Gah. It's time to grow up. Help me figure out a budget.

[greenmom4]

I WOH FT, have another PT job and am going to school.  I have plenty of money coming in and yet we live paycheck to paycheck.  I.  Am.  DONE!  Money just...goes.  I know we need to budget, but I've tried before and we haven't really stuck to it.  For non-savers out there, how did you get your butt in gear to start saving and not spending every penny that came in? 

And the weird thing is, we don't buy extravagant stuff.  We don't have cable, we don't have cell phones (aside from a pay as you tracfone that we just use for emergencies), we don't have car payments, and we have one credit card with a $500 limit that we don't really use.  No loans of any kind.  I live a 45 minute drive from any kind of shopping (so it's not like I go into Target for one thing and come out with 10) and I only go down about once a month to stock up on tp and paper towels and stuff at Sam's. 

I think we spend a ton of $ on food - and we don't really eat out at all.  Like last night I went to the store to grab stuff for dinner - and I spent almost $50.  $50!!  For one night with a few things that will work as snacks and stuff.  That can't be good. 

HELP! 

[Imakcerka]

I'm doing the pay myself first method.  I put my saving money away in the do not touch fund.  Then I pay my bills.  There will always be money left for food and gas or treats.  That stays in the account for spending when needed.  I also buy in bulk and that help alleviate unnecessary spending throughout the week.  However it took me a month to two to figure out what could really be put away and what was needed for bills and food/ect.

[greenmom4]

Yeah - I should probably spend a month, at least with groceries and gas just figuring out what we actually spend now (gulp).

Another question - if you have flexible spending accounts for childcare/healthcare, how do those figure in to your budget?  Right now I have maxed out our childcare FSA, so my take home pay is less, but I can get that money back almost immediately by filing a claim.

In the past it's been so easy to just transfer the money from our savings back into checking and spend it.  Is there a way to "lock" your savings account so that you can't transfer the $ around?

[Imakcerka]

Not with my bank.  I don't know if you can set something up.  I have a credit union that allows me to lock cards when they hit a certain spending number.  Like DH can't spend more than 250 at any given time.  It used to be less but it wasn't working when he started doing all the shopping.  You could always ask your bank.  Mine offers me charts to show me where my money goes... lets just say the gas station takes my spending money... they have BEER and WINE!  Sheesh!

As far as the spending accounts I don't use mine.  I think that is just something you're going to have to dig into and arrange your funds around that.  Also you don't want to lock your savings from yourself.  You might need it in a pinch.  Just slap your hand when you want to transfer for something not needed.  Oh and one more thing.  Using a budget like this is really a life change.  I mean I had to find ways to have fun without money... WTF?  No latte for the drive to the park?  WHAT?!!  It was hard but I'm doing it.  I don't like it though.  I may someday when I can swim in my savings account!
 

Originally Posted by greenmom4 

Yeah - I should probably spend a month, at least with groceries and gas just figuring out what we actually spend now (gulp).

Another question - if you have flexible spending accounts for childcare/healthcare, how do those figure in to your budget?  Right now I have maxed out our childcare FSA, so my take home pay is less, but I can get that money back almost immediately by filing a claim.

In the past it's been so easy to just transfer the money from our savings back into checking and spend it.  Is there a way to "lock" your savings account so that you can't transfer the $ around?

[SunRise]

Two phrases I like are Pay yourself first (save) & Make your money work for you (earn interest). I did find myself buying food as a way to spend money but justify it as something needed. Aware of this, I became more food conscious shopper.

IF you save some money and then put it in a stock, it is harder to get at.  Different levels of savings may be an option for you, short term, long term etc.

[liberal_chick]

We're doing better with the savings issue, but we used to put our money in an ING savings account simply because it would take 3 days to get to us.  The eliminated the "OMG, I really NEED that new sweater!" type of money transfers.  It could be a bit of a PIA when it was for something like car repairs, though.

[liberal_chick]

And we're currently doing Dave Ramsey's system, so we use cash for groceries.  When the cash is gone, there is no more until the next week.  We budget $250 for big trips (every other week) and $100 for incidentials on the inbetween weeks.  It has made me be way more mindful of my grocery spending.

[greenmom4]

Originally Posted by liberal_chick 

And we're currently doing Dave Ramsey's system, so we use cash for groceries.  When the cash is gone, there is no more until the next week.  We budget $250 for big trips (every other week) and $100 for incidentials on the inbetween weeks.  It has made me be way more mindful of my grocery spending.

