I have been reading other blogs of people on the Dave Ramsey's Total money makeover. It seems like Food is a hard category to keep consistant and not overspend on. I have been reading a lot of posts where people use e-mealz.com. I think the idea sounds good, It makes out a list of meals for each day and comes up with a grocery list. I'm going to guess my family wouldn't like most of the meals though.
I seems to me, that the concept is good though. We could apply the concept ourselves, and pick our own meals. We could come up with a list of meals that we eat. After a trip to the store, we could have a rough estimate for what each meal costs. Then use the info to come up with a meals we'll cook that week that meets the budget.
The second part of this category makes it really hard to bugdget, because it seems like many household items run out at the same time. And it adds up quick, when you need toilet paper, paper towels, trash bags, batteries, etc. I'm not really sure how to attack this problem. Hopefully we will have extra in the envelope at the end of month to offset the months we need to buy these things.
Thursday, December 24, 2009
Planning for January
Our First Budget
My wife and I have sat down and came up with our first budget We started it with the minimum amount we expect to receive in income. The budget is about even right now, but any extra money we receive should be able to be put toward debt or savings. This is our first budget and we realized it will probably need adjusted several times before the end of the month. It will also take a few months before we start getting it right.
In our budget there is savings set aside for: automobile service, Gifts (Christmas/birthdays), Pet Medical, vacation, Electronics, property taxes, and house insurance. These are meant to build up over time to pay for expected expenses throughout the year. These Saving will be applied at the end of the month. If the Budget needs adjusted, these will be the first categories to take from to balance the budget.
Our Envelope system.
We will be putting money in envelopes to keep from over spending on certain expenses. But we will be using them to save for other expenses. We have a bad habit to seeing money in our checking, and using it. This will hopefully hide our money from our bad habits. Some of our savings envelopes will have a max limit on them. While they are at or higher than that limit, no more money from the budget will go toward them. The Max limits will be set slightly higher than the largest bill we would expect to encounter. That way we don’t over save some categories. And the money is put where it is most needed.
Cash – this amount is split between me and my wife, this is money had no restrictions on its use. This is in since our “blow” money. We can use it or save it up for a larger purchase. Giving us our own freedom to get what we want without gilt.
Clothes – This amount is strictly for buying the family clothes.
Petcare – Max limit of $350. This amount is strictly for Pet medicine and Vet expenses.
Auto Service – This amount is used strictly for auto service and repair. It can also build up for future auto purchases.
Vacation – this amount is used on anything we deem a vacation expense.’
Gift Giving – Max limit $2000 This is strictly for birthdays and Christmas and other gift giving.
Home improvement – used for home repair and improvement
Property taxes – Max limit $2000
House insurance – Max limit $700
Recreation and Entertainment – Used for dinning out, movies, bowling, skating, camping, etc.
Electronics – Used for “netnanny” subscription, computer upkeep, and future electronics purchase.
College – will be budgeted in Step 5 of baby steps. Will use envelope to save up yearly deposits.
Retirement – Will be budgeted in Step 4 of baby steps. Will use envelope to save up yearly deposits a /roth IRA.
Groceries - This is only for food, drinks, and household items such as cleaners and paper towels. Probably should be renamed "walmart".
Gas - is left out for now, pay at the pump with a debit card is great. And we don’t seem to do lots of extra driving.
My wife and I have sat down and came up with our first budget We started it with the minimum amount we expect to receive in income. The budget is about even right now, but any extra money we receive should be able to be put toward debt or savings. This is our first budget and we realized it will probably need adjusted several times before the end of the month. It will also take a few months before we start getting it right.
In our budget there is savings set aside for: automobile service, Gifts (Christmas/birthdays), Pet Medical, vacation, Electronics, property taxes, and house insurance. These are meant to build up over time to pay for expected expenses throughout the year. These Saving will be applied at the end of the month. If the Budget needs adjusted, these will be the first categories to take from to balance the budget.
Our Envelope system.
