[tinapbeana]

i started out with the simplest thing i could think of: every bill got a category. this includes bills i pay monthly and those i don't (like homeowner's, water, car & house property taxes). for those, i figured out what they cost over a year, divide by 12, and contribute that to savings so they can earn me money till i need them. then i added categories for groceries and our allowances. allowances cover gas, smokes, entertainment, and fun money.

then i took off %6 of my pre-tax income to set aside for retirement. DH contributes 6% to his 401k, and although i don't have a 401k it seemed reasonable to take the same percentage as a starting point.

i looked at what was left and decided how i wanted to break that up for saving for gifts, car maintenance, vacations, medical costs, etc. for next year i have 900 for christmas, 600 for other gifts, 900 for household, 600 for car maintenance (it's a fairly new one), 600 for house maintenance, and 1200 for vacations. i added it all up, divided by 12, and contribute this to short-term savings. in a pinch, all of this could be used as an EF.

in a perfect world everything left over will be used first for debt reduction, then to beef up the EF, then beef up retirement, then to create a little more fun in our lives. in my world, there's a chance my job will be gone in 2 months so all extra is going into an emergency EF (funny, i know!), just in case.