My baby is almost three months old and I’ve learned quite a few things about the realities of having a baby. I’m still using cloth diapers, but my list of necessities has definitely grown! My baby turned out to be very fussy, as a result of a cow’s milk protein intolerance (it gets into breastmilk, so she was very unhappy until I went off dairy). The intolerance caused reflux, which caused her pain. We had our work cut out for us with this one!

Baby Must-Haves
I have a few additions to my must have baby list from earlier:

Co-sleeper – a bassinet that attaches to the bed. My daughter nursed very frequently for the first few weeks, so it was very nice to be able to roll over and pick her up immediately. I also put a bench at the foot of the bed to hold the My Brest Friend support pillow. I could nurse without getting out of bed! I can also reach over to put my hand on my tummy to make sure she’s breathing or soothe her if she fusses in her sleep.

Swing – if you have a fussy baby, you must have a swing. My daughter would wake up after a 30 minute nap in her co-sleeper, but go three hours in the swing at the same time of day. We have a large swing, so I also bought a small rocker/vibrating seat that I can move around the house.

My Brest Friend – this breastfeeding pillow was key in the first several weeks. My daughter nursed a LOT, so I took to nursing her while I ate. I simply strapped the pillow around my waist, set her on it, and then slid my chair up to the table. The Brest Friend is better than the Bobby for this because of the strap that holds it to your waist and the flat edges – baby can’t roll off. The Boppy is great as a baby lounge chair and useful for tummy time.

Cloth Diaper update
I started my cloth diaper stash a few months before the baby came with the intention of trying several types out and then stocking up, but that plan was delayed. My baby was six pounds at birth and grew very slowly. She also has skinny thighs. That means that she was in newborn diapers for six weeks! Thanks to her dairy intolerance, she also went through 10-14 diapers a day for at least six weeks. I was happy to have disposables for a while, although I didn’t like the way they stuck to her skin. However, had I known we would use them for so long, I would have purchased newborn cloth and then sold it when she made the switch. As it is, she didn’t fit into some of her diapers until two weeks ago and still doesn’t fit into some!

So far, I’ve found a few types that work:

The gDiapers were the first to fit and have the trimmest fit because they come in three sizes. We’re still in the 8-15 pound diapers.  On the down side, I find it annoying to change the plastic liner after a poopy diaper, especially with a squirmy baby on the table. My husband prefers them because he hates dealing with prefolds and Snappis.

Thirsties Duo Wraps (covers) and Duo Diapers were the next to fit. I love these! Thanks to their inner leg gussets, they hold in the poop well. The Duo Diapers make a great night diaper. The Duo Wraps are also great. I had planned to use trfolded prefolds or inserts, my baby still poops multiple times a day, so I have to Snappi the prefold around her to avoid going through three or four covers a day.

The Flip covers fit third, but only over a Snappi/prefold combo. Because her thighs are so skinny, there is a gap with just a trifolded prefold, inserts, or the Flip inserts (which are huge!)

I recently ordered a few fitted diapers to test out. I suspect these will prove to be the easiest for my husband, the nanny, and me because we can just snap or velcro them and then put the cover over them. The Snappi is nifty, but my prefolds were designed to be trifolded as an insert and are getting difficult to wrap around her little waist. Fitteds will increase our total cost, but my husband told me last night that he wants us to pick one kind that works and then order a bunch of them.

 

I’m about halfway through my pregnancy, so it’s time to turn my thoughts to baby gear. I still haven’t come to terms with the idea that I will actually have a baby in five months, but I can at least be prepared. We started with a budget. I will be having baby showers and getting hand-me-downs, but I’m also budgeting for the things we need to buy or spend money on that first year.

