Living by a budget

[boomerkae]

Since I've never really been good at that, too many years of paycheck to paycheck and credit, I know I need to learn to budget correctly to make the 13 successful.

Anyone have any tips to share on how they did it? Did you use cash? Jars or envelopes based on what your budget allotted for each line item?

All advice so I can start planning is appreciated!

[papie]

The first thing you need to do is make a list of all of your month to month bills.....phone bill, electric, cable, mortgage, 13 payment, etc. If some of those things vary, such as electric, use the highest amount you think it would be.

For one month track your spending. Keep your receipts for groceries, pet care items, personal care items, gasoline, medical bills, restaurants, etc. Literally, track everything you spend money on....down to a cup of coffee. This will help you see where your money goes, what you need to include in your budget, and what random items you can cut.

I like to keep my budget on paper, I'm old fashioned. A lot of financial nerds I know like to use mint.com. If you google "printable budget sheets" you can find some Excel sheets if you want to go that route. I still like the old paper, pen, and calculator.

Here are the categories I use:

(month-to-month bills, withdrawn from checking account)
chapter 13 payment
car payment
auto insurance
life insurance
electric
cell phone
cable

entertainment- cash
groceries ( I put everything into this, including personal care and pet care items.)- cash
eating out- cash
gasoline- pay at the pump
savings (this stuff goes into the savings account and does NOT get touched unless something major major major happens)- online transfer
miscellaneous (medical bills, gifts, car repairs, etc.)- leave in checkings account unless it's needed, transfer leftover amount to savings at the end of the month.

I don't think I missed any, but if I did, I'll edit this post. Some people like more detailed budgets, where they budget out medical bills, gifts, pet care items, care repairs, and things of that nature. I find all that to be a pain in my ass. I like to keep it simple. Don't forget any insurances that aren't auto deducted from your paycheck.

Obviously, after you have all this stuff listed, you can see where your money goes and what if any, you need to cut. Cable can be cut, entertainment, eating out, stuff like that. Medicalls bills can be settled, phone bills can be negotiated, you get the point. If you have kids, I'm sure you have a few additional categories.

[MommyMc]

Hi!
I too had never budgeted, it wasn't easy at first. It took me the entire first year of our BK to get it right and we had some months that were hard! It took a while to figure out just how much we NEED to spend on groceries instead of WANTING to spend on groceries.
I bought a binder and month tabby dividers. I created a spreadsheet listing ALL my monthly bills, the amount and the due date. I listed in order by which they are due. I put a spreadsheet after each month in the binder. EVERYTHING that I pay monthyly is listed, ie: electric, car payments, mortgage, phone, kids lunch money,kids braces etc. I then figured out how much I needed each week for groceries, gas and incidentals. At first I shorted myself and we didn't have enought money each week. I had to 'learn' what the right amount was, use too much and you won't have anything left to put away in your envelopes.
So, once I had my list of bills and my amount per week for food/gas/etc, I subtracted all of them from our monthly pay. The amount of money that is left is what gets put into envelopes. My envelopes are: "Birthday/Holidays", "Savings", "Medical", "Home/Car", "Sports"(my sons play select baseball). I put the most money each month in savings, medical and home/car. Then into sports and birthdays. This money is not touched unless I need it. I had to have unexpected surgery this past September, I had to pay $500 copay at the time. No worries, I had more then $500 in my envelope to pay for it! Keep putting money in each month, don't take it out!! A year will go by and you'll have a nice little start in each envelope. The "home/car" envelope is for home or car repairs.
I pay 99% of my bills online. It's easy and I am not worrying about getting a payment late to someone or having a check lost in the mail. I also save money by not buying postage stamps.
I check my checking account online DAILY. I know where all my money is going and I make sure payments have cleared. I mark it off my list in my binder when I see the payment transaction has gone through. If you look at the online statement daily it is quite an eye opening experience when you start seeing all the debit transactions, $3 at Starbucks, $10 at the Sonic drive through, etc. It makes you realize where your money is going so it's easier to stop the bad habits. My kids use to have fast food 2-3 times a week! UGH!! Do you know how much money that is!!! And unhealthy!!! Now they get fast food 2-3 times PER MONTH! It took a while for them to get use to it.
The day I get paid is the day I pull the money out to put into the envelopes. I always pay myself first. Then the bills. At first we pulled out the grocery/gas money too. It's easy to see it dwindle down when you spend it. I now managem my money well enough that I can use the debit card instead of cash.
Now the binder nad the envelopes are just organizing for your budget. You need to actually sit down and create the budget. I looked closely at ALL my bills to see where I could trim the fat. I looked at my electric and then compared it to other electric companies (try Powertochoose.org to find companies in your area). I found I could get it cheaper if I switched companies. I also looked at my phone/internet. I found that I could bundle these with one company and save dollars each month. I just switched car insurance in December. I was paying $200 a month for my husband and I for 2 cars... it had been going up and up over the past year and I was sick of it. So I did an online quote search. I had many offers come in. We found a good one, now I pay $127 a month!! HUGE savings when you are on a budget!! This insurance company gave me a discount just to be on the auto pay plan. I have found several companies will do this.
There are other ways to trim the fat. We don't eat out. 2-3 times a month my husband and I will get take out after the kids go to bed. This way we are not paying for the kids to eat and we use our own beverages from home. The last time we took the kids to a restaurant it cost us $70! We can only do that 3-4 times a year. When I get them fast food, I skip it and eat something from home. We NEVER eat inside the McDonalds or where ever. We always bring it home and use our own beverages. (the exception to this is if we are on vacation)
I have 4 kids, ages 13 ,10, 5 and 2. The 3 boys all play baseball. Which means every weekend we are at the baseball field watching games. I have gotten really good about packing snacks and beverages. We don't buy from the concession stand.
So many other changes we have made. We don't go to movies. My husband may take the kids once or twice a year. But otherwise we rent from Redbox. LOVE REDBOX!!! We save our aluminum cans all year, I take them in for cash on December 1st to pay for stocking stuffers. We also save our change in a big jar and cash it in before any vacation.

