Having a Dream for the Future

The other day, my kids and I went to the public library to pick out some books to read over the Christmas break.  Not having gone to the library to look for books for myself in some 20 odd years, I decided to search for a financial book.  I ended up getting EntreLeadership by Dave Ramsey.  It has inspired me more than I was expecting.  “Strange as it may seem, when you work a daily plan in pursuit of your written goals that flow from your mission statement born of your vision for living your dreams, you are energized after a tough long day.”  I love this quote from the book, because it nicely summarizes the necessary steps to start making your dreams become a reality.

Having a Dream for the FutureAround April of 2010, my wife and I launched a mobile app development business that had a net profit of over $100k.  In fact, the day the Kindle Fire was released, we made over $8k in a single day.  The extra “gravy” was awesome.  Since there was a decent amount of money flowing in, we decided to officially create a sole proprietorship, along with a separate bank account for keeping the money separate from our personal finances.  Our little startup ran fine for a couple of years, but looking back, there was one major problem with our startup.  We never had any long-term vision for the company.  In fact, we did not ever intentionally start a business in the first place.  It all began with a couple of very simple apps and then eventually we created more and more complex apps, until, before we knew it, the money was flowing in.  But just as fast as the business grew, so did our little family.  Before we knew it, we had 5 kids and no extra time for the side business.  Consequently, over the last few years, the revenue flow from the mobile app business has dried up.  When we were at Costco today, we mulled over in our minds if we should buy the “Home & Business” version of TurboTax, or just the regular “Premier” version.  But really what were asking ourselves is: “Do we still have a business?”

Upon reading the first few chapters of EntreLeadership, I am again re-antiquating myself with the entrepreneurial spirit that I have always had.  In fact, my original major in college was in Business, with an emphasis in Entrepreneurship.  But then I decided that I did not want my main focus to be “business”, since that is so broad.  So, as Dave has instructed in his book, I am re-thinking my dream.  Succinctly put, my dream is now: “To build a software company which generates enough revenue to allow me to quit my day job.”  I know this sounds very generic and overly optimistic.  Honestly, my wife and I were very close to this dream at one point.  I believe we can get there again.

What is different about this dream from any other dream?  How can I make it a reality?  The next step is to start formulating a vision, from which I can formulate a mission statement, from which I can formulate goals with timelines, from which I can purposefully act upon daily and start seeing some traction.  Stay tuned.

Managing Money During the Holidays

Christmastime can be the most stressful time of the year for many families, both financially and otherwise.  I feel like this year, was one of the first years that my wife and I successfully navigated the Christmas season without going over budget, and still having a wonderful Christmas morning, and Christmas break.  This post is about what worked for us this Holiday season.

managing-money-holidays

Budgeting for Christmas

Our oldest child of five, is now 8-years-old.  In the past, it seems we could more or less wing it on Christmas.  As long as we bought our kids boy’ish toys for the boys, and girl’ish toys for the girls, then everyone was happy.  However, this year, the kids wanted VERY specific gifts.  My son wanted a 4-foot robot.  My 7 and 5-year-old daughters both wanted American girl dolls and Baby Alive dolls.  The younger two weren’t quite as opinionated.

The only problem was, we had already set a firm Christmas budget by the time the kids said they wanted these $200 and $100 toys.  The budget we had established was $50 for each person (including parents), $35 for all of the stockings, and $70 for each of our extended families.  This gave a grand total for the Christmas budget of

($50 * 7) + $35 + $70 + $70 = $525

We budgeted most of this into our November budget, since we wanted to be able to complete a lot of the shopping during Black Friday sales.  We managed to complete a lot of it in November, but also carried some over to December.  The best part about setting a conservative budget for Christmas was… everyone was actually happy.  I have noticed in past years, that if you give too many gifts for Christmas, many of them get lost in all the hype of Christmas morning.  However, when children get a few gifts that they really want, they seem to cherish them more.

