Where is the Money Coming From?

Over the last two pay periods, we have been able to make two big payments towards our Line of Credit totaling $1,345.30 out of a net income of $4081.11. That's 33 % of our income for the last two pays. Part of the reason we've been able to do this is because we are controlling our spending. The other part (I think) is the way I have our budgeting spreadsheet set up. I enter the net value of each of our paycheques and the spreadsheet automatically determines what is left after our regular expense deductions (including our minimum debt payments). It then populates a line marked Snowball with the amount of income over any budgeted amounts. All that extra money now has a name and is committed to a purpose.

I then deposit that money to the Line of Credit as some as possible after getting paid. That way it's gone and can't be used for anything else.

If I'm able to keep up the OT at work, we should have the Line of Credit paid off by Canada Day! So that is my Number 1 goal now. Pay off the Line of Credit by Canada Day!

I've been busy tweaking the budget.

It's been a few (6) days since I last posted. Thats been a combination of being busy, but mostly it has been a lack of focus. Instead of focusing on this blog, I have been concentrating on redoing my budget spreadsheet for a biweekly schedule instead of a monthly schedule. I ended up going back and transferring all of the 2008 transactions into the new, biweekly form and that entailed lots of fiddly squinting and typing.

It also meant a bit of staring at the old spreadsheet and trying to figure out how I wanted things to work. On the old spreadsheet that I found at FinanceandFat, it had a column for your planned budget, 5 weekly columns for actual expenditures over the month, a total expenditure column and a final column to show the difference between the planned and the actual. It's a very nice monthly budget spreadsheet and I recommend it to those of you using a monthly sheet.

The problem was I just hated the fiddly part weeks. Two weeks a month I was sticking extra days into the week which usually meant going over that weeks budgeted amount for things like food and gas. With a biweekly budget I would be spreading those two extra monthly pay cheques over the whole year effectively. I think that will let me put some of that money biweekly towards operational savings and debt repayment. Instead of two lump payments, I will be having interest work for me more effectively by paying biweekly.

For the biweekly budget, I wasn't really sure how to set it up. I didn't want to just have 26 columns for the 26 pay periods in the year. With a biweekly budget, I would be saving smaller sums to build up to the monthly bills, so I would have to show savings amounts as well as payment out. I didn't want to be moving money in and out of the savings account all the time either. Currently, I'm trying a spreadsheet that has a planned, credit, debit and balance column for each pay period. It means that it's quite wide, but because I can fit three pay periods on the screen at a time, I don't actually have to scroll left and right during a session of date entry.

So I be evaluating my design for the next while and probably tweaking it some more. I'm always interested in better ways of doing things though, so if anyone has a recommendation for handling a biweekly budget, please let me know!

And really, my Christmas excess, soon now!

We Paid Off the TD Loan

This morning before going to work I checked the bank accounts and the cheque from the PCF loan, that I've talked about before, had finally cleared in the TD chequing account. So after work we dropped dropped by the TD Bank and paid the remaining balance of the consolidation loan off. I'm not getting too wildly excited about this because we've just exchanged a debt at one bank with a debt at another. However, the new loan is at 7.5%, 3.5% less than the old loan. This means that every payment will be paying off more principle. And that's a good thing. Hmm...well it's actually worth about $1.72 per day difference in the interest on $20,000.00.

I been working out the details on changing from monthly budgeting to biweekly budgeting. For us it's just going to make everything easier. The budget will be the same for each two week period. To me the fiddly part weeks in a month alway seemed to make budgeting more difficult, did you budget extra for them or did you just try to stretch last weeks money to cover an extra four days?

Tomorrow my pay should be direct deposited into the PCF chequing account. Mrs. B's was deposited today. We both are paid biweekly, her on Thursdays and I on Fridays. So the first biweekly budget period will start tomorrow. The biggest single item is rent at 21.5%. The biggest aggregate is debt repayment with 3 items at 13.2%, 11.8% and 6.5% totaling 31.6%.

The biweekly budget lets me slip in a little extra because the two extra monthly pays are divvied up amongst biweekly items. This means that two biweekly periods are about 8% less that a monthly period. This works as long as there is enough float in the account so you don't go into the hole. I'm keeping a $1,000 cushion in the chequing account so I think that I'll be ok. This 8% is allowing me to budget for a couple of things like replacement glasses and vacation. My current glasses (invisible bifocals) were $500 and my employer only has $200 coverage for optical. Maybe if I don't need to replace them I'll be able to save up for laser eye surgery.

The other day, over at Loonies and Sense, the author posted about chequing account cushions as well.


Tune in tomorrow for my story about my Christmas excesses!