Cob Jockey

I was honestly surprised by the amount of discussion Emma's recent post on horsey finances generated.  Everyone seemed interested to hear how everyone else budgets, and specifically budgets for horses.

With that in mind, I am not super comfortable talking about my finances, but I'm passionate about personal finance in general, and I feel like my horse budgeting system is pretty solid, so I'm sharing this in the hopes you guys find it valuable.

I wasn't very good with money for a lot of my adult life, so if you're not either, there's hope!  You just have to find what works for you - which may be my way or may be some other totally different way of managing money.  It's kind of like dieting, what works for one person won't work for everyone.

I also highly recommend (or don't...really) living through extended periods of unemployment.  Nothing like not knowing how you're going to pay the mortgage and eating red beans and rice for every meal to make you OCD about money for the rest of your life - that's pretty much when I developed my money strategy.

First, this: we bloggers run the financial gamut from eating ramen to pay for hock injections, to effortlessly wintering at WEF, and everything in between.  Everything I'm going to mention in this post applies to every size budget, no matter how big or small. It's about doing a better job managing the money you have, no matter how much that is.

This is LONG, and about to get super detailed and nerdy, so I summarized my system in a nutshell for those that don't want to stick around:

1. Have one forward, one backward, and one "monitoring" way of looking at your monthly cash flow
2. Put all discretionary spending on credit cards for security's sake, pay them off monthly, and use the cash back rewards to pay for horse shows
3. Don't get too cute with budgeting, it's not worth it
4. Make it easy to track progress at-a-glance
5. Pay yourself first every time you get paid - savings goals dictate what you can spend
6. Spread out semi-big, semi-predictable expenses like horse shows throughout the year
7. Have separate savings accounts for everything you're saving for
8. Save up in advance for very big things you'd otherwise take a loan out for (trucks, trailers) by "paying yourself" that loan payment every month


1a. Have a "Forward" Way of Looking at Your Monthly Cash Flow

 My forward-looking system is not sophisticated at all - it's just a Notepad file.  I use it to plan out where my future money is going to go so that every dollar has a job to do from the moment it hits my checking account on payday.  I usually plan about four months in advance in this file. 


This is probably the only thing in this list that's not equal opportunity - I'll admit this is much easier for salaried workers than for hourly workers, tipped workers and self-employed people.  It's still a good idea to do this type of forward-thinking though, even if you need to make frequent adjustments to your planning based on actual take-home pay.

How Connor feels about budgeting

2a. Put all non-bill spending on credit cards for security's sake, pay them off monthly
 
I do all of my spending on credit cards (that are paid off in full every month) and keep my debit card disabled.  I expect to be hacked at some point (everyone should) and I do everything I can to limit my exposure and pain in the event I do get hacked someday.

To that point, I keep just $100 in my checking account at all times - my savings is kept in accounts at a different bank with no cards tied to them - so thieves have little to steal if they did manage to get to my checking account.

(Side note: 2a may not be for everyone, especially if you have a lot of credit card debt or you have impulse control issues with credit cards.  But if you are able to use them this way, it's a great way to protect yourself financially and earn free money, see 2b.)

You'd think I was always broke if you just looked at my checking 😂

2b. Use Cash-Back Credit Card Rewards to Pay for Horse Shows!

Between $300 and $400 of my show season every year is paid for by cash back credit card rewards, since I have my rewards set up to auto-deposit into my Horse Show savings account.  It's not a life-changing amount of money, but it does usually add up to three free IDS schooling shows per year!  Can't argue with free horse shows and free money.

Don't need to blur these out, this is how much free horse show money I earned from credit card rewards in 2018.

1b. Have one "Backward" and one Monitoring Way of Looking at Your Monthly Cash Flow
 
I use Mint.com to look historically back at what I spent (see my 2018 financial challenge posts (1,2) for some details on how I use this data) and also to monitor my current month spending.  Mint is free, by the way.

This month Mint is really good at reminding me that December was a complete financial shitshow 😨

3. Don't Get Too Cute with Budgeting, It's Not Worth It

The way I use Mint has changed a lot over the years.  At first I tried to use it to be forward-looking, i.e, I will only spend $50 at restaurants next month.  But I found that really granular, specific budgets were hard to stick to because life just isn't that predictable.

I eventually realized Mint was much better at helping me identify my bad spending habits after the fact than it was at getting me to stick to tons of teeny tiny probably not realistic category spending limits.  These are my current budget categories:

And obviously I still miss on my budgets some months, haha. THANKS CRAZY DECEMBER ELECTRIC BILL.

The "Everything Else" category represents all of my credit card spending for the month, which again, is ALL of my spending, so that gives me one nice even number to focus on.  Sometimes at the end of my credit card cycle I start saying no to things like eating out or shopping so that I can stay under that number, so it's a very fluid and flexible way of budgeting.