How were the kids happy if they didn’t get all the gifts they asked for?  Well, my son got a 2-foot robot, instead of a 4-foot robot.  My wife found the Baby Alive dolls on sale, so was still able to get them the dolls they wanted, just not the American girl dolls as well, which they were perfectly fine with.  The most amazing thing is, we actually stayed on budget for all of December!  It feels great to end the month, not having dipped into next months paychecks.

Having fun without breaking the bank

The other tricky part about the holidays, is managing the time off of work.  Many folks in the workforce take time off during the holidays to spend more time with their children, who are often home from school for Christmas Break.  This year, I took a full 10 days off (between Christmas Eve and just after the New Year).  Most activities cost money, and some of them can cost a LOT of money, when you think about it.  Skiing can be $90+ per ticket.  Movies can be $10+.  Eating out adds up quickly also.  We are nearing the end of the Christmas break, and here are some of the great, low-budget activities that we have been able to do this week, without spending a ton of money:

  • Seven Peaks Fun Center (free, after purchasing pass-of-all-passes)
  • Sledding (free, just find a hill with some snow, maybe up the canyon)
  • Papercraft Rollercoaster ($5.28, needed to but some card stock)
  • Sticky Shoe Dollar Theater ($17.50, 2 buckets of popcorn, 2 large drinks)
  • Arctic Circle ($3, the courtesy cones are free, but we buy some fries too)
  • Bean Museum ($5, entrance free, but bought some toys at the gift shop)
  • Movies at Home ($2, sad to see VidAngel go away, but Redbox is here)
  • Board Games ($15, we bought the Pie Face game, the kids love it)

Getting ready for next year

With the passing of each year, come New Year’s resolutions.  We have a lot of fun activities planned for this next year, and it will take some serious budgeting to stay on track.  In January we are going to Kauai, Hawaii.  In March we are going to Disneyland, California Adventure, and Legoland.  Needless to say, it does not look like we will have our fully funded emergency fund by February 1st, as we were originally hoping.  But that’s okay!  We currently have 4 out of the 6-month emergency fund in place, which is most of the way there.  This will allow us to have a debt-free and worry-free vacation in Hawaii in just a few short weeks.  Before we know it, we will be on to Baby Step 4 of Dave Ramsey’s baby steps!

You Can Have Your Cake and Eat It Too

The phrase, “you can’t have your cake and eat it too” goes back to the 1500’s.  All it really means is that there are certain decisions in life in which you cannot realistically have the best of both worlds.

eat-cake

I was having a phone conversation with my sister about finances earlier tonight.  While we were talking about the balance between enjoying life, while also being fiscally responsible, I realized, you can have the best of both worlds.  You can enjoy life and spend money, while also planning for the future.

One area of life in which this becomes very important, is in the raising of children.  The fact is, your kids are only at home for (hopefully) 18 years at the most.  During that time, you want to spend as much quality time with them as possible.  I grew up in Northern Montana, where quality time often meant going out hunting, making up games in the backyard, or helping out my Dad at the local dental office.  There really was not many activities that you could pay for to keep everyone entertained.  The closest movie theater was an hour and a half away.  You get the picture.

However, in most places, including where we live now, we are surrounded by activities that cost money.  A movie theater ticket can be almost 10 bucks.  Halloween activities, including corn mazes, haunted houses, carnivals, all cost money.  So, what do you do?  Do you spend the money and enjoy these activities with your kids, or do you save that money?  One of my co-workers recently explained this problem of prioritization like this, “When you wake up in the morning, you know you need to brush your teeth, put your pants on, and put a shirt on.  Do you stop and ask yourself in the mirror, ‘Which of these is the most important to do before going to work?’  NO!  You do all three of them, because they are all important.”  At least I hope you do.