What You Really Need
If you walk into a baby store and ask them what you need, they will give you a very long and very expensive list. So here’s what you really need:

Crib
Dresser/changing table (combo to save space/money)
Changing pad and cover (to go on the dresser and keep baby from rolling off)
Crib sheets
Crib mattress
Clothes (get as many hand me downs as you can)
Car seat
Car seat stroller, or travel system
Diaper bag
Diapers/wipes
Bottles
Breasts or formula (note, breasts are free unless you’re adopting)
Receiving blankets
Baby wash, diaper cream,
Rectal thermometer
Baby nail clippers
High chair

That’s the bare minimum. As your baby gets older, you’ll likely want things like pacifiers, baby spoons, a baby tub, sippy cups, and toys. But your baby will survive bathing in the sink and not having a million toys or a bouncy chair or any of that other stuff you see in the stores. A rocker/glider is highly recommended to soothe an upset baby, but not required. That’s not to say I won’t buy those things, they’re just not totally necessary.

Other things are completely unnecessary and you should not buy them or let someone buy them for you. These are items like crib bumpers, diaper stackers, crib pillows, and crib blankets/quilts. You’ll notice the stores sell fancy baby bedding sets, but most of the components are not recommended for use with babies. All you need is a crib, mattress, mattress pad, and sheets. If you live in a cold winter climate, you can use a light blanket, but it’s better to put your baby in a warm sleeper suit or sleep sack.

How Much to Budget for Baby Gear
Baby magazines often mention a figure around $10,000, just for gear and food, for the first year. That doesn’t include child care. The Baby Bargains book estimates you can do it for $4000.  The latter is a lot more reasonable, especially if you stick to the simpler, more affordable stuff. Obviously, don’t skimp on a car seat, but you don’t need a $600 crib or $1800 stroller system. A $125 crib that meets current safety standards and a $100 stroller are just fine. A fancy (useless) baby bedding set can cost as much $400. A crib sheet costs $15.

However, there are times when you might want to spend a bit more to get something that will last longer. I looked at a cheap Ikea baby dresser for $100, but I hated it. Instead, I plan to buy a nice $400 dresser that will last for several years.

My budget for first-year gear is around $4000. My baby will eat homemade food and breastmilk. If you opt for formula, factor in another $700 for the year. I will also be cloth diapering, but if you use disposable diapers, add another $1000 to your budget.

How Much to Budget for Child Care
The biggest budget item is child care, and this varies by region. In our area, day care and nannies are very expensive. Infant day care is sometimes MORE expensive than a nanny, and very hard to find in some areas! I will be adding $12-$18,000 to our first year budget for child care because I live in Los Angeles, which child care is pricey (but cheaper than New York City.)

How Much to Budget for Healthcare
You also have to factor in costs for healthcare. Assume your baby will visit the doctor 10-12 times that first year, so that’s 10-12 co-pays. Your newborn is only covered under the mother’s coverage for 30 days following the birth. You need to have coverage in place for the baby after that. My employer has a very generous dependent benefit, but many employers don’t. Compare your plan with your spouse’s, then factor the additional cost into your monthly budget. Typically, it’s deducted from your paycheck. If you find the dependent premium is over $150/month, consider buying a child-only individual plan through a health insurance provider like Blue Cross or Kaiser.

The birth will also cost at least a couple thousand dollars, depending on your insurance coverage and out-of-pocket max. If you have an FSA, you can save a bit of money by using the FSA funds for those costs. Yes, it’s still out of your pocket, but it reduces your taxable income, so it will ultimately cost you a little less.

If you’re looking at the total for all these costs, you’re probably freaking out. Remember, you’re not spending all of it at once. The initial outlay for baby gear can be spent gradually before the birth. The hospital bills will come in a month or two after the birth. Things you need as your baby grows will also be purchased over time, and you can shop for deals. Child care is also paid monthly, not all at once.

This post will probably sound like I’m bragging, but I’m not. Instead, I’m realizing how wonderful it is to have breathing room in the budget. To be able to pay for things and not worry about it.