Take a good look at where you spend the money. Be honest in knowing what you NEED vs what you WANT. Know you are going to have to trim the fat somewhere. Use coupons, look for deals, always buy on sale.

I love my budget. I live by my budget. My kids are happy, they get the things they want and need. I don not feel deprived in anyway. We are so much happier going through this then before the BK. We travel, we afford Christmas presents, it's just all with my own money and not a line of credit. I start planning for Christmas 6 months in advance, same with a trip. I may have to plan 9 months in advance for that.

Got budget questions? I'll help! Just PM me.

I hope this helps! Good luck.

[HHM]

It's not so much about budgeting as it is about lifestyle control.

But, you do need to know where your money is going, so you need a way to track. Frankly, Quicken makes it damn easy, but there are online sources as well, mint.com etc.

The categories are already in there, you just need to have the discipline to track. For example, when you go to the grocery store and if you buy things other than food (i.e. cleaners, shampoo, soap, etc), you need to break down the receipt and enter the info by category in your expense tracking system. So, for a $100 grocery bill, you might have
Food, $70
Personal Care $15
Pet Supplies $10
Household $5.

Generally, step one is to LEARN where you money is going and keep track of it (in detail). You do that for one month to build the "habit." Then, step 2, now that you know HOW you are spending your money, you can start addressing the issue of "why" you are spending like you are spending. Step 2 is when you start to proactively manage the budget. For example, if you are a household of 2 and spending $800 on food, something is awry. Then you can start taking action to analyze your lifestyle and make necessary changes to adapt to your new reality.

As a previous poster mentioned, I pay all "bills" online.

[boomerkae]

Thanks for the feedback! I use Microsoft Money so am used to the categories and such. I certainly do know where it goes when I take a look. There's just been too many times, (and a lot are eating out - and I'm getting a better conscience about it) that the money just isn't there. I was curious how others managed. I'm thinking of paying the bigger bills (my car payment and house/rent) out of each paycheck so it's done and no temptation to spend.

I too pay everything online that I possibly can and use the check card for nearly everything so that I do know where its going. I hardly EVER have cash.

I guess the other trend I'm seeing is that though...cash. The money that I allotted in my budget during filing - I should go ahead and pull that as cash and tuck it away; not leave it in the bank.

