Budgeting

Discussion in 'Countryside Families' started by Country Lady, Dec 25, 2006.

  1. Country Lady

    Country Lady Well-Known Member Supporter

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    I suppose I could have waited until after Christmas Day to bring up this unpleasant word, but I think it's a word that will be on all our minds very soon. We did well this year not overspending for gifts, but we've been careless with other spending recently and need to get a tighter grip on finances. I was wondering if anyone has any suggestions for some good message boards on budgeting to get my thinking going in the right direction, or maybe where I can go online to print out good but easy budgets. Please share your budgeting techniques with me, and ways you descipline yourself with little careless spending.
     
  2. MorrisonCorner

    MorrisonCorner Mansfield, VT for 200 yrs

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    Some people use the envelope system, which involves stuffing cash into various envelopes marked "mortgage/rent," "utilities," "food," "insurance," etc. I prefer not to have that much cash floating around the house (and you can't write checks on cash in an envelope) so I use account books. Among other things, this allows me to look back over a year and document exactly where it all went.

    I use 3 column accounting paper, which you can easily make from ruled paper by drawing several lines, or buy. I buy it because I have difficulty with vision now and the green paper is easier to read.

    The columns are debit, credit, and balance. I have a sheet of paper (3 actually) for incoming cash. This is where I keep track of the income from my husband's paycheck, and my two businesses. At the end of the month I transfer a set amount from these three pages into our budget... like filling up a tank with gas. So the page for "property taxes" gets its share, the page for "insurance" its share, "food," "utilities," etc.

    Then I charge everything. I very rarely use cash. There are two schools of thought on this (never have cards and have cards) with variants (use only in an emergency, use all the time) but for me it boils down to convenience, savings, and being disciplined enough to pay them off at the end of the month. It costs money, not much but something, to write a check. I pay the cards off online. The cards accumulate points which either give me credit toward things I'd buy anyway (Amazon.com) or flat out cash (Schwab.com) for, again, things I'd buy anyway. I've got everything from utilities to taxes running through those cards to maximize the credits I get from them.

    At the end of the month I take the bills, add up the charges and debit them from the appropriate category. At the end of the year there is almost always an imbalance. This year, for example, we were deep in negative territory in the Medical category, but, since I was sick of course, had a positive balance in "travel and amusement." So on January 1 I'll wipe out the negative Medical by transfering travel to plug that hole and start fresh.

    The thing to remember is that for the most part "budgeting" is a bit of a mental game. There have been highly respected studies done which show that the limiting factor on growing wealth is not that you don't have access to the fancy investment vehicles that rich folks do, but that we wee people in the vast lower middle class become uncomfortable with "too much." Quite Calvanistic really. But what this translates to in real life is, for example, arriving at the end of 07 with a positive cash balance across the board and instead of rolling that extra into another contribution to a savings vehicle we think "yahoo... now I can buy..."

    And while this might be a very legitimate "now I can buy..." (for example "winter tires!") more often than not we do, in fact, spend the entire amount because in the back of our little pea brains we've made a deal with ourselves to save X over the year, and we've achieved that. So the excess is above and beyond and must be available to spend, right?

    In my household we wage a constant war over "found money" because as a self employed individual my income is highly variable. I've finally resorted to all sorts of tricks to funnel money into savings vehicles, including auto draws... money goes POOF into savings vehicles...

    One of the "preps" I think tend to be overlooked, especially by people starting out and struggling to maintain house, hearth, and toddlers, is the bank account. Lots of beans in the cupboard is nice. Lots of beans at the bank is way more flexible. And if something goes tragically wrong, like you lose a spouse, you're going to need resources to draw on. And as we age I'm increasingly aware that there is no way we can reasonably expect to duplicate our parent's retirements, which are funded from company pension funds. We have to provide our own retirements. And while our current plan is to continue working, at least part time, long after a conventional retirement age, we can't predict health issues. So prudence dictates that any spare cash at the end of the year is swept into savings vehicles.

    What about something like... say... replacing the leaking bathroom plumbing? I budget for that... so make sure you've got an "emergency" page in your budget and you consistently throw money into that fund. If there is a positive balance in that fund, or the health care fund, or the auto/transport fund, I roll those over year to year.
     

  3. tyusclan

    tyusclan Well-Known Member

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    morrison corner,
    I like the advice you gave. We did this for a while and then we just sort of stopped and for the life of me I can't remember why.
    It does work and it was encouraging to read again how it's done.
    Thanks for posting it. tyusclan momma
     
  4. Mid Tn Mama

    Mid Tn Mama Well-Known Member Supporter

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    If you are going to use the credit card way to pay things off, consider using a checkbook to record each purchase. That way, you are only spending what you have budgeted--not willy, nilly spending.

    We also are in the use the credit card for everything camp. But we are very disciplined and don't overspend. Each year we get a report from our credit card company telling us what categories (roughly) we have spent in. They are a good starting point for budgeting money.

    My advice is to be your own bank. Put a couple months worth of $ away to use for emergencies: car breakdowns, furnace replacements, etc.. Do this before you take a vacation or go out for fun. It's the best investment you could have.
     