Two examples from last week:
My husband was driving home from the hardware store the other day and pulled his car charger out of the lighter socket. The socket came with it! So, to the shop we went. He also needed his 90,ooo mile service, and they discovered the lighter had blown a fuse. The bill came to $544. We put it on our Goodyear card to take advantage of the six months same as cash deal, because we like to do that when we can, but we could have paid cash for the bill right then. It was nice to have a choice.

We realized that we’d surpassed our emergency fund goal without meaning to. So, we took a look at the budget. We also discovered that we won’t need to dip into the fund to pay upcoming insurance and property tax bills. So, now we can start contributing to Roth IRA plans! It is so nice to have that cushion.

The Beauty of the Cash Surplus
We’re still pretty frugal, but we like having a surplus. It gives us freedom. Now, we’re not likely to run off to Paris for the weekend because we can, but it does allow us to buy living room rugs without worrying about how we’ll pay for it or saving up for months. When my husband finally decides which iPod he wants to replace his dead seven-year-old iPod, we can just buy it.

How We Got Here
It didn’t happen overnight. We started by paying down $40,000 in debt. We still have a hefty pile of student loan debt, but that’s amortized over 30 years and we prefer to focus on retirement savings instead of paying down low-interest loans that can be deferred if necessary.

It also required a change in habits. My husband is less likely to buy stuff than he used to be. I bake less than I used to. We don’t go out very often (partly because we have very little interest in most of the movies that come out these days, and partly because dining out is hard for me, and partly because we’re so busy doing house stuff!)

Tax credits (like the homebuyer credit) and tax refunds helped boost our emergency fund and windfalls helped pay off that debt. We’ve streamlined expenses where we can.

Finally, we got there through income growth. Our income has grown by 600% from the year we got married when we were both grad students and I was only working part time. That’s no doubt the largest contributor to our surplus, but we wouldn’t have it if we’d let our spending increase with our income. Instead of applying for the largest mortgage we were told we could afford, we opted for something we knew we could comfortably afford. Instead of going on a spending spree when we moved in, we shopped carefully and found a good mix of high-quality affordable pieces that will last a while. Instead of rushing out to landscape the front and back yards, we did it over time.

We still budget our expenses each month to make sure we can cover them and plan for large purchases, but I haven’t run out our costs recently to see where we need to cut. I should, I’m sure there are areas where expenses have crept up, but I’m not as worried about it as I used to be. And that’s the real joy of having breathing room in the budget – peace of mind. You can’t buy that.

Yesterday marked the first day that banks had to ask your permission before automatically opting you in to overdraft protection when you open a new account. They have until August 15th to beg existing customers to keep the coverage, at which point everyone who doesn’t actively choose it will be opted out. Some banks, like Bank of America, are abolishing their overdraft protection program altogether. As for the rest, don’t fall for the queries asking you to sign up, because most of their arguments just fall flat.

Overdrafts Don’t Affect Your Credit Score
Overdrafts don’t hurt your credit score. That’s because checking and savings accounts don’t appear on your credit report. They’re not loans or debts, they’re cash, and therefore not reported to credit agencies.

Overdraft Protection Doesn’t Save You Money
The new rules only apply to ATM and debit card transactions, not bounced checks, so overdraft protection won’t save you money on bounced check fees. In fact, NOT having overdraft protection WILL save you money because your purchase or withdrawal will be rejected. So, just make sure you always have $20 in cash in your wallet or access to a credit card in case you’re at a restaurant and didn’t realize your balance is low.

Checks and Automatic Bill Payments Are Exempt
If you write a bad check, you’ll still get hit with fees. The same holds true if an automatic debit hits and you don’t have the cash in your account. So if you opted into OP to protect your mortgage payments, you might as well opt-out. OP doesn’t protect you.

Overdraft Protection Alternatives
So what you can do to avoid overdrafts from any source? It’s actually quite simple.

