You Need A Budget {Part 3}

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Part 3: It All Comes Together..

Happy Monday! And it’s now March–already. Have you gotten your budget ready yet? Well, this is the final part of the You Need a Budget Series, which means you should have decided why you need a budget and what categories you need and how to figure out your monthly income. Today, let’s talk budget amounts.

Of course you know some things like your mortgage and your phone bill, car insurance– anything that is the same amount every month.

Things like electricity and water you may have to estimate until you have a better idea, unless you can see what you spent over the last year. I average it out for the year and budget that amount monthly. Some months it will be a little less and some it will be a little more but you will have money accumulated in that budget category for the “more” months from the “less” months.. does that make sense?

I would take everything but the groceries, eating out and entertainment budget and subtract it from your monthly net pay (ours will be $3,000).

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So in this case, you’d have $662 left for groceries, eating out, entertainment and any kind of savings and/or debt you had. I would budget $400 for groceries, $40 for eating out and use the rest as savings and/or a debt snowball on that car payment. 😉

That will all just give you an idea though. I’m visual so I like to show numbers with what I’m talking about it. I think it’s really important to budget to $0 though. If you have $10 left in the budget, call it “savings”. If you leave it, it will get spent!

Another really great tool for this to give you some perspective is this budgeting tool that Dave Ramsey has on his site. Each category has a little drop-down that explains what would fall under each category. I wouldn’t just use this, but I do think it’s a neat tool to see what you are “supposed” to be spending with your income level.

Isn’t that neat? Budgeting doesn’t have to be such a pain though. Of course, it’s annoying when you run out of money before you get to the end of your budget.. but you only have what you have. Unless you want to be rolling around in credit card debt, of course. I take it as a challenge though.. for instance, I want to get our grocery budget below $400. Every month we seem to be pretty much right at $400. I’m challenging myself to do less convenience stuff, even though we do little now, and just be more frugal with it and get it down. Even if it’s only to $380 every month! That’s an extra $20 for our Snowball! 😉

And you all know I’d recommend YNAB to keep track of it all. 🙂 Here’s my referral link if you’re interested in getting $6 off the purchase price. There is a 34 day free trial to give it a test run if you aren’t sure, also.

Have you got your budget planned and ready for March? Are there any other aspects of making a budget I could touch on that would help you? 

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You Need a Budget {Part 2}

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Part 2: Now What?

Happy Hump Day! Hopefully you have had a chance to sit down, by yourself or with your spouse, and decided WHY you need a budget and what categories are appropriate for your budget. Now things get a little more detailed, because you have to actually figure out how much money you have to budget with and how much to budget for each of those categories.

Of course, you could just go and put in numbers for every category because that’s what you think they should be and try to stick to them. But if you budget $200 for groceries and then 2 months from now, realize you are actually spending $500 a month, you may just give up budgeting right then and there.

Obviously, I like numbers and budgeting– give me my YNAB and a spreadsheet and I can sit here for hours– I know I’m a nerd. But since everyone is not that way.. I’m going to tell you the way that I think would be best to get started for this step. It will take you a while that first time of doing it, but then you’ll see what you are spending and should only need to update your budget from time to time.

So, again, I’m going to give you my little plug for the budgeting software I use, YNAB (You Need A Budget). This link is my referral link and will give you $6 off your purchase. Unless you are really good with spreadsheets or love writing a bunch of stuff down, I think it’s the easiest way.. I’m telling you. If you aren’t sure, you can always do the 34 day free trial to see if you like it.

Monthly Income – how much money do you make?

 

If you are paid monthly this is a super easy step for you. However, since most of us aren’t you’ll need to get out your calculator.

So if you are paid weekly and your paycheck is $750 you are going to get 52 paychecks a year for a total of $39,000. Either you can be conservative and budget for the at least 4 paychecks you’ll get every month which will be $3,000. Or, you can divide the $39,000 by 12 months for a total of $3,250 a month. I prefer to be conservative and plan on the $3,000 a month and have 4 “extra” paychecks throughout the year to make large snowball payment with or build up savings.

