How do I get started?

[mea772]

My husband and I recently admitted that we are needing financial help. I have sat down and worked and reworked all my expenses, incomes, etc. We are still not doing that great. Then, for the next 3 days, I have done numerous hours of research trying to find ways of budgeting our money and saving money. I have many great ideas on both!

I have printed out many budget worksheets, etc and I really am ready to go but my question is...how?

I have put everything in different categories (ie: groceries, loans, credit cards, utilities, etc) Under each category I wrote down how much per month needs to be put in those "accounts". It would be easy if I had enough to put in them to get me started but I don't.

How do I get started?

(if you can think of a better tool instead of the categorizing method...please let me know!)

Thank you!!

[skydivingchic]

When I started using Mvelopes in January, I was forced to sit down and really lay out a budget. I also did not have enough money to fully fund each category. It was the middle of the month, so I estimated how much I would need in each category until the next paycheck. For example, groceries $100, gas $50, etc.

You need to sit down and figure out how much money you do currently have and divvy that up to cover whatever categories need to be covered until the next paycheck. Also figure out which paychecks will cover which categories/bills. For me, I am paid biweekly, but I only budget for 2 checks per month. Until recently, the first paycheck of each month went to fund my utility bills, groceries, gas, spending money, insurance, etc. The second paycheck of the month funded my mortgage and HOA envelopes.

After I paid off my CC, my next goal was to save one month's worth of expenses (seperate from my EF), so that all my envelopes are now funded on the first of the month. The paychecks I receive in September sit in an envelope and don't get touched until October 1, when I fund all categories fully for the entire month. I would recommend you make it a goal to save up one month's expenses so that you can do this eventually.

[disneysteve]

Record all spending for a month. Be sure to add 1/12 of bills that don't get paid monthly like insurance, taxes, subscriptions, etc. Divide the list into Wants and Needs. Be specific. A phone is a need. Caller ID, voice messaging, call waiting are wants. Clothing is a need. Buying new outfits every month at Macy's is a want.

Trim or eliminate as many things as possible from the Wants column. Shop around to try and lower costs on things from the Needs column. Shop for lower insurance rates, a cheaper phone plan, cheaper internet access, etc.

If your spending still exceeds your income, you either need to make further cuts or find a way to increase income. Get a 2nd job. Do online surveys. Babysit. Walk dogs. Mow lawns. Deliver papers or phonebooks. Do whatever it takes to make your income exceed your expenses.

[mea772]

Thank you for the replies

I saw Mvelopes site...I think I will check it out again!

Yes, I cannot wait until the day comes where we have a month worth of expenses all saved up!

DisneySteve, we are definately struggling but I believe we have just enough for everything (I did write everything down and believe me...there isn't much in the "want" list LOL

I am working only part time right now but I have a lot of resumes out and actually am waiting on a call from an interview I had last week...I am getting full time. This will almost double my income putting us in a much better situation.

[skydivingchic]

Once you go to full time and have more income, you can use the "raise" to pay off the credit cards and loans you mentioned. You are already covering the essentials with your current income, so the additional income can be used to help pay off debt relatively pain free.

[QuadSquadMom]

May I offer the suggestion to check out your local library for a book called The Total Money Makeover by Dave Ramsey. He's very specific on the how of becoming debt-free step by step. In addition, Dave is entertaining funny and most of all practical.

Dave would advise to first cover the 4 walls: food, utilities, shelter, and transportation. (Baby step 1a)

After that, sell stuff or increase income to save $1,000 for a starter emergency fund. This is for those emergencies that would normally cause one to reach for a credit card such as car repair ER visit, things Murphy's law could visit upon you. During this step establish a written monthly budget. Spend every dollar on paper before you get the money. Be in agreement with your spouse on the budget. This is Baby step 1.

Step 2 is work the debt snowball. List your debts, smallest to largest balance, and throw every extra penny at the smallest debt, while paying minimums only on the rest; as you pay 1 off, roll that money into the 2nd, and so on. This gives you quick successes and motivation.

Step 3 is to set aside 3-6 months of expenses into a money market account . This is the fully-funded emergency fund, also known as Murphy insurance.

Step 4 is to place 15% of your income into retirement savings (Roth IRS, 401k, etc.).

Step 5 is start saving for kids college funding (if applicable).

Step 6 is pay off the home mortgage early.

Step 7 is Build wealth & give like gangbusters!

You can visit his web at DaveRamsey dot com. Highly recommended!!!

[loanstar]

I think you should set priorities, some areas such as groceries and utilities you might be able to sacrifise, cut down on consumption.
when you get a full time job, you could double those budgets.

[DavidSB1950]

QuadSquadMom has the perfect plan of attack....

the main enemy to building wealth is what you hear on the boob tube all the time..."You DESERVE it".... guess what... thats just a quick road to wasteful spending and high credit card debt...I cringe every time I hear some commercial announcer mouth that line...

we only deserve what we can afford and what we are willing to give up in return.... huge difference between wants and needs as stated previously...

a quick true story... my wife and I always lived frugally.. we are both professionals and make adequate incomes and maxed our savings in company stock plans over the last 30 years..
my brother is a sucessful attorney and is forever borrowing money from me to make his monthly bills (after his wife stated that she just couldnt live like us)... well, we are retiring next year at 56 years of age and have amassed a fund that generates more yearly income than we do working now....

moral... HANG IN THERE!!! you are headed up the right road!!!

P.S. There is a book (out of print but available at libraries) that I read 30 years ago..."How to beat the Salary Trap" by Riffenback (I think).. we used it as a guide and it echos QuadSquadMom's lists... and it worked for us....

[disneysteve]

a quick true story... my wife and I always lived frugally.. we are both professionals and make adequate incomes and maxed our savings in company stock plans over the last 30 years..
my brother is a sucessful attorney and is forever borrowing money from me to make his monthly bills (after his wife stated that she just couldnt live like us)... well, we are retiring next year at 56 years of age and have amassed a fund that generates more yearly income than we do working now....

Great story. The power of frugality and living below your means. Congrats. Enjoy your retirement.

[GRITSinMS]

If I am reading your question correctly, you really want to know how to begin budgeting with the very basics? I don't know anything about this Mvelopes system that I see mentioned; however, you can set up your own envelope system to keep some of your budgeted items under control. You use one envelope for a category and on payday "fund" the envelope with the budgeted amount. Not all of your expenses go into envelopes - only those such as groceries, gas, lunch money. You pay utilities and rent out of your checking account and do not touch it for anything else. If you are having a hard time just paying for necessities at this point, then you want to focus on paying for what you have to have first, then use what is leftover on the next budget item - that would be in order - 1. food 2. utilities 3. housing. Hope this helps.