Budgeting before and after BK

[TheBajan]

A few quick survey questions;

1. Before filing for bankruptcy, did you keep any sort of written budget? Please explain.

2. If so, did you use a popular software (such as Quicken)?

3. How has your budgeting habits changed since filing?

4. What would you say is the most important lesson you have taken to heart through this process?

Thanks for your participation!

The Bajan

[pamkev]

I can tell you we have just started a budget which we should have done eons ago and maybe we would not be in the place we are now. My hubby started a spreadsheet and so far we are tracking everything. I have also started using coupons, last night went to the grocery store bought over 60.00 of items and only paid a little over 31. I was so proud of myself something I haven't felt in a long time. Pam

[AngelinaCat]

I have to say that before filing, we really didn't keep any kind of budget. We had the means to purchase whatever we wanted, mostly by credit card. We had the funds to support it. However, we had an Enemy, with a couple of cohorts that nailed us endlessly with frivolous lawsuits. That took most of our energies and funds for the past NINE years. The Enemy never wanted to bring the matter(s) to trial, simply to bleed us financially dry. He succeeded.

So here we are.

We get a yearly stipend from a Trust Instrument in January each year. We try to budget that amount using Excel. The majority of this Fund pays our property taxes, household insurance, and things of that sort.

This fund goes quickly every year, and then we are on a month-to-month basis. With the rising prices for food and fuel, the Fund is going quicker and earlier in the year than ever.

[TheBajan]

Pam.... congrats for small victories! I have never been good at coupons. I'm not much of a yard-sale shopper but I'm fine shopping at second-hand stores. It's wonderful to feel proud of yourself. That's something I haven't felt much of lately.

Angelina.... yours is an intriguing story. I'm so sorry to hear about the nemesis that brought you here. I look forward to hearing more of everyone's stories. I'll be here for at least the next three to five years and it truly seems like a close knit forum. Thanks for sharing.

Any others??

[tobee43]

the only thing we now budget is our savings. prior to our bk, we didn't have enough money in the month to even budget!

our personal goals now that we only have the mortgage as debt is to pay it off within 36 months...and regain some wealth if possible. well, NOT actually regain, since we never had a bunch of it before, but to at least try and have something for ourselves if we make it to OLD age.

[TheBajan]

Tobee,
I think everyone can relate to not having enough to budget with! From the time I was nine years old I have had a budget of some sort. My Aunt frequently tells a story about a time when I was a teenager and asked her to give me a receipt for ten cents! It may seem odd but I lived in an environment that required diligence to know and keep whatever small possessions one had. Keeping good financial records was part of my identity. It was my job (as I saw it). You can imagine what an utter and complete failure I feel like at this point. The past three or four years have been a constant battle and the past two years all budgeting went out the window. Our minimum CC payments ballooned to over $3000 a month and we had both lost our jobs. I stopped making payments in Oct/Nov to my CC and since the start of this year we have been back on a budget. There's finally breathing room... not much as our income is still about 2/3 of what it used to be but still, breathing room. Thanks for sharing. It's great that you are able to save and to look at paying off your house in 36 months is a fantastic goal! Congrats!
The Bajan

[LadyInTheRed]

Despite my best intentions when I first decided to file BK, I don't closely follow a budget. I even bought Quicken and created a budget, but I just can't get myself in the habit of keeping track of my daily spending. I do have a system that keeps me from overspending.

I get paid twice a month and my checks are directed deposited. I pay all of my bills using my bank's on-line bill pay. The mortgage gets paid on the 1st and everything else on the 15th. I figured out how much I need every year for expenses that don't occur monthly, divided that by 12, added a little cushion and have an automatic transfer of that amount from checking to savings on the 15th. I also send my plan payment to the trustee on the 15th. So, all the fixed expenses are paid and money transferred to savings as soon as I receive my paycheck. I then spend as little as necessary on daily expenses and keep an eye on my checking account balance. When annual expenses like car registration come up, if I have enough cash in my checking account, I pay the expense from there instead of dipping into savings and then try to make it to pay day without dipping into the savings even though a portion of my savings was put aside for that expense. I stock up on groceries that are on sale. And go to Costco every 3 months or so to stock up on household necessities. I no longer let leftovers sit in the refrigerator until they go bad. If I don't eat them in the first couple of days, they go to the freezer. I used to waste soooo much food! When funds are low right before payday, I go to the cupboard and freezer instead of the grocery store.

Some months I have to dip into savings, some months I don't. I've had money to cover unexpected expenses. My husband and I had to tear out our crumbling bath/shower wall and replace it. Once we had the wall stripped to the studs, we realized it made sense to replace the old galvanized plumbing with copper and was able to afford to pay a plumber instead of trying to learn to weld. Then we discovered a leak in our toilet drain pipe. Fixing that was a $500 expense we didn't count on, but we were able to handle it. Our savings got low, but recovered after a couple of months.

It's not a tightly structured system, but after 22 months in Chap 13, it is working really well for me.

[pamkev]

How much does everyone set aside for a emergency fund. Now that we are not paying cc we can set some aside although we haven't file yet still waiting on the CMA of our home to see which way we will go. I don't want to have to much cash on hand that the trustee looks at but on the other hand enough now that is something comes up we have the cash since the cc are gone.

