April 13, 2011

One Year Later :: Benefits of Budgeting

This has nothing to do with this post, I just figured y'all needed some yarn. ;)

It's been about a year since we started an official budget, and today I thought I would talk about our journey so far, and the changes I've made in how we do it - both since it's the "anniversary" and because some people are interested in hearing about it.

Being on a budget has:

- Made the year fly by so fast. I can't believe we've already been doing this for a year. Not spending every week waiting for the paycheck, biting our nails, makes life so much more enjoyable and freeing.

- Opened our communication with each other. We talk about our finances in detail now, which is something we didn't really do before. We're in agreement on every single thing we spend, and that's the important part. I'm not sure what Ben would say, but I feel it's really improved our marriage to be even better than it was.

- Allowed us to pay off over $25, 000 in debt. We payed off two debts in the first month by putting our heads down, getting serious, and not allowing ourselves to spend the tax refund purely on toys (hehe). We also worked really hard to pay off a third debt by November. And now we're on our way to paying off the car - our last debt besides our house! - trying for the end of the year. If we followed the regular schedule, we'd still have 4 years left on the car.

- Allowed us to plan for the yearly/bi-yearly expenses that come up like car registration and insurance premiums. It's so nice not scrambling around trying to find the money when the bill comes.

- Allowed us to have one of the best Christmases ever last December. We saved all year and put it into our Christmas fund, and we were able to easily and guilt-lessly buy each other presents, and spoil our kids. It was great.

- Allowed us to save up a sizable emergency fund. So if this wind storm we're having as I type decides to finally take our fence that has feebly been hanging on for the last few months, we can replace it without a problem to our finances.

The Evolution

New & Improved!

I've reworked and simplified the budget sheet since my original post. I realized it was just a little too technical, and I was not only having to explain it to Ben, but I myself would get confused. Now we base it specifically off of what's coming in, not what I expect.

The paychecks go in the boxes on the right, and they total up in the box at the top. Then as we add the budgeted amounts for each category, the total of those subtract from the income, telling us what's left. Right now, any extra money gets thrown on the car.

Then, as we spend the money, I add the amounts to the middle column "Spent". The sheet subtracts the spent amount from the budgeted amount, and tells us what's left.

For our annual/bi-annual expenses I put them in the box on the top right. Then I just divide the numbers by twelve so we know what to put aside each month.

I'm really excited for this month because it's a three paycheck month. That will allow us to get a full month ahead. Meaning that the checks we get in April won't be spent until May. Up until now we've had to use the last paycheck of the previous month and the first check of the current month to figure out the budget. And if that first check didn't come in until the second Friday, we'd have to wait to finish the budget.

Every time we talk about being on a budget and how nice it is, it always comes up that even once we pay off our debt we never want to go back to pre-budget. It's hard, sometimes, knowing we can only spend x amount on something. But it's been so wonderful to know exactly where our money is going, and working hard to be debt free so that we can breathe and live our lives more freely.

Since I've had a few people ask about it, I'm uploading a blank budget sheet for y'all to use if you'd like. You can find it here:

BudgetDownload via Google Docs

You can either use it on the site itself and print it out (File button>Print), download it to your computer (the File button>Download As) and use it, or just print it out and do all the work with a pencil and calculator if you'd rather. You can easily change the categories by typing in your own. The sheet will auto-calculate all the numbers for you as long as you leave the top "Income" box and the "What's Left" boxes alone. If you'd like a completely blank page for use with a pencil, just delete all the zeros in the "What's Left" column and print it out. Just don't save any changes you make!

Have a wonderful Wednesday and Happy Budgeting!


Farm Girl said...

Wow Megan, 25,000 in a year? That is just amazing. I knew it was a bunch I just didn't know it was that much. You know too, you guys live just fine too. So that is what makes is so amazing.

Allison said...

I like the yarn better than the math. :D

Changes in the wind said...

Congratualtions on your accomplishments and keep going...it only gets better to live free.

Woman Seeking Center said...

And I like the math better than the yarn,lol
(but that's only because I can't knit - the colors/texture are beautiful).

Like you it's an ever more important, ever closer to being achieved goal live 'within means'. And it IS such a good feeling with each step of progress. Difficult to explain to those who (totally within their right and choice and may be better for them) charge, borrow, gather intently. It's all about what makes a person happy.

For my vote, I'm with you - give me home and (unworried) sleep in place of multiple new 'things'....

Great post.


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