Maybe you get paid every 2 weeks though, or bi-weekly and your paycheck is $1500. That means that you get 26 paychecks a year. Either you can be conservative and budget as if you make $3,000 a month or you can take your annual net pay of $39,000 ($1500 x 26 paychecks) and divide that by 12 months and come out with $3,250 monthly. Like I said, I prefer to be conservative and plan on the $3,000 a month and have the 2 “extra” paychecks throughout the year to make large snowball payments with or build up savings.

Lastly, you may even be paid semi-monthly, which I was at my last job where I was paid on the 15th and last day of the month every month. I’m not sure if it’s the same everywhere, but based on the $39,000 annually my paycheck would have been $1,625. There is no need for a judgement call on how to figure it here, because you’re guaranteed 2 paychecks every month this way which would total $3,250 monthly.

But, what if you have irregular income? You’re paid hourly and aren’t always guaranteed the same amount of hours or tips or commission or whatever. Well, in this case you’ll have to be a little more creative. This is the way I would do it. If your pay is not seasonal, meaning you make more in the Summer because of whatever industry you work in, then I would see how much you made over the last 2 or 3 months. Let’s say in December your paychecks totaled $3,275 and in January they were $2,850. The average of those is $3,062.50. This one will take a lot of judgement on your part. Because I am conservative, I would do my best to budget on the $2,850.

Basically, if your pay is irregular, I would budget on what you know you will get. If you have $3,000 worth of expenses budgeted, and only make $2,800 that month you’ll have a hard time so go with what you know and use the rest as a bonus 😉

How will you budget your income– conservative like me or with the higher monthly amount? 

 

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Month 4 of Our Journey to Become Debt Free: April 2013

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This is the fifth post in Our Journey to Become Debt Free series. To read more of them, visit this page.

 

April was a good month for our debt free journey. Nothing special happened, but we were able to Snowball a pretty good chunk of money by sticking to our budget. Here’s a rundown of what we’d contributed to our debt payoff through March:

Debt Payoff Progress through March 2013

And here’s where we stood at the end of March:

Debt Balances through March 2013

In April, I had to pay the final $50 to close out our contract with Dish Network now that we had returned all of the equipment to them. Since I had decided I wanted to keep groceries around $440, it had pretty much been a breeze. In April, I spent $442.80 on groceries. Of course, I estimated what I really thought we could do, but I was very pleased with our ability to stay within the $440 budget.

We added another line item to our budget in April. It’s what we refer to as “Blow” money. Basically, it’s a weekly or monthly allowance of a certain amount that you can kind of spend on whatever you want. We were already spending the money, so we hoped that by creating a budget item for it and limiting it to a certain amount would help with some of the frivolous spending. We decided on $160 for the month, which was $20 each per week.

The stomach issues I went to the doctor for in March ended in a Colonoscopy in April, so we paid $598.17 towards that, mainly using the leftover $515.74 from March’s Snowball.

We were also able to make a $664.27 payment on the Chase and redeem points for a $25.98 bill credit. That brought our Chase down another $690.25!

Isn’t it crazy?! A few months earlier we were adding to our credit card debt every month and now we’re making $500 and $700 payments on those credit cards every month!

Do you have a realistic budget? Would you benefit from budgeting software like YNAB ($6 off here)? What’s keeping you in debt?

 

Month 3 of Our Journey to Become Debt Free: March 2013

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This is the fourth post in the Our Journey to Becoming Debt Free series. To read more of them, please visit this page

 

Let me start by saying that I am absolutely loving the feedback I am getting on this Our Journey to Becoming Debt Free series. It is great to think that I am inspiring someone else to tackle their own debt to better their life. I know several of you have even started using You Need A Budget. (If you use my referral link here, you’ll save $6!)

Like Dave Ramsey says, if we’ll live like no one else now, later we’ll live like no one else.

We’re a little bummed right now about our debt payoff though, to be honest. As I mentioned Monday, Lucas had an overnight hospital stay this past weekend. Obviously, I know that it was necessary.. but I feel so defeated. Who knows how many months the bill will add to our journey!  I just need to remember to be thankful that Clint has a job that provides such a great insurance plan. Help me remember that when I get the bill, please?

So, let’s talk about March. Here’s what we looked like at the end of February:

Total Debt Month Ending February 2013 Clint gets paid bi-weekly, so twice a year he gets 3 paychecks for me to budget towards one month, instead of the usual 2. March was one of those months for us which meant a nice Snowball.

