Although I don’t think I paint my wonderful spouse in a bad light in this post, he suggested that I let all of you know that he gives his full editorial support.
Okay, so now that I’ve put it out there that I’m going to write about our family’s finances and give budgeting tips, it’s hard to know where to start. I’m tempted to tell this story right from the beginning, but I’m going to buck that and start from where we are right this minute. I fear to tell you dear reader, that we are not doing a very good job on our finances at this moment in time. All of our bills are on auto pay, and I just give the bank account a glance every few days to make sure that things are going ok.
Neither Tommy or I is a big spender after the many years of budget boot camp that we have been on. I know that we need approximately 2,500 dollars a month to meet all of our obligations for the month, and that leaves us with a few hundred dollars of wiggle room in our income to save…but we’ve not been good about saving since the twins were born.
I do not recommend this form of non-budgetting. We’re getting back into it. It’s a new month, and so I’m/we’re diving back in.
Where We Started
Okay…it can’t be helped… I guess I am going back to the beginning. When we first got married, Tommy and I had very different ideas about money. I thought we should work towards becoming debt free, and he thought that was laughably impossible. I remember talking to him about how it would be great when we paid off the car, or the student loans and he said “Those are payments that you’re just ALWAYS going to have.”
It wasn’t until after Gracie was born and we had racked up many thousands of dollars in medical bills along with extra credit card debt that we started to formulate a real plan. It was very stressful. Please don’t get me wrong though, we always had enough for food, and housing, and our utilities. However it was quite a struggle figuring out which other bills we were going to pay.
One evening, on my parents’ recommendation we watched a documentary called “Maxed Out” it was all about how in the United States, we’re encouraged to take on so much debt through pop culture, the ease of credit, etc. In return we trade in our financial well being, our health, and in some cases our lives. On that documentary was a radio host named Dave Ramsey. He seemed so real, and so awesome, and Tommy mentioned that he had seen a billboard with him on it and that his radio show came on here in Kansas City. I started searching the radio waves for him, and finally came across his show after I passed a billboard. Thus began my obsession with The Dave Ramsey show. I remember it well. It was October 2007. We had a four month old baby girl, a huge stack of bills that we couldn’t hope to pay, and I was listening to the radio trying to figure out this Ramsey guy’s plan.
The radio show had a call in format, and from the calls I could understand a couple of things…he suggested a financial plan called the baby steps, and he advocated taking charge of your money so that you could retire wealthy. It sounded a little too good to be true, so I went to google and looked him up. Sure enough he had a debt elimination calculator. I ran the numbers.
Holy hell, we had 48,000 dollars in debt. Oh my gosh, I had no idea it was that bad. The calculator then asked how much money we could put towards our debt each month. I went and calculated all of our bills and added in some estimations for groceries and gas and stuff….We could pay something like 12 bucks extra each month toward debt. I punched in the number, and waited (our internet was much slower back then). It said that we would never ever ever pay off anything if we only put 12 extra bucks a month.
I searched the website a little longer and got the gist of the plan. The first baby step was to save up 1,000 dollars as fast as humanly possible. I knew that we weren’t going to be able to save up a thousand dollars with only twelve measly dollars a month. So I went back to the list of all of our bills. What could we possibly cut out? Mind you, this was all during the day, and this entire process was taking me literally hours. Going back and forth between the baby, the radio show, the computer and my pen and paper.
Getting My Spouse on Board
Tommy is a very very straight forward person. I knew this about him, even though we had been married a short time. When I want to move the living room furniture into another configuration, I must first tell him the entire plan. There is no “Well let’s try this over here, and then we can figure the rest out as we go.” He must know where every piece of furniture will go first, and then we can start to move it. I knew this, and so I knew I needed to put together a whole plan before he got home from work.
I also knew that I needed to find about 300 dollars in our budget to be able to make headway. 50 dollars just in case something went awry, and 250 to start building up our baby emergency fund. I looked and looked at the budget and there were three things that stood out to me.
1) Our cell phone bill…150 dollars every month.
2) We spent some money on going out to eat and on specialty groceries.
3) Our cable bill…..It was only 13 dollars, but it was the only other thing in our spending that was a luxury.
So that night, he came home and I ambushed him. I told him all about wanting to follow this financial plan, with seven baby steps, and how I wanted to get started right away. How I’d made a list of all our bills and I thought that we could make something work out if we were willing to get really really serious. I stopped just short of telling him about the specifics of the groceries and eating out and the cable. I just couldn’t bear to tell my sweet husband whose favorite pastime was quoting television shows with friends, that we were going to have to give up our television programing.
