In the past ten months my husband and I have both quit our regular day jobs. We know that it wouldn’t have been possible to pursue our dreams if our finances were out of control. About three years ago we were both were working full-time jobs making more than the national family average and we had nothing to show for it. Our net worth was negative. We decided to take charge of our finances and learn about money. Since then we have paid off more than $50,000 of debt. The biggest tool that got us under control was a budget. This post is not about how to make a budget, but simply the act of getting together and trying to set a budget for your family.
Around the first of each month my husband and I get together and have a family budget meeting. We discuss how we want to spend the money that we are going to earn that month. Famous financial guru Dave Ramsey, says that when you budget, you’re spending on paper, on purpose, before the month begins. We use a zero budget and give every dollar a name. We never have to wonder where all our money went, because we knew where it was going before the month even started.
Getting together monthly helps us to plan out our calendar and our finances accordingly. We look to see if there are any birthdays or holidays that we want buy gifts for. We always know when Christmas is coming, so we know we need to save for it. Looking at the calendar also helps us be on the same page with how we are going to spend our time.
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My husband and I try our best to use a cash envelope system to manage our grocery, dining, household, clothing, auto, and personal care budgets. When we use it, it works.
This week I had $120 in cash to spend – $40 to buy groceries to last us four days, $40 for a Costco trip, and $40 to buy some kids furniture that I wanted from Craigslist.
When I went to the grocery store I only took $40 in cash with me. Knowing that I could only spend that amount made me think about what we really needed and what could feed us for a couple of days. When I went through the check out line I was ready to overcome embarrassment and put a few items back if I was over budget. The total rang up to $34! It is such a good feeling to come in under budget. $40 for about 10 meals is do-able, but you have to fight the pizza temptation when you are faced with a mound of dishes to climb!
When I went into Costco I had $40 and a random $1.50 in cash in my purse. I had my list and my phone calculator ready. I really had to write down what each item cost and calculate the best buy for my money. It took extra time, but it was worth it. My total was $40.23. I am ashamed to admit that I spent forty bucks on paper products, only to be used and thrown away. At least the quantity will last us six months and the paper will biodegrade fast in the landfill.
I saw a table and set of 4 chairs on Craigslist that I had wanted to buy from Ikea. Buying the four chairs and table from Ikea new would have cost me $95 plus tax and gas. I bought the same items second hand and barely used for $40. Awesome.
Using self-control and taking some extra time to plan and calculate saved my family a lot of money this week.
Bonus Links:
Dave Ramsey on the Cash Envelope System
Suite101.com on the Envelope Budget System
Leave Your ATM Card at Home by Liz Pulliam Weston
How To Track an Envelope Budgeting System in Quicken
I Do Not Use Credit Cards by J.D. on GetRichSlowly.org