Some people would argue that level of fluidity in budgeting is a bad thing, but anything more specific is unsustainable for me - and I feel like identifying what works for you, even if it isn't what most people consider ideal, is an important part of this whole conversation.

I based the "Everything Else" number on both my historic spending and on my saving goals - I know how much I can spend at a maximum in order to still hit my monthly goals. If you're paying down student loan debt or credit card debt, maybe those goals replace "savings" for you for right now, and that's perfectly fine.


4. Make It Easy to Track Your Progress At-a-Glance

I monitor how close I am to that max number with a widget on my phone's home screen, so I can't just "hide" from what I've spent by not logging into Mint (even though sometimes I really want to 😱):

The only number that matters to me is the one on the right.

In addition to tracking my monthly spending with it, I also use Mint's "Goals" feature to keep track of where I am on longer term goals, like building out an Emergency Fund:

Womp womp, not even close on this one yet.

5. Pay yourself first every time you get paid - savings and/or paying down debt goals dictate what you can spend
and
6. Spread out semi-big, semi-predictable expenses like horse shows throughout the year

Here's a horse-specific example: I pay myself a "horse show fund" payment once a month into a separate savings account, which you can see in the Notepad file screenshot.  I set the amount for that by taking what I spend on shows/clinics/outside lessons in an average year (which I got from Mint historical data) and dividing that number by 12.

The way I see it, I am going to spend this amount regardless, at some point in the year.  But I can either let my budget take a big hit when the show comes around (blowing a huge chunk of my monthly "Everything Else" all at once), or I can spread that hit out over the year by saving slowly for it so that it doesn't affect my monthly budget at all when I enter.

It's not about reducing the amount I spend, (because I know I can generally afford it or else I wouldn't do it at all), it's recharacterizing the way that amount gets spent to be less painful to my daily life.

I may not be granular with my budget, but I'm exceptionally granular with tracking my transactions so I can go back and look at spending trends and habits.

I've never had a non-routine vet bill (knock on wood SO hard) but if I did, I would pull it first out of my horse show fund, and then out of my emergency fund if I had to.  Minor/routine vet bills come out of "Everything Else". Board (which includes lessons with my regular trainer) and my $35/month farrier bill (If he ever does need shoes, my budget will cry) don't come out of "Everything Else" because both are fixed expenses that come directly out of my checking via check.

7. Have separate savings accounts for everything you're saving for

My husband makes fun of me for this one, but I don't care:

None of those greyed out numbers are huge, lol.  Renovating the house and paying off his student loans really annihilated our finances, and we're just now starting to get back on track.

He's always saying "but money is fungible, just throw it all in one place!" and I'm like "I'm sorry, my brain doesn't work like that."  I need my "future truck fund" separate from my "emergency fund" and my "Horse Show Fund". 

Soon I'll add a "My Next Horse" fund too, since it's almost time to start saving up for 12 y/o Connor's eventual successor (I hope I won't need to spend that fund for many, many years, but you never know)

You get three guesses and the first two don't count as to what breeder will eventually receive the contents of my "My Next Horse (Pony)" fund, lol

These Ally savings accounts are free to open, have no fees and return 2.2% APY, so yeah, I don't see a downside to having a ton of savings accounts.  If I was planning on keeping any of this money longer than 3 years, I'd invest it, but since these are all short-ish term savings goals (or the Emergency Fund, which absolutely should not be tied up in investments), they go here, where they're safe, and still earning a little money.


8. Save up in advance for big things you'd otherwise take a loan out for (trucks, trailers) by "paying yourself" that loan payment every month

Finally, the last piece of my horse budgeting strategy comes to you courtesy of my dad (who am I kidding, half of this post is courtesy of my dad, haha), regarding large purchases most people take a loan out for, like the truck and trailer.  With purchases like this, you have two ways to look at it: you can take the whole thing out on a loan/have a monthly payment/pay a giant corporation thousands of dollars in interest...OR, you can plan ahead for that purchase, pay yourself that exact same monthly payment every month you would've paid the bank, earn interest on that savings instead of paying interest, and eventually pay cash for all or at least some of that big purchase.

With some planning and discipline, you're really not changing a thing here - you're still paying a car payment every month (just to yourself, for a car you don't yet own).  You're not spending any extra money.  You're actually spending less money. 

OF COURSE, this is real life we're talking about here though: vehicles die unexpectedly and trailers get totaled and you might find yourself buying a new vehicle much earlier than you ever planned. But even if you're only a few months into this new style of saving and you only have $1500 in your "next truck fund", that's still $1500 fewer dollars you have to finance on a loan and pay interest on.  It's still a win, financially.

