SLIDER

Hello!

My name is Erika. I'm in love with making art, collecting old things & chasing after my two kiddos. This blog is a peek into my happy accidents & plots of total world domination.

NEWSLETTER

DIY- Before the Budget

 Do you keep a budget? :) I know for me that a budget is sort of intimidating.  When a bill comes in.. You pay the bill? and whatever is left at the end of the month goes into savings.. right? Well maybe in a perfect world but recently I read the book Off the Grid: Inside the Movement of More Space, Less Government, and True Independence in Modern America.   
The book is about a man on a journey to find the perfect place in the United States to live off the grid.  Off the grid meaning that his home wouldn't be plugged into agencies where you are required to pay a monthly bill.  Off the grid is where you handle your own septic.. electricity.. water...etc.   I think the biggest eye opener for me was the fact how many monthly bills everyone has.  Cell phone? just pay a monthly bill.  Netflix.. just a monthly bill.  Those monthly bills add up.

I keep a chart or if your fancy a spreadsheet with a list of all your bills and credit cards and then have a column for every month of the year.  So when you pay a bill you jot it down and you can see how much you are locked into every month.  I also keep a separate spreadsheet for our business monthly expenses.  Why is it important? Because then you can keep track of not getting ripped off for your personal finances and your business finances.
Before you start making your budget, now you know what you are spending on must pay bills every month including your credit cards.  Pick 1 credit card you want to aggressively pay off.  Under the bill section write your name- and that is your bill.  That bill is going to be your reward fund :).  Before I quit my job I had a quit my day job fund and I would be a little every month to help me quit my job.  When I was in college I used the fund for my handbag shopping problem.  So if you feel like your pinching pennies every month try 5 bucks or even 10 bucks a month that you automatically set aside for something you really want.
You take your monthly income and subtract your monthly bills from your chart and viola you have what you are left over for you to create your monthly budget.  If you want to know what your debt to income ratio is for buying a home/car, you take all your monthly bills that report to the credit bureaus, your rent/mortgage bill, taxes and home insurance monthly bill and add them up and divide by your monthly income and that is your debt to income ratio.  
Instead of making a hard nosed budget I think about it more as choices.   Instead of the fancy grocery store, go to the cheap grocery store.  If you buy lunch and a starbucks everyday.  Why not bring a bag lunch and go out to lunch on fridays? or cut down to 1 starbucks a week.  So when you make a budget you take your bank statement and see where your money is going.  Starbucks... Groceries.. Gas.. and make a list and see where you are spending your money.  Ask yourself where can I spend less? It really is that simple.  Commit to it for a pay cycle and see how it works for you.

  

   

14 comments

stace said...

This is great. I do similar things with our "spending plan." One other thing is, I have 2 envelopes that I keep in my drawer for extra saving (besides the Savings account at the bank), one is labelled "Emergency" and the other "Vacation." At the beginning of every month, right after I get paid, I put a certain amount into each envelope. Then I either deposit the rest or set the other money aside for "Food" spending and we try to pay cash for our groceries. If there's any extra money left over at the end of the month, I put that extra small amount into the envelopes as well (why not?). Savings really start adding up, especially if you're doing it right after you get paid.

stephanie said...

Seriously, I love how practical you are. My husband does all our at home accounting, since that's what I do for work and it would be too confusing for me to handle both. (Confusing as in: "Did I pay this bill for work or home already this month?") We have a spreadsheet and an allotted amount we keep as spending money, the rest goes into savings after bills are paid.

Mandy Crandell said...

Fantastic advice! I finally started keeping track of my Etsy business budget. Maybe I should do it for myself too.

bobbi said...

I was reading a book like that a month ago, very inspiring. There is a whole movement going on about living with less, i am so happy about that. maybe the world is relly about to change. Or to end. 2012 is just around the corner...
One thing I don't do much to keep my relationship with money real, is using cards. I keep some cash at home and decide day by day how much I can spend. It works.

Joyce said...

a great article. I think my husband would be happier if I would learn this word "budget". smile... xo

Mo Pie, Please said...

With the whole buying a house thing, we've really had a good hard look at our spending. Since I'm not working right now, we're pretty much maxing the spending which is no good. So we're both working on our organizational skills and trying to save as much as we can. Luckily we got a nice big tax return to give us a boost!

Aubrey Studebaker said...

Great/practical post. I have a ridiculously extensive spreadsheet. My husband gets scared when he sees it. Tee hee.

Happy Little Trees Studio said...

LOL! Your handbag problem! I've got a "costume jewelry" problem! Great post!

Lesley Myrick said...

Really great advice - I love the idea of making a spreadsheet to see all your expenses at a glance! I definitely need some budgeting tips right now...my husband is about to start seminary and we'll be down to one income!

Len♥reNeverM♥re said...

Very impressive!
I have $pending problem~ must repent!

xo*

Jess said...

ahhh yes. great ideas! It's sooo hard to budget but sooo worth it!

cindy k said...

this is great advice! i love including yourself as a bill to pay ... i have a rainy day fund. for us, actually writing down our monthly expenses has made a huge difference. we were shocked by how much we spend on practical things like utilities and more fun stuff. we've cut back on ordering in twice a week for dinner, which is about $150 a month times 12 months = $1,800!

Breanna said...

This was all very very helpful! :) I started my own document I do everything in right on my computer.

shopgirl said...

This sounds like a really fascinating read. Did you like it? I like all the little tips you have Erica! We do have a family spreadsheet, but I don't know if you call it a budget. We just try and spend within what we make every month, but I know that's not good enough.

It definitely keeps me thinking!

© Erika Lee Sears