On Thursday night, I took my dog Molly, to obedience class. It was rainy and cold, but I didn’t want to miss out. On the way home, I was driving down a country road, singing my heart out to Casey Jones, when a deer ran out in front of me. I didn’t have much time to react, but I slammed on the brakes, reducing my speed from 90km/hr to 50km/hr. That split second reaction allowed the deer to slip past my head lights by what felt like inches.
I made it home safe and sound, but that experience reminded me that when life throws things in your path, whether or not you succeed is often defined by how well, and quickly you can adjust your course.
I’m going to apply those same principles to my budget these next few months. I’m going to have to adjust my budget to account for my wonky cash flow next month. Here’s what I mean:
My Current Budget
My current budget has room for about 57% of my net income to go towards debt. Here’s what my budget looks like today.
You may notice that my budget omits some things. This is because my husband and I split our expenses 50/50. He pays for the rent, internet, and utilities, and I pay for the car, car insurance, and gas. This is why you won’t find things like housing and utilities in this budget – this budget is just how I split up my paycheques each week, not what we spend together.
My Defensive Budget
Unfortunately I’m not going to be able to keep up my debt repayment plans in October. Like the way I swerved to avoid that deer, I’m going to have to do some maneuvering with my budget in October. Due to the payroll schedule at my new job, I’ll be needing some extra cash to cover the adjustment period. Cutting out my extra debt payments should leave me with plenty of cash to cover the difference in the month of October. Here’s what my temporary, October budget is going to look like:
As you can see, I’m not spending nearly as much on debt in October, although I do plan to still make my monthly minimum payment on my car. This budget actually looks a little more like most “normal” budgets. I shouldn’t have to change any of my habits, the only difference is that I won’t be sending an extra couple hundred dollars towards my car every week. Fortunately, I’ll still have health coverage from my old job, so I’ll have dental insurance and prescription medication insurance, which will hopefully keep any health related emergencies at bay.
My Course Corrected Budget
Finally, in November, things will be a little bit more normal, and I’ll be able to make use of my complete cash flow again. My November budget will take care of my remaining car debt, and help me save for Christmas. Here’s what it’ll look like:
Of course, by December, I’ll (hopefully) have my debt paid off and I’ll be able to make my first debt free budget using my new income. I’m really looking forward to that! In the mean time, this is how my budget is going to play out over the next few months.
Budgeting is a hugely important part of how I reached my financial goals. Without it, I’d probably be struggling a lot more than I am right now. Adjusting my budget according to each month’s money demands has been a key component of having success over the past two years of debt repayment, and these next few months are no exception to that rule.
Defensive budgeting, like defensive driving, can be a great way to move smoothly past obstacles that might otherwise derail financial plans. When problems come up, don’t just slog through and hope for the best – react!
When was the last time you had to do some defensive budgeting? I want to know!