Comments on: Budgeting 101 – Part 2

By: Jon

Jon — Sat, 20 Sep 2008 15:23:40 +0000

I struggle budgeting when prices continue to go up. How do you account for utility bills that may go up 10% in a few months? I found this site http://www.utilitybillassistance.com which gave some ways and programs that help save on utility bills, both from the gov’t and utility companies themselves. It is OK site, but looking for my tips. Do you have any other ideas, sites or programs? My heating bill just keeps going up and up. Thanks

By: Patti

Patti — Fri, 29 Aug 2008 07:45:17 +0000

I have been married for 32 years and we have used a written budget the whole time. It is fun for us to go back over the years and see where our priorities have been and how they have changed! The biggest thing about using a written budget and discipline is that you are in control of your money – it does not control you. Talk about freedom! We have been able to weather several crisis situations that could have bankrupted us if we had not had money set aside for emergencies. And I can’t emphasize enough that compound interest does add up – even if you just save a little bit each month. So many of our friends have let “life” interfere with their savings and now have nothing to show for a lifetime of work. We are so very glad we started that habit – I think it was $25.00/month the first year we married. Now we are facing my son’s college tuition and our future retirement with confidence and joy.

By: BarbaraLee

BarbaraLee — Fri, 29 Aug 2008 07:13:39 +0000

I am fine tuning our budget since dh has been working o/s the home.
One thing I would like to ask is about tithing. Do you tithe before you pay your bills or before?

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Money Saving Mom here: Yes, we personally have always tithed off the top–it’s the first thing that comes out of our budget since it’s the biggest priority to us. However, I’m not here to split hairs over how people should tithe, I’m just encouraging people to take the step of faith and do it! You’ll be blessed in giving, even from a very limited budget.

By: Melodie

Melodie — Fri, 29 Aug 2008 07:12:52 +0000

My husband and I have been tracking our finances in a very detailed fashion for the past–well, nearly two years. Before that, during our first year we were careful with finances, but not so detailed with our budgeting and tracking. Now, we have been able to become much more aware so that we are able to save more and plan more for the bigger things that are really important.

We are debt free at present minus a few interest free hundred dollars we are paying my father-in-law to finish off paying for our first vehicle. But with our family growing rapidly, we are going to need a new-to-us vehicle soon and will likely take out a small manageable loan for that. (I am looking forward to your discussion about that sort of thing later. At this point not going into debt seems out of the question for us, but I eagerly await your challenges to the contrary.)

Crystal, the only thing that I would do differently than what you have suggested is (and don’t take this wrong) use a credit card. Reason? We get cash back for every dollar spent. We get 3% back on all grocery items, 5% back on all gas dollars spent, 1%-3% on all other items. We even get cash back on paying our taxes and utility bills with the card. We use our cards as if they were checking account cards ,and we pay careful attention to each purchase made, recording each one and evaluating them as we go. I realize this might be a struggle for some to keep track of and thus could be a temptation for debt; but for us, it is an investment that is worthwhile. We have gotten free hotels, car rentals, clothing and home improvement gift cards, grocery items, money off of our monthly bills, even restaurant certificates for our anniversary celebrations . . . all based on what we spent on our cards per quarter. There are even perks for purchasing online with some companies offering anywhere from 3%-20% cash back for ordering their products through that credit card’s website. We watch for sales at those places, put our orders in and have the stuff shipped to the stores so that we don’t have to pay shipping. It is a bit tedious, but the interest is better than a savings account, and it is based on our out-go versus our income.

By: Stacy

Stacy — Fri, 29 Aug 2008 00:43:06 +0000

When we started budgeting, one of the first things we did was to take one month and write down every penny that we spent in a notebook, and what it was spent on. At the end of the month, we sat down with our notebook and divided everything into categories.
Many people are really surprised the first time they do this.

By: A Classic Tale

A Classic Tale — Thu, 28 Aug 2008 20:50:28 +0000

I’ve also done the cash envelope system and at times it works well. You are less likely to pull out cash to buy something unnecessary and it’s so easy to reach for the debit card. I have to say though I think that with three kids and a busy lifestyle, it’s harder to keep track of where our expenses go with the cash only idea. I always have the best intentions, each month, to keep track and save receipts but most often don’t have the time or discipline to do so. We do budget and write out what we allow for each category, we just keep track weekly in a register or by checking online info. I’d like to know an easier way of tracking. Anyone have a suggestion?