  5. MorrisonCorner

    MorrisonCorner Mansfield, VT for 200 yrs

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    There are probably computer programs out there now which make this sort of thing easier. I never figured out how to make Quicken work this way. Quicken shows you what has happened and how much you've spent, but my version doesn't have a budget or "how much you should have spent" function.

    By the way... there are categories of "shoulda spents" which should not be overlooked. For example, if you budget $1300/year on co-pays and health costs and come in under budget because you skipped your mammogram this year THIS IS NOT A GOOD THING!! If you came in under budget in your car repair fund because you didn't change the oil all year... well... yea... in theory you're under budget...

    Penny wise, pound foolish, as the brits would say.

    Likewise if you came in over budget on the auto fund because you just had to have dual chrome tailpipes...

    Anyhow, a budget is not an excuse to be stupid.
     
  6. Country Lady

    Country Lady Well-Known Member Supporter

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    Some very good information has been posted. Thank you. I'm looking forward to ideas from others also. Come first of the year, I plan to do better than this past year.
     
  7. SaS58

    SaS58 Well-Known Member

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  8. mtmama

    mtmama Well-Known Member

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    Frugal village is a good place to go for info. They have sites for Suze Orman followers, as well as three other financial people. Lots of help on this site!

    http://www.frugalvillage.com/forums/
     
  9. Ann-NWIowa

    Ann-NWIowa Well-Known Member Supporter

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    I make my budget for each year based on the previous year's spending plus anticipated expenses for the new year. Once you have assigned an amount to each expense category you have to be sure you keep within those guidelines. If you've spent all your medical budget and need more medical $'s so you don't have to skip the mammo, then you have to look at the other categories and decide where you can switch those $'s from. For instance, you might choose to reduce the amount of recreation $'s to cover the unexpected medical.

    A budget is a listing of your planned spending. It is not set in stone. It will need to flex to fit changing circumstances throughout the year and throughout your life. The key is to remember if you need to spend more than the budgeted amount in one category then you MUST reduce another category by that amount or you will be overspending.

    Also, the kiss (keep it simple stupid) principle applies to home budgeting. If it is over complicated and/or takes too much time and effort, it will get ignored. That is why the envelope system is so popular. The dollars are either in the envelope or they're not. If not, you're out of luck. Its also a very visible way to see the money accumulating paycheck by paycheck for mortgage/rent, utilities, etc.

    If you don't like to keep cash at home, you can use the same system on paper. If you deposit your entire check in the bank, then allot it to your various budget categories so you know by looking at your paper how much has accumulated for your mortgage/rent, utilities, etc. This takes self-discipline for some people will spend whatever is in the bank without taking their budget into account then they come up short when the bills roll in.
     
  10. Terri

    Terri Singletree & Weight Loss & Permaculture Moderator Staff Member Supporter

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    Tomorrow I will give this serious thought.

    For me, it is identifying the areas of unecessary expense and plugging the holes. For the last month, I have cooked some frozen pizzas and such because I was too busy to cook. I fixed frozen fast-food like that perhaps 3 times a week.

    We don't like them very much and they are expensive, but they fed us. So, the FIRST thing I am doing after Christmas is over is, I am going to find some meat sales and fix some frozen meals. Italian meatballs, perhaps, or lasagna. It all depends on what is on sale.

    I will ALSO go over the budget, call the CC companies to see what the Christmas damage is (DH PREFERS using credit cards), and get things in order.

    Tomorrow.
     
  11. Country Lady

    Country Lady Well-Known Member Supporter

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    I appreciate the information so far. I'm sure in the next couple of days, when a lot of folks get back to normal and back on the computer, we'll have lots more thoughts and ideas on budgeting. I'll try to keep the thread bumped up. We have a week to get our thinking caps on and start the new year off to a good start with our budgets.
     
  12. Country Lady

    Country Lady Well-Known Member Supporter

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    Bumping this up to keep it on the first page.
     
  13. menollyrj

    menollyrj Joy Supporter

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    I used Microsoft Money once upon a time, and it had budgeting categories. I'd like to get back into a formal budget...tomorrow? No, really, I'd like to start off the year with a written budget rather than the informal "in my head" budget that I have now.

    We live primarily on my paycheck, which comes once a month. Check is direct deposited around the 15th of the month. Although my mortgage, car payment & health insurance aren't due until the 1st, I pay them almost immediately after my paycheck is deposited. Then I don't have to worry about having enough cash to cover the important bills. I also use online bill pay from our bank, and I LOVE it!! I don't lose bills in the depths of paper on my desk any more.

    -Joy
     
  14. okgoatgal2

    okgoatgal2 Well-Known Member

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    we're going back to the envelopes. i do so much better that way. i'm leaving the checkbook at the house at all times. will write the check to pay bills by mail, then pay the local ones cash, i do pay a few online. any extra after regular payments will be put into savings for 2 months, then i'll split it between paying off credit card and saving.
     
  15. jersey girl

    jersey girl Well-Known Member Supporter

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    Check out www.crown.org
    They have great tools on budgeting and even coaches that will help you for free. They are biblically based and also provide inspiration.
    Joanie