Friday, August 19, 2011

Budgeting without a Brain

I hate budgeting.  I an ideal world, I would spend all the money I wanted and there would always be more.  Yes, you may have some of what I'm smoking - it's very good stuff.  The problem I run into the most with budgeting my husband's money is discipline and self control.  I really have neither.  If I have the money with me, it's likely that I'll spend it.  And because I have three children, I'm not really comfortable leaving the house with no debit card.  I realize that, logically, there is very little reason why I need one.  I can check before I leave if I need gas, and if my car breaks down or someone starts choking, I'm going to call my husband to come to my aid, and he'll have money on him, but it still makes me nervous to not have it.

And so we've devised the cash only system.  This of course isn't new - I've read about it before, and I'm sure some big money guru talks about it extensively in some book somewhere that costs a bunch of money.  But since my blog is free, I figure I'll go into it some here.

First we break down our expenses into PMS

Primary means things we pay for monthly, even if some of them aren't strictly "necessary."  In this category goes:
Car Payment / Insurance
Cell Phones
Autopay entertainment (like Netflix)
Credit Cards and other Loans

Material means things we need but aren't automatic withdrawals and aren't necessarily a stable cost. In this category goes:
Groceries (encompasses food, cleaning supplies, and toiletry type products)
Dog Supplies

And Superfluous means stuff we really don't need, for the most part. In this category goes:
Junk food and soda
Clothing (which is sometimes a need, but not the way I do it!)
Fast Food
Entertainment (pretty much just means date night)

My husband gets paid once a month, and soon as it hits his account we take a small chunk out and put it in savings, and pretend like we never got it. Alternately, we could put this money towards out debt, and it'll probably end up there eventually, but having SOME savings is pretty important.

Then we figure out how much money we have left after all the bills will be payed (because sometimes rates go up, and some payments are only every other month, etc). Then we sit down with a Nice Google Doc and plan out our month. First we allot money to the Material category, deciding about how much we'll need for groceries, etc. This stays relatively constant every month, so it doesn't take a long time to figure out. As the month goes on we may adjustments, though.

We set aside a chunk of our money for “miscellaneous expenses” - things like vet bills, or signing Luke up for soccer, car repairs, etc. If we haven't spent this money by the end of the month it goes into savings, but I think we have yet to encounter a month where we don't spend almost all of it (three kids, four dogs, two cars? Yeah).

And then comes the Superfluous category. After everything else has been settled, we look at how much we have left for the month, and decide what we can afford to spend on Junk food from the grocery store, fast food, and random clothing items that Kes things are “SUPER CUTE, OMG!” It's rare that our kids actually NEED new clothes, probably because I constantly buy them things. Anyways..

After deciding how much goes in each sub-category, we withdrawal enough cash to cover what we've decided on. And before you get any ideas, remember that we have four dogs AND an alarm system. ;) lol. We keep the cash in labeled envelopes that I made all by myself (omg I'm so crafty!) – one for each category.

The reason this works is that it means I won't spend the money unless I leave the house intending to spend it. So when I leave the house for play group and lunch with Andy, I'll grab enough cash for lunch. But when I leave the house to go to the doctor, I won't grab any cash, and therefore I can't stop for lunch! And when the cash is gone from the envelop, the budget is done for the month. No exceptions.

So priority definitely matters here.
Monthly Bills
Everything Else

It still takes a little bit of discipline, because I still have a debit card with me when I leave the house, but it's a lot easier to exercise self control somehow. Knowing that I “left the money at home” lets me think that I don't ACTUALLY have it with me, and therefore I can't spend it. Prior to the Cash Only System, we had a fast food budget, and always “overdrew.” And we never had a junk food budget, but I decided that we really need one when I added up all the junk food we bought in a month (we drink a lot of soda around here).

And that's pretty much it! It's not complicated, but it works for me, the Queen of Self Control. ;)

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