If you are singing a Janet Jackson song in your head right now, you rock! That is what pops in to my head when I think about money these days, because I don’t worry about where my money goes. I tell it what to do.
Several posts back, I touched on how my husband and I handle our money. Since then, I have had questions about more specifics on how we go about our “budget meeting”, and what tools we use to stay on track. So, I decided to share a few more details, and share some of our success since we started telling our money what to do.
First, the budget meeting. We both get paid twice a month, so we typically have our budget meeting the evening before we get paid. We gather a few things to get started; Our budget binder, current and past bills, one of our laptops, and a calculator. Our budget binder is something my husband crated that has several sections. It has our past bimonthly budgets, our current and most recent bills, blank budget sheets, and notebook paper. We use the zero based budget sheets from the Financial Peace University class we took.
To start the meeting off, we make sure we have the total of what we are getting paid, and write it at the top of the budget sheet. Then, we go item by item and decide how much money goes in each category. The first category is tithing. This comes right off of the top, before anything else on our list; before our mortgage, before our bills, before our food money. There isn’t much discussion about that one, it’s 10% of our income straight to the Lord to do with what He wants (it’s really all of His money anyway, if you think about it). Next we move on to the most important money categories; no, not credit cards, or other debt, but savings, housing, utilities, food, clothing, transportation, and then medical/health. We move item by item, and talk about how much we want/need to allocate for each. Next we move to funds such as any insurance, personal needs like toiletries, subscriptions, replace furniture, and my favorite: pocket money (which we spend on whatever our little whiny hearts want to and not feel guilty). Then we set some aside in our recreation fund for things like entertainment and vacations.
What about our debts? Why don’t we put those at the top of our list? The easy answer is that it’s what we learned in the Financial Peace University Class, of course! More seriously, because we make sure our needs are taken care of first. Period. It wouldn’t make sense if we were on time with our debt card- I mean credit card payments, (which we no longer have), but didn’t have enough gas in the car to get to work to earn the money we use to pay those bills, now would it? So our debts are at the bottom of the list. This took a little getting used to, but to give you some examples, since we started doing this zero based budget, paying God, ourselves, and our necessities first, we have paid off all of our credit cards (about $6,000), $6500 on my car loan, and other smaller debts. At the same time, we saved about $1500 for our summer trip to Texas, about $700 for Christmas presents, and almost $3000 so far for IVF (this one in the past 2 months). We have also had money for unexpected occurrences like fixing our daughter’s car to pass inspection ($400), having some routine maintenance done to my car before our trip ($500), and a few smaller things like replacing some broken cell phones. Did I mention we paid cash for all of it? No more credit cards. They are chopped, and accounts are closed.
At the end of our meeting, we make a list of what amounts go in which account, how much cash to pull out and put in its designated envelope, and in what denominations. It’s an extra step, but it really helps us keep track of everything. The money we keep in our accounts is kept in a Drop Box folder. If you haven’t heard of Drop Box, it’s kind of like a cloud to store information that can be accessed anywhere (I also store pictures on it). You can choose whether or not it is public or private. They also have an app, so files are easily accessible while shopping to check balances. We can even update the balances from our phones so we have the most up to date information (and so we don’t forget to update then later… I keep my reciepts until I know I’ve updated the balance). Here is a generic example of what we have saved on ours. We also have a page of definitions in that folder, which lists what belongs in each fund and where it is located. Like what is considered a toiletry, and whose account it’s in.
If something comes up that wasn’t expected, we have an emergency fund. This is a fund we don’t touch unless an emergency occurs. We have also discussed what constitutes an emergency, so there isn’t any confusion. For example, a new pair of shoes on sale would NOT be categorized as an emergency, no matter how adorable. Same with a new video game. We have to stay pretty strict on that one because should something happen like a car accident, we don’t have to worry about where our deductible is going to come from, because at a time like that we have more important things to worry about.
Now, we aren’t perfect by any means, and we still have a long ways to go, but I think we have a pretty good foundation built for our financial health.
Again, there is a link below to the Dave Ramsey website, where you can get more detailed information about getting to financial peace.
What questions do you have for me? What suggestions can you offer to someone who might feel a little lost when it comes to doing a zero based budget? I look forward to hearing what you think in a comment below, or on my facebook page.
Thanks again for reading!