By: Susannah

Susannah — Thu, 28 Aug 2008 19:55:53 +0000

I think I budget by actually paying the bills on the day we get paid. Because I use online billpay (free through the bank), I can sit down, type in all the amounts for everything on my list, click “done,” and the bank does all the rest for me.

I don’t have a “clothing” budget. Anything extra goes for food and gas. I am striving to do the cash thing you mentioned: withdrawing a certain amount for food etc., and living on that.

By: Lisa

Lisa — Thu, 28 Aug 2008 19:00:49 +0000

I am a newbie to your site and love it. As a loan officer by day and a volunteer finacial planner at my church I wanted to applaud your post. Great points that you have given.

I really appreciate you mentioning a tithe. Though not required as a Christian, we are asked to give our first fruits to the Lord. The Bible also mentions that God asks us to test Him with our money. He will provide if you are putting Him first on the budget.

Thank you again for all your money saving tips. I am quitting my day job to become a SAHM and I know that your ideas will help make the transition a lot smoother.

God Bless you!

By: Mel

Mel — Thu, 28 Aug 2008 18:15:12 +0000

I just recently found this amazing site. I absolutely love it! Thank you for all your hard work!!
My husband and I have been married for 3 years and we have had a budget the whole time, which has given us so much financial freedom (we both had one when we were single too). We also firmly believe in giving to the Lord first, even when things are tight!
I do have a question though. This past year we have been hit with many financial trials. I was recently diagnosed with a chronic disease and the medical bills for just the diagnosis were over three thousand dollars. At the same time my husbands car starting having troubles which cost over two thousand dollars to get it fixed. We did not have enough in our emergency fund to cover all of these expenses and we felt like we had no other option but to put the bills on a credit card and then to start chipping away them
My husband and I hate credit cards too, but at the same time what do you do when you have major unplanned expenses that are just way over your budget?? Any thoughts??

By: Lyn

Lyn — Thu, 28 Aug 2008 17:18:48 +0000

I totally support your advice, Crystal. It has taken almost 5 years for us to get out of consumer debt. It was a hard road. It’s easy to think “oh, I’ll just charge this small amount” and then things add up – unexpected medical bills, car repair, etc. Add in a job loss or two (which is what happened to us) or an ill or injured spouse and now you have a balance that you cannot pay in full.

Unless you have a significant amount of savings to fully pay off a balance if such a life challenge should arise, I would not even suggest to use credit cards. Does anyone really think the credit card companies are trying to do you a favor? No, they want you to continue to charge for every little thing that you can, with the hope that at some point you won’t be able to pay the minimum, and then they can trap you. They are out to make money, they are not out to make life better for you. They psych you out by allowing you to think that you are really getting a deal, when in reality people may be shopping more than they need to in order to get that percentage back.

I also totally agree that by living frugally, I can save so much more per month than I could by charging expenses on a pay-back percentage card. Even better? Shop for true needs, stay away from catalogs, online shopping and going to the mall. That alone saves a ton of money for us!

By: Kristen@TheFrugalGirl

Kristen@TheFrugalGirl — Thu, 28 Aug 2008 15:22:53 +0000

I do like Sherri does. I wouldn’t recommend the credit card route for most people, but it works as long as you are really disciplined about it. I’ve gotten hundreds(actually, into the thousands) of dollars of rewards over the years by operating this way.

By: Kimmyannangel

Kimmyannangel — Thu, 28 Aug 2008 14:55:01 +0000

I used the “envelope” type of budgeting for a few years (while my husband went back to school), but found that it took too much effort and I stopped doing it. Needless to say, our budget suffered. I have found an easy alternative that I’ve been using for three years now. We have two checking accounts, one called Payments and one called Allowance. Every time my husband gets paid (every two weeks) we have $400 automatically transferred to the Allowance account. The Allowance account is used for all expenses except the mortgage and utilities (we have no car payments or credit card debt), for example, groceries, gas, clothing, medical, etc. I use a debit card to pay for everything out of the Allowance account, but when it’s gone, it’s gone. We also have an emergency fund and a gift/Christmas fund. That way I’m not making lots of trips to the bank to get cash and trying to keep things sorted into envelopes (how do you differentiate between groceries and clothing when you shop at Super Target?). It works great and is easy, easy, easy! Also, I would like to add my support for paying a tithe to God. The blessings will follow!