My next truck, which I'm saving for already, so I can hopefully pay cash for a used one when they are coming off-lease in a few years.  Hopefully.  Darn things hold their value way too well.  And in the meantime, crossing my fingers I can keep my current truck going until 2022.

Whew.  Seriously the longest post I've ever written!  Do you guys think I'm crazy now?  I would!

Anyone else use any of these strategies already?  Anyone find this useful? Anyone find this absolutely preposterous and want to challenge me on any of it?  I never feel like my financial strategies are settled, so I'd love to hear opposing points of view too!  Hopefully you got something out of this.  Back to my regularly scheduled short programming after this!

If you'll remember, I set one goal for myself for 2018: spend less on non-essential horse supplies.

My intent was two-fold: admit to myself that I already owned everything I needed to keep Connor healthy and happy, and also admit to myself that my spending in that category was out of control in 2017. Oh and #3: Pay off some debt.

How did I end up doing?

2018 is green, 2017 is yellow.

Turns out, if you give a girl some metrics, she nails it.  I spent almost precisely one tenth of what I did the year before.  And of what I did spend, 3/4 of it was on the KPG clinic.  Cause, you know, if you're going to be videoed by a Dressage magazine and ride for an Olympian, the right outfit is borderline essential spending, c'mon.

Looking the part!  PC: Leah

Adding the "necessary" and "unnecessary" tags in Mint helped me realize most of my spending wasn't on big purchases, but was on $20-$50 purchases here and there.  In fact, if you take out my top 5 non-essential horse transactions in 2017, the average price of the remaining 24 purchases was only $44!  It's amazing how those little "just one more saddle pad" purchases add up over the year.


Using the "necessary" and "unncessary" tags didn't feel burdensome.  I'd log into Mint once a week and spend a minute or two tagging the week's purchases.  And it ended up helping me rein in my spending in other areas of my life too.  Turns out it wasn't just horse stuff that was making my money disappear a little at a time!



The best part of all of this?  We paid off both the kitchen and his student loans this year!  The kitchen was a certainty but the student loans were a definite stretch goal, so that feels especially good.

Noooooo regrets

In 2019, I'll be increasing my horse show spending again, but the year of cutting back on my non-essential horse purchases has permanently changed my relationship with spending money on "stuff".  I learned to be content with what I have, to unsubscribe from all the "SALE!" mailing lists, and how easy it is to let your hard-earned money slip away one $44 purchase at a time.  I'm not saying I'll never buy a pair of breeches again, but it probably won't be until my current pairs get holes in them!

You may remember that I resolved to reduce my "Horse Supplies" category spending in 2018 while my husband and I make a final push to pay off our renovation-related debt and his student loans.

Specifically, the debt it took to turn this...

...into this. Worth every cent.

First, a reminder: I'm defining "unnecessary" as anything not essential to Connor's health, comfort or happiness.  So, things like my saddle getting reflocked are necessary, but things like buying new breeches for the clinic were unnecessary. 

But I bought them anyway and have no regrets!

To track this, I'm using custom categories and tags on Mint.com.  I have a "Horse Supplies" category, and then I have "Unnecessary" and "Necessary" tags that I apply to each transaction.  "Horse Supplies" is loosely defined as anything I could buy at a tack store and doesn't include things like vet, lessons, board, dentist, and shows, which I track separately.

So how am I doing a month past the halfway point of the year?  Here's a visual:

Green bar is 2018, yellow bar is 2017

This is not quite a fair comparison, because the yellow bar represents all of 2017, while the green bar represents the first seven months of 2018.  But clearly I'm very much on track to spend waaaaaaaaaay less this year.

Where has that "unnecessary" spending gone so far this year?  Welllll...


The answer is "going way overboard on buying things I really did not need for the clinic" (again, no regrets, #diditallforthephotos), re-buying my whip after I lost it somewhere in our outdoor, and a one month FeedXL subscription.

I'm not doing quite as well on "necessary spending" because getting my saddle looked at, reflocked, and widened ended up being pretty expensive.  In fact, that accounts for over three-fourths of my "necessary" horse supplies spending this year.  I'm not complaining, that money could not possibly have been better spent, but it does turn this graph upside down:

Once again, green is this year, yellow is last year.

Other "necessary" purchases this year include all the stuff I've bought to try to stop Connor's muzzle from rubbing his face, two new stall fans (they keep dying), and his maintenance gut supplement.

Current plan of attack: biothane halter in "Can't Possibly Lose THIS in the Pasture!" green

Anyone else using Mint.com to track horse expenses?

So I did some end-of-year reporting in Mint.com a few days ago.  I track all my expenses in it, and by that I mean I hop in once a week and make sure everything is categorized correctly.  Not as hard as it sounds.