We will be putting money in envelopes to keep from over spending on certain expenses. But we will be using them to save for other expenses. We have a bad habit to seeing money in our checking, and using it. This will hopefully hide our money from our bad habits. Some of our savings envelopes will have a max limit on them. While they are at or higher than that limit, no more money from the budget will go toward them. The Max limits will be set slightly higher than the largest bill we would expect to encounter. That way we don’t over save some categories. And the money is put where it is most needed.
Cash – this amount is split between me and my wife, this is money had no restrictions on its use. This is in since our “blow” money. We can use it or save it up for a larger purchase. Giving us our own freedom to get what we want without gilt.
Clothes – This amount is strictly for buying the family clothes.
Petcare – Max limit of $350. This amount is strictly for Pet medicine and Vet expenses.
Auto Service – This amount is used strictly for auto service and repair. It can also build up for future auto purchases.
Vacation – this amount is used on anything we deem a vacation expense.’
Gift Giving – Max limit $2000 This is strictly for birthdays and Christmas and other gift giving.
Home improvement – used for home repair and improvement
Property taxes – Max limit $2000
House insurance – Max limit $700
Recreation and Entertainment – Used for dinning out, movies, bowling, skating, camping, etc.
Electronics – Used for “netnanny” subscription, computer upkeep, and future electronics purchase.
College – will be budgeted in Step 5 of baby steps. Will use envelope to save up yearly deposits.
Retirement – Will be budgeted in Step 4 of baby steps. Will use envelope to save up yearly deposits a /roth IRA.
Groceries - This is only for food, drinks, and household items such as cleaners and paper towels. Probably should be renamed "walmart".
Gas - is left out for now, pay at the pump with a debit card is great. And we don’t seem to do lots of extra driving.
Restarting my total money makeover, the right way.
A few years ago my brother-in-law gave the “The total money makeover” by Dave Ramsey for Christmas. For a long time it sat on a shelf collecting dust, like most books do so well. It stayed there till spring 2009 when I had to work nights for a couple weeks. I was looking a book to read during the slow times at night. I saw the book and decided to take it to work. Within a few nights I had the book read. I now had a new outlook on money. We were already saving well for retirement and had our credit cards paid off. I still wanted to apply what I read in the "total money makeover" to my family’s financial life. Hopefully this will be our road to financial peace.
There was problem though, we were in the middle of a Large addition on our house. The addition was a two car garage, with workshop area, a full upstairs over it, and a new entry area for the house. We had built the structure, had the windows and doors in place and a new roof on the entire house. The only work we had hired was the concrete floor in the garage, the rest, we did ourselves with the help of family. The addition still had lots of work to be done. I also had a lot of knee trouble and was having surgery soon.
So we started working back on the house again in the summer of 2009 after my knee healed up. We planning to work on the house, but trying to apply Dave Ramsey’s Ideals as we went through the year. We tried to pay down our debt and work on the house. Over the rest of the year, we had put siding on the entire house, put in a new concrete driveway, and a new front porch on the outside. On the inside we put in a new staircase and had most of the interior walls framed out. During that time we were putting 20% of my paycheck in an account for vacation, property taxes and house insurance. With this savings we took a trip to Walt Disney world. We did it because we didn't take a vacation the year before, while building the addition. We felt like it needed to be done before are boys get too old.
In My mind the debt we had to work on was a 2nd mortgage, car loan, camper loan, and a personal loan from my parents. During the summer we had paid off the 2nd mortgage and the personal loan, the two smallest debts. It was probably only around $3000 in debt we paid off early. Most of our money was going to the home addition. We weren’t doing very good paying off our debt.
In November and December time frame of 2009 we had some large expenses. We had Christmas ($1500), new tires put on SUV ($650), and the pets needed the next 6 months of medicine ($250). All of these expenses should have been predicted and planned for, but we hadn’t planned for them. We had to dip into our emergency fund to help pay for all these expenses. Needless to say, we had no extra money to pay on debt. We were moving backwards financially. This is the point at when I got upset. This is when I got sick and tired, of being sick and tired. I proceeded to look back over the last 9 months and realized all that we had been doing wrong with money. I saw all these mistakes we had made.
