how do you budget?

[**guest**]

we just paid off a huge debt (not due to any merit of our own, but because of an accident compensation), and i'd like to have a fresh start with budgeting. to be honest, we had avoided it before, as it was so depressing and we never had enough money to cover everything, but we'ved been frugal and didn't spend much. we just didn't do any concsious 'budgeting'. but now we should have 'extras' to put into savings, and i'd like a fresh start, and would like to be more organised with money. we've never had any money left from paychecks, so this is new to us.

so do i try to be as frugal as possible and put whatever is left into savings (and we decided to have a vacation fund), or do i budget a certain amout of money for various things, and then stick to it?

like for example, do you have a strict 'eating out' budget, or you just eat out infrequently, and when you do, you do, kwim? and do you carry over?

or what about groceries? strict amount as well, no matter what, even if you have 'extra' money left from the paycheck?

or am i overthinking?

help me to have a clean fresh start! i don't want to be in debt every again!

[Attila the Honey]

Well, they say the best way to budget it to spend at least a month tracking your expenses so you can actually see what you spend on what.

But, I never wanted to just wait a month so I started by gathering all my bills, getting a calendar and writing when they were due and marking when the paychecks were coming and going from there. It took probably a good 2-3 months of this before I really felt like I had it right.

What I do is I have a strict amount for everything and whatever is over goes into an envelope for that purpose. I mean, I budget $120/2x a month for groceries. If I only spend $90 the extra $30 sits in an envelope in my underwear drawer in case we need incidentals or as a cushion. Then, if it's still there the next paycheck I theoretically have $150 for groceries, with whatever is left over going back in the envelope.

The same goes for almost everything, but if an envelope gets too big (I don't like a cushion of more than $100 for groceries) I put it in savings. If for some reason our electric bill is $10 cheaper than usual, that $10 sits in the electric bill fund as a cushion just in case it should be higher the next month.

Here are the budget categories I use (plus some extra that I thought of):

Rent/Mortgage
Savings
Food
Home Insurance
Heating
Phone
Car Insurance
Gas for Car
Netflix
Entertainment/Fun Money
Water Bill
Garbage/Sewer
Debt
Travel Fund
Clothes Fund
Car Repairs
Home Repairs
Holidays/Birthday Fund
Internet

This accounts for about 60% of our income, the rest goes into our savings until we've saved 6 months worth of expenses, and then the remaining 40% will go for dd's college and our retirement.

Hope that helped!

[lmonter]

Well, to us, budgeting is knowing exactly where every penny you've worked hard for is going - so there's no extra - it all has a purpose somewhere for something. Not depriving us of things per se though. We know how much we're saving up (not much, still chiseling away at debt). We know exactly how much of our debt we're paying off every month. We know exactly how much I'm saving up for this year's garden. And, I gotta say, since dh and I started writing everything down and sticking to our budget, we haven't worried about our finances as much. We're on the same page, know where we're going, know where we've been, and have a plan. We're not just planning willy-nilly and hoping it'll stick.

I've linked to our budget worksheet in other discussions in this forum, you could search or just snoop through my posts and find it somewhere.

We have a secondary checking account I transfer money into once a month. In there we save for irregular expenses. Things we know we're going to buy or need at some point - so we save up for them so we're ready and don't fall into the CC trap. Things like home repair, furniture replacement, vacation, life insurance premiums, car insurance premiums, car repair and maintenance, clothing replacement, blah blah blah. It works for us, though it might not for someone else.

What helps us stick to our food budget is doing it all in cash - no debit or credit card. I budget a certain amount each month for *all* food. Milk, grocery store, Costco, eating out, everything. This month it was $250 (pantry challenge, etc.). Next month it'll be $600 (we aim for $200/paycheck instead of a certain amount each month, next month is a 3-payday month - only works out to an extra $400 a year which we're okay with). I might try to make that number smaller to put more on the car, or we might do one adult dinner at the local fancy restaurant that literally floats on the water and has fantastic food. We don't include vacation eating out in the grocery budget though - that'll come from the vacation fund.

Did any of that make sense? I've been chasing after a 10mo after every other sentence...

