Tell me about your budget process.

[mrsklamc]

We've always lived on a somewhat flexible budget but will be looking to buckle down next month-more of a zero based budget. A couple of months of medical treatments has depleted our emergency fund and we want to get it built back up.

I've been around the board awhile so I know folks will recommend youneedabudget.com and Dave Ramsey- but I am more interested in the small details that come up that will be different for everyone. Do you use physical envelopes with cash in them, or the same concept but with a credit card and a spreadsheet? How did you and your DH/DW decide how much 'mad money' you each get? Looking for more personal stories, seeing what details DH and I might overlook as we work this out....

 

[disneychrista]

I think the first step is to know what you are actually spending and on what. Keep track for a month or two and see. Then you look and see where you can cut spending...

do you really need that $3 latte every morning or can you "live" with once or twice a week? What about entertainment...do you really watch enough movies to spend $20/month on Netflix or is it cheaper to get them for $1 through redbox? It is these extras that are real budget busters.

Next step is utilites/phone/cable - are you paying for extras on your phone/cable that you don't need/use? Can you cut your heat a few degrees by wearing a sweatshirt? Put your computer/tv/stereo, etc on power strips and shut the power strip off when not in use.

Personally I use a spreadsheet to keep track. I have each of my budget items listed out and then compare them to what I am actually spending. Actually I lost my budget when my laptop broke...so I am going to have to recreate it.

 

[lisaross]

i break down my expenses by pay-check..husband gets paid weekly so first i write down all my expenses such as

mortgage, electric, gas, cell, phone, cable, vacation savings, long term savings, weekend spending etc etc. i figure how much to take out weekly

example

say you take home 1000.00 weekly

week 1

1000.00

-150.00 electric
- 50.00 cell
-100.00 vacation savings
-500.00 towards mortgage
-200.00 personal spending

then do week 2 and deduct...

i also have 1000.00 in "emergency" fund for small things that might go wrong - such as an appliance to be fixed or repaired, car etc

i have in 6 months emergency fund split between cd's and savings..

i have a bunch of accounts in ing which i like (my envelope system) and i have money transfered weekly such as money into our "vacation" fund - i also have an account for our water bill - we get billed quarterly but i save monthly this when when the bill comes, i have the money ready to pay!

good luck - you will probalby have to try different methods and see what works for u - i do use an enveleop for food shopping money!

 

[wdwfan16]

We use the CC and spreadsheet method. DH and I get a certain amount at the begining of the week to use for all work expenses. Neither of us spends what we get. We are both pretty good, DH more than me, about keeping the costs down.

 

[dfchelbay]

DH only carries a few dollars, one check and two credit cards in his wallet. Everything he must purchase goes on the credit card. We monitor the CC online almost daily. We had a credit card stolen a few years back and used by the thieves. So we closely monitor it now. Looking at the charges online really makes you see what you're spending/wasting your money on daily.

 

[SandrA9810]

I use an excel file.
I list all the pay day dates going across. Then fill in below of the payments that are due. At the bottom is an automatic 125$ that is placed into a seperate savings account for the rent. Then when I go to get the money order, I just call on the bank's automated line and transfer the money to my debit card account, and the rent is paid. Since we save an extra 70$ each month, I transfer that over and use it either for gas/food or pay towards a credit card.

The remaining balance of the paychecks go to our bill payment account. one checking account is strictly debit card use, the other is bill payments. None of the accounts are tied together for overdraft protection. If the money is not there, then it's denied.

Bill payments are set up on the day before pay day, and the money is withdrawn from the account friday morning. So I never have to worry about there not being enough to cover the bills.
The remaining balance is then transfered to the debit card account to used for gas and food. If there's extra money, it's sent to one of the credit cards, it'll do me more good to not pay 20% interest than save it at .05% interest.

I try to even out all the payments, making sure there's about the same amount after the bills.


It's nice having seperate accounts, but still all at the same bank. And as much as I hate automated voice things. it's not so bad, cause I can transfer money instantly. It's there two seconds later.


Before when the income was great... I was sending double payments and such to the CC, 15% would go into the savings account. And combined our last check of the month would cover the rent. But I wasn't paying attention to where the money was all going. We were wasting 6$ for breakfast at McD's... random snacks waiting for each other to get off, eating out a lot, buying things because we wanted them.

I think now that I've done this, no matter what happens in the future, I will keep this budget. Know where the money is being spent, and stop wasting money, whether we have it or not.

 

[minnie1928]

I agree with the PP that said that you need to keep track of your money. We've been using Quicken forever, so when we really got our butts moving on this it was easy for us to see where the money had been going. So, I ran a report that showed our expenses for a year. I have it categorized, so it was easy to take the annual expenses per category and divide it by 12 for an average monthly expense.

My DH is paid monthly, so that makes it much easier for us to budget. We don't have a set amount of "spending" money per person since much of our money is budgeted by category. I don't use real envelopes with cash, I've created subaccounts as envelopes in Quicken. All our expenses go on credit cards and are paid off each month (we get LOTS of reward dollars this way). The only cash we use is the $200/month that is used for lunches, dinners out, minor purchases here and there. Most months we don't actually use it all.

