Spending or Overspending? When Expenses Keep Popping Up

After complaining about my crappy smartphone for more than a year, I finally broke down and bought a new one. A Moto G5.

It’s awesome.

Finally, I can check my email without deleting apps or clearing my cache. Plus, it has a great camera and terrific battery life. Every time I look at it, I cackle in glee.

Jon, however, soldiers on with his old Samsung Grand Galaxy, the same model that drove me crazy. He uses far fewer apps than I do, and it just doesn’t bother him other than camera envy. Still, I worried about phone inequality. After all, if I had an awesome new phone, shouldn’t Jon get something at least a little nicer?

“Um, maybe we need to slow down on the spending, honey.”


A Tight Month?

I was sort of taken aback. Not only had we talked about new phones for both of us, but I thought I was totally on board with the frugal lifestyle that’s allowed us to maintain our semi-retired status.

“It’s gonna be a tight month.”

Well, Okay, maybe so. Our renters vacated one of our properties after their college graduations (and got some awesome advice from Jon as they moved out.)  We expected that, but we haven’t found replacements yet and have a few things to do on the property. And, as usual, there are a few things to be done on the other properties.

Our property insurance rates increased, raising the mortgage payments a touch. Car insurance was due for the rest of the year. And we’d spent more than usual on Little Bit’s birthday with a trip to Great Wolf Lodge and a movie outing with three of her friends.

Plus we’d paid for swim lessons, a new tail pipe and muffler so the pickup could pass inspection, Father’s Day gifts, grad gifts, some new books…

Ye gads. Jon was right. Like mushrooms after a rain, expenses seemed to pop up everywhere we looked.

Were we spending or overspending? We needed to evaluate our situation to tell the difference.

Spending or Overspending? When Expenses Keep Popping Up

Evaluation Time

First, we avoided the real trouble sign: We hadn’t added any debt.

While we had spent a fair amount, there was more than enough cash to cover the expenses. Paying for our purchases didn’t concern us. Still, spending more than you’re bringing in or budgeting for can bankrupt us as easily as it can Johnny Depp.

Expenses over Income might be okay short-term. Long-term, it’s a disaster. Which scenario were we looking at?

Some of the expenses, like the car insurance and repairs, are budgeted even if they aren’t regular. For that matter, every landlord should anticipate having an occasional renter transitions with no rent. That goes double if you rent to college kids.

So we had a financial cushion, just for that reason. Still, you don’t want to rely on your cushion too long.

Was this a blip or a trend?

Ask the Questions

We needed to look at what we were doing more carefully. First, we had lower income in June. Was that a permanent situation or a temporary one?

Will income go back up?

Probably. We don’t have new tenants yet, but Jon received several calls inquiring the property. We’re looking at August, though, not July, so we’ll have at least one more month of lower rental income.

It might be a good time to see if we can’t sell some of this excess stuff in our house, but income doesn’t look bad long term.

Next, I took a look at our expense tracking for June and asked some questions about our past and future spending. I updated the spreadsheet as best I could with receipts and online banking. Then I started running reports.

Would we be spending a lot more this month?

Maybe. We wouldn’t need groceries other than milk, and I didn’t see any more entertainment spending. But we’ll have some business expenses getting the rental ready again.So it might go higher by $100 or so for the month of June.

What happened last month? The month before?

I checked where we were for the previous 5 months, and while our June spending was on the high end, it wasn’t ridiculously high. Our six-month average is about where I thought we’d be, right on track with our numbers from last year.

And that average is well within our projected income/expense expectations. Yes, rental income is down. But the market’s way up and I earned more in my seasonal job this year, which gives us some leeway. Our net worth should still be higher this quarter than last.

So why did our spending seem high?

Lost rent and cost shifting. We paid for our Great Wolf Lodge stay in April, not June (just like we’d paid for our May beach trip in February.)

Going on vacation twice in a three-week span contributed to the feeling of excess. So did a packed refrigerator, despite the fact that our grocery spending wasn’t that high. I’d picked up some summer clothes this year, too, after several years of not picking up any. We spent some money on cheap books a couple of times and there were a few impulse purchases.

Plus the fancy new phone.

It was all accounted for in the budget, though, even the vacations.

We didn’t spend a ton, but we spent often. And when you spend often, there’s always a concern that if you aren’t careful, your little purchases add up to more than you thought. T

Are there discretionary items to cut?