By: Sarah

Sarah — Thu, 28 Aug 2008 13:54:32 +0000

One thing I think we forget when the word ‘budget’ is present is how freeing a budget can be. Granted I’m a tightwad when it comes to many things; I’m pretty good at keeping costs down and telling myself I can’t have stuff. What I’m not good at is allowing myself things that make me happy (travel, family fun, giving generously, etc.) or things that I genuinely need, unless I’ve budgeted for it.

I live in Alaska and our shopping options are pretty limited. When I visited family last year, I took along a list of all the clothing my husband and I needed for the coming year. I went on a two day ‘shopping spree’ spending our budgeted clothing allowance. It was fun because I was getting things I needed/wanted and very satisfying because I was able to get everything on my list within our budget!

And last year when my mother-in-law announced she was coming to visit, I added a travel category to our budget. We had a wonderful time with Mom, because I had planned the activities we wanted to do and budgeted for them.

My budget *allows* me to spend money while living below our income.

By: Jennifer

Jennifer — Thu, 28 Aug 2008 12:59:59 +0000

I’ve been reading your blog since we moved to the States and I find it very informative, helpful and interesting. My husband and I have been incredibly strict budgeters since we got married – we were forced to in some ways as I moved to Australia to be with him, couldn’t work (because of a visas) and we had to live on one income. I was lucky and didn’t grow up having to budget every cent, but he did, and I quickly changed my ways, and thinking. We look at our budget as a “working document” and it is reviewed at least each week, if not more frequently (I’d actually recommend new budgeters look at their’s every day in the beginning). I’d like to suggest a few additional things to think about when setting a budget:
1. Don’t put a category called “miscellaneous” which we did for the first few years. We’d put about $50/month aside (we were paid monthly) for Misc and found by the end of the month we had spent $100 in Misc. We realised that EVERYTHING should have a “real” name – and soon we weren’t spending that $100 anywhere!
2. Inevitably you’ll want to buy presents throughout the year (birthday, new babies) and Christmas. Every January we sit down with our calendar and map out the birthdays we need to buy for, Christmas, etc and come up with a budget for each individual, the occasion and then the total amount. We divide it by 12 (the number of pays we have) and set it aside in our bank account each month. Then when I’m out and about if I find something on super sale that I know is perfect for someone – I have the money there to buy it. This way I’m not running out at the last minute and spending four times the amount for something not on sale the day before their birthday because I forgot!
3. Our latest thing is couponing. As we don’t have coupons in Australia, I’m getting into it here in the States. I only use coupons on items that I would buy normally – so the savings is a bonus. I think add up the total saved each shopping trip and set it aside in our bank account. As I would have bought the item anyway, the coupon, for us, is viewed as “extra” savings. I know this is not the case for everyone. At the end of a 6-month period we are going to take that “extra” savings and use it for investments.

I would like to encourage anyone sitting on the fence about this budgeting thing to definitely try it. We have a couple who are our good friends who are heavily in debt (due to credit card spending and just bad financial decisions) – yet they continue to put off making and sticking to a budget. They keep saying “we’ll do a budget when our debt is paid off”. This is such, in my opinion, a backward way of looking at it – they need a budget NOW more than ever! Work your current debt payments into your budget and it will disappear before your eyes.

Good luck!

