We have always been very money conscious but we never actually put a budget to paper. Clayton said that he has always had a budget in his head and he’s always been pretty close, (he got us this far!) but truly budgeting effectively is much more than just running numbers and estimating. We knew that moving to the farm would mean needing to be more strict with our budget because we have more to upkeep and a long list of projects, on top of our goal to be 100% debt free. I would love to say by age 40, but 30 is coming around the corner FAST so I usually take the safe route and say by age 50 which is around the time Clayton will retire (if not sooner!). When we sold our house this past fall, we were able to pay off both vehicles and a credit card. That was a HUGE step forward and we have now started to see the impact of those payments staying in our bank account after a few months. We now just have one credit card left and then paying off our mortgage early.
Now that the dust from moving has settled and with the start of this new year, I knew I wanted to get more strict about budgeting to pay off the last credit card, add more to our savings, and start making extra payments on the principal for our mortgage. A quick Google search for budgeting apps brought me to EveryDollar, and being a long time fan of Dave Ramsey, I signed up for the free account and got to work.
I got started at the end of January so I went back through and added every paycheck and every transaction for the entire month to see where we were without having a budget in place to set our baseline for where we needed to improve. Turns out, we were pretty spot on, but there were definitely areas we could reduce to use those funds more effectively for our goals.
I budget EVERYTHING. From every paycheck to every dozen eggs sold, every income transaction gets tracked in EveryDollar for starters. When setting up the “Planned” amount for paychecks, I shoot low so I am budgeting our normal expenses with the bare minimum income to end up with money left over at the end of the month. When I update the “Planned” income to the “Received” income, that leftover money goes towards extra debt payments, extra savings deposits, and extra payments on the mortgage principal.
I have a category for EVERY EXPENSE so we can stay organized and see exactly where our money is going. The animals all have their own budget category so I can break down exactly what species is costing us the most (horses, I’m lookin’ at you!). Last month was a much more expensive month on the animal front because the horses’ had their annual dental floats, the dogs had their annual heartworm tests, we built the new stall coop run, and I ordered our guinea keets for later this spring. Normally all that added expense would have had me hyperventilating thinking we would be going over our budget, but using the EveryDollar budgeting app allowed me to shift the budget around in other categories to make sure everything was totally covered and still leave some room for Chipotle! Winning!
With the EveryDollar app you can also set up “funds” to save ahead for expenses like car insurance, taxes, or big projects. You set aside part of the budget towards that “fund” every month, planning backwards from when that expense will be paid and dividing the total by the number of months you have to save up for the expense. It’s much easier on the budget and your mindset to put $50 a month towards a bill than to get hit with $500 all at once. Looking ahead to next year, I can set up a “fund” for the annual vet appointment for the horses and dogs. I can also create “funds” for big farm and house projects like building a composite front porch in a few years. I may also set up a “fund” for hay since that is one of our larger, more frequent farm expenses.
I typically work on our budget from my computer on the EveryDollar website but there is also an app for your phone to enter transactions on the go. Both the website and the app are very easy to set up and use. It’s almost a game to play with the budget categories to see where you can move money around to put it to better use! Maybe that’s just my green personality showing, but I really think budgeting is fun and not stressful now!
I encourage you to sign up for the free account and give it a try! Financial freedom is a goal we should all be striving for!