1. Track your spending and upcoming debits. Don’t rely on your ATM balance to tell you how much money is in your account. You may have other payments that will hit that same day and put you over the limit even if your debit cleared earlier.

2. Sign up for low balance alerts. Many banks offer a program that will send you an email or text alert if your balance drops too low. Then you can either stop spending money or find some cash to deposit into your account before you overdraft.

3. Budget. Budget. Budget. It’s that simple, people.

4. Use a credit card. If you have a credit card, then charging the purchase may be cheaper than a $20-$35 overdraft fee, even if you have to pay interest for a month or two. Of course, this assumes you can actually afford the thing you’re buying. If you can’t afford it, then no amount of overdraft protection will make it affordable.

So, have I convinced you that you don’t need overdraft protection? If you still feel you need it, then you also need to ask yourself some hard questions about why you can’t balance your checkbook and spend within your means. Is spending hundreds of dollars a year on overdraft protection really helping your budget?

Yesterday, LearnVest (a cool financial blog for women) offered a post about the true cost of a child to age 18, and offered some tips for preparing for a baby. The post includes a cool info-graphic that outlines the USDA’s tally. Learnvest says:

“Take a deep breath: According to the U.S. Department of Agriculture, a baby born today to a middle-class family will cost about $221,000 by the time she turns 18—not counting college! For more info, look at a detailed breakdown of child-rearing costs. Before you fall into a dead faint, remember that you won’t shell out that whole sum at once.”

Child Cost Breakdown
The biggest portion of the child expenses is housing, which you’d have to pay for anyway, however housing may cost more once you have a child. Many families opt for a bigger house. Most of us don’t want to be living in a one-bedroom with a two parents and a 15-year-old!

If you really think about, most of the costs the USDA details are manageable over 18 years. It’s just $12,777 a year. Obviously, children are most expensive in the early years when they need childcare unless one parent can work from home or become a stay-at-home parent. The expenses ease up a bit once children start school and are old enough to watch themselves. But that doesn’t last long, because then come the teen years, with cars, pricier clothes, and gadgets galore.

Preparing for Baby Costs
The next portion of the LearnVest post offered six tips for preparing for baby costs. The first one made people go nuts! It was: “Plan to have at least $20,000 in the bank at the outset.”

Most people were outraged at the very idea that they should have to save a lot of money for a baby. And it’s true, many families don’t. However, do you really want to start your new baby’s life by going into debt just to get her out of the hospital? Even if you have insurance, there will likely be some cost. Most insurance plans require a deductible. Some plans have an additional maternity deductible.

Then there are things like diapers, extra food for you if you breastfeed, formula if you don’t, baby clothes once the baby grows out of all that adorable stuff you received at your shower, medical insurance premiums, etc. Yes, you can save by choosing cloth diapers, breastfeeding, and making your own baby food, but there will still be expenses, even if you’re super-frugal.

That figure also includes childcare. If you already have childcare worked into your budget, then you may not need to have $20,000 in advance, but plan to spend around that much for first year expenses all together. Pay as you go is one option, and it works if you budget carefully, but it never hurts to have a little extra in ye olde savings account either!

My husband and I are heading in the general direction of parenthood and we’ve already started working on our budget and plans. So far we’ve: bought a house with room for a nursery/child’s room, made plans to replace my car with one that will fit a stroller/baby-seat, decided on cloth diapers, budgeted the cost of childcare, and decided to make our own baby food once it’s on solid food. And I’m not even pregnant yet! If you’re considering children, it’s never too soon to start planning for that event. Save now, while you can.

This is mostly about time management, but it also applies to personal finance. Every week, I create a To Do list in my notebook. It includes my usual weekly tasks (because I like crossing things off lists, not because I worry I’ll forget to buy groceries), the TV shows I plan to watch, events I plan to attend, as well as the things I need/want to do. I never mark off all the things on the list, though, because I make other things a priority.

