Creating Our New Budget Plan

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zero-based budget, budgeting, envelop method, frugal living, financial planning

The following post is by MPFJ staff writer, Travis.  Travis is a customer blogger for CareOne DebtRelief Services, and also appears weekly at Enemy of Debt.  Travis candidly shares his personal journey to pay off $109,000 of credit card debt and the tips he’s learned along the way. As a father and husband, he provides a unique perspective on balancing debt, finances, and family.
Have you ever spent so long working on your budget that your head felt like it was going to explode?
That happened to Vonnie and me last weekend, but I’m glad we did it.

Before Vonnie and I joined our debt management plan, our budget consisted of a piece of paper that resided behind the packet of checks inside the checkbook.  When it was time to pay bills, I’d take it out and unfold it.  After the bills were processed, I’d fold it back up and put it back in it’s spot.  It had aged so much from being folded and unfolded so many times it looked like it could have been a historical document.  On it were written the major bills of the month, as well as my paycheck amounts.
It didn’t include my wife’s income, the list of expenses was incomplete, and it was never updated.

When we finally decided to take control of our finances, we struggled to find a budgeting method that worked for us.  I came up with something I called the whiteboard method in which I would write on a whiteboard when each bill was due.   Both Vonnie and I are visual people, and this would seemingly work well.  This method gave us a complete picture of our recurring bills,  but it left us rudderless with our discretionary spending, and the whiteboard was cumbersome.
We then tried a variation on the envelope method in which we would pay our bills, then divide the money left over into amounts to spend during the week on things such as groceries, entertainment and gas.  The cash would be put into their respective envelope.  The problem with this method was that we didn’t save anything.  The entertainment envelope was the catchall for any remaining funds, and we always said that we’d save whatever was left over. 
Of course, there was never anything left over.

The other major problem with the methods we tried was that they were too short sighted.  They didn’t include any planning that allowed us to set and work towards any long term goals. So over last weekend, we spent many hours putting together a budget proposal of congressional proportions. 
Monthly Budget

I constructed a monthly income statement and recurring expense report (including due date) for the next five months.  We have some changes that needed to be taken into account as we transition through the next few months such as our daughter’s dance class breaking for summer, as well as our car being paid off.   We decided on a constant amount of funds to make available for the weekly budget, which then generated the amount that would go into savings each month.  This information along with the projected savings account balance is included in each month’s statement.
Weekly Budget:

Weekly spending is very fluid, but there are some general categories that will always be there.  We put together a template from which we will start each week.
Scheduled Budget Discussions

·           On the last day of each month, Vonnie and I will sit down to review the next month’s information in the long term budget package and make any necessary changes.
·           We do most of our spending on the weekend:  cars get filled up with gas on Friday, groceries on Sunday, and entertainment.  Therefore, each Wednesday night we will create our spending plan for the upcoming weekend, take cash out of our checking account and put the money into the categorized envelopes.
 Cash only keeps us from overspending!

·           Finally, we will review the weekend spending on Sunday night to ensure we’re on track, make any needed adjustments, and discuss any spending that needs to occur during the week
This is the most detailed budget plan that we’ve ever put together.  It accounts for recurring monthly bills, weekly discretionary spending, as well as long term savings goals.  We’re both on board, and committed to making it work, or continuing to make adjustments until we find something that does. 

How about you all? Are you continually tweaking your budget method, or have you found one that works for you?

Share your experiences by commenting below!

    ***Photo courtesy of Image courtesy of Ambro / FreeDigitalPhotos.net

    Comments

    1. Derek Olsen says:

      Great post. And good luck with the updated budget.

      My wife and I use the same budgeting forms each month(a Google Doc that I created). We tweak the numbers every month. I believe it isn't good enough to create a yearly budget and then divide by 12. Some months are different and need special attention. We always look ahead a month or two to see if there are any expenses coming up. We also keep our yearly goals in mind every time we do our monthly budget. I believe that monthly course corrections or realignments are necessary, important, and easier than you might think. It might take a little more time, but it is well worth it.

      I have found that the time spent working a monthly budget will produce financial results that are far greater than what you would earn in the same amount of time at work. Yup, worth it.

      -Derek
      My recent post 001 I’m being chased – His Plus Hers Equals OUR$ Podcast

    2. Thanks for your comment, Derek – I agree that frequent course corrects are necessary. Granted we're still getting our arms around this new system (and it will take awhile), but we sat down 4 times this weekend to tweak the budget just for the remainder of March! Better very frequently than not frequently enough, right?

    3. Why try and reinvent the wheel? Plenty of great budget programs out there. I have used YNAB for 3 years. Wife and I stick to the budget, save money, and have fianacial peace.

      • We've tried several “well known” budget plans, but there's always something that just doesn't work for us. Everyone has to find a budget system that works for them, and I think that if you truly look at how every day people handle their finances, a hybrid of different methods are used. Thanks for your comment – and I'm glad that you have financial peace – good for you!
        My recent post Beer, Friends, and Losing Control of your Spending

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