Budgeting Bonus #27

November 12, 2014 at 11:19 pm Leave a comment

Soon after I started budgeting, I noticed some bonuses entering my life.  Most of these bonuses are in the category of psychological.

Let me explain:

More Secure:  Within 6 months of starting my budget, I had put aside around $1500 in an emergency fund.  While that’s a very small emergency fund, it is enough to keep me from getting stressed about the little things that come up from time to time.  It has already come in handy on at least two occasions where I would have usually had to whip out a credit card and then run a balance for a while.

Less Stress Making Payments:  In the past, I would try to schedule my bill payments so they would be on-time, or perhaps a day or so early.  Now that I’m budgeting, I typically pay them as soon as I get them.  As an example, I typically get my cell phone bill a few days before the end of the month, due around the 21st of the following month.  I usually pay it around the 1st, weeks ahead of the due date, but in the month that the bill is for.  By paying quickly, the bills are off my plate, less for me to worry about.

Less Stressing about Missed Bills:  In my pre-budgeting life, I occasionally forgot to pay some regularly monthly bills, like cable or cell phone.  The bill would get misplaced, or something along those lines.  With a budget, I have line items for each regular monthly bill.  I can just look at the budget and see that I have money left in the Cable category this month, telling me that I haven’t paid that bill yet.

Less Stress about Job Stability:  Sure, I could still lose my job, and it would be a very stressful situation.  Since I started budgeting though, I’ve gotten to be “fully buffered”, whereby the money I earn this month is for next month’s expenses.  My pre-budget self would be in deep…. trouble…. If I lost my job.  I’d have bills coming due within days that I had no way to pay.  My post-budget self would still be in trouble, but it wouldn’t be nearly as urgent.  I’d most likely have 4 weeks from my buffer, plus another couple of weeks from my emergency fund before I’d run out of cash.  If push came to shove, I’d be able to stretch that out longer by moving money from my car replacement category, etc.  It would still be very bad to lose my job, but it would be much less stressful.

More Confident about Major Financial Decisions:  I started budgeting because my oldest daughter (still living with me) was about to attend a very poorly performing public high school.  My wife and I wanted to send her to a private school, but it was essentially impossible due to the high cost and our monthly expenses and debt.  After budgeting for a year while sending three children to a private K-8 school, I was able to forecast things pretty closely to reality.  My 8th grader was graduating that school, and I was able to enroll my oldest two in private high school, while keeping my youngest two at the private K-8 school.  Remember that I didn’t know what the incidental expenses would be for private high school, but I felt confident that we’d be able to make it.  We are almost half way through the year now and I’m in the process of saving up for next years application fees.  When it comes time to reapply, I expect to have all the fees already saved up.

A Note about my Credit Card Past & Now:  Pre-budget, I was not great with credit cards, running balances month after month.  Soon after I began budgeting, I saw them in a new light.  They are now a secure and convenient way to pay.  No worries about my checking account getting sucked dry (can happen with debit cards), and no worries about ordering things on-line that never show up (if that happens, just call the CC company).  Now, I charge on my credit card and schedule a payment within a couple of days (once it clears my card).  Since I’m budgeting, the money has already been set aside for the purchase.  The fact that I’m paying with a credit card is incidental.  It’s just a payment method.  The money moves from my checking within a couple of days, the same as it would if I had written a check.

This Budgeting Bonus is paid in Cash!  Just tonight, I realized another bonus that budgeting empowers me to do, even though I started doing it about a month ago.  Because I budget and I’m fully buffered, I have freedom that I didn’t have before.  I can now take advantage of promotions various banks are offering.  It started with me getting offers in the mail, but now I’m actively looking for special promotions to make money.

Many banks are now offering promotions where you earn cash for getting accounts with them.  There will usually be some strings, such as a monthly fee on the account, unless you do $X per month in direct deposit to the account.  In addition, many credit cards are offering bonus cash when you spend $X during your first 3 months.

For the bank account promotions, that is generally true income, deposited right in your account.  You can then budget that money to whatever spending category you wish.

With credit cards, the rewards are usually statement credits, which (on the surface) is less exciting.  But, if you are using your credit card to spend money that’s already in your budget, a statement credit is effectively income too!



Entry filed under: General.

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