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The following is a guest post by fellow blog reader, Mr.CBB, who is the voice behind Canadian Budget Binder. His motto is that, “It’s not about how much money you make, it’s how you save it.”
Mr.CBB shares budgeting tips, frugal lifestyle, relationships, recipes, parenting, personal finance and so much more for his over 4500 fans all around the world. After all “money is money, debt is debt” no matter where you live. Come join him on Facebook, Twitter, and Pinterest. Enjoy!
Putting a budget together for us was the easy part, but the beast not so much. The beast, in this case, is our personal finances, so in other words, the money. Can we really make a budget work with the money that we bring in each month?
As a newly married couple going back a few years now we hadn’t really thought about using a budget. We didn’t have much debt except for paying our every day expenses. It’s not like we have never had debt in our lives, we just never felt the need to track it because we thought we were so good with money. That was our first mistake.
A Budget Is Not For Everyone
That’s right, and I used to think I didn’t need a budget because I could tally up all the people I owed money to in my head. Heck, it was simple to save money as long as I spent less than I earned, so who needs a budget?
I needed a budget, that’s who, and shortly after getting married, we knew we would have to put a budget together. We not only had a mortgage and bills to worry about together as a married couple, but we also had 2 incomes and plenty more responsibility than when we rented.
Living in the UK
When I lived in the UK, I owned my first house (which was a flat) at the age of 21. What I bought was not a house, rather, it was comparable to a condo or a fancy apartment.
It wasn’t a million dollar mansion, but it was my little kingdom and I owned it. I didn’t need to have 3 bathrooms and a kitchen fit for a king. If the flat had four walls, a proper kitchen, running water, and a toilet that flushed, I was chuffed.
From there, I sold my flat and bought a 600sq ft house. Now, I know you are thinking it was small, and it was, but it was perfect for me. Considering the cost of real estate in the UK (which is very pricey in some areas), I didn’t think I did too badly.
When I moved to Canada, I don’t think I was prepared for all the expenses that were coming my way with new laws and regulations, taxes, insurances, and home repairs. There are many things about housing in Canada that differ from the UK, and I needed to get up to speed.
Dreams
I’ve always believed that if you have an opportunity to do what you love, don’t give up on your dream. My dream was to go back to school to learn something new, and I did just that, as scary as it was for me.
When it came time to buy our house (after much deliberation of whether we should rent or buy a house), it meant we needed to work together to get our finances on track and the money working for us.
Paying Off the Mortgage
Not only did we want to design our own budget, but we wanted to kill our mortgage as fast as we could. We saved for a nice down payment on our Canadian home, which gave us a head start in the mortgage payoff game.
We are both demons when it comes to owing people money even if it is just the mortgage. We’d rather work hard, play tough, and reap the rewards along the way. The budget was set up to help us speed up the mortgage pay-off process.
Tracking Expenses
No more guessing how much money we had left or scribbling notes on paper. Instead, we designed our own
10 step budgeting series and budget spreadsheet. When we bought our house, we paid $265,000, which left us with a mortgage of $185,000 to pay off.
Mortgage Freedom
It may not sound like a lot, especially with today’s low interest rates, but you can imagine how much money in interest we are paying. That was enough for us to get serious about our mortgage.
This was a huge debt for us, so we worked hard to save as much as we could to balance the budget and pay extra pre-payments on the mortgage. We have also been investing in our retirement funds along the way.
Sure, we haven’t invested to the max, but now that it’s 2013 and only 4 years since we bought our house, we will be mortgage free hopefully by June. That’s the plan at least for now, which leaves us plenty of time to put money into our RRSP’s and other investments.
Some people have their own reservations about paying the mortgage off and would rather invest, but I say just do what feels right. A friend of mine always reminds me to make sure that I diversify my portfolio, so that is the plan.
How the Budget Helped Our Mortgage
Knowing where our money is going each month and how much we can spend to reach our goals has helped us to save more money. Make informed decisions and talk to a personal finance advisor for help if you need guidance.
So, can the budget and the beast work together?
You bet they can, and here are my tips on how to make the budget and the beast work for you like it has for us.
- You need to get organized
- You need to commit to the budget
- You need to re-visit the budget often
- You need to evaluate what works and what doesn’t work for you
- You need to understand the process in order for it to succeed
- You need not give up when you fall
- You need to invest in yourself and financial literacy
So, although some people may think a budget is for people on low incomes or who are heavily in debt, think again. There’s no business that I know of that runs its organization without an accountant, so why should you run your household without a budget?
Don’t let the beast rule your budget. Take control of your money and know where, when, why, and how you are spending it each month.
How about you all? Do you have a budget that you track/follow each month? If so, how do you track it?
Do you ever find it hard to make your finances actually fit within your budget?
Share your experiences by commenting below!
***Photo courtesy of http://upload.wikimedia.org/wikipedia/commons/9/9b/-_Money_01_-.jpg
