What's your budget system?

[budgetmom]

I am wondering if you all could tell me what system you budget your money with. I guess I basically use the envelope system, but I do it in my head. We seem to be growing deeper into debt, no matter where I trim the fat. Something is not working somewhere and I need some help to figure out how to fix it.

[JanH]

Re: What's your budget system?

Using the information found here, I use an Excel spreadsheet. It is an envelope system on the computer. I inputted the amounts in the budget that I had for each category, then every day, Hubby and I subtract from those amounts what is spent (if anything) and then we can see what is left for the month to spend. He helped me set it up cos I didn't know how to run Excel. But so far, it has worked real well. I do better with a starting point and subtracting out--like an envelope. I just didn't do real well on funding the envelopes cos I have many categories. It made too many envelopes.
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[budgetmom]

Re: What's your budget system?

I never knew there were guidelines of how much things should cost (30% for housing, etc.)I've been analizing my budget, but I'm not sure how to add some of the items in. We are behind on some bills right now, so do I take the entire cost of the bill (past due included) or just the average? If I just calculate the average, it shows about 30% unaccounted for. But I know a lot of that is going toward getting caught back up. The rest is considered discresionary, and that would be included in household, right?

[jmjj215]

Re: What's your budget system?

I wouldn't worry so much about percentages that people decide are appropriate -- just track your spending for a month or two and find out what you really spend because I promise you that what's in your head is rarely what's really happening

Once you've tracked your spending you'll have an idea of what types of categories are appropriate and which don't apply to you.

To your specific question: I would worry about what you need to do today so if that means that you're playing catch up then I would definitely build that into the budget. A budget is not a pie-in-the-sky plan of the perfect month. It's a system of sitting down at the beginning of a month and, to the best of your ability, anticipating and allocating your money to the places it needs to be.

[Fizgig]

Re: What's your budget system?

Budgeting in savings has been a tremendous help to me. Track your spending for a month. (Every penny!) Break it into categories and set your ideal amounts.

I added up my monthly bills and reasonable, but low amounts to spend on everything else like entertainment. I subtracted the total from my monthly income and set up the surplus to automatically transfer to a savings account with each paycheck. It seemed like it should really hurt to keep my spending that low and have money siphoned from my checking account, but it didn't hurt at all.

You say that you're paying off debt, so I suggest still having money transferred automatically, but then use that money to pay what you owe.

Don't get too stressed out about categories - the goal is to keep the total spending as low as possible as you pay off your debt, and then later so you can save money.

[Broken Arrow]

Re: What's your budget system?

I am wondering if you all could tell me what system you budget your money with.

PDA, baby! Yeeehaw!

I guess I basically use the envelope system, but I do it in my head.

I highly recommend starting out with real life envelopes, and put cash into these envelopes. There's nothing like physical items you can see, touch and count to really help put things into perspective. That's how I started out when I was learning to budget.

Later on, once you get a good grasp of your budget, then feel free to move on to other methods if you wish. Good luck! We're all cheering for you.

[disneysteve]

Re: What's your budget system?

This is a post I made a few days ago on another budget thread.

The two most important aspects of developing a budget are knowing exactly how much money is coming in and exactly how much is going out and where it is going.

The coming in part is generally easy assuming you have a steady income source.

The going out part is where you need to do some work. Start by writing down every regular, recurring expense that you have. This includes things like rent/mortgage, taxes, utilities: phone, gas, electric, water, cable, internet, insurance premiums, tuition, etc.

Then get a little notebook, carry it with you at all times, and record every penny you spend on absolutely anything for a month.

At the end of the month, sit down with your lists and divide every expense into 2 categories: Want or Need. You need to be very specific here. Phone service is a Need. Caller ID, call forwarding, voice messaging, etc. are wants. Having a car is a Need. Getting it detailed every other month is a Want. Having a TV is a Need. Having premium digital cable and a 42" plasma screen is a Want. You get the idea.

Don't forget to include expenses that don't get paid monthly, like magazine subscriptions, insurance premiums, auto registration, club dues, etc.

So once you've done all of that, look at the bottom line. If your expenses are greater than your income, you need to take a good look at that Wants column and start cutting back. If your income is greater, you're off to a good start, but you may still need to trim the Wants if you aren't saving adequately.

Don't ignore that Needs column, though. Just because you need a phone, doesn't mean you currently have the cheapest plan. Just because you need life insurance doesn't mean you shouldn't shop around and see if you can find a cheaper policy.

[budgetmom]

Re: What's your budget system?

Ok, all this I have done pretty much. I am a little reluctant to post out all my findings, mostly because of embarrasement. I'll spell it all out, please tell me if I'm doing this right.

Total monthly takehome (2 adults, 2 kids) $2000
Rent $670
Elecric $200
Phone/Internet $165
Water $45
Groceries (including diapers & houshold items) $240
Gas $120
Ins. (car) $90
Pet $5
Smokes (this is DH vice, I have talked with him regarding and he has agreed to start buying every other day instead of every day so it actually brought the cost down from my actual figure by half) $120
Laundry $40
Remaining balance for Debt minus $20 for leasure

I will try the envelope method. We don't have any credit cards and sadly the bank account is overdrawn (included in the debt category) so this will work fine for now. I can just go to the store to get money orders for everything until the balance is cleared up. Once that happens I will create another envelope for savings and split the debt money in half (half going to debt and half going to savings). Also, some of the other balances are high do to previous balances. They will be cleared up at the end of the starting month (next month) so the average balances will be smaller next month. Any ideas on how to allocate those remaining funds? Am I even doing this logically/realistically?