Given that spending quality time with loved ones is important, and planning your finances wisely is also important, how do you balance the two?  I think one of the most important things, is to have a great budget.  You should budget fun things into your budget.  You should have an amusement category, a restaurant category, etc.  One thing my wife and I did recently was to create shopping budgets not only for the kids, but for us individually.  It has been GREAT!  This month, I used my budget to spruce up my church clothes with a new collared shirt, new ties, and shoe polish, all for less than 50 bucks.  When you spend money on yourself, I think it can help give you confidence and enjoyment.  Who doesn’t like shopping for things they love now and then?  The key here, is to have fun spending money responsibly.  I did not go and buy a $500 suit just because I felt like it.  But I did spend enough to feel good about my appearance.

You may have noticed, that in reaching this balance, I mentioned multiple times the words quality time.  I would argue that some common forms of entertainment (going to the movies, haunted houses, etc.) are not quality time.  How much do you really talk to others when you go to the movies?  I read an interesting article the other day that highlighted the fact that spending quality time with your family can be a much better use of your money than buying material items.  But that does not mean you have to break the bank to do it.

This week, we have had to balance these priorities in our own lives.  Fall Break just started here in Utah, which means the kids have five days off from school.  With 5 young kids, 8-years-old and under, you can imagine the stress my wife feels in trying to entertain them all.  But it can be done.  Some examples of things we will be doing over the break that are relatively inexpensive are: The Fun Center (free w/ season pass), Ice Skating (free during October), Dollar Theater (free w/ season pass), board games, outdoor sports, etc.  Okay, I know I said movies were not quality time, but we are still going.

In summary, I feel like often when people hear that you are focused and determined to reach certain financial goals, one of their initial reactions is “Well, that is good for you, but I am going to enjoy my life and my kids, and not be cheapskate.”  I would suggest it is not one way or the other.  You do not have to spend tons of money on your kids to have a great life.  You can have the best of both worlds.  It may just take a little bit of extra effort and creativity.  Now… back to fall break!

The Quarter Million Mark

We did it!  We are finally millionaires! … or not.  We are a quarter of the way there though.  This month when we were doing our net worth update, we were a little surprised to discover that our net worth had exceeded $250k ($250,585).

Okay, I know that this is not very impressive for a couple of 34-year-olds.  But, when you look at what our net worth was 8 months ago, at $146,969, then I am encouraged.  It is awesome to think that our net worth has gone up by more than $100k in the last 8 months.

net-worth-last-8-months

How did our net worth go up by $100k in 8 months?  In looking over the history, $50k of the increase was due to property values increasing ($40k on the primary residence, and $10k on the investment property).  But what about the other half?  Another $27k in net worth increase came by paying off my student loan.  That is the beauty about net worth calculations, is that they take into account paying off debt, which is avery important part of the equation.  Another $11k came from both contributions and other increases in retirement funds.  Lastly, we also paid off $6k in mortgages.

It would be great if our net worth continued to go up at this rate for the next 10 years, but I know that this is not realistic, given our current portfolio.  Either way, we’ll keep at it and hopefully see our gains continue.  I am very greatful that even with a single income, we are able to support or family of 5 kids comfortably.  We don’t live extravagant lives, but we feel we are never left wanting.  We attribute this to our Faith in Jesus Christ and his commandments.  We always pay our tithing, and trust that the Lord will take care of our needs.

Baby Step Three: How much should I put in my emergency fund?

Baby Step Three

Currently we are in step three of Dave Ramsey’s Baby Steps.  In step three you build up your emergency fund from $1,000 into a full “3 to 6 months of expenses in savings”.  This blog post goes into detail on how we chose to build our emergency fund.

