Adjusting a budget

[SOnotLayuh]

What do you do when your money flow changes? DH and I have been living off of a very crappy salary and managing to get our bills paid and save A LITTLE every month.

He was just offered a new job with a different company, which will be paying him more than his current position. We're stoked, needless to say, and want to use the increased money flow to put more back in savings. However, the last time I was working we were earning more money but still seeming to spend it everywhere. I don't really know how!

How do you MAKE yourself save? Do you have any tips and tricks... because I'm trying to get more disciplined, but I don't know how.

Also, would you focus more on *saving* or on paying off credit card debts and medical bills sooner? We're unsure what we should be focused on.

 

[JillandFamily]

You might want to try reading Dave Ramsey total money makeover. he has a lot of good advice

 

[minnie1928]

I agree with the recommendation to read Total Money Makeover. But, really the key to doing what you asked is to pay yourself first. Before you buy any wants, pay for your needs. After seeing how much is left over, pay down your credit cards or put it towards savings. If you wait, the money will find an excuse to be spent. You need to make sure that every dollar you get has a purpose, be it to pay the mortgage, increase your savings or buy groceries.

Basically, you need a budget or a plan for your money. A great place to start is to track where all your money goes for a month. And I do mean ALL your money. After a month tally up the totals and see where your weak spots are and address them with your new plan.

Good luck! It's really not a bad thing, in fact it's great!

 

[bumbershoot]

If the idea of actually reading Ramsey makes you nervous, you can read regular people talking about the ideas on livinglikenooneelse.com (llnoe.com).

But the first thing is to really determine your true needs. Your mortgage, food needs, insurance power heat..., car if needed for work. List the debts lowest to highest, focus on the lowest putting extra towards that, while paying minimums on the others. Once the lowest is paid off, put that money towards the new lowest. On llnoe.com they call it snowballing.

We found it very easy to spend every last bit we had, too, before we finally opened our eyes to Ramsey's stuff. Now, in less than a year since we had our eyes opened, we've put so much more towards our car than we ever ever thought we could do inside just a year. It's nearly paid off...last August, we owed nearly 10K on it. Just repurposing the money, just making our budget and sticking to it (and we have a total of $150 towards "fun", between a small bit for DH and I and then some towards the family fun stuff), has made all the difference.

They say a budget is so that you're telling your money where to go, instead of just wondering where it went.

Good luck and congratulations to your husband!

 

[HeyIt'sMe]

What do you do when your money flow changes? DH and I have been living off of a very crappy salary and managing to get our bills paid and save A LITTLE every month.

He was just offered a new job with a different company, which will be paying him more than his current position. We're stoked, needless to say, and want to use the increased money flow to put more back in savings. However, the last time I was working we were earning more money but still seeming to spend it everywhere. I don't really know how!

How do you MAKE yourself save? Do you have any tips and tricks... because I'm trying to get more disciplined, but I don't know how.

Also, would you focus more on *saving* or on paying off credit card debts and medical bills sooner? We're unsure what we should be focused on.

Congrats to your DH on his new job!

When DH & I get a raise at work we increase our automatic savings deposit by the raise amount - that way our net take home pay is the same and the extra is going to savings automatically.

I would say build a small emergency fund ($1,000-$2,000) first and then tackle your credit card debt and medical bills. After those are gone you can fully fund an emergency fund (6-8 months of living expenses).

 

[SOnotLayuh]

Thank you all SO MUCH for your suggestions!!! We're both fairly recent college graduates... and honestly... feel entirely unprepared for life in general. I wish they had offered courses in budgetting - I feel so clueless.

I will do some more research and definitely take your advice on stuff! Snowballing seems like a good idea... and I'm trying to find a FPU class in our area. A few local churches are offering them, so we're looking into that.

Thank you for all of your advice! I knew I could count on the Dis!

 

[DISdreamin']

Two words - direct deposit.

As others have mentioned, paying yourself first is most important. Personally, I have a portion of my paycheck direct deposited into savings (general) and a vacation savings account. I also have money taken out pre-tax for childcare expenses - I get that back at the end of the year and dump it into savings too. It makes my paycheck look much smaller, and helps force me to stick to the budget because the "extra" money intended for savings isn't just sitting in the checking account.

 

[apnep]

...He was just offered a new job with a different company, which will be paying him more than his current position. We're stoked, needless to say, and want to use the increased money flow to put more back in savings...

How do you MAKE yourself save? Do you have any tips and tricks...

Also, would you focus more on *saving* or on paying off credit card debts

You just answered your own question. Whatever money he makes OVER what he used to make should go to pay down your debt.