Sure, there always are. I just mentioned that our fridge is overly full, and I didn’t HAVE to get new clothes…or a new phone.

That said, I don’t feel like we wasted a ton of money either. Aside from our vacation and a couple of donuts, we haven’t eaten out, which can be way more tempting when we cut back on groceries. Little Bit’s become a much better swimmer after a week of lessons. Everyone enjoyed Captain Underpants, because who doesn’t love potty humor?

That said, we probably will cut back a bit on some of the discretionary expenses in July and limit our shopping excursions to picking out school supplies for our new school year. (July 10th!) Even if we’re within budget, a period of extra-vigilant savings works pretty well as a reset button to keep the bad habits at bay.

The Verdict: Spending, not Overspending (for now)

So after careful consideration, I’m now convinced that Jon may have a point.

We weren’t overspending…yet. While our month might not look so hot, our trend for the year showed us well within our means. We looked good for the year, even with a temporarily empty rental house.

But we got a little closer to stepping over the line than I’d realized, and it’s probably good to scale back our spending a bit. We had gotten comfortable with a few extra luxuries. We probably should put some of them on hold until we find some new tenants, just to be on the safe side.

How do you decide if you are spending or overspending? Does your budget allow your income to fluctuate? And how do you bounce back from a spendy month?

*Part of Financially Savvy Saturdays on brokeGIRLrich.*

32 thoughts on “Spending or Overspending? When Expenses Keep Popping Up

  1. I definitely feel a little anxiety when we’ve spent a lot in a month, even if it’s accounted for in the budget. This year has been a little tight because we’re making payments (0% interest) on dental work and on getting rid of the timeshare. So any other large expenses in a month makes me feel like we may be overspending, even if we’re not. When I evaluate the spending, I also look at previous months as well as what’s expected for the next few months to come. If we really have overspent, we cut back on all purely discretionary purchases for at least a few weeks if not longer.
    Gary @ Super Saving Tips recently posted……And The Savings Awards Go To: The 2017 SST AwardsMy Profile

    • Sounds like we’re on the same page, Gary, although your expenses have been a little less fun than ours, and I think that makes it both easier and harder to scale back the budget. On the one hand, everyone needs a little fun, and when you’ve had to skimp on the fun for necessities, you still have your cravings. On the other, spending on fun stuff can easily get you into a fun spending mindset, hence our need to buckle down for a bit even if we’re within our budget.

  2. A good, informative blog. Wish I had you around when we were raising a family. We live on a fixed income, and know exactly what our monthly expenses are. We even save a little. Then, POW, the unexpected happens. I had a crown with root canal fall out exposing broken roots and a possible abscess. Total cost? Just over $1,000. That would really slam our budget if we had not had a little put away. I felt guilty, as I had just bought an almost new three wheel bicycle for myself and the hubby had bought a riding lawn mower the month before. We were paying $20/week to have our grass cut. The mower will pay for itself in a year. We live in Florida, where most grasses grow year round, but slower in the winter. But the bike kind of gnaws at me. I got it to ride to the mail pickup about a mile round trip from our house. Good exercise and maybe in a year we will save $50 on gas. Our big old car only gets 17 mpg! A belated Happy Birthday to Little Bit!

    • Thanks, Jayne. Sorry about your tooth! That said, your dental issues are one of the reasons most of us need to have some extra money aside. Few things in life are more guaranteed than that the unexpected WILL happen, and that the unexpected can get expensive.

      The bike will probably help you get more exercise, and good health is a long-term money saver. Just be careful!

      Harper loves her new pink cowboy boots, and she’s gotten a ton of compliments on them.

  3. I’m with Gary, I get an uneasy feeling when we spend outside our norm. June has been a particulate spendy month for us with prom, graduation, graduation party, etc. We tend to evaluate, tighten the belt, put expenses on hold if we can. The best thing we do is identify the issue before it goes on too long.
    Brian @ Debt Discipline recently posted…Time of Your LifeMy Profile

    • I totally agree with your last point, Brian (well, your whole point, but the last point in particular.) Recognizing that you’re approaching, close to, or over your budget limits is vital to keeping your finances in balance. You have to have a good system for reviewing your situation. It was good that we’d been tracking for a while, so I had some points of comparison and our expenses mostly entered. But I may need to review more often than monthly, which is when I usually run this sort of analysis, and I had to set up a new report to look at our organized expenses in more detail than usual.

