The Home Budget – Working Within A Balanced Budget – Part III

If your budget is balanced you are ready to focus on the key areas outlined in Part I. 

Home Mortgage or Rent

Child Care

Utilities

Groceries

Non-food Household Items

Medical

Auto – gas, insurance, maintenance, registration, emission test, etc.

Transportation – bus passes, transit passes, carpool, etc.

Debt repayment – loans, credit cards, student loans, medical bills, etc.

Savings – retirement, emergency fund, savings account, college fund, vacation fund

Gifts 

Home Mortgage or Rent 

I am all about owning my own home.  For some that is not an option at present but it should be a goal for the not too distant future.  For homeowners the goal should be to pay off their mortgage as soon as they can. 

Here is an easy way to make a huge dent in your mortgage.  Let’s assume your monthly mortgage payment is $800. 

$800 ÷ 12 = $66.67 + $800 = $867 new monthly payment. 

On a 30 year mortgage you will shave off nearly half your mortgage time simply by making one extra payment per year.  Adding it to your monthly payment makes the amount more manageable and impacts your mortgage every month so don’t wait to pay the extra payment at the end of the year.  It is all about compound interest.  If you can afford to pay more than by all means do so. 

Want to run an amortization schedule to see how your additional payments can affect your mortgage?  Go to bankrate.com. 

Child Care 

I consider this my most important bill.  I am entrusting someone with my most prized and precious possessions.  I expect them to keep my children safe, nurture them and keep them fed and sheltered in my absence.  For this very reason I make sure no matter what this bill is paid in full and on time every month. 

Utilities 

I cut my expenses in this arena as closely as I can.  We only heat our downstairs and let the heat rise to heat upstairs in our house.  We are careful about wasting water, we don’t leave the lights on when we leave a room, etc., etc. 

Groceries 

By now I’m sure you know where I stand with my grocery budget.  Review my previous posts and know there will be more in the future. 

Non-Food Household Expenses 

This is another where area I have a tight budget in place.  I spend $25 or less per month on cleaning supplies, laundry supplies, pet care supplies, light bulbs, toilet paper, etc. 

Medical 

This is for routine care to help maintain and keep us healthy.  Budget enough for regular visits to the doctor, dentist and eye doctor.  If you wear contacts or eyeglasses or your kids need braces you will need to have an amount in place for these expenses. 

Auto 

Probably the largest amount for this expense category will be for gasoline.  After that insurance and then all the regular maintenance, registration fees, etc.  This does not include auto loans. 

Transportation 

Regular occurring public transit expenses – bus passes, transit passes, carpool, etc. 

Debt Repayment 

This category is a big one and we’ll need to explore this one more in-depth.  This will include all the minimum required payments owed to all your creditors – loans, credit cards, student loans, medical bills, etc.  You will need enough budgeted to meet your monthly obligations. 

Savings 

This is another big one that doesn’t usually have the place of importance that it should.  We will definitely explore this area more in depth as well.  For now you need to know that something, anything needs to be budgeted for savings and as you probably already know you most likely aren’t saving enough.  We will explore ways to improve in this area as well. 

Gifts 

You need to budget and track expenses for gifts.  This is easily the most overlooked area because it is considered incidental spending.  It is also quite easily the biggest money leak for most people, especially at Christmas.  We will focus additional time on this so you can reign it in and still give nice gifts without blowing the budget. 

Looks like we are off to a good start!  How are you doing?