Choosing Between Priorities
This weekend, for example, I wanted to do several things:

  • Go for a hike with my best friend
  • Paint my powder room
  • Make curtains
  • Paint a box for the bathroom
  • Work on a writing project.

Obviously, I had to narrow that list down, because there was simply no way to do it all and still have time with my husband.

So, I figured out which was most important to me.

I’d already agreed to the hike, and it was her birthday, so that was easy. Plus I got exercise, which I needed. Working out was also on the list!

The writing project was next on my list because I’ve given myself a personal deadline for it.

After taking care of some other household chairs, the other three things on the list didn’t happen. They’ll move to next week’s list.

Tips for Setting Priorities
If you’re deciding on priorities for your budget or your time, it’s all about calculating the relative importance.

My best friend is more important than my curtains. My writing project is also more important than my curtains, but less important than my best friend. If I had a paying deadline, the writing project might take the top spot.

If you’re budgeting, your rent/mortgage and other bills are priorities, whereas the vacation savings can wait.

If you’re choosing between purchases, or budgeting your spending money, decide which is more important to you. Do you need to buy the shoes more or can those wait so you can add to your vacation savings? Should you go out to eat or would it better to eat at home so you don’t have to put the movie tickets on the credit card?

Here are five questions to ask yourself before taking an action:

  1. Is this a want or a need?
  2. Is this related to an obligation?
  3. Is this related to a personal or financial goal?
  4. Can I do afford this without stretching my budget?
  5. Is the benefit greater than the cost?

For the hiking trip, the excursion was a want. The exercise was a need. It was an obligation, because I’d already agreed to go. It wasn’t related to a goal. It was free, so no cost. Definitely had a lot of benefits!

The Benefits of Setting Priorities
Obviously, we all want to do more than we have time for, and most of us want to do more with our money than we reasonably can. So, it comes to making choices. Priorities help make those choices easier. Most people, including me, have goals in the backs of their minds. By consciously prioritizing those goals and writing them down, you can more easily prioritize the other choices you have to make instead of taking an action and then realizing later that it was a mistake.

Two years ago, I posted my top 5 budget busters. Now my life has changed a lot, so I’ve got a mostly new set of budget busters.

House
Want to blow your budget fast? Buy a house. On top of the tens of thousands we spent buying the house (in the form of the down payment), we’ve also bought paint, furniture, and home maintenance tools. So far we’ve managed to keep the costs manageable, but a $5500 sewer bill sure put a dent in our plans!

Husband
Sadly, my husband is still one of my budget busters. He’s getting better, I promise, but he still has his moments. I thought I’d broken him of his habit of buying weekend lunches while he was recovering from surgery, but once he was able to drive again he went a bit crazy. He went even more crazy once he started working part-time. I’m still struggling to rein him back in.

He also still has ideas about what we should buy to keep up with our lifestyle. He keeps telling me I can afford a more expensive car, but I don’t want a more expensive car! He’s insisting that he’s going to buy himself a very nice car in keeping with his profession. Clients don’t see his car, but he still thinks he deserves it.

Surgery
My husband’s surgery blew our budget in the sense that the drop in income required us to shift some budget items around. So far we haven’t had to pay much in the way of medical expenses, but there have been some, which have come out of our FSA. That means that other FSA expenses we have planned may have to come out of our pockets.

Food
Food is still one of our biggest budget items. We’ve cut it in some areas because I’ve been shopping at farmer’s markets and using more coupons, but it’s still high. Gluten-free food will do that to a budget. Throw in my husband’s lunches (even though I buy him food), and you can see the problem.

Insurance
With the house came higher insurance costs. On top of higher auto limits (we have more assets to protect now), we have homeowner’s, flood, earthquake, and life for me. We’re still shopping for my husband’s life policy. For some reason, they didn’t want to insure a guy going in for surgery! Our insurance bill currently tips the scales at $5100 a year, up from $1800 when we rented. It will only get higher once we add my husband’s life insurance and the rate increase for my new car.