  4. ” a period of extra-vigilant savings works pretty well as a reset button to keep the bad habits at bay.” I have certainly found this to be true. Once or twice a year we will look at our spending for the previous few months and realize it has been trending upwards. Our response is an extra-vigilant savings month, which will reset our baseline and keep our spending low again for a while.
    Matt @ Optimize Your Life recently posted…The Onslaught of Automation (Why I Save So Much, Part 3)My Profile

    • We’ve done the same thing a couple of times. I don’t think we’ll go as far as a No-Spend month, but we’ll take a break on some of the extras and try to cut back on the groceries a bit.

  5. If the overspending is planned for I get less anxious than when it’s unplanned.

    Last February, though, we had my nephew’s wedding in the Berkshires. The negotiated hotel rate was $250/night for two nights (prime ski season rates). That took some getting used to, even with a plan. Add in a generous wedding gift and another hotel night during the drive, and we spent a lot. Like 30% more than our average monthly nut. We were very mindful in March about keeping expenses below average.
    Mrs. Groovy recently posted…How Geoarbitrage Gave Us Our Financial Freedom (and Our Sanity) BackMy Profile

    • I love the monthly nut idea. And I felt the same way after we went to Orlando last year. Between the hotel, theme park, and eating out, we spent way more than usual. Add on the fact that it was November, when we do the bulk of our Christmas shopping, and we were 50% over.

      But yes, the budgeted and expected expenses are much easier to take in stride than the ones that hit you out of left field. A medical issue, accident, or emergency upsets your emotional equilibrium, which makes any financial stress that much harder to deal with.

  6. That’s why it’s so nice having a budget and tracking spending. It makes comparison much easier to find the root problem and hopefully ease concerns that your overspending. It’s great your staying in top of it all. I go through periods like that too where I look back and wonder where the money went. The reset and refocus helps ease the anxiety too!

    Glad you’ve enjoyed the phone so much! I’m about due and just waiting for mine to crap out before I pull the trigger. But either way, it’s been budgeted for! 🙂
    The Green Swan recently posted…Working in London: My Last UpdateMy Profile

    • Yes. It’s a lot easier to evaluate where you are if you have the systems in place to analyze your data. (LOL, I am so nerdy.) Whether you use an app, a spreadsheet, or paper and pen, though, it’s good to have the information recorded when something triggers a financial concern.

      And good luck on the phone, JW.

  7. Thanks for the update Emily. The thing that stood out to me is how comfortable you are with your numbers – particularly why your spending is up, how it relates to the average and what your forecast for the current month is. I think it’s impressive and speaks very well to your overall preparedness. Perhaps ironically, I think if you were truly having overspending troubles you wouldn’t be aware of it and right this blog post!
    Jay recently posted…Canadian Breakout Stock Picks – How to Find Them!My Profile

    • You’re probably right, Jay. The fact that we have the data means we are concerned enough about our finances to monitor so that we can correct if we need to.

    • Ouch! That’s an expensive, unexpected, and not fun expense, Troy. But it speaks to why it’s important to have a financial buffer to dip into when bad things happen. Because they do.

  8. We had an expensive May (just as I knew we would). It’s something I had kind of accounted for, but I know I can do better with it next year. Still, our spending wasn’t out of control, and we didn’t cave to the “just order a pizza” mentality (much). I count it as a step in the right direction.

    As for phones, my Hubby always wants a nicer phone while I could care less. But my current phone does get thrown a lot. 😉 I’m trying to hang in there a few more months until our magical debt free date!

    • I get it, Jamie, and you guys have done an awesome job of eliminating your debt. Like you, I think in the past we may have done much more spending than we did this month. And good luck getting that phone to hang on just a little while longer.

  9. Realy like the way you laid out this post and walked us through your month and thoughts, Emily.

    I keep a buffer in our checking account to account for a bit of extra spending, but I watch it carefully and if it gets lower than I like, I know we need to cut back. But, we rarely spend these days outside of our routine expenses, so it’s not a reoccurring issue. I’m really focused on savings now!

    Glad do to hear your positive verdict.
    Amy @ Life Zemplified recently posted…What Financial Health Means to Me #FinHealthMattersMy Profile

    • Thanks, Amy. Monitoring the excess in my checking account balance used to be how I made the determination of whether I spent too much too. But now, we’re using credit cards for points a lot more. We pay them off each month, but that means that the checking account balance doesn’t tell us as much about our spending levels as it used to.

      Good luck on your saving!

