Budgeting?

[cb2boys]

Hello...I'm brand new to this forum but very glad I found it! My husband and I filed last week, and I know it will take us some time to rebuild our credit. However, neither of us have ever been good at budgeting our money. Any suggestions on where we could start? I've usually handled the checkbook & our bills, so I'm not even used to sharing budgeting issues with him....He has always offered to help, but I'm such a "control freak" that I usually don't let him. I'm afraid we're going to get ourselves back in the same fix before BK, and I don't want that to happen...We also have 2 sons (10 & 12) and I am afraid they are going to learn our bad habits...they never have any money left over from birthdays, Christmas, etc...Any advice would be welcome.

Thanks!

[HHM]

First, do you use any type of personal finance software. Apparently you have a computer, so picking up something like Quicken of MS Money would be useful.

Second for all discretionary spending, i.e. anything you go out and buy (groceries, eating out, gas for car, etc), pay cash. Once you start paying cash for things, you get a much better sense of how far your money goes. This is helpful because it puts you in the position of forcing yourself to go without if you run out of cash.

[LinSC]

This is so true! We've been paying cash for well over a year for EVERYTHING. It hurts at first but you'd be surprised how it changes your spending habits over time.

We put together a simple budget just using Excel - at the time we couldn't afford to go out and purchase new software. Excel does just fine, just be sure to include every possible expense when you're planning your budget. Include EVERYTHING; haircuts, pet food, home and car maintenance, recreation, etc., be sure to include a set amount for discretionary spending so that you won't feel strapped to your budget.

Good luck, things will definitely get better for you now!

[Lightning]

Setting up a budget means allocating your income so you spend less than what you earn. Set a certain amount or percentage of your salary aside for savings before you even start to spend.

[StaciMM]

A starting point for us was to break things down into periods. We're paid weekly, so we based it on that. I know what is due to be deposited each each week, and I know what bills (rent, car, insurance, utilities, etc.) are due, as well as necessary spending (groceries, gas, etc). Our week starts on Thursday, as I get paid on Thur and DH gets paid on Friday.

My suggestion for grocery shopping is go in w/ a plan. It may sound corny, but if you plan out the # of meals you need to prepare & what items you need for them, you spend a lot less than random grocery shopping. I don't go to 10 different stores to hunt for sales, but I do go in w/ some flexibility so that if X has a better value than Y brand that works for me!

I think one part of successful budgeting is allowing a little wiggle room. You can't prepare 100% for everything. We allow $40-50 weekly for miscellaneous items. That might include something the kids need for school, cigarettes for DH, an oil change, a movie rental, etc. When the misc. $$ is spent, that's it. Anything else needs to wait til the following week.

I tend to run the check book-its too complicated if we're both trying to update it. DH has gotten into the habit of checking w/ me though on where we stand before he makes a purchase. He used to have a 'if I see it-I want it NOW' approach to things but has gotten better. I still tend to think the worst when he calls and asks if there is money for him to spend, LOL! Certain weeks are known to be tight weeks This past week was for us, as we pay rent on the 15th and that is our largest expenses.

I don't know your work/lunch situation, but I've started taking a loaf of bread, along with cheese slices & sandwich meat to eat for lunch at work. About $5-6 buys lunch for 1 - 1 1/2 weeks. Not only does it save $$ on lunch (better than $5-6 per day fast food) it also saves on gas as I'm not driving anywhere unless I have errands to run. I do like soft drinks a bit too much, so its also good to buy them from the grocery store rather than paying $1+ for each one individually.

Well, that is probably more than you wanted to hear. Hope something in it can help!

[HHM]

This is so true! We've been paying cash for well over a year for EVERYTHING. It hurts at first but you'd be surprised how it changes your spending habits over time.

