Monthly spending plans help!!

[iowabergmanns]

My wife and I have finally put together a pretty good spending plan with the raw numbers and we have some questions that would seem elementary but we're having trouble with. She is paid semi-monthly (1st and 15th) and I'm paid bi-weekly. We're planning to have a handful of cash envelopes for some categories (eating out, blow $, etc) and we're having difficulty in setting everything up so that we don't overdraw our checking account between pay dates. When do we take out our $$ for the envelopes is one hurdle. How do others set up their budget where people are paid like my wife and I? I'm thinking a program like Mvelopes would help us. Or are we making this too difficult than it needs to be?

[sweeps]

Can you pay all your monthly bills with her 2 checks and your 2 checks? You will have 2 extra checks a year... that could go into savings.

I like the idea of Mvelopes, but I don't like the idea of spending $8-$13 a month on a budgeting system.

[disneysteve]

Do you have any savings now or are you currently living paycheck to paycheck?

If you have savings, this probably isn't an issue.

If you are living paycheck to paycheck, does your new spending plan include money to build an emergency fund? If not, it needs to. Without seeing the plan, I'd venture to say that the best way to avoid the problem is that for the first month or so, the envelopes for eating out and "blow" money need to stay empty. That will let you build up a little surplus in the account. Once you have a surplus (more money in the account than you need for that month's bills), the risk of overdrawing the account goes away.

[iowabergmanns]

We have $1,000 in our emergency fund, but our newest spending plan currently does not have any dollars going towards the EF.

I guess my question was more geared towards tracking and the day to day administrative things with our budget.

[skydivingchic]

I've used Mvelopes for a little over a year and absolutely love it. It is by far the best thing that has ever happened to my finances and has more than paid for itself.

That said, if you want to do this on paper and pencil or excel, you certainly can. It would be a matter of faithfully inputing new transactions every day or two. You could put together an excel workbook with multiple worksheets - each representing a different envelope that keeps a running balance of that envelope. You would also need a checking account sheet that shows all transactions to keep from overdrafting. I would, however, highly recommend that you make it a goal to save up a buffer in your checking account.

[maat55]

We have $1,000 in our emergency fund, but our newest spending plan currently does not have any dollars going towards the EF.

I guess my question was more geared towards tracking and the day to day administrative things with our budget.

All you need to do is build up enough money in the account to act as working capital. One months bills will allow you to pay every bill as it comes in no matter when your checks are deposited.

Enter this money into your account as a check that never gets cashed. If you have 1500, then 1500 is 0. Always treat having only 1500 as 0 as if it was really 0.

[Fizgig]

I agree with setting up a buffer in your checking account so the little blips won't snag you.

As for the monthly budgeting with the paychecks, I see two options.

1. For the biweekly paychecks, use the average monthly income for your budget. 26 paychecks a year/ 12 months = Average pay.

2. Like sweeps said, consider those two "extra" paychecks a year as a bonus. Budget based on two paychecks per month, and when you get a third, throw it at your debt or into savings.

[LuxLiving]

I'd suggest that you read the forums & articles over at YNAB dot com (you need a budget dot com).

[neobudget]

I get paid bi-weekly, but I budget for 2 paychecks a month. That means I have 2 unbudgeted paychecks per year (because I budget for 24 checks, but actually get paid 26). This has allowed me to pad my envelopes in my budget so that it doesn't matter when I withdraw during the month. I always have one month worth of padding.

In other words, I already have all the money I need for this month in my checking account. My paychecks this month are going toward paying next month's bills. If you can get ahead of the game by padding your account by a paycheck or two, that will solve many of your issues.

[KellyB]

My partner and I have the same paycheck dates as you - I am bi-weekly and she is 1st and 15th. I moved bills around so that I could pay all the fixed "bills" with her checks - mortgage, electric, cable, trash, water, etc. I use my checks to cover variable expenses week to week like food, gas, entertainment, etc. It is all budgeted in the plan, but it helps a LOT to know WHEN in the month you need to pay these things. I had to move some bills to the 2nd half of the month as the mortgage took a big chunk out of the 1st check of course. Once I did that, I was able to automate all the fixed bills as I knew we'd have her check on a certain date and could pay bills A, B, and C or whatever. Made things much easier.

BTW, I did use Mvelopes also for about a year, helped me figure this out and now I can do it on my own and have for over 2 years. Build in EF as other posters have said, make it a monthly bill and automate some savings from whatever paychecks you can do it from.

[KellyB]

oh forgot this -

as for tracking, I set up an Excel spreadsheet in 4 columns, one for each week. I put the income on the top, and even if we get paid the same week I only put one check in per week. Down the side I put all the categories, and the budgeted spending expected for them during that month.

I just track everything through my checkbook, and input the entries into the Excel sheet once every few days. The only hard part is ATM/Cash transactions, I just always take $100 at a time and keep track in the checkbook again as I spend it - $20 dining out, $15 groceries, $25 entertainment, etc. That has to tie back to the $100 I took out. That way I'm able to input the proper amount into the categores again, nothing is "lost".

The budget is "zero based", so everything balances out. If I overspend somewhere, I know I have to reduce spending somewhere else to balance. So if I've overspent in Dining Out, I need to reduce my budget for entertainment or something.