I hit just a little bit under my $440 grocery budget in March, coming in at $438.42. Go me!

We used the rest of the tax refunds and some of the Snowball and made a $500.00 payment on the Chase. I also finally went to the doctor to have some stomach issues I’ve had going on for around 3 years looked into, so we had an extra $175 in co-pays.

After all of that, we still had another $515.74 to Snowball. But I’ll admit it, I was scared. The idea of throwing every extra penny to debt is hard for someone who has always tried to save, which is silly because what’s the point in building a savings account while you’re building debt on the other side of your finances.  But I was scared, so I held onto that $515.74 into the next month. Don’t worry though! We reaffirmed our plan in April and used every bit of it. Come back next week to read about that.

Do you have a “savings” and debt? Why not just put that savings onto your debt? What do you think about the concept?

 

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Introduction to The Journey We’re On {Becoming Debt Free}

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This is the first post of The Journey We’re On {Becoming Debt Free} series. To see all posts in this series click here.  

In January of 2012, Clint and I found out that we were pregnant. We were ecstatic! Our original plan was to get pregnant around June or so, but God had other plans for us I suppose. Since we were planning to get pregnant, we were putting a little money aside in preparation, but not much. So with my excitement, came anxiety.

We started putting aside another $300-$400 each month, which was to pay medical bills and buy all the baby things we would need. Eventually, we needed more than we were saving, so we put a little on credit cards. When we decided to transfer our care to a midwife at the very end of the pregnancy though, we had to pay her immediately, so that also went on a credit card. Then, as we added a new member to our family, we had also added several thousands in credit card debt.

But let me back up a little. When I did finally decide that I did want to have children and Clint and I decided that getting pregnant during the Summer of 2012 was a good time, we also discussed me being a SAHM (Stay At Home Mom). If I was going to have children, I wanted to be home with them to raise them myself. I know not everyone thinks that way, and of course, I’m not knocking anyone for the way they do things… but that’s what we wanted.

Once we got the surprise positive on the pregnancy test, I stopped dreaming about being a SAHM and started looking into an affordable childcare option. I mean, we have car payments and a mortgage to pay and my salary helps pay them.

At the end of 2012, when Lucas was a few months old, Clint got tired of hearing me complain about being a WOHM (Work Out of Home Mom) asked me what it would really take for me to stay home. I started researching and making spreadsheets like crazy and really cracking down on our budget. Our budgeting software, You Need A Budget (YNAB) was extremely helpful for this! Click on this link for a $6 discount on the YNAB software.

It was during this time, that I found Dave Ramsey. After researching Dave Ramsey’s steps a little, I read his book [amazon-product text=”The Total Money Makeover” type=”text”]1595555277[/amazon-product], which I absolutely recommend.

[amazon-product align=”center” alink=”0000FF” bordercolor=”000000″ height=”240″]1595555277[/amazon-product]This is when I had my epiphany: I was never going to be a SAHM with all of the medical bills, credit card debt and car loans we had accumulated. Clint wasn’t sold on it at first, but has definitely come around. We’re not super strict DR (Dave Ramsey) followers but we do apply several of his principals and terminology to what we do.

Since January of 2013, we have sold a car, bought an older car, sold half of our furniture, bought cheaper furniture, and sold off almost every single thing in our house that is not used on a regular basis and paid off a large chunk of debt!

paidoff

Over the next several weeks, in this series, I am going to share (in detail) exactly what we’ve done financially and how we’ve accomplished it. Since we aren’t yet debt-free, I will also post a ‘progress report’ at the beginning of each month showing you what kind of progress we made for the month prior. If you don’t want to miss then, be sure to Subscribe and they will be delivered straight to your Inbox!

Paying off our debt is extremely important to us so I hope you’ll join us in our journey to become debt-free (and a SAHM, for me).

Go ahead and order your copy of [amazon-product text=”The Total Money Makeover” type=”text”]1595555277[/amazon-product], and meet me back here next week for a recap of January 2013.Yes, I am going to be as transparent as possible and include our actual debt numbers, not fictitious numbers. Any questions for me before we get started?

 

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