How do you manage money/budget your life?

[happybratpack]

OK, I'm trying not to sink into a depression here. The last six months my finances have gotten way out of control. I bought a house which caused me to have a mortgage and continuing rent payment for 4 months (May is the last month of the double payments, thank goodness). I know this wasn't smart, but the house was too good of a deal to pass up.

Anyway - I've slid into living paycheck to paycheck and I HATE it. I want to work on a new budget that gives me an allowance for spending/saving/vacation as well as takes care of the monthly bills. Thankfully I have no credit card debt so I'm clear there. I've cut down a LOT on the Disney trip next month because of the added expenses...I'm just happy I can still afford to go. I just re-read this post and don't want to give off the wrong impression, I have enough to live comfortably but want to get ahead financially.

How does everyone budget their money monthly? Do you track it with software or manually? My SO isn't always that enthused about budgeting and cutting back so any help with convincing him of that would be good too. Any tips/tricks to save or whatever would be greatly appreciated.


Thanks for your input!

 

[Brooknwdw]

HI ~

You need to read the "BEST MONEY SAVINGS TIPS" thread..it has some GREAT tips on budgeting & saving.

First off, congrats on having no credit card debt...thats a huge plus right there! Try to keep it that way.

One thing to watch is eating out and extras like that. Those can really add up.

First step I'd take is start a "journal"..write down EVERYTHING you spend over the course of a month. Then, write down ALL your bills in a month..I use a notebook & pen, not the computer, and I keep the notebook in my bill drawer with my bills. I have it written out like a calender, what bills are due on what days. Then, I mark them paid once paid.

This will give you an idea of exactly what you are spending on food/etc AND bills, against what $$ you are bringing home. Then, you can clearly see areas where you can save.

Hope this helps!

 

[lemondog]

My husband would be happy if we could move into an Excel spreadsheet and live there. He is very anal and in fact works in the financial services industry for a living so it's what he does best. Every month we plot each bill and allot money to different categories, such as gas, groceries, diapers, entertainment, etc. If we go over budget for the month, we have to pull the money from another category. Every evening I go into the spreadsheet and type in how much I spent under each category. DH has it set up so that it automatically deducts what I type in and shows me how much I have remaining. It sounds insane, and it actually is. I would never do this if not for DH's Type A behavior. Although it is VERY important for him and I think compromise is important for a marriage, so I do it. As much as I hate it. This attention to detail does pay off in the long run, though and for someone like me who likes to spend, spend, spend it does help make sure we are able to put money toward savings and debt every month.

 

[Colinsmom]

Does your employer offer a 401(k) plan? Many do, and many also offer company matches. My company matches the first 5%, so that is basically free money, and it is not taxed, which means more free money. And since this money comes out before we get our paychecks, it's "untouchable" for all intents and purposes. We spent a lot on fixing up our house over the last few years and felt like we hadn't saved much, but by maxing out our 401(k) and deferred profit sharing contributions, we saved well over $24,000 last year! It adds up fast!

Even if your company doesn't offer a 401(k) you can use the same principle of automatic savings by setting up an automatic deduction of, say, $50 per paycheck to go into an ING or other savings account. You'll quickly get used to the money not being there, and if it isn't there, you can't spend it!

 

[EthansMom]

I agree with what some of the other posters have said. I also use an Excel spreadsheet to track budget and spending. I don't keep it to the penny, but it does give me a good framework.

I also tracked our spending for the first couple months to figure out what we REALLY spent. Instead of writing it all down in a notebook, which is a good idea, I kept all of the receipts and bills in a manilla envelope and then went through them every week or so. If I made a purchase and didn't get a receipt, I would write it down on a scrap of paper and throw that into the envelope. You'll be shocked by how much you are REALLY SPENDING on some things.

As far as your SO, well my DH isn't so much into the entire budgeting thing either, but he lets me control the finances -- mostly because I've proven to be good at it. We each get our own money to spend each month from the budget and have to check with each other before we make any big purchases -- which we also save in advance for so that we don't buy it on credit.

I also agree with ColinsMom about putting money into your 401k. If your company has one (even with no match), it's a great way to save. Tip: Whenever you get a raise, change your 401k contribution so that half of your raise is going directly into your 401k. After a couple years you could be maxing out your 401k. If you don't have a 401k, then you should think about getting either a Traditional IRA (contributions may be deductible on your fed taxes) or a Roth IRA (you don't pay taxes on the profit when you withdraw at 59.5+).