[HHM]

An interesting thing going on from one of the attorney's I know is the Thrifty Spender Experiment

Ultimately, you need to decide to make changes. Lifestyle change is harder than most people suspect. The vast majority of people "assume" that necessity is the mother of innovation (or change). But that is simply not true. If it were true, people wouldn't get $100,000 in debt or liquidate retirement accounts "hoping" for the the "if only" scenario that never comes.

If you already track where your money goes, then it is time for discipline. Set simple, straightforward, goals for each month. For example, for January, spend as you normally would except that for the entire month you DO NOT EAT OUT.

[Pandora]

All great advice. We've used cash since 2008 and its amazing to others that we dont have a credit card (not amazing to us obviously ).

I dont use any computer programs - just too old fashioned I guess - so I use the standard notebook and do a 3 month budget since I know where my money goes. Its easier for me to do it that way because if something happens to the computer (as did recently for 2 weeks) - I still have the necessary info at hand. Its also great because if something unforseen happens (expensive vet bill / car repair etc) that is over the amount I budget for every month and set aside, I can look ahead and see where I can move things if needed and still not be late in paying them.

For where to put the money - it varies for us; I use a folder type envelope (the type for coupons) and set cash in it for bills that are due quarterly or ones that just sit until needed (clothing expenses, christmas money, entertainment). Otherwise, everything else just stays in the checkbook.

I did notice something rather amusing this holiday season while shopping other than online for items; every time I went to pay the bill and pulled out my debit card, the very first thing every cashier would say is "Credit?" and I'd say "no..debit" - with the return response of "oh, okay" - like they were surprised it wasnt a CC. Strange.

Like HHM and others - I also pay bills online for all available that do so. Much easier

[tobee43]

All great advice. We've used cash since 2008 and its amazing to others that we dont have a credit card (not amazing to us obviously ).

I dont use any computer programs - just too old fashioned I guess - so I use the standard notebook and do a 3 month budget since I know where my money goes. Its easier for me to do it that way because if something happens to the computer (as did recently for 2 weeks) - I still have the necessary info at hand. Its also great because if something unforseen happens (expensive vet bill / car repair etc) that is over the amount I budget for every month and set aside, I can look ahead and see where I can move things if needed and still not be late in paying them.

For where to put the money - it varies for us; I use a folder type envelope (the type for coupons) and set cash in it for bills that are due quarterly or ones that just sit until needed (clothing expenses, christmas money, entertainment). Otherwise, everything else just stays in the checkbook.

I did notice something rather amusing this holiday season while shopping other than online for items; every time I went to pay the bill and pulled out my debit card, the very first thing every cashier would say is "Credit?" and I'd say "no..debit" - with the return response of "oh, okay" - like they were surprised it wasnt a CC. Strange.

Like HHM and others - I also pay bills online for all available that do so. Much easier

ahhhhhhhhh ...at last! the budget queen is here!!!

we are NOT in a 13.. but i always also pay on line.....and or....there are a few that have FREE phone payments services ...like our telephone company and a few others. our rent i pay via paypal...works for us!! no stamps...

pandora, interesting comment about the "debit" card use...we found exactly the same attitude...with one exception....we got many of the sales people responding with OH...yeah, i can't use my cc again more they upped my interest rate to over 30%.....so even for those that still use them, hopefully they are learning to STOP now!!

[HHM]

I actually use a credit card for all expenses, but I use a points/miles credit card. There is always a rolling balance but pay at least the balance owed on each statement to prevent interest from accruing. Granted, for those coming right out of BK, you probably won't have access to a miles/points type credit card for some time. You will need to find what works for you. Personally, a cash/notepad system would be too labor intensive. I can download all my Credit Card and Bank transactions directly into Quicken (and after a few times, Quicken will generally learn what category goes with a particular payee). The only labor intensive part is breaking down an individual receipt that contains purchases in multiple categories (i.e. food, personal care, household, etc), but those are maybe 1 or 2 per week. The nice benefit with software is the reports and other functions that can really help you analyze your financial situation and spending.

The cash system is a good way to start out but you must resist the temptation to whip out the debit card if you are over budget. But for those that are just starting to control spending, its a good starting point.

