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Wednesday, November 3, 2010

A New Approach

Doug and I have been budgeting for a while now.  We are Dave Ramsey followers and have tried to follow his advice.  We are completely debt free except the house.  We are almost done with our full emergency fund.  If all goes as planned, by the end of 2010 our emergency fund will be fully funded!  We've done well in some aspects, but other areas we still need to do some work.

Sticking to the budget is one of those areas.  So this month we are approaching it differently.

In the past we have had our budget meeting, set the dollar amounts for each category, then went off on our merry way.  Only to come back together a month later and find several budget items almost always go over.  For most people this would be impossible, because you would literally run out of money, but since Doug always works overtime, we almost always have the extra money to let this happen.  Not good.

We have been budgeting based on his base pay, assuming no overtime, and allocating any and all overtime to go into savings for our emergency fund and extra giving and/or anything else we might need that month (like home improvements/repairs).

We have had several months where unexpected bills have come in.  Doctor bills mainly.  With a broken arm and a broken finger/mangled hand, we've had some extra expenses.  Those aren't usually the problem.

The main problem, I have to say, is me.  There, I said it.  I am the problem.  Mostly anyway.

My budget almost always goes over.  Plus the kids' budget, which is money that I spend on them, almost always goes over.  Doug's budget goes over about once every six months.  He works so much, he doesn't have time to spend his money.  :)

So this month instead of taking October's overtime money and putting it all in the emergency fund, we only took part of it for the fund.  The rest we took out in cash and gave envelopes to the categories that usually go over.  Dave recommends the envelope system, but we have always liked to use our debit card since it earns us fuelperks through Giant Eagle/GetGo.  But ... using the debit card still allows us to overspend in certain categories.  Because the extra money is always in the account.

So yesterday I took a bunch of money out of the account and divided it into envelopes.  I gave Doug his, we put some money into an envelope for medical/doctor bills since we know we'll be getting some after his surgery and dental work, I have an envelope for me, and I also have an envelope for the kids.  I will admit, I was a little nervous about the whole thing.  Convicted is probably the better word.  But I need to get this under control.  Under better control rather, because it isn't totally crazy out of control.  Just slightly out of control.  Does that make sense to anyone but me?

This morning I got to test out our new system.  I had a few items to return so I did a little shopping also.  Alex needed a new coat and I wanted to do a little Christmas shopping while he was in preschool.  

What a difference when I used cash!  Using cash really made me stop and think, "do I really need this item right now?"  "Is this the best deal I can get on this?"  "Is this necessary this month or can it wait?"  Wow!  My brain was hurting a little from so much thinking.  :)

At the same time, it is kind of a pain.  For instance, at Walmart I bought 5 things.  One was for me (a new pair of slippers), one was for Alex (a new coat), two were for Christmas, and one was a miscellaneous item (Benadryl so I can breathe at night).  So the dilemma came at the register.  Do I have the cashier ring everything up separate since the money is coming from different envelopes?  What a pain!  Not to mention annoying for anyone waiting in line behind me.

So I decided to just ring Alex's coat up separately with the money from the kids' envelope and pay for the rest out of my envelope.  I figured I could move some money around once I got home.  Which I did.  But it was still a pain.  And a bit confusing.  Because now I need to reimburse myself from the Christmas account and the checking account.  I have it all figured out, but it was still a pain.

I'm not discounting this whole paying with cash/envelope system though.  I believe it will be a good thing.  Especially for me.

Now we need to have an envelope for food since that is another category we often go over in.  I think we'll start an envelope for that after tomorrow's pay.  That way when November 28th rolls around and I don't feel like cooking supper, if there's no money in the envelope for pizza, either I'll have to cook or we'll eat cereal.  :)

And if all goes well, on December 1 I can tell you that I still have money left in my envelopes!
Here's hoping.



*Katie* said...

I HAVE to do the envelope with food, because I will do just that, ohhh I don't feel like cooking tonight...I'll just go get pizza. Or Chick-fil-a. Or whatever. Now I have no choice if there's no money! It has also made me use the stuff we already have in the cabinets to save money on groceries if I want something special :)

Melissa said...

sounds like a great plan & i bet it will get a little easier when you get the hang of it!

i have had the same problem. & i still do sometimes. I usually have to move a little around, which isn't good. i'm doing better!

& yes, it does make perfect sense (the out of control part)!

Heidi said...

Yeah, I can't stand the envelope system because of what you said. I do know that when I actually have cash, I do the same thing. Hmmm... Do I REALLY need this? But we've been doing good sticking to our budget. I think you can do it too!

Laura said...

I have to get back on track with budgeting as well. I overspend a lot.