1 month of Expenses

In order to get started with baby step three, the first thing you have to do is figure out how much money is one month of expenses for your family.  If you already have a budget, then this is easy.  I am going to log into EveryDollar right now and take a look.  Here is the breakdown:

    Fast offering 30
    Mortgage 1550
    HOA 140
    Water 113
    Natural gas 22
    Electricity 200
    Mobile phones 70
    Video streaming 22
    Internet 50
    Gas 80
    Groceries 800
    Shopping 150
TOTAL $3,227

In going through the budget, you can see that I did not include everything that could be considered an expense.  For example, I did not include taxes.  One expense that I struggled with a little bit, was should I include tithing in the above list of expenses?  After thinking on it, I decided that the main purpose of the emergency fund is to replace my income if I were to lose my job for whatever reason.  In that case, if I do not have an income, then I would not be paying tithing, so I have chosen not to include it.  Do whatever makes sense for your situation.

Three, Four, Five, or Six Months?

Why does Dave have say 3 “to” 6 months!?  Doesn’t Dave know that we are all mindless drones, and he should give us an exact number?  Well guess what, he does this on purpose.  Again, you have to decide what makes sense for your situation.

I feel as though my line of work (Software Engineering) is quite stable.  I have never gone a day without being employed.  However, in planning for the emergency fund, one thing to keep in mind is whether or not you are in a single income or a dual income household.  Since my wife is a stay at home mother, if I were to lose my job, we would have no other income to fall back on.  Similarly, my family is one of those families that is prone to medical issues.  With that in mind, for our situation, it makes sense to have a full six month emergency fund.

As you can see, the way to really decide if you need a three month fund, or a much larger fund is how much risk does your family carry?  You can think of the emergency fund as insurance against the storms of life.

Our goal

Now that we know that one month worth of expenses for our family is $3,227 and that we need six months of expenses, the rest is easy.  Our total emergency fund should be:

Full Emergency Fund = ($3,227 expenses / month) * (6 months) = $19,362

Dang gina.  That is a lot!  But, Math don’t lie.

How long will it take us to get there?

Currently, we have $3,271 in our emergency fund (~1 month worth of expenses).  We have a long way to go!  We are 17% of the way there and have $16,135 left to be fully funded.  In looking over the budget, I think we can realistically save about $3,400 per month, which puts us at:

Months to be Fully Funded = $16,135 / $3,400 = 5 months

Given that we have already budgeted out September, that means we will be building up the emergency fund for all of October, November, December, January, and February.  So, on February 1st, 2017 we will have a fully funded emergency fund!  It feels like that is forever away, but I am sure it will come before we know it.

Where to put the emergency fund?

It needs to be in a place that is easily accessible.  Dave suggests a money market account or a checking account that comes with a debit card or check-writing capabilities.  We happen to already have a USAA savings account that has both a debit card and checks.  Perfect!  The Annual Percentage Yield on this type of savings account is 0.15%.  Low, right!?  But remember this is not an “investment” account in the traditional sense.  This is insurance.

What counts as an emergency?

Lastly, how do you know if you should spend the money in your emergency account.   Dave suggests asking yourself three questions: Is it unexpected, Is it necessary, Is it urgent?   The more of these that you answer yes to, the more likely it is an emergency.

In Summary

We are glad to be building up a fully funded emergency fund at this time in our lives.  We can build it up faster now that we do not have any student loan debt.  I sm sure it will bring even more peace into our lives.  I just wish we could get through this step faster so that we could be putting more into retirement!  Maybe I will try to earn some side money somehow by getting back into mobile app development.  If you have an idea let me know!  😀

What is Your Net Worth?

What is the single most important financial number for your personal finances?

I would argue that the most important personal financial number is: the amount of money you need to retire.  In Chris Hogan’s “Retire Inspired” book, he calls this your Retire Inspired Quotient (R:IQ).  What is that?  You could phrase this as “How much money do I need to retire?”  But that is not correct either.  If your assets are diversified across real estate, precious metals, stocks, etc., then it really is not how much “money” you have, it is how much your assets are worth.  However, this still is not correct either, because if you have a huge amount of loans that offset all of your assets negatively, then you really are not ready to retire.  Really what we are talking about is: How much money would be in your bank account if you were to die today and all of your assets were sold, and all of your loans were paid off from the proceeds.  The financial term for this is net worth.