[autoxer]

Re: What's your budget system?

Ok, all this I have done pretty much. I am a little reluctant to post out all my findings, mostly because of embarrasement. I'll spell it all out, please tell me if I'm doing this right.

Don't be embarrassed, the more honest you are, the better help you will get.

Total monthly takehome (2 adults, 2 kids) $2000
Rent $670
Elecric $200
Phone/Internet $165
Water $45
Groceries (including diapers & houshold items) $240
Gas $120
Ins. (car) $90
Pet $5
Smokes (this is DH vice, I have talked with him regarding and he has agreed to start buying every other day instead of every day so it actually brought the cost down from my actual figure by half) $120
Laundry $40
Remaining balance for Debt minus $20 for leasure

Are these ideal numbers or actual numbers? Tracking my spending for a month revealed that I was spending money much different than I had thought. Did your DH actually cut back on the cigarettes, or did he just agree to?

I will try the envelope method. We don't have any credit cards and sadly the bank account is overdrawn (included in the debt category) so this will work fine for now. I can just go to the store to get money orders for everything until the balance is cleared up. Once that happens I will create another envelope for savings and split the debt money in half (half going to debt and half going to savings). Also, some of the other balances are high do to previous balances. They will be cleared up at the end of the starting month (next month) so the average balances will be smaller next month. Any ideas on how to allocate those remaining funds? Am I even doing this logically/realistically?

If that budget is complete, then you have $285 left over every month. If you want to use that to reduce your debt, then you will need to list all of your debts & prioritize them. Getting the checking account current should be high on the list, so you don't have to keep buying money orders. (how much do they cost & how many do you need to buy each month?) Then look at all of the interest rates of the debts to know which ones are costing more.

[disneysteve]

Re: What's your budget system?

Phone/Internet $165

I'd take a good look at this. That sounds awfully high. Broadband Internet is about $30-$40/month. Basic phone service is $20 or so. Long distance should be no more than $.03/minute. You may be able to trim that bill a lot.

[budgetmom]

Re: What's your budget system?

These are the actual numbers. I am normally an average frugle person. I mean, I never really had a savings set up but I did manage to get my bills paid on time and whatever was left over after that was fun money. When I had kids that change and the fun money went to making sure they had clothes, shoes, toys, etc. Now, this went on just fine until DH started complaining becase he thought he was getting paid enough money to be able to afford some luxuries. We argued a lot about it and finally I gave the financial responsabilities over to him. A month and a half later we took a two week trip (me and the kids) out of state to visit family. It was then that I realized there was a problem. My(by the way he can't get a bank account in his name) bank card was declined. Well, when I got back I took the finances back over. He realizes now that I am just better with money (although I'm not really doing it the right way currently either)and trusts me with having that control more now. I do keep him very well informed of what I am doing now, though. That is something I didn't really do before. At any rate, while I was gone he didn't pay the bills either (there was a lot of money missing that he could not account for) so we got WAY behind with everything. The electric alone got to be over $500. I started trying to stick to a budget then, that is what you are seeing now (for the most part). Some of them are a little high because they include a previous balance. Should I have included those in the debt category? I just figured it would be easier to list the whole current bill amount than try to break it all up. So, the electric and the phone/internet will go down to around $115 for electric and $75 for the phone/internet once the prievious balances get paid. DH said that he will start when I talked to him last night. The original rate I had calculated to set aside for him was $240. I have not prioritized my debt, aside from the bank balance. I figured it would take priority and would take a little to pay off (overdraft protection can be a drawback when someone doesn't manage money properly). disneysteve, it is still a little high for the phone. I have talked with the phone company and got rid of our long distance service altogether. We no longer call long distance because those reletives have moved back into the state and city. Once this billing cycle is over our rate should drop even more.

[disneysteve]

Re: What's your budget system?

So, the electric and the phone/internet will go down to around $115 for electric and $75 for the phone/internet once the prievious balances get paid.

That sounds a lot more reasonable. So that will give you an additional $175/month for other things, like savings. That will help a lot.

[Ima saver]

Re: What's your budget system?

Do you have an emergeny fund? If not, you need to start one immediately.

[budgetmom]

Re: What's your budget system?

I do not have an emergency fund. I want to start one as soon as possible. We have no benifits through my DH's job so no insurance. We do not qualify for aid with that either. MY FIL just recently had to stay in the hospital for a week (he's ok now) but they got their bill for it yesterday and it was like $87,000. They have insurance that will cover a lot of it, but it got me thinking about something like that happening to us. It would be absolutely devistating! So, an emergency fund is a must! My savings will be going towards getting a new (at least new to me,lol) vehicle and getting a new apartment/house(?). We live in a two bedroom apt. now and it is just not big enough. I would like to be able to give the kids their own rooms now so I won't have to worry about it later (I have a boy and a girl).

[DayByDay]

Re: What's your budget system?

I would make getting medical coverage the highest priority over those other things you mentioned. Call and get Blue Cross's cheapest individual plan if you have to, but get something. An emergency fund will never pay anything near what you'd need for a serious medical problem (as you can see from your FIL's bill). Our insurance is not the best (very high deductible and co-pay), but it saved us from getting completely wiped out when we ended up with hospitalizations for five years in a row.