But, since it doesn't sound like you've got any savings put away at all, I would advise that most money you can manage to save should be put away in an EMERGENCY FUND. The best place to put this is the highest interest savings account (no checking) that you can get -- maybe a credit union or ING. This is your EMERGENCY FUND to be used if your car dies, you have unexpected medical costs, etc. It is not to be used for buying Christmas presents, clothes, dining, etc.

My story: About 5.5 years ago, DH and I had just bought our first home and were both making decent money as engineers. Boom! I got laid off. I found a new job in just a couple months but the scare made me take a good look at our finances and realize that at our rate we weren't going to be able to do many of the things we really wanted to do with our lives. I got pretty serious about cutting back our expenses in order to put together a sound emergency savings fund and to pay off our higher interest loans.

Fast forward to last year -- We had done well with our finances and our life planning. DH's income had increased and I was able to stay at home with our son and we were awaiting the birth of our daughter. And Boom! DH's contract was not renewed. We lived off our savings for 6 months while DH tried to start his own business and ultimately ended up taking a position with a new company. The 6 months without income set us back, but we never lost a night of sleep over it. We had enough savings to live off for at least a year!

Fast forward to this year -- We're still saving up to get back to our past levels, but the bills are paid and we're putting quite a bit aside also. So, it does work.

Here are my hints/tips/tricks for quick savings:

Do you have cable t.v. or phone add-ons (like caller id, call waiting, etc.)? Those are two things that I never had when we were first starting to do some serious savings. (Oh, you should have heard our family members complain when they would come to visit and we had no cable -- like they came to watch our t.v. rather than visit us.) Savings: $35/month or $420/year.

I anaylized our receipts and found that some restaurants were $10 more expensive per visit than others -- we cut out the expensive restaurants altogether and cut down our dining out to no more than once per week. Also, at $2 per soda, we stopped drinking soda when we went out to eat and instead ordered ice water with lemon. Savings: $30/month or $360/year.

We tried to cut down on paying for convenience items -- for instance, it costs more to purchase a rotisserie chicken (cooked) at the store than it costs to purchase the same kind of chicken uncooked and bake it in the oven for 2 hours and buying juice costs more in juice boxes than in a big jug which is usually more than buying the juice concentrate and mixing it myself. Likewise, it's cheaper to drink water out of the tap than to buy soda and it's cheaper to buy soda in a 2-liter bottle than in cans. Savings: $50/month or $600/year.

On our vacations, we could afford to stay delux, but even with the AP rate, that's over $200/wk more than a moderate. I'd rather save the $200.

Don't get me wrong -- it is HARD making the sacrifices, but SOOO worth it! When my husband sees someone his age driving a nice car, he'll often say "I wish I could have a car like that!" That's when I remind him that the guy driving the car is only leasing it and that the guy doesn't have money set aside for his retirement or his kids' college.

People still occasionally laugh at us for our frugality, but we have no debt other that our mortgage and a little left on DH's college loans and we're amassing some tidy savings. We'll get the last laugh.

Good Luck to you!

 

[Aidensmom]

My husband would be happy if we could move into an Excel spreadsheet and live there. He is very anal and in fact works in the financial services industry for a living so it's what he does best. Every month we plot each bill and allot money to different categories, such as gas, groceries, diapers, entertainment, etc. If we go over budget for the month, we have to pull the money from another category. Every evening I go into the spreadsheet and type in how much I spent under each category. DH has it set up so that it automatically deducts what I type in and shows me how much I have remaining. It sounds insane, and it actually is. I would never do this if not for DH's Type A behavior. Although it is VERY important for him and I think compromise is important for a marriage, so I do it. As much as I hate it. This attention to detail does pay off in the long run, though and for someone like me who likes to spend, spend, spend it does help make sure we are able to put money toward savings and debt every month.

I am just as anal - nothing gets spent without consulting my Excel spreadsheet! It consists of three columns: Budget Amount, Actual, and Projected. Budget Amount is pretty much the same from month to month - this is my actual budget. Projected is the same as Budgeted to begin with, but if there is an unbudgeted expense that is coming up, like drivers license renewals or something, it goes there Actual is what is actually spent - and then Projected gets adjusted to reflect Actual. Difference between actual and projected is my over or under budget amount. (the reason there is both an actual and a projection is real time versus future projections). If I spend something that is not budgeted, Budgeted column gets 0 and actual and projected get amount spent. Savings is a budgeted expense so I am sure to always put something in savings. Ok, now after writing this I realized I am much more anal than I thought, I am getting so excited describing my budget!!!

Anyway, my point is that the budget really helps to be able to save money. You can see exactly what you spent, how much you are going to have in the future, and where you need to cut back. My goal in life is to always be under budget, any extra is what we are allowed to use for fun things like Disney .