Okay, so really what we are saying here, is that the single most important financial number is: The net worth I need to reach in order to retire. This means that the second most important financial number is your current net worth.  If you know both of these numbers, then you now know how close you are to retirement as a percentage.  For example, currently, I know that I am 7% of the way toward retirement.  The reason I know this is due to these two numbers:

R:IQ: $3,500,000
Net Worth: $242,299

If I just divide these two numbers (242,299 / 3,500,000 * 100 = 6.9%) we quickly arrive at the 7%.  At first, this may be discouraging.  But, what I have found, is that once you start tracking your net worth over time, it can actually be quite encouraging as you see your assets increase in value, and your liabilities decreasing, causing your net worth to quickly explode (in a good way).

How do you calculate these two very important financial numbers?  How can I calculate my R:IQ?  You can calculate your R:IQ using Chris Hogan’s website.  But honestly, that site just tells you the final number.  It doesn’t show you any pretty graphs or anything.  But it is good if you just want something to start with.  Another good site is bankrate.com.  Thebankrate.com calculator will actually show you a graph like the one below.  I like that bankrate uses a more conservative 7% rate of return rather than the aggressive 12% rate of return that Chris Hogan’s site uses.  The graph below shows your money building up as you save for retirement, and then finally the decline as you take money out of retirement.  This can also help you to know if you are on track throughout your income earning years.

How can I calculate my net worth?  Your net worth is defined as the sum of all of your assets minus the sum of all of your liabilities:

Net Worth = Assets – Liabilities

Simple right?  It really is that simple.  But what is an asset?  An asset is anything that you personally own which someone would pay you for.  Common assets are: 401k’s, IRAs, savings accounts, cars, houses, etc.  Similarly, financial liabilities are generally money that you owe to other people.  Common liabilities are: mortgages, student loans, car loans, money borrowed from family members, etc.  Let’s look at an example over the last 2 months:

8/1/2016 9/1/2016
Assets
Primary home $430,718.00 $430,101.00
Investment properties $158,992.00 $161,812.00
Retirement accounts $47,139.47 $51,747.15
Savings accounts $2,005.03 $4,275.31
Cars $10,721.00 $10,622.00
Total Assets $649,575.50 $658,557.46
Retirement Assets $218,857.50 $228,456.46
Liabilities
Primary mortgage $265,372.53 $264,852.73
Investment mortgages $151,662.18 $151,405.19
Student loan $0.00 $0.00
Car loans $0.00 $0.00
Total Liabilities $417,034.71 $416,257.92
Retirement Liabilities $151,662.18 $151,405.19
Net Worth $232,540.79 $242,299.54
Retirement Net Worth $67,195.32 $77,051.27

In the above example, you can see that I created two overall categories, “Net Worth” and “Retirement Net Worth”.  The reason I did this, is that there are some assets which you would not sell when you retire, so you can’t count them toward your retirement savings.  For example, I excluded our primary home from the list of Retirement Assets, since I do not plan on selling my primary home when I retire.

What tools can I use to calculate net worth?  As you can see above, I just use Excel (Google Drive).  Some websites, such as mint.com will do this for you, but do not seem to work that well.  Maybe at some point I’ll create a web site which does this in a clean way.

Net worth can be a useful tool in helping you to make financial decisions.  For example, when you use cash to buy a car, what would be the impact on your net worth?  The day you buy the car, for example, you could take $21,000 out of your savings account and walk home with a brand new car worth $21,000.  At the instant you bought the car, your net worth didn’t really change.  You lowered your savings account asset by 21k, but you added a new asset worth 21k.  However, after 6 months or so, that car has probably depreciated at least a thousand dollars in value.  So, your net worth has likewise gone down by a thousand dollars, which hopefully you are making up for in other areas.