I'm thinking of buying grocery gift card things and using those for grocery trips.  Blah.  This stuff is so not fun.

Oh - and for our DCRA (flexible spending) account, I'm thinking of just entering that $ as an extra "income" line item?  Seems like that should work...

[cristeen]

Get a notebook, and write down every penny you spend for the next 2 weeks - that includes paying parking meters, giving a buck to a homeless person, etc.  That will give you a better idea where your money is going.

Before I met DH, I was a lot like this.  I was renting a room for $300/mo, making a decent salary, and living paycheck to paycheck for 2 years.  I honestly couldn't tell you where that money went in that time.  $5 here, $10 there.  It took time to learn fiscal responsibility.  Time and practice.  It's not an overnight change to be made.  Set up a plan, and do your best to follow it.  Realize and accept it may take some tweaking to find what works, it's going to take some time to form habits, and you're liable to have some back-sliding.  But if you stick to it, you will eventually work it out. 

As for the money transferring issue, one way to do it is set up separate accounts (not linked accts).  At my DH's previous job we direct deposited a percentage into one savings account, and DD the remainder into a different checking account.  We can't easily transfer between them because they're not connected (we can do it, but it requires calling the bank and actually talking to a person).  We used the savings account to save our property tax $$ for the year, so there was no touching it - it just wasn't an option unless there were truly an emergency (and we had emergency funds elsewhere, so that account would be a last resort).  This is one reason I don't internet bank - it's too easy to juggle the money and screw myself over in a moment of impulse. 

Our accounts are set up like this:

Joint savings/joint checking, linked - paycheck gets DD into the checking, savings is savings and touching of it requires discussion and agreement, and a phone call to the bank.  We always have a cushion in checking, although the amount fluctuates.

Personal savings/personal checking, linked - we each have one of these.  His was used for years as savings for the property tax (as above), which we don't do any more (his current job won't split the DD).  Mine was my "fall back plan", JIC type of account, up until I had DS.  Now it's got about $30 in it.  But it does have my emergency CC attached to it, so I keep it, just in case I ever need it.  We have checks for both of them, but the books are locked in a filing cabinet, and it would take a while even to find them.  No impulse spending here.

Investment accounts - Ours are with ETrade, but ING is another one a pp mentioned.  There are several internet banks that can do it.  Basically, this is locked up money.  We don't have any easy access to them - it would require contacting them, filling out paperwork, and waiting for them to cut/mail us a check if we needed to touch this money.  This has been sitting there for a decade untouched, and unless something major were to happen, it will continue to sit for a while.  This is the very last place we will touch if an emergency were to happen, even after the HELOC, most likely. 

[3timesamom]

FIrst I made a list of my bills. Then I added them all up. Then I added up our minimum income. The step is after all knowing that you make enough and what SHOULD be left. Then I decided how much we should save. I pay us like a bill to ING once a month.  Like PPers have said it makes it hard to spend your savings while  your getting use to it. We also have an ING account for irregular expenses like the dentist, car reg, and yearly car ins premium, Christmas, and water and sewer. That account we expect to rise and fall. The other account we like to see grow. It makes it easier to not pull from it for silliness too.

Lastly we use cash for things like Groceries. If you don't enough you put something back!

The biggest advice though is decide what you want to contribute to savings and pay it to savings when you get paid. If you let it sit there, you spend it.

[SomethingAnonymous]

Originally Posted by cristeen 

Get a notebook, and write down every penny you spend for the next 2 weeks - that includes paying parking meters, giving a buck to a homeless person, etc.  That will give you a better idea where your money is going.

 I was going to suggest exactly this. It's a great place to start.

[diana_of_the_dunes]

If you want to look at your past spending habits, look into Mint.com.  You link your account and any credit cards, loans, etc, into it, and it will categorize your purchases for you.  It also has a section where you can budget a certain amount for each category, and it will automatically send you a message when you're approaching your spending limit.  I found it VERY helpful when I was first getting started with my budgeting.  I also found it helpful to use cash for groceries as well as to shop the sales and stock my pantry.  This way, I don't need to buy pasta unless it's on sale, because I have 10 or so boxes in the basement.  Same with cereal and other staples.

Good luck!

[Imakcerka]

Oh that sounds good.  Though I'd yell at my phone if I got a message that told me to stop buying paint!
 