In reality, budgeting is the EASY part. The HARD part is figuring how to actually cut expenses; what option are really available. What to buy, where to buy it, how to buy it, and so forth are the real challenges. That is where lifestyle and budget collide; the endless struggle between convenience and budget. I don't know if you guys caught this on the Learning Channel (or Discovery) about Extreme Couponing (http://press.discovery.com/us/tlc/pr...eme-couponing/). The guy was able to get $1,000 worth of various groceries for about $36.00 after all coupons were applied. I DO NOT recommend it, but it is interesting, but is very very very labor and time intensive.

[tobee43]

interesting approach hhm....

firstly, i have found the most important aspect of developing a budget is money.......LOL!!! without it one cannot have a "starting" point. i know those in chapter 13 have much of this laid out for you...but for some of us, we have to use something called self control and careful planning.

secondly, i have attempted to minimize both expenses and paperwork....keep it as plain and simple as possible....have as few bills as possible...make it easy. i'll tell you, prior to us filing bk we must have rec'd 30 pieces of mail a day to go through......it was terrible. now we make it a "game" in this house who can save the most...in an attempt to make it "fun" to save and live by a budget.

we also developed a "reward" system. i would LOVE to go to the theater....it's been a few years now...if i can reduce my budget i.e. food allowance...i can put that into the "entertainment" fund...and maybe by next year i can go to the theater!! LOL!! let's hope it will not take that long...however, rewarding yourself helps your morale..at least for me.

we not only "downsized" our home, but "downsized" our way of living which resulted in less bills......less to HAVE to budget.....and i'm happy to report tomorrow will be our 3rd......that's THIRD deposit into a savings account!

[momofthree]

I'm like Pandora, I need to write things down to absorb the info, plugging numbers into a computer just doesn't work for me, so I write out our budget each month on paper. We use the envelope method and use cash. It's too easy (for us) to lose track of how much we're spending when we use debit cards or checks. When you have just enough cash to get thru the month and you can actually SEE it dwindling, it's easier to stick to your budget. And when you only have $50 cash at the grocery store for your groceries with no atm card or checkbook as backup, you are forced to spend no more than $50 (and whatever change you can dig out of your purse, lol).

We actually take it a step further and save our yearly expenses in envelopes too. Things like car repair, timeshare fees, medical expenses all get filed into their own envelope. When it's in the bank (where my dh can see it), it'll get spent, guaranteed. So I have to withdraw it in cash each month and make a deposit into our envies.

Now, of course, for our set expenses (mortgage, tt, utilities, car insurance, etc) that don't change each month, I either do an automatic payment or send in a check.

I don't know if you guys caught this on the Learning Channel (or Discovery) about Extreme Couponing (http://press.discovery.com/us/tlc/pr...eme-couponing/). The guy was able to get $1,000 worth of various groceries for about $36.00 after all coupons were applied. I DO NOT recommend it, but it is interesting, but is very very very labor and time intensive.

This is actually what I do. I've had numerous cashiers ask me if I was that "lady on the news." lol. No, I've never been on tv, lol, but I'm pretty good. Unfortunately, we'll never have those 90% savings all the time because we have gluten/dairy allergies and a lot of those fabulous deals are on unhealthy boxed glutenous foods. We eat a lot of fresh fruits/veggies and gluten/dairy alternatives that off-set the savings we get on the other items. I average about 60% savings on a regular basis. Honestly, it's the only way we can afford to feed our family on our tight budget, lol. I also keep all my receipts so I can tally up where our money went each month. I've been averaging about $360/mo for food for our family of 5. That includes school lunches & all our snacks as well....And like I said, we eat healthy---though I admit I homemake pretty much everything.

That said, we do consider my couponing to be my 2nd job. I easily spend 10+ hours each week going thru ads, matching coupons, visiting blogs, and doing the actual shopping (starting out, before I got the hang of it, it easily took up to 20+ hours/wk). For some, it'd be easier just to work a bit of overtime, but we don't have that option, so we do what we have to.

