Frugal Wife » budget

Overcoming Black Friday Temptations

frugalwife — Fri, 27 Nov 2009 12:54:07 +0000

O how I hate Black Friday. I’m not sure if I’m paying more attention or something this year, but it seems like retailers are trying extra hard to get you in the stores before Friday. I’ve already succumbed twice to deals online. If I were to step into an actual store, it’s over. It’s one of those times of year that I struggle the worst to keep on track with my goals.

I’ve got this list, you see. It’s got all the things I’d like to buy written down on it. Those items are then ranked. #1 for the things that I’m going to buy next, #2 for the next, on down to #100 which is my catchall for someday/maybe. But being the bargain-hunter I am, I find it extremely hard to pass up a good deal.

So how am I dealing? I’m trying really hard not to lose sight of those goals on my list. When I feel myself tempted by an ad that I’m reading, I take a look at my list and remind myself of what my #1 goals are. It’s worked okay so far, but there’s still that feeling of loss and worry that there’ll never be a deal as good again. Then I remember that Christmas is coming up and the retailers will be trying just as hard to get people in the stores…

Financial Evolution: The Budget

frugalwife — Sat, 24 Jan 2009 18:52:06 +0000

My budget isn’t so much a budget as a detailed spreadsheet of where the money from each paycheck is going to go. When you think about it, that’s what a traditional budget is. You earmark $50 for this, $100 for that, etc. The way I do my budget is a little bit more detailed than that. It, of course, only makes sense if you’re doing envelope budgeting.

I do the spreadsheet for my budget by year. My budgeting system assumes that you have a basic budget put together already. You already know where your money needs to go on a basic level each month. The name of every category that I want to budget for goes on the left hand column. Next to that, I put the amount I’d like to budget for each month in that category.

Across the top of every column, I put the date of every single paycheck that we’ll get that year. I even include columns for our tax refund (if we’re lucky enough to get one) and any bonus’. One way in which Google Calendars can once again come in handy is to create a calendar just for your paychecks (especially if you’re a 2 income home and get paid on different days). It makes it a bit faster if you have a reference to help with the dates.

I’ve created a sample template in Google Docs so you can see what I’m talking about.

I started to do my budget this way once I realized that my husband and I had different pay schedules. He’s on a twice a month and I’m every 2 weeks. Money comes in at such strange times and I needed to make sure I was going to have the money in the bank (and envelope) for each bill at the correct time.

I hope this helps folks understand how I get things organized. It’s pretty labor intensive to get going, but once it’s in place there’s little to do.

Good luck and feel free to leave question in the comments.

Financial Evolution: Keeping Track

frugalwife — Fri, 16 Jan 2009 15:44:09 +0000

I think the first thing you realize when you start having more than 1 or 2 bills is that you need some way to keep track of what you’ve paid and how much money you have in your accounts. For my husband and I, we both started using Quicken when we were in College. Quicken gives you the ability to electronically track all of the items that come in and out of your accounts. It also makes it so that you can setup a budget and categorize every item that comes in.

One of the failures that my husband and I started to recognize when we had been married for a few years, is that you always seemed to be dealing with things after they happen. We wanted a way to be able to plan for what was coming and set aside money that couldn’t be touched for specific things. I described this a little bit in my post about not letting the bills control me. When I was 16 and got my first job, I would do this so I would have enough saved up for my car insurance. 1 of my paychecks wasn’t nearly enough to pay for all of my insurance so I would need to set aside a certain amount out of each paycheck in order to have enough. I had a plastic 3×5 notecard box with 1 divider for each thing in my budget (insurance, gas, food, clothing, etc). Every paycheck I would deposit some into savings and take the rest in cash. The cash would be parceled out into each divided section. Thinking back on that time, I really wanted something that could do the same thing for me and yet handle the complications of our current finances.

That was when my husband discovered Mvelopes. It’s a web-based budgeting site (ala Mint.com) that uses the Envelope budgeting system. At first I balked at a subscription-based service but then after some conversation with my husband we decided to take advantage of the 30 day free trial. If at the end of that time I didn’t think it was worth $13 a month, we wouldn’t use it. Needless to say after an initial period of education where we figured out how the application worked, I was in love. I can’t think of not using it and I don’t know what I’ll do if it ever goes away.

The ability to have all of your transactions downloaded just like Mint and Quicken is awesome. It also makes it so that you can put every transaction in the envelope that it falls under. It instantly subtracts the amount of the transaction from the money in the envelope. In fact, I’ve gotten to the point where I no longer look at my account balances except to make sure that they’re not being overdrawn (which never happens any more). I use the envelope balances as the judge for whether or not we can afford to spend money on an item. The fact that you can add your 401k’s and loans makes it so that you can click one button and see your Net Worth at any moment. It’s such a motivator for me when I see it go up and up and up!

Envelope budgeting is definitely a system that requires that you change your perception of how you view your money. You’re no longer looking at the dollars and cents in the account, you’re looking at what’s in the envelopes alone. If it’s in the envelope, you can buy the item but if it’s not you can’t. I’m not sure this budgeting system is for everyone but if you think you’re disciplined enough to follow it, I would definitely recommend it.

I control the bills; bills don't control me!

frugalwife — Fri, 09 Jan 2009 22:40:14 +0000

In the past 2 years or so I’ve taken over the bulk of the bill paying and finance planning from my husband. He started a company with a friend and working on that and his 9-5 job started taking up too much of his time. Besides that, I love playing with numbers. I thoroughly enjoyed my accounting courses in college and my time working as a bank teller.

My husband and I started using the Envelope system of budgeting after we bought our new house in 2006. At it’s simplistic this means that in order to purchase anything, you have to have the money in the bank first. This seems like a ‘duh’ thing for some people but we just seemed to be struggling with it. We kept having things creep up that would inevitably make it so that we had an ‘IOU’ in the envelope. That starts to get extremely frustrating after a while.

In the past year or so, I’ve started creating Envelopes for any purchase that I can predict. For example, you know that you’re going to have to buy new tires for your car every 5 years or so. So if your tires cost you $500 over 5 years, that’s $100 a year or $8.33 a month. I’ve started putting away $8 or 9 a month every month so that when the time comes to get new tires, we’ll be ready.

Getting started with this is a little tricky. Say you bought tires 2 years ago, you’ll have to save that $500 over 3 years instead of 5. I put together a spreadsheet of items like that so it was easier to see the math. The columns I created were: Item Name, Total Cost of Item, Number of Months till Needed, Cost per Month. The only column that has an equation in it is the “Cost per Month” column. The equation is “Total cost” divided by “Number of Months”.

A byproduct of this is that we’re now able to save more consistently. Because we have money already set aside for our large purchases, we’re not scamming money out of the Emergency fund to try to cover these bills. It also gives you a little peace of mind to know that when the time comes and you need to make that purchase, the money is already there.