By: Jessica

Jessica — Thu, 28 Aug 2008 12:47:50 +0000

I am also a ‘rare’ one I guess, in that my husband and I earn money from our credit cards. We have never paid any interest or late fees. We only charge what we would normally buy. I live in a large city and simply do not feel comfortable carrying more than $20 in cash. Plus, my work place requires direct deposit, and my work hours don’t coincide with bank hours, and oddly enough, there is no atm near work! I use my Meijer card, and the rewards are “meijer bucks”, which equals free groceries. Our only debt is our mortgage, which we are paying off extra on the principal each month. If we continue on our current track, we’ll have it paid off after 7 years rather than 30! That assumes we both continue working full time and paying off at the same rate. However, we’d like to have another child in the next year so we may not be able to continue paying off so much on the principal. But as long as we can, we will. It also helped that we bought much “less” house than we could afford. Our house is not in the best neighborhood, and doesn’t have the best ammenities, but it is good enough for now.

By: Kasey

Kasey — Thu, 28 Aug 2008 11:47:42 +0000

I remember reading a story during our first year of marriage about a man who was in his forties with a wife and 3 kids, and was desperate because they were barely making ends meet. It hit home with me, because my family had been that way growing up, and I was currently in that state with my husband.

At that moment, it hit me like a lightning bolt- if I wanted my future to be different, I had to be the one to change it. Just sitting around waiting for a better paycheck or to win the lottery wasn’t going to get me anywhere!

That was when I started budgeting. We made a plan to pay off all our consumer debt, and buy a house. Now we have been married for 6 years, and we are completely debt-free with the exception of our home, which is big enough that we should be able to stay here until our kids are grown. We are on a bi-weekly payment plan with our mortgage, and we are paying 30% extra on it every time, so we are on track to have it paid off in 11 years.

We are also quickly building our emergency fund, and we should have that in place within a year, and we have both a 401k and some stock investments with my husband’s company that are growing steadily.

All in all, it feels so good to have financial security, and to know that at 26 I am better off financially than my parents were at 45. Money trouble is one of the big reasons their marriage failed, and it is reassuring to me that my husband and I have an open money relationship- we talk about it and we get excited about our financial future.

You know the saying that “Nothing tastes as good as being thin feels”? Well, I believe that nothing of monetary value is worth as much as the feeling of being financially secure. My husband’s income is only marginally higher than it was when we met, but we are now putting that money to work for us through our budgeting, and it feels GREAT!

All I can say about a budget is DO IT! That which doesn’t change stays the same. If you are not happy with your financial situation now, the only way it will change is if you do something about it.

By: Marli

Marli — Thu, 28 Aug 2008 10:58:50 +0000

Pastor of Gateway Church in Southlake TX and author of The Blessed Life speaks about tithing and giving. He discusses why it is so important and how it can bless your life http://www.theressomuchmore.com I highly encourage you to visit and watch these messages. It is lifechanging.

By: Jamie

Jamie — Thu, 28 Aug 2008 10:52:55 +0000

I was introduced to Dave Ramsey through the radio program and eagerly bought his book before I was married. We struggled with the envelope system in the beginning when our standard of living increased from small town living to big city living and we did not have a consistent flow of income. Last month we decided to take the challenge again after the majority of our debt has been paid off and we saved $650.00 in August!

By: Joye

Joye — Thu, 28 Aug 2008 10:47:14 +0000

Your site is such a blessing. I continue to come here everyday for new and useful information! We have tried to follow Dave Ramsey’s teachings and for a few months is was working but I got lazy…I have to get serious again and you are helping me move forward! My hubby and I are both spenders by nature (we were raised to spend…bad!) but we are both realizing that we are too young to have this much of a financial woe…so we are working to get everything back to debt free. I look forward to your next post, and plan to go home tonight and show this to my husband – we can make the list together!

By: Sherri

Sherri — Thu, 28 Aug 2008 10:44:12 +0000

We must be some of those “rare” people you mentioned. I DON’T buy extra things just because I’m using a credit card. I used a cash system for several years before we switched over, and I have not noticed any difference in my spending (with 3 kids now, I’m probably tighter now than I was before). My credit card also gives me some freedom- if on Friday I find boneless skinless chicken on markdown at 99 cents a pound (and I have), then I can still buy 12 pounds of it without being “out” of cash. I budget monthly instead of weekly- that gives me the flexibility to get a good deal whenever it happens to come up.

So, I’m with IVY- my credit card saves me money. We get about $20 back each month by buying the things I would have bought anyway.