The State of Our Finances (part 4 of 4)

I have laid out the other 3 areas of our finances:  income, debt, and assets.  Now, we move to the part I struggle with the most–The Budget.

The Budget

The Early Years:  Henry and I are terrible, terrible, terrible at sticking to a budget.  We’ve tried the envelope system.  Didn’t work for us.  It seemed like we spent MORE money not less when we used envelopes.  We would look in our coupon folder (our version of using envelopes) and see all this money and think, “yeah, let’s go eat out tonight.”  Or, we would forget our envelopes at home and have to use our debit or credit cards.  Kind of defeated the whole purpose. 

The Not-As-Early Years:  After I graduated from law school, our income doubled and budgeting kind of went out the window.  We were flush with cash and it seemed like we didn’t need to budget.  Then, we decided we wanted to buy a house.  That meant saving money.  We tightened our belts and just saved what we could after we had paid our bills and set aside some money for fun.  If we didn’t have money in our checking account to go to the movies, we just didn’t go.  There wasn’t a lot of rhyme or reason to it, but it was sort of working.  We saved enough money, put the downpayment on the house, and did some “fixin’ up.”  At that point, we realized, we owed a lot of people a LOT of money.  Neither of us like that feeling of owing poeple.

The Nasty Now & Now:  We want freedom.  Not freedom to the point of where we can quit our jobs and live on the beach (although that doesn’t sound too bad right now).  No, we just want freedom to not have to pay so many freaking bills every month.  We want to invest and earn interest instead of paying interest.  So, we have come up with a quasi-budget.  It’s not overly restrictive, yet it allows us to throw all our “leftover” money at debt every month.  This is what it looks like:

Paycheck 1 $1,300
Car Payment $355
SallieMae #2 $265
Groceries $125
Eating out $75
Gas $175
Child Care $160
Total $1,155
Paycheck 2 $1,381
auto insurance $150
electric (avg.) $150
water (avg.) $60
Child Care $160
Groceries $125
Savings $200
Savings (automatic) $345
Total $1,254
Paycheck 3 $1,300
Mortgage $940
Groceries $75
Gas $125
Child Care $160
Total $1,300
Paycheck 4 $1,381
Trash $30
Citi student loan $117
Phone $144
Internet $51
Child Care $160
Miscellaneous $50
Savings (automatic) $345
Groceries $125
Total $1,022
Total Income $5,362
Total Costs $4,731
extra payment fund $631

I’m too technologically illiterate to know how to import my Excel spreadsheet, but in Excel is where I keep the budget.  I have it divided according to paycheck because the makes the most sense to me.  Child care is a pretty expensive category, but that is because we have someone come to our home to watch Baby Girl.  Starting in 2 weeks, Henry is taking a position where he will only work 3 days per week.  This should chop our child care bill down to $120 per week and free up $160 more per month to throw at debt.  There are areas where we could trim, but we are pretty happy with our categories as they are right now.  They are loose enough that we don’t have to micromanage every penny, thus ensuring that we actually will stick to our “budget.”  Also, any extra money we get, Henry’s overtime, tax refunds, bonuses, etc. go towards debt. 

How do you budget?  Do you manage down to the penny or are you like us, prefer it a little more loosey-goosey?

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