Wow, what an eye-opening week and a half! We're following Dave Ramsey's very simple steps and have created both a "quickie" budget and a more complex one. If you're interested just let me know and I'll e-mail you the Excel sheet we're using to plan our expenses. It's very eye-opening to put all this stuff down on paper and really see where our money goes. We approached it step-by-step: 1) income at the top so we know how much monthly income we have coming in 2) expenses listed underneath so we can see where it's all going today and how much is left (or not).
The excel document is a typical business style cash flow statement that many businesses use to track money and I really like this style of budgeting because I can see a 12-month plan at a glance. For instance, we learned that we should be able to easily put $200 into savings every month. We discovered this by listing every conceivable expense that we anticipate and have had in the past and then shifted dollars around after talking over what we REALLY need. For example, we asked ourselves, "do we really need to spend $50 every month on dining out?" Answer: no, let's put it into savings and not eat out for a few months. The KEY here is to put it all on paper (computer spreadsheet if your geeky like me) and then you can analyze what is really going on and adjust your behavior to meet your goals.
Our first goal (care of Dave Ramsey's "baby steps") is to get $1000 into an emergency fund. According to our plan, we'll have that in 5 months, however, since we are committed to sitting down together every month for a "budget committee meeting" I suspect that further adjustments will get made in the future to help us accelerate that. I'm also going to be a little more aggressive looking for freelance programming work to increase income so we don't have to cut more spending. That's another key. We are pretty much living our lifestyle on just my income so any additional income (Diane working at school, me getting more freelance work) can be used to accelerate our emergency fund.
Jackie, your description of how your family operates is exactly like what we were doing until we put all this on paper. I strongly encourage you to write down your income and the expenses you have just to start the learning process. Once you have real information to work with instead of emotions and stressful anxiety you will be able to understand the options and choices that can be made to set goals and take control. Trust me. It might sound like having real data in your hands is scary but, trust me, it is an awesome exercise in learning what is really happening with your dollars.
The other apprehension I had was that putting it all on paper would prove the stupid stuff I was doing. Did I really need to spend $800 to build my own computer? Did I really need to spend $400 on a really cool wide screen LCD monitor? Yup, I made some bad choices especially when I compare those expenses to having the security of that kind of money sitting in the bank and earning money. But, with Diane's help and teamwork, I'm now committed to this plan and changing my bad habits.
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