  10. We’ve had a couple of spendy months recently (for many reasons). My response is to go no/low spend where we can to cope. In June, I’ve done just one shopping trip and then just bought milk and bananas the rest of the month. I also put our gym membership on “hold” since we’ve been too busy to go and are getting our exercise outside and working on the new rental property. And we haven’t had to buy any clothes either.

    It’s awesome that you ran your reports and everything was okie dokie! It helps to have all those frugal habits in place!
    Amanda @ centsiblyrich recently posted…Teens and Money: Should they have a limit?My Profile

    • That’s an impressively frugal grocery month, Amanda. I didn’t do that well even during my no-spend month! But I’m starting to get a few things from my gardening effort, and I can see where if you’re growing some food, you can cut back a lot on groceries.

  11. It’s amazing how expenses can get away from you during the month! A little extra celebrating and then some unexpected expenses can bust your budget (even if you don’t have one!!) We are going to need to be a lot more careful as we move forward. I’ve always checked every two weeks to just keep an eye on things – but without paychecks coming in, it will stress me out more! I’ll put a new system in place in the next few months. I don’t need to add stress – it’s time for less stress 🙂
    Vicki@MakeSmarterDecisions recently posted…Forced To DIY – Money To Spend But Few To Hire   My Profile

    • Yep, going from a regular paycheck to early retirement money management will probably require some changes, Vicki. I know it did for us.

  12. Love this, Emily! We had this same discussion this month. After a slew of unexpected, large expenses the last three months, we went over our 2017 spending to see what we could have cut. The number was over $2500.
    While some might argue that much of it was necessary spending (a medical bill that probably could have been cut down, as well as we could have been a bit more frugal on groceries and gas) I realized that was have to be more extreme if we want to reach our goals on time. It’s easy for me to fall into the “well, we don’t spend nearly as much as most people on…..” mindset, and that has to go if we are going to reach our goals faster.
    Laurie @thefrugalfarmer recently posted…6 Money Beliefs That Might Be Keeping You PoorMy Profile

    • Wow. That’s a lot of spending you think you could have cut, Laurie. I know you guys are gazelle-focused right now on eliminating debt. It’s inspiring to see. And it’s good to have all that data to look back on to see where you’re on (and off) track with your plan.

  13. We aren’t one of those families who budgets every dollar. Our basic lifestyle (house, utilities, car) is affordable on our paychecks without having to worry about every penny. We are blessed.

    That being said, we realize we can’t spend more than we make, long term, and succeed. This year has been a #$%. In the fall, we planned to buy one used car, from savings. Instead we ended up with one used car from savings and one nearly new car, partly from savings and partly financed (interest under 2%). That expensive car means expensive insurance, and the used car was for college girl and we decided on full coverage for it. Yes, the insurance bill went way way. In the fall I had a tooth pulled, a root canal and an extraction with dental implant. Ouch in the wallet as well as the mouth. This spring I got hit with a lot of medical bills (I’m fine). Instead of three tuition due dates (two for college, one for grammar school) we are down to one (high school). While the total is actually a little less, having to come up with it all at once hurt.

    Because of the market, our net worth is up, but we’ve pulled almost $5000 from savings since the first of the year, when our goal was to add to our investments. Hopefully the next half of the year is better and we can get back on track. One thing I did do is added up the cost of tuition and the cost of all our insurance premiums and divided by 12. I’m now moving that much per month to a savings account and will move it back when those bills need to be paid. It won’t help with the unexpected but it will keep us from dipping into savings for the expected .
    RAnn recently posted…Blogging About BloggingMy Profile

    • That’s a good system. And the unexpected may be shaking you up a bit, but you’ve planned for it. I do sympathize on all the bills coming due at once, even when they’re less. Big drops in the accounts hurt!

  14. I loved this and was something I kind of needed to hear right now. My spending has been out of whack the last two months, but it wasn’t actually overspending, it was just getting hit with a lot at once. The occasional overspent month IS fine as long as you’re mostly on course. Thanks!
    Mel @ brokeGIRLrich recently posted…Financially Savvy Saturdays #201My Profile

  15. I might do the reset with you in July. We took our trips early this year, and we haven’t been as frugal as our normal selves. It’s been those expenses you have to take on every couple years that have been doing it for us. They’re largely budgeted for, but it still makes me feel out of whack.
    Femme Frugality recently posted…Credit Unions, Tech & Security: 360 InterviewMy Profile

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