I need a little guidance

[rosie_plus_one]

I know how much DP and I make each week, I know approxiamately what we spend, but for some reason, I seem unable to create an "actual" budget. I would like to know exactly how much money I have to spend each week for groceries, take it out in cash, and carry it in an envelope. When it's gone, it's gone. However, I honestly don't know how much is reasonable, I don't really know how much I can afford, etc.

I think that the basis for my problem comes from having so many bills that are "negotiable." For example, my babysitter will take as little as $2 an hour if I am really broke one week, but I generally try to pay her between $2.75 and $3. But really, I just kind of randomly decide as I drive to her house on Friday to pick up the little monster. Likewise, my credit cards are a minimum of $25 or so but sometimes I seem to have extra so I write a check for $150 instead. Again, basically a random decision.

I have all of my info - I know exactly how much I make, I know approx. how much DP makes, and I know how much our major bills are. Can anyone help me set up some kind of system for figuring out the variable amounts? I am more than happy to just make up a little word document with all of our expenses if that is what is needed.

[LEAW]

Well first set up a budget based on the things that don't change - mortage/rent, gas, water, phone, elec, car payment, etc.

Then add in food, other consumables like pet food, toiletries, eating out, gas for the car, etc.

Budget for the babysitter - if your average is $2.50 and you usually use x hours, budget that. Or start paying her a regular amount and budget for that.

Finally, your cc minimums, and then see what is left, and send that to the smallest cc bill each month adn get out of debt!


An easy way to do this is to write down EVERY penny you spend for a month. EVERY single one. Use that as a base budget, and if you think you went a little nuts in groceries or something, then try each month to work on less money. Same with eating out, gas for the car, long distance, etc.

It took me about 6 months of looking at all my bills and credit card statements and checkbook and writing down all the cash before I got a good feel for where the money was and where it went, and then I wrote out a budget to fill the "necessities" (house, utilities, food, minimum cc payments) and then I took what was left and budgeted it into categories for haircuts and going out and paying off our debt. Most of it goes to the debt, we've paid of thousands of dollars on cc debt in the last year.

Now I challenge myself to keep the grocery budget, and to not go crazy shopping for fun, etc. and my reward is seeing the cc balances get smaller and smaller.

[mightymoo]

I never liked budgets for that reason either. If you budget into these little categories, I think its harder to stick to because now you are trying to scrimp to fit an arbitrary grocery budget, but you didn't use any of your clothing money, etc.

What I prefer to do is track expenses and add 'budget' in where I think its appropriate.

I have an excel spreadsheet. At the top I have DH's take home pay for hte month. Then I have a section for bills. Then I have a section for expenses. Whenever we spend something I put it in here. At the top I have it all added up and subtracted from the take home pay so I know what we have left for the month. At the end of hte month I do things like add up all the gas charges, the grocery charges, etc - basically just seeing for myself how much we spend on big categories.

Once you've tracked your expenses for a while you'll get a better idea of what you are spending on things, then you can say 'we spent $400 this month on groceries, but I bought a lot of unnecessary or expensive items, next month lets try to keep it under $300', etc.

I do do some simple budgetting that I add to as time goes on. I have an 'annual expenses' tab where I have a budget for each birthday and christmas gift and other annual expenses. I divide that by 12 and subtract it from each month, so I'm paying for christmas now, etc. At the beginning of the month I will look forward and think about what expenses we have that month coming up and put them in at the beginning, so the money for them doesn't get spent. Oh, I also write in October's bills in the November tab, so I start the month knowing exactly how much money is left. We have that luxury becuase we do not live paycheck to paycheck - my main concern is that I not spend more than he brings home after 401k and savings, etc, not exactly how everything goes in and out of the checking account.

The key to having it be useful is keeping on top of it, if every day you know what you have remaining for the month I personally stay more on target, no matter what the number. If its high (amoun remaining) I am motivated to be frugal and save that money, if its low I'm motivated to be frugal and not spend it all, but when I shut my eyes and don't pay attention and neglect my expense tracking, I end up overspending.