[minimunklemama]

we just started doing the envelopes
W figured out our monthly expenses anddivided by four,every monday i do the evvelopes and if there money left from the week before i also carry it over,some weeks i only spend 90 on food but the following week it 175.i take my cc in my wallet but i haven't used it since we (apart from the kids clothes that were needed)started,we have only been doing it a month but it's working out good as we have extra money in our account this month so we must be doing something right

[**guest**]

thanks. i've been keeping track of sorts for some time, so i think i am pretty sure what goes where. right now things are much simpler than normal, let me try to break it up. we are in a housing subsidized by dh employer, so rent and utilities (Same every month) is deducted from his paycheck. we don't have a car, but we use:

'public transportation', which ranges from $20 month to $120 months, depending on the needs and on the weather.

we buy groceries once a week on-line (the cheapest choice in our community), and we rarely need to buy something in between, and it is $250 a week.

we need to be saving towards our sealift, in which we will buy most of the nonperishable stuff from costco, to last us the next year.

transportation

groceries

sealift fund

internet

telephone

savings

entertainment /fun

vacation fund

clothes fund

holiday / gifts fund

postal / parcels fund


***

okay, it is getting clearer to me. so all of these i keep in envelopes? do you find the actual envelopes work better, rather than 'virtual'?

and to assess from month to month?

but for example, is this really bad / trap if i think "okay, i can buy this thing now, using money from my savings, and i can pay it off back into my savings in 2 months"? i have a feeling what you'll tell me but if i am disciplined? or it is better to stick to it and just save for 2 months, and then buy it?

what are the traps of using a debit card? just basically being disciplined enough?

thanks so much for advice and ideas!

[lmonter]

It depends on how disciplined you really will be with it.

The reason we don't use our debit card (well, dh isn't allowed to) for groceries and such is because when you hand over cash it's more visceral and personal than swiping a card. At least for us. Makes dh think twice about whether he really needs two cartons of ice cream that aren't on my list.

[minimunklemama]

we use real envelopes,i physically have to count out the cash to go with my list,then i wont be temptedi actually leave my cc in the car when i go whole foods as my willpower just isn't strong enough for all their yummy goodies,

[CityChic]

I love this budgeting tool...hopefully its useful to you as well!

http://www.crown.org/Tools/budgetguide.asp?aid=

[rainyday]

Yes, the envelope system is all that's ever worked for us.

Using the debit card doesn't work for me because I won't ever take the time to immediately subtract what I spent from what I allotted for that category. For example, if I spend $50.65 at the grocery store, I'd need to immediately subtract it from whatever our food budget is. With DS with me, I know I just won't do it.

Instead, we do what the others have said, put cash in envelopes, and when it's gone, it's gone. After that it's debit card for emergencies only, and wanting something more exciting than beans and rice doesn't count as an emergency.

I go to the envelope system when we really need to be strict. If I just try and be careful but don't use envelopes and use the debit card, I end up spending at least $200 or $300 more every month. Sometimes that's fine, but not always!

[jkpmomtoboys]

Quicken, quicken, quicken...it helps us track everything we spend on our credit and debit cards easily. We also have a "cash" section. It's really useful in tracking...

[JenLove]

My husband and I started budgeting about 6 months ago when he changed jobs. I wrote this article to explain how we did our budget. It explains why to have a budget and then it walks you through using our budget form. Let me know what you think.

[Belleweather]

Just another perspective: I actually find it easier to have FEWER categories, with bigger amounts, and to build in some overrun. For instance, our budget looks like this:

$800 rent
$300 bills. (Includes all reoccuring monthly charges, so car insurance, heat and electric, phone/internet, Netflix and Warcraft (shutup).)
$1200 Student loan payments (mandatory)
$1000 daycare/kid expenses
$350 groceries/gas
$350 savings

Which leaves us with $1000. $800 of that goes to paying down debt faster, and the $200 is for 'overrun' -- the occasional meal out, an oil change, copays for the doc or a medicine we need, new clothes for me or DH, whatever. It's there to be spent, which makes it different from our savings which is there for an emergency or a big expense like a vacation. Having an overrun helps me to not freak out about little things and keeps me from thinking of our savings as spendable money. Plus, joint categories like gas/food and daycare/kid's stuff helps me keep thinking that if I splurge on one thing I must economize elsewhere to make the numbers fit.

[saraisabee]

I have a question about the envelope method - you keep all cash in the envelopes, right? So isn't it a pain when you go to pay actual bills, either online or by check - then you have to get to the bank to re-deposit the cash, right? That seems like trouble. Please explain the logistics.