Originally Posted by diana_of_the_dunes 

If you want to look at your past spending habits, look into Mint.com.  You link your account and any credit cards, loans, etc, into it, and it will categorize your purchases for you.  It also has a section where you can budget a certain amount for each category, and it will automatically send you a message when you're approaching your spending limit.  I found it VERY helpful when I was first getting started with my budgeting.  I also found it helpful to use cash for groceries as well as to shop the sales and stock my pantry.  This way, I don't need to buy pasta unless it's on sale, because I have 10 or so boxes in the basement.  Same with cereal and other staples.

Good luck!

[VisionaryMom]

Neither of us are clearly spenders or savers, so it's made us really wishy-washy with money. Here's what's helped.

1. We use Mint.com. It was helpful to see where the money went.

2. We have 2 checking accounts. A specific dollar amount gets deposited into the "discretionary" account with each paycheck. Everything else goes to bills. I pay bills either on auto-draft or on the day that one of us gets paid. We have a bills schedule.

3. I move money into savings on the day we get paid. It is the first thing that comes out when I'm paying bills.

4. We do not budget to the penny for the discretionary money. It's used for groceries, gas, entertainment, gifts, etc. My MIL does the "$10 per month toward household purchase, $15 toward yard purchases, $20 toward Christmas" thing, and it drove me nuts when I tried to do that. We don't. Sometimes we spend everything in it. Other times we don't, but I don't have to worry that DH ordered a beer when we went out to eat, and that's going to put us $2 over the restaurant category. 

[diana_of_the_dunes]

Originally Posted by VisionaryMom 

We have 2 checking accounts. A specific dollar amount gets deposited into the "discretionary" account with each paycheck. Everything else goes to bills. I pay bills either on auto-draft or on the day that one of us gets paid. We have a bills schedule.
 

Oooh, I like that.  I have two savings accounts, one long-term and the other short-term, and it's really helped me to have a true emergency fund as well as a "oops, I forgot that the insurance was due this month" fund.  But to put all our discretionary money into one place would be awesome!  The whole, "$50 for entertainment, $25 for clothes" thing doesn't work for me either.  Great idea!!

[eirual]

Originally Posted by greenmom4 

....  Blah.  This stuff is so not fun....

Just a reminder to MAKE it fun!! I like cheesey little graphics (I had a flower graph on our fridge, where the roots were our debt and the stem leading up to the flower was our savings goal and would colour in squares worth $50 as we progressed). Once you know where you stand and where you're going, seeing that progress IS fun!! And the clarity financial security brings to the rest of your life is awesome.

If you haven't read Dave Ramsey's Total Money Makeover, I'd start there. If you're feeling frustrated it will pump you up and show you EXACTLY where to focus your efforts to get results. You're deffinitely heading in the right direction.

[AnkaJones]

I second (third) the Dave Ramsey plan.

I was where you are about six months ago.  We had what should have been more than enough income, but were still somehow hemorrhaging money.  If either of us had been buying big ticket items, it would have been easy to fix, but it was all $10 on a book I "needed", and $5 on a latte and scone because I woke up late and didn't have a chance to get breakfast before leaving, or $20 on takeout because we didn't have food in the house [BTW, we live on the east coast... I realize these amounts probably sound extravagant to someone in the midwest, but these are relatively cheap for our city]. 

What we did was look over the bank statement from the prior month, and made a budget which just reflected what we were already spending.  I didn't try to save at all.  The only other major change was we started meal planning; again, no attempt to scrimp or save, no cutting back.  Just every week we had a plan, shopped for the plan, and stuck to it.  In the first month we saved about $500.  I was stunned, because we had decided we weren't going to try to save.  About $100 of it was saved because I found we had recurring payments on our bank account that shouldn't have been there, and cancelled all of those.  Another $100 was books (I started using the library).  The other $300 was food and eating out.  The other thing I noticed was that because we were committed to staying on budget, there was a pause before every purchase ("Is this in the budget?").  Even though the answer was almost always yes, because again we hadn't really cut back at all, that pause kind of focused our attention on the money we were spending.  In retrospect, having a month where we didn't try to cut back but had a budget was great because it helped get DHs buy in, and gave us as a family the chance to adjust to a new way of thinking about money.

After one month of being on that "no save" budget, I made a new budget that reflected our reduced spending and we did the same thing for another month.  By that point, meal planning had become pretty easy and we had worked out some early kinks (we both work out of the home, so I try to make sure we only cook 2-3 days per week, and that weekday recipes are really easy), so we were able to start looking for deals and stocking the pantry.  Our grocery costs plummeted, and our food waste went way down.  Again, no cuts that felt like cuts, but we were now making serious progress on paying our debts.  This was the first month we saw our minimum payments go down because we completely paid off the car, which was almost paid off anyway, but suddenly we had another $300/month which could go to debts.  It was easy progress up front, and really helped keep us motivated.  Again, DH was giving even more buy in, and started to get excited about it.  The third month we made some more difficult cuts.  Again, this is something where we sat down at the beginning of the month and were like, "It's embarrasing we spend over $100 per month on our phones"... it hand't been a plan when we first wrote our budget.  We cut our cell phone plan back.  We started line drying clothes.  We started having one frugal meal per week (breakfast at night... no one felt deprived).  Again, big debt payments.