Each month when I sit down to pay the bills I can clearly see where we are budget wise. By using annual expenses it takes out the volatility of things. For example, I unexpectedly needed 2 tires this week ($315) but I didn't fret because I knew I had more than enough money in my "auto" category.

Right now our only debt is our mortgage, but when we were focussed on paying off loans/DVC I used a slightly different method. I budgeted our money every month and would leave a little in the account to pay for unexpected things. Then, the night before payday, I would look at the balance of the account in Quicken. I would then take whatever the Quicken balance was and send that to pay down the loan. That way I always started each pay period with a blank slate per se. It also gave me some wiggle room/comfort to know that I had money in the account for unexpected things but at the same time it made me feel like I was accomplishing something whenever I made that extra principal payment on the loan.

 

[Mathfailure]

I think everyone's budget catagories are a bit different, but the overall process is the same.

1. What is a standing bill - house, car etc. Include savings here...

2. What is food, gas money, etc such weekly expenses that will happen..

3. What is a bit more flexible: Cothing, eating out, gifts, little incidentals.

4. A set 'allowance' for each person to have for what ever...

1 and 2 need to happen, 3 and 4 are where you can tighten the belt so to speak, and really spend almost nothing for a bit. Yes you will need new clothes eventually, but most of us have plenty for at least a year. You need to eat, but can make all food at home. See?

Personally, we have set amounts for 3 that we put in actual envelops, and when have saved enough if we need something we get it.

For 4 my husband and I each get a small amount biweekly when we get paid, and the children receive a dollar a year for school. This is the money we all use for the 'I wants'.

If you write down the plan, and set aside a small amount regularly, it is surprising how well you can do in six months.

Once you get on the 'other side' and have the savings back where you want, to stick to a less rigid plan will seem like a piece of cake.

And it will seem as if the money goes farther, no idea why but true.

 

[mrsklamc]

We do *have* a budget and can easily see where our money goes as we currently put everything on a credit card and then pay it off at the end of the month. We review our spending and balances regularly and pay down extra on debt.

But, if we know we have a comfortable cushion, we might for example go out to dinner. We want to get away from that and make sure that every single dollar has a name to it at the beginning of the month, and if there is extra it goes to debt reduction. Previously DH has been reluctant to live under a budget that feels that constrained, but cancer sidetracked us for a couple of months and it's what we'll have to do to get back where we want to be.

 

[mrsklamc]

And it will seem as if the money goes farther, no idea why but true.

Because most people have no real idea how much they are 'leaking' on lattes and McDonald's

 

[lacrosse_lady72]

Because most people have no real idea how much they are 'leaking' on lattes and McDonald's

No kidding Everyday I would get 2 venti white chocolate americanos... I would drink one right away and put one in the fridge to have later... that's $5.40 (no taxes here) plus $1 tip. That's 5 times per week ($32), 52 weeks per year ($1,664).

That's a lot of money, enough to take a vacation somewhere for a couple of days...

 

[Mathfailure]

One thing to consider about paying off the credit card, if you do this all the time for living expenses, you are actually a month behind.

If you do not have the money on hand, it is a lag of one month. Things can and do happen, and that month lag can increase.

A small point, but if you are putting thousands on a month, and hit a bump, you are automatically in a hole.

 

[NeverlandClub23]

I add up all of the bills I have for a month. I divided it by two and have that amount automatically taken out by ING to go into my savings account with them (my budget is set up so I'm really a month ahead of my bills, like I'm saving right now for January's bills). I also figure out how much I want to save every month and have that automatically taken out as well. The only thing I don't have taken out is money for groceries, gas, and entertainment. I take that out as cash every paycheck and take my account down to zero (I even transfer the change over to my savings account with my credit union).

I put the money in three separate envelopes for each one and once it's gone, it's gone until the next paycheck. I keep an Excel spreadsheet for any of my debt. The best part of this system is that I'm earning about half a month's interest on the money as it's sitting there before I have to use it to pay bills. This system only works if you stay on top of it though (like transferring the money a week before the payments due).

Lately I've been leaving the "cash" money in my account and buying my groceries, gas, entertainment with my Disney Visa card to get the Disney Dollars and keep track of what I'm spending in a register so that I have the money to pay it off every month.

I only give myself $20 every paycheck for entertainment (I automatically save $15 every paycheck for beauty stuff like haircuts, make up, new clothes, etc. so this money is purely for going out to eat, or going out for a movie, etc.). Most of my friends spend that in a day. I've found I do a lot more free things, like going for walks, with my friends and I am absolutely not allowed to go out to eat for lunch at work. I was spending way too much money doing that (let alone what I was doing to my heart).

 

[charming23]

I start off each month by calculating how much income that will be coming in and then subtract all the every month bills like mortgage, gas, electric, insurance, car, cable, phone, internet and debt management program.

I then see what is left and make a budget based on what I think we will need each month. $100 always goes into savings. Usually it is $25 a week but by the end of the month there is always $100 more in there.

As the month goes on I keep close track as to what is in the pantry and freezer and look for sales in the ads for anything else we need.