[rainyday]

I keep cash in an envelope in my purse. The amount in the envelope is what is allocated for stores. So it's things like groceries, clothing, splurges, gifts. For gas I do use the debit card, but I don't feel the need to do the envelope thing because our gas usage is pretty consistent month to month. I don't decide to impulse buy gas.

For me it works bests to have one envelope. That way I can kind of keep track of how much total we've spent.

I keep money in our checking account to pay bills with. Our written budget is based on averages for each of our bills, and we always keep whatever we've budgeted plus a couple hundred extra in our account. Extra after what we've budgeted for all the above stuff goes into savings.

[amyb15]

Originally Posted by annabanana

we just paid off a huge debt (not due to any merit of our own, but because of an accident compensation), and i'd like to have a fresh start with budgeting. to be honest, we had avoided it before, as it was so depressing and we never had enough money to cover everything, but we'ved been frugal and didn't spend much. we just didn't do any concsious 'budgeting'. but now we should have 'extras' to put into savings, and i'd like a fresh start, and would like to be more organised with money. we've never had any money left from paychecks, so this is new to us.

so do i try to be as frugal as possible and put whatever is left into savings (and we decided to have a vacation fund), or do i budget a certain amout of money for various things, and then stick to it?

like for example, do you have a strict 'eating out' budget, or you just eat out infrequently, and when you do, you do, kwim? and do you carry over?

or what about groceries? strict amount as well, no matter what, even if you have 'extra' money left from the paycheck?

or am i overthinking?

help me to have a clean fresh start! i don't want to be in debt every again!

Honestly I try to cook cheaper meals and reduce going out to dinners. I also shop online and wait for a deal to pop up to save some money. There were 16 articles of baby clothing for $16!

[munchie]

Not a "budget", but savings help-
I give myself a certain amount of money to live off of for the week, for lunch, coffee, and so on. At the end of the week I empty out my wallet and put aside any left over. It's amazing how it can add up in no time!

[Einen]

Originally Posted by CityChic

I love this budgeting tool...hopefully its useful to you as well!

http://www.crown.org/Tools/budgetguide.asp?aid=

The calculator at this link is interesting. It's worth a look at even though it told me to spend more on clothes per month (over 10 times what I have budgeted now ) than what to put in savings!

[Einen]

We have just started (Feb was our first month) of writing down a budget limit for every category. Our categories are similar to Attila's. It has kept us from eating out at least 4 or 5 times.

[Knittin' in the Shade]

first, do not leave savings for "whatever's left" becuase invariably you will find other things to spend that money on and it'll never actually wind up in the savings account. We pay ourselves first, savings is just like another bill. We have a set amount direct deposited directly to the savings acct from each check, no hassle for us and it sits there until we are ready to invest (usually every 6 mos we pull some out and invest it in higher yield areas) If you aren't able to set up direct deposit with your DH's job, then every time he gets paid, after you deposit the check, write yourself a check from that account to your savings account.

For budgeting, write down every single thing (even the daily coffee, gum, whatever) you buy for at least a few weeks, ideally a month or more. Then categorize it all and that will give you a good estimate of where your money goes

[Just Me]

This is a handy budget planner that doesn't miss out stuff

http://www.moneysavingexpert.com/cgi...89226742,17582,

Rest of the site is pretty UK centred about credit cards and stuff, but that planner is great for anyone.

We also find using online banking and Microsoft Money very helpful. We input all our incomings and outgoings and it helps us see hotspots in the budget, and when we actually have money spare and when it just looks like e do but don't IYSWIM. Handy forecast feature too. It doesn't have to be a new version either, an old one is fine.

Motley Fool is great for info on reducing debt and lowering bills, and I find the biggest areas that are easiest to reduce are:
groceries (meal planning being key)

gas (amazing how many unnecessary trips we make using the car)

utility bills (over door airers and clotheslines reduce elec. bill by a LOT. Dryers EAT leccy like a child will eat candy) also energy saving bulbs really do work, and did you know you can hook your washer up to drain into a watering system for your lawn? My mom did that in Florida for her lawn and flowers. They took the drain pipe to the washer, hooked it up to pVC pipes they bought from the hardware store, adn connected sprinklers and drip lines. Using a crock pot for stews and casseroles also saves a bomb on electric, as does microwaving stuff. A microsteamer will use 30% less power than a stove. Notsure about the ratings on an elec steamer.

Also, after making savings everywhere else, ALL loose change should be put on a high interest debt. Even $5-$10 extra a month will drastically reduce your debt as it pays off capital.

HTH