Despite these new budget busters, we’re managing to keep our budget in check and have resumed saving money (or at least we’re not drawing down our savings too much despite the big sewer bill.) It’s more of a struggle, though. And we’re certainly not saving the 25% we once managed with ease.

I’ve written a post in the past about inexpensive hobbies, but I happen to have a really expensive hobby. It’s also very time and labor-intensive, so I don’t get to do it often, but I haven’t given it up. In fact, I’m thinking of taking up a new project now that I have a house.

Expensive Hobbies
Several of my friends have very expensive hobbies. I have a friend who is an excellent quilter, but quilting is very, very expensive. Scrapbooking is another pricey one. Knitting, too. Basically, crafting in general has gotten expensive unless you only use the cheapest supplies.

Playing a sport can become expensive if you join a team, have to buy equipment, or have to pay team dues or rent game spaces.

Horseback riding, bike riding, etc. can also easily get expensive, especially if you do it competitively. Really, any hobby that you try to transition into a career or competition can quickly become expensive.

Collecting anything can be a very pricey hobby indeed.

I have two hobbies. One is novel writing, and yes, it can be expensive. However, because I pursue it professionally, I can deduct some business expenses for taxes. My second hobby, which I can’t deduct, is stained glass crafting.

I haven’t actually made a stained glass piece in at least ten years. I tried to make one in my old apartment, but glass-crafting is very messy. First I had to tape garbage bags all over my dining room to avoid getting glass slivers on the floor while I cut it. Then I had to tape garbage bags all over my kitchen and crouch over a stool to grind the edges of the cut glass. After that, I vowed not to make another piece until I had a house where I could do the work outside or in a garage.

Calculating the Cost of Expensive Hobbies
Well, now I have a house and a small window in need of decoration. I plan to make a small window hanging from stained glass. I already own most of the supplies, but I may need to replace some of them, and that could be expensive. For example:

New diamond grinder head: $26.95
Copper foil: $5.95 a roll
Cutter tip: $14.66
Particle board work surface: $20
Pattern paper: $8.95 for 100 sheets
Glass: $8-20 per sheet

Of course, I’m not truly considering the cost because I enjoy making stained glass windows and I want to make a window. I’ll try to keep costs down by using some of the glass I already have. I have several large sheets, as well as a big box of glass bits that are perfect for small cuts.

If a hobby is truly expensive, you’ll either have to decide how to afford it, or find a new hobby.

Budgeting for an Expensive Hobby
|When cash was tight, I didn’t make stained glass pieces. I simply couldn’t afford it. If you have debt, you can’t afford a hobby. If you don’t have debt, arrange your budget to accommodate your hobby without creating debt. Look at your expenses to find other areas you can cut.

Some simple examples:

  • Use coupons at the grocery store. Put your savings toward your hobby.
  • Cancel or reduce your cable. If a hobby is keeping you busy, do you need cable?
  • Brown bag your lunch.
  • Sell CDs, DVDs, or supplies from old hobbies you’re no longer active in.
  • Cancel monthly subscriptions.
  • Pool resources. If you know other people with the same hobby, schedule meetings where you can share your supplies and avoid having to buy all the tools that others might have.

Once you make the necessary cuts, budget the hobby into your monthly expenses so you’ll have the funds ready when you need to buy supplies or sign up for a class. You should also follow crafting blogs or newsletters to be alerted when supplies or equipment go on sale.

We all need hobbies. They’re creative outlets that help us reduce our stress and provide simple enjoyment. In fact, if you spend most of your time sitting on the couch watching TV, you probably need to get a hobby! Just make sure it’s one you can afford.

This weekend, my husband and I mapped out our cash flow for the rest of the year. I noticed that he wasn’t scheduling our usual monthly transfers to savings, but was instead letting the money pile up in the checking account. That started a debate about whether it was better to leave the money in the checking account for convenience, or better to transfer it to savings to earn a few bucks of interest. I’m sure you can guess which side of the argument I came down on!