Have your money directly deposited. Make sure you have at least some money in a savings account for little emergencies. Pay off your debt, then start focusing on saving as much as you can. And as soon as you get the $$ put it toward your debt immediately, like that day! So it's accounted for.

DH and I have his money taken out of his check by direct deposit and it goes straight into a savings account. We never see it. Once you get used to living off a certain amount, you just do it. Out of sight out of mind is very helpful to not spending.

Good luck!
Ang

 

[apnep]

Two words - direct deposit.

... I also have money taken out pre-tax for childcare expenses ...It makes my paycheck look much smaller, and helps force me to stick to the budget because the "extra" money intended for savings isn't just sitting in the checking account.

Pre-tax flex accounts for dependent care, health care, YES! And 401K, not only helps you save, but cuts down on your taxes too.

 

[v.t.]

First look into 401K, with the extra money max out his 401K. It will pay off in the long run. Direct deposit is your friend, use it. Pay off all your debt and then keep saving that money after the debt is down. It will be a blessing to have the savings when (or if) you have kids. DH and I lived off half our salaries before kids and were able to remain debt free ever since. (Even with major medical problems). Congrats on the increase, it sounds like you are headed in the right direction!

 

[BrettS]

I know you said that things are tight now, but if your budget is currently working for you, then technically you can take all of the extra money and put it in savings and continue to use your existing budget. It takes a little discipline to be able to see that money grow in your savings and remember that it's not for you to use whenever you want, but it gets easier as time goes on.

However, if things are so tight right now that you're just barely getting by and you can't spend any extras on anything, then I would suggest using some (or maybe even most) of the extra money to round out some of your budget catagories.

For me, at least, saving money is much easier when you still have some extra money in your budget to do a few fun things once in a while. It's a lot easier to see money going into your savings if you know that you can afford to go out to dinner next week, rather than keep watching money going into your savings knowing that you can't afford to go out to dinner for a long time.

 

[SOnotLayuh]

First look into 401K, with the extra money max out his 401K. It will pay off in the long run. Direct deposit is your friend, use it. Pay off all your debt and then keep saving that money after the debt is down. It will be a blessing to have the savings when (or if) you have kids. DH and I lived off half our salaries before kids and were able to remain debt free ever since. (Even with major medical problems). Congrats on the increase, it sounds like you are headed in the right direction!

This may be a silly question... but... how important is this for people in their early 20s?

Should it be a priority just like saving and paying off debt?

 

[SOnotLayuh]

I know you said that things are tight now, but if your budget is currently working for you, then technically you can take all of the extra money and put it in savings and continue to use your existing budget. It takes a little discipline to be able to see that money grow in your savings and remember that it's not for you to use whenever you want, but it gets easier as time goes on.

However, if things are so tight right now that you're just barely getting by and you can't spend any extras on anything, then I would suggest using some (or maybe even most) of the extra money to round out some of your budget catagories.

For me, at least, saving money is much easier when you still have some extra money in your budget to do a few fun things once in a while. It's a lot easier to see money going into your savings if you know that you can afford to go out to dinner next week, rather than keep watching money going into your savings knowing that you can't afford to go out to dinner for a long time.

I do like the idea of being able to go out every now and then! We will have to learn how to not do it a lot... maybe if we could figure out how to cook more than spaghetti and hamburgers





Also, thank you to everyone who suggested direct depositing funds. We will definitely be setting that up!

I knew I could count on the Dis

 

[clh2]

This may be a silly question... but... how important is this for people in their early 20s?

Should it be a priority just like saving and paying off debt?

This is HUGE...a nice nest egg when you retire starts from making contributions when you are in your 20's.

It never gets "easier" to find retirement money. Once you have kids...you'll be buying diapers, formula, day care. Then there will be the "hypothetical college fund" then they will be involved with dance, soccer, piano lessons. Then they will be learning how to drive...then insurance...then college. Oh - and not to mention if your "snowflakes" will need to go to parochial school.

If you don't have kids - you'll be travelling to fun places, driving cool cars etc.

There are many retirement calculators out there - that will show you great examples of what happens with retirement money invested in your early-to-mid 20's vs. how much "more" you need to contribute when you are in your 40's.

 

[Pakey]

This may be a silly question... but... how important is this for people in their early 20s?

Should it be a priority just like saving and paying off debt?

Also, if you start young, you will be in the habit of doing it and it won't seem like a big sacrifice. My son has been putting 5% into a 401k from his first paycheck after he got out of school and I'm stunned at how much he has accumulated.