1. We didn’t make a hard budget and stick to it.
2. I had borrowed money from my 401k, thinking it was my money, and not treating it like debt.
3. Didn’t plan for Automobile service.
4. Didn’t plan for the expensive pet supplies that are needed every 6 months and vet visits.
5. Didn’t save enough for Christmas and birthdays.
6. Didn’t control our money when going out to dinner, movies, and activities.
All of these mistakes, can all be avoided by a well planned budget, using the envelope system, and never borrowing again, even from our own 401k. So I sat down with my wife and we discussed better planning and using a budget. We decided we will work at this together.
My Goals for 2010
For my new years resolution, I have decided to set some goals financially for this year. Goals based on the total money makeover principles.
1. Have a written budget each month.
2. Use the Envelope system to help save and curb spending.
3. Budget Home Improvement costs and not let the house control our money
4. Have a “will” written
5. Get term life on my wife and additional on myself.
6. Have my Wife’s name put on our property.
7. Start a debt snowball rolling!
There was problem though, we were in the middle of a Large addition on our house. The addition was a two car garage, with workshop area, a full upstairs over it, and a new entry area for the house. We had built the structure, had the windows and doors in place and a new roof on the entire house. The only work we had hired was the concrete floor in the garage, the rest, we did ourselves with the help of family. The addition still had lots of work to be done. I also had a lot of knee trouble and was having surgery soon.
So we started working back on the house again in the summer of 2009 after my knee healed up. We planning to work on the house, but trying to apply Dave Ramsey’s Ideals as we went through the year. We tried to pay down our debt and work on the house. Over the rest of the year, we had put siding on the entire house, put in a new concrete driveway, and a new front porch on the outside. On the inside we put in a new staircase and had most of the interior walls framed out. During that time we were putting 20% of my paycheck in an account for vacation, property taxes and house insurance. With this savings we took a trip to Walt Disney world. We did it because we didn't take a vacation the year before, while building the addition. We felt like it needed to be done before are boys get too old.
In My mind the debt we had to work on was a 2nd mortgage, car loan, camper loan, and a personal loan from my parents. During the summer we had paid off the 2nd mortgage and the personal loan, the two smallest debts. It was probably only around $3000 in debt we paid off early. Most of our money was going to the home addition. We weren’t doing very good paying off our debt.
In November and December time frame of 2009 we had some large expenses. We had Christmas ($1500), new tires put on SUV ($650), and the pets needed the next 6 months of medicine ($250). All of these expenses should have been predicted and planned for, but we hadn’t planned for them. We had to dip into our emergency fund to help pay for all these expenses. Needless to say, we had no extra money to pay on debt. We were moving backwards financially. This is the point at when I got upset. This is when I got sick and tired, of being sick and tired. I proceeded to look back over the last 9 months and realized all that we had been doing wrong with money. I saw all these mistakes we had made.
1. We didn’t make a hard budget and stick to it.
2. I had borrowed money from my 401k, thinking it was my money, and not treating it like debt.
3. Didn’t plan for Automobile service.
4. Didn’t plan for the expensive pet supplies that are needed every 6 months and vet visits.
5. Didn’t save enough for Christmas and birthdays.
6. Didn’t control our money when going out to dinner, movies, and activities.
All of these mistakes, can all be avoided by a well planned budget, using the envelope system, and never borrowing again, even from our own 401k. So I sat down with my wife and we discussed better planning and using a budget. We decided we will work at this together.
My Goals for 2010
For my new years resolution, I have decided to set some goals financially for this year. Goals based on the total money makeover principles.
1. Have a written budget each month.
2. Use the Envelope system to help save and curb spending.
3. Budget Home Improvement costs and not let the house control our money
4. Have a “will” written
5. Get term life on my wife and additional on myself.
6. Have my Wife’s name put on our property.
7. Start a debt snowball rolling!
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