I have only been doing this for about 6 months and have already seen a difference. We are not struggling at the end of the month and praying for the first of the month to come. We also have been eating healthier by planning out meals and actually eating at home (I have lost 6 pounds since September) and I do not feel extremely guilty if we do go out for a meal once in awhile since we have the money available.

I do agree that you do have to learn where all you money is going each month and I do admit that is a learning process. I finally feel like I have begun to find my footing. that doesn't mean I don't still make mistakes cause I do or do some impulse buying.

 

[Mrs.Reese]

Ours started out being complicated and then became very simple over time. First is I know that I need $2000 to cover our fixed expenses (mortgage, car payment, electric, water, internet, YMCA, phone, insurance). We make $4800/month after taxes. I automatically take $1000 of that and it goes into a savings account for murphy. Another $500 goes into a vacation savings account. The rest is ours to use for variable expenses (food, gas, entertainment, etc).

We have rules for our budget. These mainly help with variable expenses

1. Coupons and sales are our friends.
2. I can probably live without it.
3. Mending/Repairing is usually all it needs.
4. Eating out does include Wendy's.
5. Bring your own lunch ALWAYS.
6. I get a pedicure every month or I feel deprived.
7. DH is allowed to buy rifftrax without consulting me.

The rules pretty much keep us focused. We each have our little indulgences but still have extra left over.

 

[DawnM]

We do a Dave Ramsey type program and have "mental envelopes."

I have a date book that is in my purse and I jot down in the lower corner in tiny writing, EVERY time I spend money and a little note as to what I spent it on.

DH would rather me do it on quicken, but I told him he can do that with my datebook in hand later if he wishes. I am a paper and pencil/pen person!

We do have the mental evelopes for the following categores:

Housing

This includes mortgage, utilities, garbage, water, cell, home phone

Food

I include all food, including eating out, groceries, toiletries, paper goods, two Sunday papers per week, and the subscription to The Grocery Game.

I coupon like crazy and have learned to stockpile during good sales. For example, yesterday I got $250 worth of groceries for $75 and this included two Sunday papers in my cart.

Entertainment[/B]

This includes Directv, internet, eating out, fun stuff

Car

We don't have a car loan, but we do have to pay insurance, registration, sinking fund for repairs, upkeep, and gas

Contributions

This includes all charitable giving, tithe, etc....

Savings

I do not include health insurance or life insurance or retirement, because it is automatically taken out of DH's check. I only budget on what he brings home. It makes it easier that way for me.

Dawn

 

[Waseller77]

We have rules for our budget. These mainly help with variable expenses

1. Coupons and sales are our friends.
2. I can probably live without it.
3. Mending/Repairing is usually all it needs.
4. Eating out does include Wendy's.
5. Bring your own lunch ALWAYS.
6. I get a pedicure every month or I feel deprived.
7. DH is allowed to buy rifftrax without consulting me.

Love it!

 

[NeverlandClub23]

4. Eating out does include Wendy's.

I think a lot of people trying to budget forget this!

 

[CherylA]

I use youneedabudget, it was hard to get the hang of for me but now I love it. Any type of spreadsheet based program that you can import your spending into works well becuase your spending is being recorded for you. I put everything on a card that I can. And good point by Mathfailure about being a month behind if you are using a cc for everything. I had that instant "you're in a hole" occurance happen to me once and never again! I pay my credit card balance weekly and save a full months worth of income ahead of time (it's a youneedabudget thing)

Anyhow, any cash I spend I write down until I get a chance to enter it in my spreadsheet. With this system cash was a problem for me. It seems I take more out of the ATM than I write down for spending. It does sort of leak away. I have started saving my ATM receipts and writing right on that what I spent that money on. Sometimes I might only write down $50 worth of spending when I took $60 out of the ATM. I have had to make up a misc category for this type of occurance. Good luck to you. There is also a "no buy" thread on the budget board where a bunch of us keep track of our daily spending and try to have as many days where we spend nothing as possible! This has helped me keep those cash differences down. I seem to remember the buying a little better when its for the no buy thread!

 

[christianweecare]

I use youneedabudget, it was hard to get the hang of for me but now I love it. Any type of spreadsheet based program that you can import your spending into works well becuase your spending is being recorded for you. I put everything on a card that I can. And good point by Mathfailure about being a month behind if you are using a cc for everything. I had that instant "you're in a hole" occurance happen to me once and never again! I pay my credit card balance weekly and save a full months worth of income ahead of time (it's a youneedabudget thing)

Anyhow, any cash I spend I write down until I get a chance to enter it in my spreadsheet. With this system cash was a problem for me. It seems I take more out of the ATM than I write down for spending. It does sort of leak away. I have started saving my ATM receipts and writing right on that what I spent that money on. Sometimes I might only write down $50 worth of spending when I took $60 out of the ATM. I have had to make up a misc category for this type of occurance. Good luck to you. There is also a "no buy" thread on the budget board where a bunch of us keep track of our daily spending and try to have as many days where we spend nothing as possible! This has helped me keep those cash differences down. I seem to remember the buying a little better when its for the no buy thread!

Is there a cost involved in this program? (youneedabudget)