Do you have a budget? Do you coast along hoping there is enough money to cover all your expenses for the month? At the end of the month do you wonder where on earth all the money went? I love budgets, and while I don't always follow them to every last cent, having a basic budget really helps me prioritize expenses.
Dave suggests having the "four walls" taken care of before anything else. These are your needs. You need a house to live in, you need food to eat, you need lights and heat, and you need gas to get to work. So the first part of my budget looks like this:
Rent $400
Food $250* (using the rule of thumb $100 per person, with some cutbacks since my kids are small) This also includes toiletries.
Utilities
Natural Gas $57
Phone/Cable/Internet $160
Gas $100*
Total $967
So now I have my four walls covered, I can live, work, and eat. Now I can focus on other parts of my budget. I of course figure in tithing, 10% of my income, which roughly works out to $150 a month.
Total $1117
Next important expense is daycare, and I average about $200 a month in daycare costs. So now we go to not so necessary expenses. I have to pay daycare since I need to work to make money. But after the 4 walls are covered, and daycare is paid, if I don't have the money, the items under those are put on the back burner.
Daycare $200*
Debt payments $140
Netflix $5.33
Grand Total $1462
I don't always make enough to meet all my expenses, but now that I have my emergency fund in place, its not as stressful. I like having the cushion the EF provides. My income looks something like this:
Child Support $767 (this is a fixed amount, so there is no estimating on this one)
Wages $800 (Varies)
Total $1567
So according to this budget, I should have about $100 left each month, this won't always be true as I don't always make that much money. But this basic budget gives me an idea of where my money needs to be going and how much.
The items in the budget that have an asterisk* near them, indicate items that Dave recommends using Cash Envelopes for. I figured I could still just use my debit card, but I've noticed that I overspend those categories by a few cents, a couple dollars here and there. So next month, I will be switching to cash, using the envelope system. I purchased Dave's deluxe envelope system, and so far I am impressed.
I encourage all of you to write down a basic budget. Dave Ramsey's site has some wonderful basic budget forms, along with other wonderful forms for financial planning.
skip to main |
skip to sidebar
My journey to freedom using Dave Ramsey's Total Money Makeover
Baby Steps
- 1. $1000 Baby Emergency Fund- DONE!!!
- 2. Debt Free- Current Step
- 3. Fully Funded Emergency Fund $6000
- 4. Invest 15% in Roth IRA's adn Pre Tax retirement
- 5. College Funding for Children
- 6. Pay off home early
- Build wealth and give!
My journey to freedom from debt
3 comments:
Writing a budget helped us figure out why we seemed to be coming up short each month, and why our debt payoff of short-term/low-interest debt always seemed to require further debt instead of completing the payment. Now we have a much clearer picture of how we spend, and what we need to do if we're feeling a crunch. The current debt we're under should be the last we have to get to manage our cash crunch. Then we can use the items we've been paying to debt for savings instead.
Why use a cash envelope and what is it?
A cash envelope in its basic form is just an envelope that you put cash into for a certain category. At the beginning of the month, and this is the hard part, you withdraw the amount of cash you need for your cash envelope categories. Easiest example is food. Say your food budget for the month is $200. At the beginning of the month, you take $200 out of the bank, and put it in your cash envelope. When you go grocery shopping, out to eat, etc. the money is pulled from the cash envelope. Once the cash is gone, its gone, no overspending, and you can't "borrow" from another category. If you have leftover cash in that envelope at the end of the month, you can either roll it over to the next month, or apply the leftover to a debt payment, or savings. A lot of people worry about carrying cash, but I've noticed with myself, and studies have shown, that people are more likely to overspend using their debit/credit cards than using cash, if the cash isn't there, you can't spend it!
Post a Comment