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How did you get started budgeting?

How did you get started budgeting?

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  • rudolphia rudolphia's Avatar 01-12-07 | 01:49 AM
  • We are preparing for the possibility that it will be just too difficult to keep working with a little one (and once we have a second baby, I definitely plan to stay home). I've been lazy about planning because we've been fortunate to have plenty with both of us working. I know we've wasted plenty of money and can live on much less. So I want to put together a draft budget, but not sure where to start.

    The good news is we have no non-mortgage debt and already have a great start on college savings. And because I've been contributing the maximum before-tax to my 401k for a while, I should be fine on retirement savings.

    One thing that complicates things is that we will have additional expenses when I quit. For example, I get a company car, and the insurance and gas are included. Also, I'll have to get my own cell phone, as work provides that.

    Thoughts?
  • the_littleminx the_littleminx's Avatar 01-12-07 | 01:54 AM
  • I don't have any tips, but I'm looking forward to seeing what replies you get. Lord knows we could all use some every now and then.
     
    Also, good luck in whatever you end up doing.
     
  • Dopey406 Dopey406's Avatar 01-12-07 | 10:58 AM
  • We started budgeting because we really need to get out of debt. We got Dave Ramsey's The Total Money Makeover book from the library. It has 7 Baby Steps for achieving financial freedom and building wealth. The steps are as follows:

    1. $1,000 Emergency Fund (this is in preparation for Step 2).
    2. Debt Snowball
    3. Full Emergency Fund of 3-6 months' worth living expenses--note that this is NOT 3-6 months INCOME--just living expenses.
    4. Invest 15% of household income into retirement (IRAs or 410k)
    5. College funding for children
    6. Pay off home early
    7 Build wealth and give, give, give.

    As you can see, you're already ahead in some of these steps. Because you are entering into SAHM-dom without debt other than your house, you're in an enviable position. We still have $15,000 to pay off our debt before we get to that stage.

    I would suggest taking a look at
     
    for information regarding budgeting. He has Quickie Budget sheets and Cash Flow plans that can help you get started.

    Also, getting his book from the library is a great way to read through his philosophy and realize why so many people have committed to his approach to securing your future for yourself and your family.

    We have found amazing freedom with this plan and have successfully lived on a budget for more than a year now. We would probably have a little bit more spending money if I took a job, but the sacrifices of stayong home are worth more than ANY job I'd ever take. I don't think you'll regret it!!
     
  • Janine Janine's Avatar 01-12-07 | 11:45 AM
  • We started budgeting when we moved in together because we have 2 seperate checking accounts and we needed to figure out what bills needed to be paid out of which account. ( I had a bankruptcy pending that kept me from being able to be added to his bank account, and we've just been too lazy to change it yet.)

    We made a list of our reoccuring bills and every month we update the amount and the due date. Then we divide out what account we are going to pay them out of ...( Our ultimate goal is to be paying for all bills out of Dh's account because he only gets paid once a month, and then use my account for gas, food and entertainment-we shoudl reach that point next month!)
    We decided that we need a minimum of $150 week for food and gas, but like to have closer to $200. We print it out, cross off the bills as they get paid, so nothing gets overlooked. ( we found out that is easy to do when we get a lot of statements online!)
    At the bottom we make notes of things we need to make extra payments for, large nonreoccuring expenses (like tagging a car) and large purchases we'd like to make with any "left over" money. That way we have a goal to work towards each month. It feels good to cross the bills off, and we are staying motivated to save money for the extra expenses.
  • Dopey406 Dopey406's Avatar 01-12-07 | 12:10 PM
  • I suppose I should have EXPLAINED what we do, right?
     
    Sorry.

    DH gets paid on the 15th and the last day of the month. We have a "budget meeting" twice a month with his check is deposited into our account. On our bulletin board we have a
     
    with the months across the top and the bills listed down the side. The top four bills get paid out of the first check and the bottom four bills get paid out of the second check, based on the due date.

    The first thing we do is pay the four appropriate bills online. Then, using Quicken, we make sure that the bank balance matches our balance. Once that's done, we move to an Excel spreadsheet. We list all of the things we know we'll need to buy for the next two weeks.

    The DEFINITE categories are:
    Groceries--$130
    Diapers--$50
    Gas--$50
    Dining--$30
    Miscellaneous--$25


    Then we PORK BARREL any other anticipated expense. These might include things like:
    Haircut--$30
    Sam's Memory Box--$100
    Sewing supplies--$25
    Postage for Gift to Cleveland--$5
    Emma's birthday gift--$15

    ...and any other thing we can think of that we'll need money for until we get paid again.

    Then, Excel subtracts all of those expenses from what we have left after paying bills. THAT is how much we take out of the bank in CASH. We use envelopes from the bank and write the category on the bottom of each, then fill it with the appropriate amount of cash.

    Any other money leftover goes DIRECTLY toward our debt payment. In order to be out of debt by Christmas 2007, we have to average $1300/month toward debt. So you can imagine that we're living frugally. But this system works amazingly well for us.


     
    is another post that might explain our process more clearly. It does take a little bit of perseverance to get into the swing of it, but once you do, it's GREAT!!
     


    HTH more than the first post.
     


    ETA: It probably sounds very complicated and lengthy, but it really only takes us about an hour, twice a month to do the budget. The most amount of time is spent sitting around trying to think of Pork Barrel needs so we don't underestimate what we'll need. So don't be afraid!!

    Last edited by Dopey406; 01-12-07 at 12:20 PM..