[momofthree]

I also want to add, and I'll sound like a broken record to some because I say it all the time. You HAVE to save save save, especially at first. Your budget is going to allow a monthly allowance for clothing, medical, car maintenance, etc that do not come up each month. You're going to pay your bills and realize that you have a lot of extra money, and it's very easy to spend it. But you don't have credit to fall back on anymore. When you have to buy school clothes for your kids, or your kid needs glasses or dental work, or you need new tires, you NEED to have that money set aside in order to pay for it. These expenses are NOT unexpected. You know they'll arise and you NEED to plan for it. You need to save that money each month and build up your cash reserves.

Maybe even set a number in your head and when you reach that number you can ease up on savings and live a little bit, while still continuing to save. For me, that number was $3000. I make sure I always have at least $3k set aside, and we've tapped into it several times already for medical expenses and car repairs, and as soon as that number drops below $3k, I save hard-core again until we're back up to $3k minimum. It's my safety number. For someone else, that number might be $2k, $5k, or $10k. Think about how old your house is, how old your vehicles are, how secure your job is when you're considering what your number should be. We have secure jobs, an older car, and a 10-year-old home. We also have a special-needs child. Those were my considerations. Of course, I always try to save as much as I can, but I'm more lenient with myself as far as recreational spending when we have that $3k set aside.

[HHM]

Thank you for chiming in momofthree, queen of the budget

To each their own. This is a good thread because of the different ideas that get generated.

How I keep from having to print things out is through the use of GMAIL and GoogleDocs. Anything I need to SEE (or take with me) I upload to google docs. (if you need to print to PDF, you can use Cute PDF which is a free app for printing a PDF file without annoying water marks http://www.cutepdf.com/Products/CutePDF/writer.asp). Then I can access the doc via my android phone. Now granted, I am not advocating going out and getting a 4G phone and spending the money on a high end Cell Phone plan with unlimited web and text etc., but it is one way around paper.

You are correct, much of the "food" items that can get you extreme savings is stuff you "shouldn't" want or need. That is my dilemma as well. There are tons of videos on YouTube about this, most are more of showing off, very few tell you actually HOW TO IT. But I would never buy 50lbs of Oscar Meyer hot dogs.

[jange]

A lot of great suggstions and ideas. I do use my debit card for most purchases as I rarely carry much cash. I use quicken to track everything and download from my checking account. I also check on online balance frequently. I use my banks bill pay to pay most of my bills. You can schedule them ahead of time so when I get the bill I schedule it and that way I don't forget to pay them. I do use the Visa side of my debit card as it gives you the same protection as a regular Visa transaction. Also, I prefer not to put my pin # in as much as possible. If the store gives me the choice I always go with credit, but some don't.
I put money away every week by using an online saving account. My husband gets paid every week and I get paid every other week. So I transfer one amount weekly and then an additional amount every 2 weeks. since it automatically comes out of my checking account it forces me to stay on my savings plan.

confirmed 7/22/10 1 year done 4 more to go.

[tobee43]

A lot of great suggstions and ideas. I do use my debit card for most purchases as I rarely carry much cash. I use quicken to track everything and download from my checking account. I also check on online balance frequently. I use my banks bill pay to pay most of my bills. You can schedule them ahead of time so when I get the bill I schedule it and that way I don't forget to pay them. I do use the Visa side of my debit card as it gives you the same protection as a regular Visa transaction. Also, I prefer not to put my pin # in as much as possible. If the store gives me the choice I always go with credit, but some don't.
I put money away every week by using an online saving account. My husband gets paid every week and I get paid every other week. So I transfer one amount weekly and then an additional amount every 2 weeks. since it automatically comes out of my checking account it forces me to stay on my savings plan.

confirmed 7/22/10 1 year done 4 more to go.

ahhhhhh...an online savings....very interesting...

i must say we always, well, when we had jobs for 40 years always did our savings directly out our checks...so this is a "new" experience actually taking money and putting it into a "savings" account. actually, i think this may be the first "savings" account we have had since our college days! (in those days they really didn't have investment accounts for people like us..)

we do use our debit card for food and some bill paying since that's the "paper" i use to "follow" the money trail....

also..we get direct deposit...take out X amount for gas and misc. and that's IT...no more going to the bank even if we are out of cash until the next pay comes in.

we are just hoping for a better year and see in black and white some money we are saving!