Living On Less...Part Two

Last week, I shared how we began our task of learning to live on less.  We began by reviewing every routine bill we had and then determined if there were ways in which those could be reduced.  As painful as it was, we also looked at our spending habits for an entire month.  Most people would probably be as shocked as we were to see just how much money one piddles away.

Around this time, we began taking a class called Financial Peace University by Dave Ramsey.  It was a 13 week course on achieving financial freedom.  Although we took it in a class setting, you can also do it at home on your own.  I would HIGHLY recommend taking it, as it really put us going in the right direction.  More information can be found on their website: http://www.daveramsey.com/fpu/

One of the things we were told in this class was to tell your money where to go each month instead of wondering where it went, like we were doing.  It was then that we created our "budget."  (You know, that evil piece of paper with numbers on it that no one likes to speak of!)  In the end, the budget turned out to be our friend.  Not only do we know exactly where our money is going, but we've also learned self-discipline and have a road map for the future.

You can have that too!  If you don't have one already, why not try doing a budget for one month and see if it makes a difference.  There are multiple ways to set one up, but the easiest for us to use was an excel spread sheet that automatically deducts each amount spent.

Happy budgeting!                                        

Sherri

Rules --

1.  Most important!  Give every penny you bring home a name.  That means allocating it to some category.  By the time you finish your monthly budget you should have ZERO money left to spend.

2.  Once money is designated into categories, you do not spend more than the amount allotted for that pay period.  For example, if you have $250 designated for food, then that's the limit.  Learn to live within your means.

3.  Create a "blow fund" on your budget, and again stick to the limit.  This money will be used for anything you wish or is unexpected.  If you go to the movies, or grab a snow cone on your way home, it comes from here.  (We tend to determine our amount based on what is left after all the other categories are assigned, but also have a cap of $100 for two weeks.)

4.  Anytime you have extra money coming in that you aren't expecting, put it towards an emergency fund first or towards paying off one of your debts if you have at least $1,000 in your emergency fund.


Sample budget --
    Please note that categories and amounts are examples only and not our real expenses.

ALLOCATED-SPENDING PLAN
ITEM		PAY PERIOD:	6-Jul		20-Jul
Income		Sherri’s pay	$1,350.00		$1,350.00
		Jean’s Pay	$1,350.00		$1,350.00
		Total	$2,700.00		$2,700.00
CHARITABLE GIFTS		10%	$270.00	$2,430.00	$270.00	$2,430.00
SAVING		Emergency Fund	200.00	$2,230.00	$0.00	$2,430.00
		Retirement Fund	200.00	$2,030.00	$0.00	$2,430.00
		Health Savings Account	$0.00	$2,030.00	$150.00	$2,280.00
HOUSING		First Mortgage	$516.00	$1,514.00	$516.00	$1,764.00
		Escrow	$97.30	$1,416.70	$97.30	$1,666.70
UTILITIES		Electricity	$0.00	$1,416.70	$184.00	$1,482.70
		Water	$63.51	$1,353.19	$0.00	$1,482.70
		Gas	$0.00	$1,353.19	$62.00	$1,420.70
		Phone	$83.00	$1,270.19	$0.00	$1,420.70
		Cell	$0.00	$1,270.19	$162.54	$1,258.16
		Trash	$0.00	$1,270.19	$37.00	$1,221.16
*FOOD		*Grocery	$280.00	$990.19	$280.00	$941.16
		*Restaurants	$50.00	$940.19	$50.00	$891.16
TRANSPORTATION		*Gas and Oil	$170.00	$770.19	$170.00	$721.16
		Car Insurance	$80.19	$690.00	$0.00	$721.16
		License and Taxes	$0.00	$690.00	$75.00	$646.16
		Car Replacement	$0.00	$690.00	$250.00	$396.16
PERSONAL		Clothing	$0.00	$690.00	$75.00	$321.16
		Haircuts	$0.00	$0.00	$50.00	$271.16
		*BLOW $$	$100.00	$590.00	$100.00	$171.16
			$0.00	$590.00	0.00	$171.16
DEBTS		Student Loan	$0.00	590.00	$171.16	$0.00
		XYZ Hospital	$250.00	340.00		$0.00
		Credit Card Payment	$125.00	215.00		$0.00
		Xtra Pay to Student Loan	$215.00	0.00		$0.00