He was cautious and skeptical especially since I hadn’t broken down all the numbers for him, but he was nearly as anxious as I was to make a change. That night however, I couldn’t sleep. I felt like a huge weight was sitting on my chest and finally I just had to speak up. “We’re going to have to get rid of cable.” I blurted and burst into tears. Tommy guffawed at this. He was ready to do whatever we needed to.
Working Out a Plan
The next day I dug into the nuts and bolts of our plan. I called the cable company, and the cell phone company and cancelled our plans (luckily we were not under contract with either of those providers). I set to work on our November budget. Dave Ramsey recommended a zero based budget, which means that you give every single dollar of income a name for the month. You plan it out completely, and then the money that you will be spending on things other than bills, you withdraw from your account and put them into envelopes: groceries, gasoline, money for entertainment, gifts, etc.
Our First Budget Meeting
When Tommy got home that evening, we sat down and went over every penny that we were going to spend in November. We simply wrote down our income and expenses in a ledger book. We do not do a fancy spreadsheet. I can make up a very fancy spreadsheet that never gets used. The important thing is to basically make a pact with your spouse that this is the only way money will be spent during the month…unless you have a meeting and decide otherwise (sometimes stuff happens and you have to make a contingency plan) Anything that was left over would go to our baby emergency fund. It was a huge relief to both of us to have that baby emergency fund in a savings account and know that if some emergency were to arise, we could handle it.
Here is what our first month’s budget looked like:
$2559.62 + $86.00: Monthly take-home pay + Money we already had in our checking account
So we would be starting the month with: $2645.62
These were the expenses that I have written down:
250.00 for Groceries (We quickly found out that 250 dollars a month was way too little for us.)
343.00 for Utilities
700.00 for Household expenses (no idea what this category means…gasoline? various other bills? I have a feeling it’s a jumble of things that I found overwhelming at the time. The credit card bill, the pediatrician that we owed a thousand dollars, a payment for our washer and dryer, etc.)
435.52 for the Car (not sure why the car payment was so high…I distinctly remember it being 285ish)
108.88 to Mohela (This is only Tommy’s student loan amount as mine was being deferred at the time)
207.42 for Insurance (I think this was car insurance and health insurance maybe?)
31.00 to Met Life (Life insurance for Tommy)
50.00 Fun (We split this up into 10 dollars for each of us individually, and 30 dollars for the family)
50.00 for Charity
337.00 Christmas gifts (that was gifts for every person on our list)
This left: $132.80
So that’s what we put into savings.
What Happened as Soon as We Committed to Our Plan
However, something must have shifted in the universe when we decided to get serious about our finances. Up until that point it felt like such drudgery to try and make progress, but once we had committed to plan, something amazing happened. Extra money started coming into our home.
- Insurance ended up paying for large portions of our hospital and doctors bills, and so we got a refund of some of the money we had paid to the hospital.
- A family member gave us some money to help with the cost of Grace’s NICU bills.
So, sometime that very first month we had scraped together our 1000 dollars of baby emergency fund. At the time this felt like a miracle. It wasn’t though. I mean it was certainly fortuitous that it happened at that exact moment, however it really was so simple when I look back.
Odds and Ends about Budgeting
We set a goal: Becoming Debt Free
We made a plan to get there: The budget was the road map
We committed to it: Both of us got fully on board
We made it easy on ourselves: When we got our thousand dollars in the bank, we realized that 13 dollars a month was just about the cheapest form of entertainment in the universe…so we ended up keeping the cable. Also, doing the cash based budget was a way for us to not cheat. We took out cash every month for every expense that wasn’t a bill. This included: groceries, gas, gifts, fun money, etc.
We are not spreadsheet people….I can make a pretty spreadsheet, but I don’t have the discipline to go back to it over and over during the month to make sure that I’m following it. The cash held us accountable. It let me know when we needed to scrounge together leftovers in the kitchen for dinner, or cook up some bean and rice from the cabinet. It disciplined both of us…without having to make it hard every single time we went out somewhere…if we had the cash for it, we could have it, if we didn’t, we couldn’t. No more playing math games in our mind with our debit card.
We learned that budgeting in a little money for fun helped us immensely. I cannot tell you how much we saved over time because Tommy and I had our own little bits of money that were just ours. Yes, in the beginning it was ten bucks each, and 30 for the family (to be able to eat out once a month). Without those little things that we looked forward to, we couldn’t have done it.
Okay, I could honestly go on and on about this subject, but I would absolutely LOVE to hear from you. If you are just getting started with budgeting or getting out of debt, what exactly are you struggling with? If you’re an old hand at this stuff and have your family finances well under control, what can you share with the rest of us?