Lastly, you’ll notice that I posted a lot of information in this post about my personal finances.  For whatever reason, details about personal finances are a taboo subject in America.  As Americans, we are very quick to show off our nice cars and homes.  But we are very private about all the debt we incur to get there.  Personally, I think it can be helpful to learn how others are winning with money and what has worked for them.  Everyone is in different financial stages of life, but I think we all have something to learn from each other.  Please share your insights and things you have learned along the way in the comments below!

If you are not already tracking your net worth, then start now!  It is hard to do retroactively, but easy to do in the present.  Good luck!

We’re Debt Free!!!

After 16 months of being gazelle intense about our finances, we are debt free!  In total we paid off:

  • $49,276 in Student Loan debt (Jeff’s Master’s degree)
In addition, there were several unexpected expenses that we cash flowed during that time:
  • $12,000 in medical expenses
  • $4,344 in replacement car
Here is a graphical summary of all of the craziness we have been through since we got married 10 years ago:

Honestly, when we started Dave Ramsey’s Total Money Makeover, we thought it would take about 3 years.  But after we started to see the loan amount go down, we got more focused and were able to knock it out much more quickly.  It was hard putting any extra money from bonuses, tax returns, etc., toward the loan, but those kind of things helped to take larger chunks out of what we owed.

Now that we are finished with Baby Step #2 … (I think it is funny that Dave calls paying off all of your debt a baby step… I mean really, it seems like it has to be the hardest one for most folks).  Anyway, now on to Baby Step #3 of saving a 3-6 month emergency fund.  We think we can do that in about 5 months total.  Honestly, I think that step is almost more exciting, because it puts you on very secure financial ground.

After saving the 3-6 month emergency fund, we should be in good position to start paying off the house.  Worst case scenario, we should have it paid off in 11 years.  But I am hoping for 7.

Oh, and guess what!?  We did book that Hawaii vacation yesterday to celebrate our 10-year anniversary.  We are so glad that we cancelled the original booking to pay the debt off faster.  The flight ticket prices didn’t change much at all.  They only went up by 66 bucks.  And, it was better too, since we got to pick our seats which are exit row seats all the way there and back.  We are super excited about it!  😀

Nearing the end… Only 1 payment left!

I said to myself, “Self, great day!” … was a statement that my Economics professor in college would often say.  We are finally down to one student loan payment remaining.  It’s funny.  I told myself that I want my student loans paid off before my oldest child turns 10.  I can’t remember why I picked that magical number in the first place.  I think I estimated how much we could realistically pay, and then projected out.  Well… he turned 8 this past January.  So I would say that we far exceed that goal.  The most exciting thing of all, is that we won’t be paying that 7.5% interest rate any longer.  Instead, we will be investing that money and receiving about the same level of return back .  Again, a great day.

We can’t wait to start really making big differences in our finances.  The first changes we will make are:

  • Booking that Hawaii vacation (see Hawaii Vacation Temptation)
  • Fully-funded emergency fund (3-6 months of expenses) by end of year
  • 15% for retirement, including maxing out Roth (currently we only do 4%, with a 3% match)
  • Increasing the mortgage payment so it is paid in full within 15 years of the origination date
  • Improving our quality of life (no more rice and beans or beans and rice)
  • Maxing out the 529 college savings plan on all the kids
    • Contributing $3800/year/child would give a tax credit of $950 for 5 kids ($190 each)
Let the fun begin!

Budgeting Successfully – Part 4 – The End of the Month

The end of the month is the true test of how well your budgeting is going.  If, at the end of the month, you feel strapped for cash and that you hate life, then something is seriously wrong.  As long as you are splitting out the major budgets (like groceries and shopping) by week, then the last week in the month isn’t much different than the first week.  On the other hand, if you spent most of it in the first three weeks, then the last week could be rough.

