what I ended up with off of this statement. I just did this in excel and here is what I ended up with

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So you can see. In 10 days in Sept I spent $144.18 on fast food and restaurants, $32.52 on gifts, etc. In Total I spent $804.98 in ten days. Like I said…I went WAY off budget not giving a care as I was preggo and miserable. This happens. You fall off the band wagon then you see your mistakes and move on. Now you will notice that I subtracted 350 from the 804 to get 454.98. Why? I use my credit card for EVERYTHING and then pay it off 2-3 times a month. I put that in there so that I can see that the 350 is really just a transfer of funds. I REALLY spent 454.98. However if you are not using your credit card for everything and paying it off (which I don’t recommend until you feel like you really have control of your money) you need to call a spade a spade. If you are carrying a balance, you spent money on debt repayment not transferring money. So you spent 801.98.

Question: How do I make categories?
Answer: Start at the top and make categories as you go. If you find something that doesn’t fit create a new category for it or slide it into an “other” category if you know it was a weird one time type purchase for you. So you can see I started with fast food, then added gifts as was necessary then added Medical etc. Keep adding categories until you have a chart that is meaningful to you. Include income as a category!! This includes job income as well as tax cheques, gst etc.

STEP FIVE
Grab another drink. You deserve it. The numbers may be shocking already.

STEP SIX
Do this for the remaining 5 months. 

Here is a small example with made up numbers

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so in this case…this person spent 100 even on fast food in may, 21.25 on fast food in june etc. in total she spent $2018.22 in May and she spent $617.63 on fast food in 6 months. Hopefully this chart is making sense to you.

STEP SEVEN
Figure out your average spending.

So random person above spent $617.63 on fast food over 6 months. So take 617.63 and divide by 6. 617.63/6=102.94. So on average this person spends 102.94 a month on fast food. Now do you see why it is important to look at a 6 month average? In June she only spent 21.25 but on AVERAGE she spends WAY more than that. If you attempt to do a spending analysis on just a month or two your numbers WILL be skewed.

STEP EIGHT
Do the same thing with your income.

So May +2500 June +2540 July +2500 etc. Now take your spending and minus your costs. So if she made 2500 in May and spent 2018.22 she spent 481.78 LESS then she made. Good for her! (2500-2018.22=481.78) Most people this number will be negative because believe it or not most people spend more money than they make a month using credit to pay the difference.

STEP NINE
Play with the numbers

See what you are overspending, Look at what categories you are spending too much. etc. Let it all sink in.

STEP TEN
Grab another drink and prepare to make a budget that works! 

Fixed Expenses Can Be Flexible

Before you start working on your actual budget I encourage you to do two things. 1) Take a look at your “fixed expenses” really closely. Some of these are actually quite flexible and you may be able to get these prices down and free up some money in your budget. 2) Take a look at any category that kind of took your breath away. For example, everytime I look at my family’s numbers I think to myself “Are we REALLY spending that much on transportation a month?” (Between car/truck payments, insurance & gas we spend about $1100/month on our vehicles….this is a bit insane!). Find  ways to save money right off the top. Today I am just going to write about number one.

Look at “Fixed Expenses”

The Cell Phone Bill
      Since signing your cell phone contract have you gone back to talk to them about new plans that have come out? Husband and I have our cell phones currently through Rogers. Once a year or so we go to Rogers to talk to them about our plan and get our costs down or at least our benefits up. Essentially, we approach the sales consultant (or whatever their official title is) and say that we are looking to cut costs on our cell phones and although we are happy to stay with Rogers we will pay to break the plan and move somewhere else if it is beneficial. (In all honesty, we are lazy and like our cell phone numbers and probably won’t switch providers but they don’t need to know that). Think about this situation from a buisness perspective, Rogers doesn’t want to lose our buisness. We have a great payment history with them, we are gaurenteed income. Rogers also wants to stay competitive to the outside market, always trying to bring in new customers. When you add these two things together, you will learn that Rogers is continually bringing out new plans to entice new customers…and exsisting customers can tap into these plans with no pentality. For example, last time we went in, which was just a couple months ago, we were able to decrease the amount of money we were spending each month on cell phones by about $20 (or $240 a year or $720 over the course of the 3 year contract). What’s better is that we are getting MORE for the money. We over doubled our data and now have unlimitied calling between the two of us (even if we are apart…if I’m in British Columbia and he’s in Alberta we can still call each other for free), then unlimitied evening weekend and substantially more daytime hours. Essentially we saved ourselves money and doubled all of our benefits. We did not sign a new contract. The end date is still the end date. The catch is you need to make time to see what your options are and be dilligent about cutting costs.