Fast forward to today -- we're cut down to a lean-mean-savings-machine.  Our monthly minimum payments on debt are about halved.  And this turned out to be a far bigger deal than I could have imagined.  DH is getting laid off (OUCH!).  But guess what?  We're okay.  We wouldn't have been okay six months ago, but when it kicks in Feb 1, we're okay.  What could have been an incredibly stressful time is instead me and DH looking at each other with pride and realizing that because we were able to make those lifestyle changes over the prior six months, we were still finanically secure despite what would have been a pretty catastrophic problem a few months earlier.

As far as generalizable advice?  Start where you are.  If you try to do everything at once, you might lose your family buy in, so take it slow at first.  You'll be shocked by how big an effect just figuring out where your money is going will have on you.  Having a written budget will also make you more concious of where you're spending money... it'll become more intentional.  Look for places where your lifestyle improves when you cut back -- are you plaing more scrabble because your cable is shut off?  are you eating healthier and more tastey foods and spending less time hunting and gathering each night?  are you buying your way out of debt slavery?  Make sure you congradulate yourself on that stuff, and point them out to DH.

Best,

Anka

[lilacvioletiris]

Before I was married I had an allocated budget that outlined all the bills I knew would come each month and approximately what day and I kept a spreadsheet to let me know how much money I had left for food/gas/misc.  I didn't save much but I never ran out.  Then I got married July 2010.  DH is a free spirit with money.  We would think "Oh, you worked overtime, of course we have enough money to buy some remote control airplane stuff".  Then we overdrafted our account, several different times.  I knew something needed to change.

Then I read the Dave Ramsey book over my Christmas vacation. DH and I are going through the Financial Peace University with our church.  DH is on board.  We agreed we wanted to put $2000 in an emergency fund then start a debt snowball to get rid of our debt so we can live free!

The biggest change is allocating all our income to savings, bills, food/gas/misc other categories in a spreadsheet.  I sat down with his income and my income on 12/20 (we both got paid the same day) and figured out what automatic withdrawals for things like mortgage, utilities, credit card payments, student loans, etc would be coming out over the next two weeks and subtracted them from our income.  Then I put money in other categories - food, gas, personal expenses (money to BLOW), etc.  I got cash out for groceries, gas, and clothing.  It made me more mindful of what I was spending even though I didn't reduce particularly what I was buying.  Then two weeks later, he got paid again, with a little overtime and he thought, oh, I have that extra to buy some R/C airplane stuff.  Well because of the allocation, we saw that no, there was a big student loan withdrawal coming out and there wasn't the extra money to pull from.  We decreased our food budget this two weeks because we had to increase our gas budget since both cars needed gas.  But we knew where our money was going.  We wouldn't overdraft.  It was a tough pill to swallow for my DH but we had our budget committee meeting and agreed to what we were going to do this pay period and agreed it was what we needed to do.  Talking about it was the best thing.  Before it was mainly me paying bills and buying groceries and our communication about where money was getting spent wasn't as open as it could have been.   Writing down where the money is going to go before it is spent helped us to stay within our means and not deprive ourselves.

[AnkaJones]

One cognitive trick/note with regard to using a cash system (a la Dave Ramsey): they've done studies and the pain part of your brain fires when you spend cash in a way that it doesn't when you spend on a card.  They've also done studies of consumer spending behaviour and found that people spend something like 40% more if they're in a McDonalds or such and are able to put it on the card rather than using cash.  So cash systems really do decrease your spending, aside from providing a convenient way to track how much is left in the budget that month. 

Another note -- you're less likely to spend if you carry around large bills.  It's unlikely you're going to break a $50 to buy a latte, but you sure might be tempted if you have a couple of dollar bills in your wallet.

Anka

[eirual]

Something I like to keep in mind re: sticking to the budget (which DR brings up in his book) is even if you stray from the budget, at least you had set out a path and were heading MORE in the right direction than you would have otherwise. (picture wandering in circles or backwards without a budget vs. zig-zaging and being led off trail, but still moving forward towards your goal by having a budget).