New Year, New Budget

Christmas is almost here and New Years is around the corner. I have a feeling there will be some buyer’s remorse, and maybe some New Year’s Resolutions to stop spending so much money. I hear ya. I’ve been there. In fact, I go through that phase a few times a year. Yep, that’s right. The girl that preaches debt-freedom, and living off of a strict budget is…*gasp*…not always so strict.

There are times when we lose our focus and drive, and we get off track by spending more than what is designated for spending. For this reason, Mike and I go through our finances every week in what we call a Budget Meeting, and a few times a year we thoroughly go through our finances and average spending. We look at our needs vs. wants, our bills, our upcoming expenses, our savings, etc. and find areas that need improving. We just did that a few weeks ago and since I talk so much about all of this budgeting and debt-freedom, I thought it might be helpful to share our actual budget sheet. Here is a look at what we use each week followed by a list explaining the purpose for each category.

Monthly Budget
Pay Period 1/4 1/11 Pay Period 1/18 1/25
Income ______ ______ Income ______ ______
Total Income: ______ ______ Total Income: ______ ______

1st

Giving 2nd Giving
Tithe ______ ______ Tithe ______ ______
World Vision ______ ______
CMF Intl ______ ______
Saving Saving
Emergency Fund ______ ______ Emergency Fund ______ _______
Bills Bills
Electricity ______ ______ Rent ______ ______
Car/Renters Ins ______ ______ Water/Sewage ______ ______
Life Insurance ______ ______
Cell Phone ______ ______
Weekly Expenses Weekly Expenses
Groceries ______ ______ Groceries ______ ______
Gas ______ ______ Gas ______ ______
Mthly Expenses Mthly Expenses
Laundry ______ ______ Laundry ______ ______
Postage ______ ______ Clothing ______ ______
Toiletries ______ ______ Gabriel ______ ______
Cat Expenses ______ ______ Gift Fund ______ ______
Debts Debts
Medical Bills ______ ______ Medical Bills ______ ______
Entertainment Entertainment
Dates ______ ______ Dates ______ ______
Extras ______ ______ Extras ______ ______
Total: ______ Total: ______

*The top portion of this form is for incoming funds, and the bottom portion is for outgoing expenses. The columns are divided into two sections labeled “1st” and “2nd” because my husband is paid bi-monthly. The bills under the 1st section are paid with the paycheck at the beginning of the month which covers the first two weeks (marked with Friday’s dates each month, and here as 1/4 and 1/11). The bills under the 2nd column are paid with the paycheck in the middle of the month which covers the last two weeks (1/18 and 1/25). Some of our bills are due immediately after payday, these are written in the corresponding blank after each individual bill under the appropriate week. Other bills are due in the second week, and these are written in the second blank.

  1. PayPeriod/Income – My husband is paid bi-monthly. In this section, the dates of each Friday in the month are written at the top, beginning with the first pay day. The totals of the checks are recorded below, along with any other income generated through side jobs, bonuses, etc. and any remaining/leftover balance from the previous week or pay period.
  2. Giving – Once a total is generated, we start deducting our bills. The first to come out is tithe. We give off the top, from the pre-tax total of all our income. This goes to various organizations (as listed), and individuals that have a need.
  3. Saving – We had a Car Fund savings built into our previous budget, but realized that any extra savings came out AFTER all the other stuff, including the things that were not needs. So, not meeting our savings goals fast enough, we moved savings to second place and raised the amount to match our tithe – which is triple the amount we were saving before and a huge improvement.
  4. Bills – This makes up the largest percentage of our monthly expenses. It is where all of the essential bills are paid, rent, utilities, and all of our insurances. Our cell phone is not considered a need, but because we can pay all of our bills with a balance left over, it is included along with the utilities. If there was a time when we could not make ends meet, our phones (or atleast my iPhone) would be one of the first things to move to the bottom of the list.
  5. Weekly Expenses – This category is tough because gas fluctuates so much. We noticed for several weeks we were running too close to our budget or running out entirely, so we upped the total in this category. I’ve also started shopping monthly (an explanation for another blog post) which has significantly helped out the budget.
  6. Monthly Expenses – In this section are extra things like laundry (we have to pay for it), postage, toiletries like shampoo, make-up, toilet paper, etc., cat litter and food for Izzy, clothing for each of us, and money for Gabriel. We’ve been stocking up on diapers and we save for other items he’ll need once he’s born. This is also where our Gift Fund comes into play, and for that I will explain below:

GIFT FUND – The biggest headache saver this time of year, and something I HIGHLY suggest you to start as soon as possible! We always seem to forget about this until June or July, but we put it on our list a few months ago and it has been awesome. We wrote out a list of all of the birthdays, our anniversary, Christmas gifts, and other holidays where we buy gifts or spend money (including ones that Gabe will be a part of next year), then for each we assigned a price. We added up the total and divided it by twelve. This became our monthly Gift Fund amount. It goes directly into a savings account to be withdrawn only for the next occasion on the list. The best part of this is: NO CREDIT CARDS FOR CHRISTMAS! Although Mike and I live without credit cards, not everyone does. I think it can be entirely avoided though, and here’s how: you charge your gifts to a credit card, pay it off over a few or several months and pay MORE than you originally spent because of the high interest rates. OR Imagine this: You start a Gift Fund in a savings account and set aside a little bit each month all year (just like you would if you were making credit card payments), EARN interest until Christmas, and pay CASH for gifts. Seems completely doable, huh? Cause it is!

  1. Debts – This is my least favorite column. We paid off all of our debts, only to be greeted a few weeks later with medical bills. Technically this is not something we chose to collect like a loan, and it doesn’t earn interest that we have to pay. But also “technically” it is a bill that we owe. We make payments on this and after we reach a few other savings goals, we will be wiping out the rest of this like we did our school loans (which you can read about in Steering Clear of College Debt). This is our only “debt.”
  2. Entertainment – Date money and fun stuff like movies, meals out with friends and family, etc. falls into this category. We have a planned amount each month for dates, and anything else is decided based on whether there is enough extra money to do it or not. This section is considered a want, so if there’s no money left, we don’t do it. That doesn’t happen often, but when it does we remind ourselves of all of the good we’re doing throughout the rest of the month, then we raid our change jar and buy a cheap pizza or soda 🙂
  3. Extras – No matter how much we try to budget for everything we can think of, it seems like every month has some extra expense. Whether it’s an ink cartridge for the printer, or something for the apartment, it is an extra expense, and if we can do it, we will.

Below is a chart using the suggested spending percentages that I’ve taken from Dave Ramsey’s Financial Peace University workbook. We fall inside all of these percentages except health insurance – something we’re making top priority to reduce once Gabriel is born, until then we have no choice. Our categories on our budget sheet are different from Dave’s categories below, so I have rearranged my list to match his so that my percentages will be accurate (otherwise, I would be figuring all insurances under what he has as Utilities including life insurance, which he has under Personal, etc.) The formula and instructions are below so you can take a look at your own budget to see how your spending adds up. Have fun!

PLEASE NOTE: Dave emphasizes that these are suggested spending amounts, are meant for an average budget, and should be adjusted to match higher and lower incomes.

The Formula:

If, for example, your monthly income is $4,000 and you spend $900 on rent and $30 on renters insurance each month, your calculation for the housing category will look like this: 930 / 4,000 = 0.2325 (23.25% or 23%)

Dave’s Percentage:

Our Percentage:

Charitable Gifts

10-15%

10%*

Saving

5-10%

10%*

Housing

25-35%

27%

Utilities

5-10%

8%

Food

5-15%

10%

Transportation

5-10%

7%

Clothing

2-7%

3%

Medical/Health

5-10%

14%

Personal

5-10%

5%

Recreation

5-10%

3%

Debts

5-10%

3%

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