Cable/Internet/Home Phone/ etc.
       Guess what? This works EXACTLY the same way. After an awful experience with Shaw that literally had me in tears of pure frustration, husband and I decided to call Telus and see what they had to offer. Turns out Telus was cheaper (by about $40/month) and we have been much happier with the service anyways. We also get more channels and a better PVR and faster internet. So once a year or so I call Telus and see what’s what. Exactly the same as above, if they want to stay competitive, they will lower your costs. They are always coming out with new bundles of channels etc. This also works great for when you are paying for a channel bundle package and only watch 1 channel in it…they may have a new bundle that is more beneficial for you or you may want to cut that bundle entirely and pay just for that 1 channel. I think we are all guilty of the “Ooohhh that sounds like a cool channel”….then you watch it twice and go “ok maybe not” While you’re at it…if you have a home phone do you really need it? Sure youre “saving” money by having it in the bundle if you don’t use it whats the point? Save yourself the $20 and do something more productive with it. Some companies also offer bonus items…we got a free tablet for switching to Telus.

Mortgage Renewal
       I don’t have a mortgage yet but am hoping to make that step in the next year (hopefully less), and while researching for it I found something quite interesting. Apparently a lot of people simply renew the mortgage when the time comes without thinking twice about it. This shocks me. Your house is probably the biggest purchase you will ever make, not negotiating terms is throwing money away. The wonderful thing about banks is that count on your being lazy. Simply don’t be lazy and you can easily beat the system.They offer their best rates to new customers and count on you just signing the dotted line at renewal without asking questions. Take your time and start looking around for better rates a few months before your mortgage is due for renewal and take time to negotiate with your bank. You are literally giving your money away if you don’t do this.

Lease Renewal
       A few years ago, husband and I found a GREAT deal on a townhouse. We were renting a 3 bedroom, 1.5 bathroom, great square footage, awesome location, beautiful townhouse. We found it online advertised as $995 a month while all other townhouses we could find that were comparable were closer to $1200. We went and looked at it, fell in love (seriously the storage in that place was amazing…so was the basement….i miss it…) and decided to go ahead on the lease and moved in shortly after.
As our lease came to a close I started looking around again to get a sense of the market. Turns out things had gotten more expensive, now while we were paying $995 the comparables were upwards of $1400-1500. We braced ourselves for a rent hike and low and behold three months prior to the lease ending (which is the legal obligation of the landlord here) we received out notice. We could resign a lease at the same price! We were happy but I had already prepared myself for a battle. While we were happy with the continued rate I contacted the landlord to ask if he could decrease the price at all, he said no. So I contacted his boss who also said no. So I contacted his bosses boss who was based out of BC. The bosses boss said the same thing as the other two, we were receiving beyond fair market value for the home. I pointed out to her that while that was true, that we had an excellent payment history, we were good tenants and had actually improved the value of the home since being there (by doing landscaping in the back, installng a new and better thermostat etc.) and finaly she caved. We resigned the lease at $950. Again not a ton of money…but all these little things add up.
I worked as a landlord aka “customer service representative” for Boardwalk Rental Communities for a year right after high school, I learnt there that rents are negotiable. Always have been always will be. However the person at the front usually can’t do anything about it.