After you have made it through your first month on a written, well-planned, and executed budget, you should start noticing some things.  First, you should start to notice that you know where your money is going.  That is really the goal behind budgeting.  The goal is not to cut back expenses, but rather to dictate exactly how your money is being spent.  It should get you to your financial goals faster, whatever they are.  If one of your financial goals is to buy a boat, then budgeting can help you do that.  If you were running a large corporation, would you want to know how the money in that company is spent?  Of course you would!  Then why should your personal finances be any different.  You spend a lot of time away from your family and home to earn the money you have.  You might as well be a wise steward of it.

After a monthly budget ends, the next month begins.  Both Mint and every dollar will automagically carry over your budget settings from the previous month when you start budgeting for the next month.  But one thing that bugs me about Mint is that you can’t budget in advance!  You can only set the budget for June once June 1st hits.  That part is really annoying, as it doesn’t allow you to plan ahead very easily.  Every dollar handles that well, but again, makes you pay for the automatic transaction tracking that Mint gives you for free.  That’s why we end up using a combination of both.  Maybe I’ll write my own one day that implements the best features from both.

What tips and tricks have you learned from your budgeting experiences?  Please share them.  I would love to learn what has or hasn’t worked for you.

Budgeting Successfully – Part 3 – Middle of the Month

feel that perhaps I gave the wrong impression about the purpose of this blog.  I started writing this blog because I wanted a place to jot down my ideas and things I have learned.  I am fully expecting and hoping to look back at some of these initial entries, and see how much I have learned from experience and also from the advice of those around me.  With that view in mind, if you are reading these posts, and have an idea or piece of advice to share, please do so!  Your comments are encouraged.  There is still a lot I do not know, and I would love to learn from you.

Ok, so now for the post.  Usually, during the middle of the month, we find ourselves with some unexpected expenses that we had not thought of or planned for when we did our budgeting.  For example, last month on April 20th, we had a garbage disposal go bad in the townhome that we rent out.  It happened completely out of the blue when the renter texted and told us it wasn’t spinning and was starting to smell bad.  I got over there, and sure enough it needed replaced.  So how did we come up with the $118 in the middle of the month to pay for it, when we are in the middle of our debt snowball?  Sure we could take it out of our emergency fund, or heaven forbid put it on a credit card.  But at this stage in the game, we are trying to save money anyway.
To solve this, my wife and I sat down and took a hard look at the budget.  We decided together that we could cut 60 bucks out of our grocery budget, 20 out of shopping, and a bit here and there from other budgets.  Since we have quite a bit in food storage, and other necessities, this really wasn’t a big deal for us, and helped us to cash flow this minor expenditure.  This is just a simple example.  For other larger, more pressing emergencies, we would have needed to tap into the emergency fund.  After all, that is why it is there.  Another great way to handle these unexpected expenses is to build a bit of padding into your budget.  You could have a 100 or 200 dollar “stuff happens” budget for those unexpected expenses.  You should pick the strategy that works best for your situation.
Lastly, another thing that we have found to be helpful in keeping the budget on track throughout the month is to actually use it and be committed to it.  If budgeting is something you want to do, then committing yourself is half the battle.  Once you are committed, it makes decisions easy.  You can quickly look at the budget before you go shopping and tell yourself how much you’re going to spend, and then stick to it.  Most budgeting software has a mobile app so you can quickly check on the go also.
Be creative.  We have found that we can spend less on dining out and other activities, while still having a great time.  Our kids are young enough where they can’t tell the difference between the sticky shoe theater which costs a buck a head, versus the Larry H. Miller Cinema, which is more like 10 to 15 bucks a head.  Similarly, we found that we are getting older and less able to digest endless mounds of carbs.  So when eating out, we can just share a meal, and cut the cost (and health hazards) in half.  Little things like this help you to still enjoy life, but not overspend.
As with all of this, you are the one in charge of your money.  If you want to budget 200 bucks a month toward fun money for each the husband and the wife, and you can afford to do so, then do it!   A budget may actually help a spouse remember to spend money on themselves at times too.  It’s no fun to always be running money so tight that you do not enjoy the fruit of your labors.