Anticipated Expenses
He reasoned that we have quite a few big expenses coming up. For example, we’re buying a new coffee table, TV, and TV console later this year, we have our homeowners insurance, earthquake insurance, flood insurance, and auto insurance due between July and November, and then I’m buying a new car around the end of the year.

That brings our total planned spending to around $9000. However, we’re not spending it all in one month, it’s spread out into three large chunks.

Low Interest Rate
Our current interest rate is 1.29%, which is pretty darn low. Each $1000 earns $12.90 a year, or $1.07 a month. So, leaving $3000 in the account for three months earns us a whopping $9.56.

Convenience
It’s true that leaving the money in checking (which earns no interest) is more convenient. We don’t have to schedule transfers to make sure the money is back in our account in time. It also doesn’t make sense to transfer money from checking to savings and then transfer it back two weeks later.

Convenience vs. Interest
If the interest rate were higher, the convenience factor would be less compelling. However, it’s not exactly inconvenient to make a few clicks and transfer money around. While I won’t transfer funds out of the checking account during the months we have to make big payments (because I’ll be transferring money in), I will transfer the funds out in the interim months. Even if we only earn $3 in interest, that’s $3 more than we had before and it’s certainly worth 60 seconds of my time.

When interest is this low, it doesn’t always make sense to transfer funds out of checking, but if you can map out your expenses, I think it’s worthwhile to move the money into savings if it can stay there more than a month. Most online accounts allow six transactions a month, so there’s really no reason not to use at least one of them!

As I’ve mentioned several times, my husband and I built up a sizable emergency fund before he went on disability. While on disability, we’ve been down some from our usual income, so we’re not increasing the emergency fund, but we have been continuing our tax set asides. When this plumbing emergency developed, we had the cash, but also had to readjust our spending plans for three sofas and sliding doors.

Why We Want to Readjust the Budget
Although we could buy the sofas and sliding doors right now, we also need to replenish the emergency fund with the $5500 we just spent on plumbing. When it was just $1775, we weren’t concerned, but we were concerned when it ballooned to $5500.

Other Priorities This Year
We have several major priorities this year, two of which are now in flux.

  1. Replace the French doors with sliding doors. We want to do this in 2010 because there’s a 30% tax credit for energy-efficient windows. That would be a significant savings.
  2. Buy me a new car. One car I’m considering also has a tax credit, although others I’m considering do not. I don’t expect the tax credit to be used up this year, but I don’t want to miss out on it by waiting too long. The other reason I need a new car is simply because mine is almost 14 years old and has over 130,000 miles on it. It’s starting to show its age.
  3. Buy furniture. One room of our house is empty and another room has furniture that is too large for the room. We’d started to buy, but we’re not done yet.
  4. Increase retirement withholding. We really need to get on this.
  5. Build our emergency fund. We need to get up to six months expenses, but we have to balance that with other priorities.


How to Adjust the Budget
In order to adjust the budget, we did a few things.

First, we looked at our planned spending for the next few months. We worked out that we’ll need to transfer money from our emergency fund in June to cover the plumbing bill. That doesn’t yet include the sofas we want to buy. It does include upcoming insurance bills we already have the money saved for. We may not need to dip into savings to cover them, which will help replenish the emergency fund.

Second, we figured out how much we plan to spend and when we can realistically expect to do that this year. We also looked at what we expect to be earning once my husband returns to work.

Finally, we looked at the increased budget expenses we expect to have next year.

Then we did the math and worked out what we need to save to replenish the fund and what we have left over to work with.

It’s challenging to have such a huge crimp thrown into our plans. That’s why we have an emergency fund, but we also don’t like dipping into it, because then we have to replenish it! We haven’t quite figure out how we’re going to make this all work, but we’ll find a way. And if we can’t, some things will get delayed. That’s just life.

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