Insurance
I’m sure you are getting the drift now. Call them. Ask for a better rate. If you just got your insurance through a certain company because you heard good things, seriously consider calling an insurance broker. When husband first bought his truck he got insurance through a broker at the dealership as his previous provider (AMA) was going to change a crap ton of money for him to stay with them. After a while I did what I always do and got frustrated at how much we were paying a month in insurance. I called my broker and asked about combining the two vehilces on one plan. My heart broke…..by putting his truck and my car and the rental insurance together we would be saving like $100 A MONTH!!! How did I not make this call earlier?  Since then I have also called and raised our deductible to $1000 (thanks to our emergency savings) and saved us another almost $50 a month. When our insurance is due for renewal in November I will be calling the broker again and asking if she can renegotiate our price. That being said, she is AMAZING and our insurance has decreased by $40-50 a month every single year at renewal without me asking.

Auto Payment
I haven’t tried this. But if you have a conventional loan you may be able to negotiable the interest rate or move your auto loan to a new place which has a better interest rate.

The Bottom Line

 It never hurts to call and ask. Be persistant and proactive. Looking at the examples I have given above, husband and I have saved about $140/month or $1680 a year.  Think of the options: That could be an emergency savings, go towards debt repayment, give you more money to play with, money to save for a house etc. Its worth calling! Yes, some of these things are time sensitive, you need to do at the time of renewal others you can call anytime. Its your money, take control of it and stop giving it away!

It’s Budget Time: Where to Start?

I realize I haven’t written in a while. The weather has been super hot and our computer room has the Chameleons cage in it with heat lamps so the thought of sitting up here 9 months pregnant was all kinds of not appealing.  I have to leave soon for a Doctors appointment but figured I would write a little bit about where to start with a budget.

 

First off, if you haven’t figured it out already I am a huge fan of Gail Vaz Oxlade. I watch all her shows and have read most of her books. She is brilliant and interesting. So my guide to doing a budget is very much based on her rationale. I have read many other blogs and books etc. about creating a budget and i think they all have one common fatal flaw. You cannot and should not (in my opinion) even attempt to make a budget without first doing a spending analysis of at least the last 6 months.  Yet most people say this is unnecessary and a waste of time. However, how the heck are you going to set up a realistic  budget if you have no idea what you have been spending?  One of the biggest mistakes people make with budgets is that they guestimate…well my car payment is around $300 a month so I’ll budget that. No! My car payment is $282.45 a month and that needs to be budgeted as such. In that example it helps free up some money…Rather than over budgeting for the car I need to budget the $282.45 a month, the exact cost. This now leaves 17.55 a month to be placed somewhere else ( that’s 210.60 a year…of bad budgeting). All too often though we guestimate the wrong way. Well I usually only spend $40 a month on gas and husband probably spends about a hundred so if I budget $150 a month that’s realistic. Is it? Looking at the numbers we often spend  closer to $250 a month on gas.  Surely we could be smarter and drive the Sonic more often and the Ram less often and save a bundle on gas but you cannot make these choices without knowing the numbers. The numbers do not lie! If you skip this step and attempt to just make a budget, you will go over budget and you will be hit with “unexpected costs” (really you have to pay for registration on your car EVERY year? How did you miss budgeting for that?!). Ultimately, by skipping this step, you will never be successful with your budget.

There’s a couple of good ways to do a spending analysis.  When we initially started budgeting I did a spending analysis the good old fashioned way and it is the way I still personally recommend. Print off all of your bank statements and credit card statements for the last 6 months, get out a calculator, a highlighter and a notepad and start working (a big mug of hot chocolate with whip cream would not hurt this process either).  I love the flexibility that using pen and paper offers. You can make your own categories based on what is important to you. For example, for Gail pets falls into the “other” category. However we have 2 cats, a dog, and a chameleon and we are hoping to buy a fancy mouse and get our fish tank back up and running in the next few months. Our pets are important to us.  By doing my own spending analysis I can see how much we are spending on our pets and create a budget column just for them.  So I would go through all of the bank and credit card statements and look for things related to pets, the humane society, Petsmart, the vet etc. and add up all of the costs over the entire 6 months then divide by 6. That is my average spending a month. It is not good enough to do this for just a month or two. Find the average over at least 6 months. This is vital because it holds you accountable for “one-time spending” that you otherwise could have missed. For example we just bought my dog deworming pills. He is a big boy and needs a double dose compared to a smaller dog. We spent $60.65 on medication for him in the month of July. If I had only looked at Augusts spending that medication would have been missed. It is dumb to miss things like this and by not looking at at least six months you are setting yourself up for failure.