I have several horse categories: Board/Lessons, Horse Shows, Farrier, and Horse Supplies.  Horse Supplies is a pretty broad category into which I throw anything that could be purchased at a tack store, so it contains everything from fly spray to breeches to tack to horse cookies.

Unrelated: Connor's Aunt Mary wearing something other than barn clothes last weekend, gasp!

So that end of year review?  In 2017, "horse supplies" was a massive number.  Embarrassing, really.  Four times what I spent on shows - and I did a lot of rated shows this year.

Now, I did buy a saddle this year, and the new trailer is included in Horse Supplies too.  (One thing that is not included - the Equisense and BoT stuff I just bought, because they never hit Mint, being spiffs).  But I still spent a ton of money, mostly one $50 SmartPak transaction at a time, on...stuff. And I hate stuff!  I'm a ruthless declutterer.

A good purchase

When my husband was un- and under-employed for three years, I asked myself "Will we die without this?" every time I thought about buying anything. While life at full employment is immeasurably better and less stressful, I miss the perspective on every dollar that time in our lives gave me.

So all that said, I'd like to challenge myself to lower that "Horse Supplies" spending category in 2018.  Specifically, I want to ask myself "Will we die without this?", or, more accurately, "Is this a medical/safety/horse health necessity?"  

Another no-regrets 2017 purchase <3

It means I'll buy his Smartpak but not a new saddle pad.  I'll get his nice halter repaired rather than buy a new one at Rolex.  I'll admit to myself that my wardrobe keeps me cool in the summer, warm in the winter, and presentable at clinics and lessons, and that's enough. 

I can't say "Horse Supplies" will be $0 this time next year because that's not how horses work, but I hope it's a fraction of what it was in 2017.  Call it a one year detox.


Here's to looking in my tack room, my closet and my grooming bag and thinking "This is enough, and I'm happy."

One of my resolutions for 2017 was to increase my savings.  Going through two years of my husband being un/underemployed from 2013-2015 definitely changed my relationship with money.  No matter how secure our jobs seem, for the rest of my career, I'll never shake the memory of the desperation and depression I felt every time I looked at our checking accounts and bills during that time.

September of 2013 - not a lot of showing during these two years, so we entertained ourselves in other ways.  And I worked off a lot of my board, otherwise I would not have been able to keep Connor.

Hand in hand with that, I also vowed to change the way I pay for predictable-but-not-fixed-expense events like horse shows, horse association memberships, Christmas gifts and car insurance.  Usually, I don't think about horse shows or Christmas gifts until it's time to pay for it, which means I have to absorb that big expense all at once.

And I do love Christmas...

I track my expenses in Mint.com, so in early January 2017 I sat down and looked at the Horse Shows category for 2016 to figure out what I spent last season.  I then thought about what this year's show schedule looked like vs last year's, and calculated how much horse showing should cost me per paycheck if I spread it over 24 pay periods.


This did a couple of things.  First, it was interesting to see by how much each and every paycheck is reduced due to something like horse showing.  Second, it made it possible for me to plan ahead and "pay myself" for horse shows by putting that amount of money straight into a separate savings account right away when I get paid, the idea being that I will move that money back over to checking when I need to pay for a show.

Ya'll don't need to see where I bank, but the Emergency Fund and (post-tax) retirement funds are in high-yield savings accounts at a separate bank (with retirement eventually going into an IRA), then checking and the account I'm talking about in this post, the savings account, are tied together at a different bank so I can easily pull the money back and forth.

There are two things that make that separate savings account thing work for me: first, it's separate from my checking: mentally that makes it dead to me.  That same money could be in my checking account and I'd spend it, but if it's in savings, it's like it doesn't exist.

(There's a name for this phenomenon but I can't remember what it's called.  Basically, if you give someone one big bag of potato chips, or if you give them the same amount of potato chips in four separate small bags, the person with four separate bags will eat less, because they have to make four separate conscious decisions to open the bag and keep going, while the one-bag person only had to decide to eat the chips once.)

I would prefer to bury my head in the sand when it comes to what percentage of my actual spending 'Pets' is, but Mint doesn't let me forget.  (Auto & Transport I can explain, I'm aggressively paying off the truck right now.)

Second, I don't move that money over automatically.  I do it manually as soon as I get paid, so that I'm consciously aware and mentally telling myself "This is for horse shows and Christmas and car insurance, I am paying my future self right now."  It makes it mean more and hurt less.  After all, it'd be way more fun in an instant gratification way to go on a shopping spree at Riding Warehouse with that money...but...future self says no.

Anyone else play mental games with themselves in order to be more responsible with horse money?