Pam

[pamkev]

the only thing we now budget is our savings. prior to our bk, we didn't have enough money in the month to even budget!

our personal goals now that we only have the mortgage as debt is to pay it off within 36 months...and regain some wealth if possible. well, NOT actually regain, since we never had a bunch of it before, but to at least try and have something for ourselves if we make it to OLD age.

We are hoping to do the same within 5 years after everything is said and done

[TheBajan]

I get paid twice a month and my checks are directed deposited. I pay all of my bills using my bank's on-line bill pay. The mortgage gets paid on the 1st and everything else on the 15th. I figured out how much I need every year for expenses that don't occur monthly, divided that by 12, added a little cushion and have an automatic transfer of that amount from checking to savings on the 15th. I also send my plan payment to the trustee on the 15th. So, all the fixed expenses are paid and money transferred to savings as soon as I receive my paycheck. I then spend as little as necessary on daily expenses and keep an eye on my checking account balance. When annual expenses like car registration come up, if I have enough cash in my checking account, I pay the expense from there instead of dipping into savings and then try to make it to pay day without dipping into the savings even though a portion of my savings was put aside for that expense. I stock up on groceries that are on sale. And go to Costco every 3 months or so to stock up on household necessities. I no longer let leftovers sit in the refrigerator until they go bad. If I don't eat them in the first couple of days, they go to the freezer. I used to waste soooo much food! When funds are low right before payday, I go to the cupboard and freezer instead of the grocery store.

Some months I have to dip into savings, some months I don't. I've had money to cover unexpected expenses. My husband and I had to tear out our crumbling bath/shower wall and replace it. Once we had the wall stripped to the studs, we realized it made sense to replace the old galvanized plumbing with copper and was able to afford to pay a plumber instead of trying to learn to weld. Then we discovered a leak in our toilet drain pipe. Fixing that was a $500 expense we didn't count on, but we were able to handle it. Our savings got low, but recovered after a couple of months.

It's not a tightly structured system, but after 22 months in Chap 13, it is working really well for me.

Lady...
This is an awesome plan! Very simple, no frills, easy to follow! Congrats! Thank you for sharing the details. It's inspiring. Quicken is a wonderful system for tracking assets and finances but the budgeting side of the software leaves something to be desired The idea is to find what works for you as an individual and it sounds like you've done that. Your plan is one that will sustain you forever! Congrats again!
The Bajan

[TheBajan]

How much does everyone set aside for a emergency fund. Now that we are not paying cc we can set some aside although we haven't file yet still waiting on the CMA of our home to see which way we will go. I don't want to have to much cash on hand that the trustee looks at but on the other hand enough now that is something comes up we have the cash since the cc are gone.

Pam

Ideally, I like to have six months set aside. I believe most "experts" suggest 3 to 6 months. Go with what makes you comfortable. The trick is really understanding that this money really is for emergencies and then defining (in writing if necessary) just exactly what an emergency is. For example... buying a new car does not fall into my definition of an emergency because that is something we all know we will need at some point so there aught to be a separate savings goal to prepare specifically for that. However, if the hot water heater goes on the blink, that's not something most of us can anticipate. While I have a budget category for those type of expenses, I keep it capped at a smaller amount for more ordinary home maintenance. Chances are that I will need to dip into our emergency savings for the remainder.

Regarding your question about having cash on hand right now (before you file), perhaps someone else who has been in this process longer could answer that one. I have one just begun and I don't want to steer you wrong.

The Bajan

[AngelinaCat]

How much does everyone set aside for a emergency fund. Now that we are not paying cc we can set some aside although we haven't file yet still waiting on the CMA of our home to see which way we will go. I don't want to have to much cash on hand that the trustee looks at but on the other hand enough now that is something comes up we have the cash since the cc are gone.

Pam

Some people advise having three months cash on hand for emergencies. This includes things like hurricanes that cause power outages where you can't run to an ATM for cash. What that three month supply should be depends on the cost of living in your area.

'Hub and I each keep a 100.00 bill folded up and hidden in the depths of our wallets. These are to be forgotten about until a dire emergency arises, such as when breaking down on I-26 in the North Carolina mountains and having to be hauled off by a rollback driver. He didn't take credit cards.

[AngelinaCat]

As far as the 'cash on hand' question goes, you will need to talk with your attorney. If I remember right, Pamkev, I think you are planning for a CH13. 13s are different from CH7s, which we were. Our attorney told us to have the balance in our bank account as close to zero as possible.on the date we filed. We were actually several dollars in the red. We had perhaps $20.00 between us in change on us. I don't remember if the attorney declared that amount or not.

[LadyInTheRed]

Yes, pamkev, how much savings to keep is a different question before filing BK. Before filing a 7, you don't want to have more cash than you can exempt. In a 13, if you have non exempt cash at the time you file, it will create a minimum amount that must be paid to your unsecured creditors during the length of your plan.

[pamkev]

We are hoping to be file a 7 but we might have to much equity in our home and might have to do a 13 although when we went and did credit counseling they said we would pass the chapter 7 means test but advise we talk to a lawyer. We have talked to lawyers and waiting to choose from 2 waiting to see what they said when we get the CMA of our home.

Pam