Dave Ramsey says something in his
Financial Peace University series that really makes a lot of sense if you have been watching your money fly out the window. To paraphrase him, having a budget is not a punishment or a practice for the poor; living on a budget is telling your money where to go instead of wondering where it went.
I took his FPU course at a church several years ago, and honestly through a divorce and financially challenging times that I could never have fathomed before, I've lost the habits I started to develop during and after that course.
Basically, Dave wants you to begin by putting together an emergency fund and paying down debt. I have no emergency fund; I have debts left from my divorce. I'm getting back on track because I'm tired of chasing money.
First step is to figure out where your money is going. If you want to join me, start writing down everything you spend every day. After doing this for a week or two, I'd be willing to bet we'll see where we can not spend $5, $10, $20 or more each week. Think about that...$20 a week is $80+ a month that you can probably cut painlessly and use better elsewhere.
My first cut is going to be $12 a month for a subscribed MP3 thingy. We don't use it. I mean to cancel it every month and haven't. I have WASTED $144 in the last year! This got deducted from my account this morning, so it is my first expense that is going, going, gone.
Yesterday I spent $6.75 at the library. $4 for movies (which is a good deal, we get them for a week) and $2.75 for late fees. I've got to cut the late fees...I'm really bad at this. I even get emails 3 days before they are due, and all I would have to do is log in and renew them...but I always think I'm going to get them back on time and I rarely do.
The only solution here is to "Just Do It", like Nike says. I also programmed a one day ahead reminder in my phone for what I checked out yesterday. That way, I will more realistically be able to figure if I can get them back.
I'm not sure if I should admit to you that I can actually walk to my library in about 3 minutes. No judgement, please!
I also bought two diet sodas yesterday. One was $1.25 and one was $1.59. Yep. I know I need to stop drinking it. I know it! At the very least, I should buy it in a 2-liter size to save. I think my compromise is to figure that given yesterday's habits, over the course of 7 days I would spend $19.88!!!!!!! Holy cow! I
just did the math. TWENTY DOLLARS IN DIET SODA! I'm sorry. I'm a little freaked right now.
OK, I'm just going to start an
envelope system. It can not longer be put off. One of my envelopes will have a diet soda label, but I am cutting that amount in half and giving myself $10 a week.
Wow. I'm overwhelmed by that amount going to soda.
If you're not familiar with the
envelope system, here's the short version....you put money, cash, greenbacks, you know what I mean, into individual labeled envelopes for different budget categories that can be paid in cash. You allot a certain amount each month or week for your budgeted items and put the money in the corresponding envelope, and when the money is gone, it's gone. You cannot spend in this category anymore until it is replenished the next month.
Now, obviously your rent or mortgage will not be part of your envelope system. Think of how many things could fit into this though: Clothing money, toiletries, grocery, eating out, school supplies, allowance, haircuts, cosmetics, car repairs...there are many, many categories which you can save for in cash each month. Not allowing yourself the swipe of a debit card (or worse, a credit card) and disciplining yourself to use what you have in the envelope is a great lesson in using what you have and also a great way to force yourself into budget consciousness.
Don't get overwhelmed. Do some research about budgeting, write down what you're spending this week, and I'll check in with you next Tuesday.
And I highly recommend checking out some books by Dave Ramsey or Larry Burkett. Just go to the library, don't spend money buying them until you've previewed them!
Please post in the comments if you are going to write down all you spend for the next week!
Psst.....if you spend money to go out and buy a little notebook to stick in your purse to write down your spending, don't forget to write the spending on the notebook in the notebook. XXXOOO