We put together a simple budget just using Excel - at the time we couldn't afford to go out and purchase new software. Excel does just fine, just be sure to include every possible expense when you're planning your budget. Include EVERYTHING; haircuts, pet food, home and car maintenance, recreation, etc., be sure to include a set amount for discretionary spending so that you won't feel strapped to your budget.

Good luck, things will definitely get better for you now!

Ok, quick high horse moment here...excel is only economical if your computer come preloaded with it. Otherwise, you can pick-up a basic version of Quicken or MS Money for under $30. MS Excel 2003 will cost you over $175 to buy individually.

Anyway, everyone has good advice here...to summarize, set yourself limits and pay cash for items and you should do fine.

Personally, I am in for a big shock myself, I am getting ready for a 10 month sabbatical around the world, but at home I am used to using by debit card for just about everything. This trip will be the first time I have had to truly live within a set budget and spend cash for nearly everything, it will be an interesting experience.

[StaciMM]

I'm sure there are pre-paid Visa cards, traveler's check cards, etc...

I usually have very little cash on hand. Its not the fear of losing it, but I know ME well enough to realize that if I have cash, I'm more likely to spend it. Using the debit card involves accountability-if I buy fast food for lunch, for example, I have to put it in the check register & it shows on the statement. Spending cash leaves no evidence, so its easier to make bad choices.

Personally, I am in for a big shock myself, I am getting ready for a 10 month sabbatical around the world, but at home I am used to using by debit card for just about everything. This trip will be the first time I have had to truly live within a set budget and spend cash for nearly everything, it will be an interesting experience.

[HHM]

I'm sure there are pre-paid Visa cards, traveler's check cards, etc...

I usually have very little cash on hand. Its not the fear of losing it, but I know ME well enough to realize that if I have cash, I'm more likely to spend it. Using the debit card involves accountability-if I buy fast food for lunch, for example, I have to put it in the check register & it shows on the statement. Spending cash leaves no evidence, so its easier to make bad choices.

True, spending cash takes dicipline, sometimes more dicipline than a check card. However, what you have to be able to do is set limits.

An interesting, and surprising exercise, is to figure out how much you spend on a daily basis. Essentially add up all you spend in a month, and divide by the number of days.

Next, add up all your fixed expenses (i.e. rent, car payment, insurance, utilities etc), these are typically the ones you write a check for each month. Deduct that amount from your net monthly income. What ever is left over is your discretionary income to spend on food, hygiene, gas etc. Divide your discretionary budget by 4, and each week, take that amount out in cash at the beginning of each week. Use that cash for groceries, gas, hygeine etc, and be disciplined to say, once that cash is out, you don't get any more until the beginning of next week.

For example:
Let's assume you earn $2000 per month, NET (i.e. take home pay).
Your fixed expenses, rent, insurance, car payments, utilities, totals $1200 per month.
Thus, you have $800 per month in discretionary income. Thus, for each week, you only have $200 cash to spend.

The only problem with this plan is discipline if you underspend. I think our natural tendency is to spend ALL cash on hand, so its not conducive to saving, but you put savings in your "fixed expenses" bugdet.

I generally only recommend this plan to those with lower income who are having trouble making ends meet. This plan does a good job of helping people budget and learning the true cost of things they buy.

[Minnymouth]

HHM,
Surely you'll survive without your debit card LOL.......cash/money orders - remember!!! Hope you got a budget lined out for your trip....
Now me, I would have it all spent in the first couple of months buying things to take home.

HAVE A BLAST HHM............

Minny

[moneyfolk]

Simple Advice

If you have Excel - that's great. If you don't do it the old fashioned way. Get a piece of paper and write down your "IN" and "OUT". IN is your monthly income and OUT is expenses. Create a chart like this one.

Make sure you are in the black. I also agree try to pay for alot of your expenses with cash. It will definetly slow you down as far as spending.

Another thing that you can do, if paying with cash is not convenient. Pay with your CC and then pay the bill as soon as you get home. This works best with Online banking.

Online banking is a fantastic way to pay your bills on time.