Where to Start with Budgeting?

[sparkprincess]

Dh and I have been married almost 10 years. I'm a sahm and he's a part owner of an IT company. We make good money and don't have much debt ($3k right now), but we are living paycheck to paycheck and I think that's ridiculous considering what we make.

We have a REALLY hard time tracking our money. I have heard people mention an envelope/cash system and I'm curious to know how this works. Can we continue to pay our bills online (automatically deducted from our account and then get the rest in cash and divvy it up? How should we go about this?

[sabrinat]

Originally Posted by sparkprincess

Dh and I have been married almost 10 years. I'm a sahm and he's a part owner of an IT company. We make good money and don't have much debt ($3k right now), but we are living paycheck to paycheck and I think that's ridiculous considering what we make.

We have a REALLY hard time tracking our money. I have heard people mention an envelope/cash system and I'm curious to know how this works. Can we continue to pay our bills online (automatically deducted from our account and then get the rest in cash and divvy it up? How should we go about this?

I just started using the system called mvelopes it's a virtual envelope system that interfaces with your bank and helps you keep track of your budget and spending. My biggest motivator was like you we make good money and I feel like we should have more savings than we do. My friend has used it for 3 years and it's helped them save a ton. There's a free trial for it. It's also recommended by Crown Financial (I think that might be Dave Ramsey's group). I've used a budget book/real envelopes before but I kind of like seeing everything online and the bank interface better.

[KariM]

We use the envelope system and we do pay our bills online first.

The way it works in our household is DH gets paid on the last day of the month. He then schedules/launches the online bill pay. All the bills are paid. We transfer into savings the money that we budget for savings as well as all of the budgeted items that don't get spent monthly.

Our personal allowances, grocery money, and gas money come out in cash and get put in envelopes. Pretty much everything else goes into savings or goes out in paying bills.

[Cajun~at~Heart]

Originally Posted by sabrinat

It's also recommended by Crown Financial (I think that might be Dave Ramsey's group). I've used a budget book/real envelopes before but I kind of like seeing everything online and the bank interface better.

Crown Financial is not Dave Ramsey's group, but it shares many of the same money principles. They offer a course similar to Dave's Financial Peace University.

We pay bills online, use the debit card for gas and online purchases only, and use cash for the rest of our spending money. I started out w/ DR's envelope system, but upgraded to something larger. I now use a wallet size poly accordian file that I got from the office store. The first few months of the budget and using cash only was tough since we used to put everything on our Visa and then pay it off every month. It's amazing how well it works now that we've used it for almost a year.

[2M's Mom]

We are in a similar situation. We have been looking closely at where our money is going, and it is not the big stuff. It is STUFF. So, we do the envelopes (a friend IRL does it and has been really successful at it). At the beginning of the month we get cash and put in 5 envelopes. DH, me, Kids, Household, and Food. IF I am somewhere I need to use credit or ATM, I come home and take that $ out of the envelope and put it in a 6th envelope, which is for paying the CC or paying our bank account back.

The personal envelopes are working really well for us. We are only on our third month, but the household and grocery are slower going (trying to figure out how much to budget for those).

[BMG580]

I'm in the same boat. I am interested in the envelope system too. Thanks for the link!

[Benji'sMom]

What we did was first of all, we kept a receipt for everything we bought, EVERYTHING, for a month. If we didn't get a receipt we wrote it on a slip of paper. (Or you could do 2 months and average them together, whatever you want.) So then we wrote a list of how much we spent, with different catagories like groceries, eating out, gasoline, electricity, cable TV, etc. So then what we tried to do is figure out how to decrease the amount we were spending in each chatagory if possible. To prevent us from buying too much useless "stuff" we give ourselves a cash allowance. To stop wasting money on food we take cash to the grocery store. We do still pay bills online or write a check, but the only money in our checking account is for those types of bills. Some people don't do cash but they keep track of everything on a spreadsheet. That wouldn't work for us though because DH would forget to imput anything he spends.

[monkey's mom]

I think writing down the day's spending at the end of every day is the place to start.

Just as simple as:

3/17 Gas $20
Lunch $11.50
Bottle H20 $1.09

3/18 Newspaper $0.27
Candy bar $0.67
Iced Tea $1.32

For me, this works better than just stuffing the receipts in an envelope b/c it actually forces me to stop and consider what I've spent that very day. If you haven't been keeping track, you will likely be SHOCKED at how quickly the pennies and dollars add up. What I used to spend in a month at Starbucks would give me a heart attack now--but b/c I wasn't adding it up, it only seemed like a few bucks here and there. And truly, it was. But that adds up!!

Anyway, at the end of a week or month you can categorize things as you like and sum up the total spending. From there, you can decide what is reasonable and what is too much.

At the beginning of the next week or month you can set those goals: like $30 for eating out/snacks; $150 for gas; etc.

Then as you go, you can tally along like $14.23/$30 for eating out. The first number is where you are and the second is the max you'll spend. Or you can set up some sort of Excel worksheet that will auto deduct as you enter the figures. Or do it by hand. Or whatever.

But there is a max and you will adhere to it (barring some emergency or miscalculation of what your normal spending is). And at any given point, you can quickly figure out that you've got $7.18 left for snacks....or whatever....and decide from there if the $4 coffee is in the budget and/or worth it based on what you've got left to spend for the month.

I've found the No Spend Challenge thread to be an awesome way to track my spending and be accountable--just to myself! So you might want to join or lurk there.