Some things on this will be easy for you to map out, that is- your “fixed expenses.” These are things like the car payment, insurance, rent/mortgage, etc. it is the same amount every month so it is easy to track and easy to budget for. It is your variable expenses that can get difficult. You will want to create categories for things like groceries, vehicles (gas, oil, repairs etc.), entertainment, possibly utilities (I know mine aren’t always the same depends on the time of year right?), clothing, gifts, charitable donations,  debt repayment, health and fitness, children,  and personal care (hair cuts, medications etc.). Then you will want an “other” category as well to catch things that are occasional expenditures that don’t fit into the other categories. Make sure you don’t overlook your bank fees. I can also practically guarantee that you are going to find things on your bank statements and have absolutely NO idea what it is. It may be a random jumble of letters…check the amount. If it is $41.50 it could very well be $40 withdrawn from an ATM + the 1.50 charge. Keep track of the ones that you just aren’t sure about and look for trends.

Finally, while doing this process you are going to want to look at how much money you actually bring home on an average monthly basis and how much you spend. It is amazing how easy it is to spend more than you make. You put a few things on the credit card here and there and give them the minimum payment and well….you’re still spending more than your making.  If you notice that your average spending is say $200 more than your average income you know when you create a budget you need to decrease your spending by AT LEAST $200 if you don’t want to continue down to debt trail.

If this sounds like way too much work for you I am tempted to say that you don’t actually care about your financial status. You don’t actually care about getting out of debt or buying a house or starting a family because if you did care you would find time. I found the time to do this while being a full time-5 classes- university student working 30-40 hours a week and while maintaining a good GPA.  If I could find the time you can find the time. However, if the task itself seems way to daunting (maybe numbers freak you out), I get a sick joy out of this. Send me an e-mail at blair-marie@hotmail.com and perhaps we can work something out. It is really eye-opening to do it yourself though and I highly recommend it. Feel free to comment on this post if you have questions about the process.

Another option for completing your spending analysis would be to use a site such as http://www.mint.com. To use mint you plug in all your banking information and it does all the work for you including making some sweet charts for you. Mint is a free service that makes it money through advertising. It may come up and say “You spent a lot of money on gas this month have you considered getting a cash back gas credit card?” etc. You do need to be careful with sites like mint. It is never advisable to give out your banking information and this site does require your bank account numbers and passwords to online banking. This allows it to constantly update its data. It is a really cool site however, if you are ever the victim of identity theft and your money all disappears the bank may just laugh at you if they find out you were using this site because you signed a contract saying you would never give your information and passwords to anyone including your spouse.

So to sum up:

Creating a budget: Step 1 is to do a spending analysis of the last 6 months. You can achieve this by

1) Print out all of your credit card and bank statements for the last six months.

2) Add up all of your fixed expenses over the 6 months and divide by 6 to get an average

3) Create categories for your variable expenses that are meaningful to you

4) Add up all of your variable expenses over the 6 months and divide by 6 to get your average monthly spending

5) Add up all of your sources of income over the 6 months and divide by 6 to get your average monthly take-home income

6) Add up all your expenses (fixed and variable) and divide by 6 to get your average monthly spending total

7) Subtract your spending from your income to determine if you are actually living within your means.

 

While you are doing this process, take a moment to add up all your debt as well. Student loans, car loans, lines of credit, etc. So that you can see how much money you owe. The average Canadian has over $20,000 of debt so don’t be ashamed if you have a lot. Be ashamed if you just keep sitting on it paying minimum payments and hoping it will go away.