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Saturday, March 28, 2009

Let’s Talk About the Budget

Bills

Every year at the first of the year, I get a little OCD and reevaluate and refresh our budget. I think tax time throws me into it.  For about twenty years I’ve used financial software to track our spending and I’ve done some unorthodox things to try to make ends meet.

Back in our young married (and not so intelligent) years, we spent what we made and whenever a “big” bill came due (like quarterly auto insurance), I’d have to figure out a way to come up with a chunk of money that I had not prepared for.  Same thing with Christmas, etc.  So, my first attempt at being budget-minded included opening a separate checking account that I would transfer money to each month (just like paying a bill) that included:

  • Utilities
  • Christmas spending
  • Auto insurance
  • Property and Real Estate taxes
  • Clothing budget
  • Gifts (other than Christmas)

I took yearly averages (that’s what’s great about having tracking software – you can see in an instant what you spend in any given time) and came up with monthly amounts to transfer.  When the bills came due… I had no worries, because the money was just there!  It’s basically “the envelope system” – Jacquie’s way.

A year or two ago, I opened yet another checking account that promised a great interest rate… so I started filtering most of the money there and adding as much savings money as I could put back.  I added a new “envelope” for short-term savings (an item I wished to purchase that I would save for, or for a vacation or something of that nature.  I saved for a year before buying a TV.  In a year, you pretty well know it’s not an impulse buy. I’m learning self-discipline, too).

Well, since the economy has gone south, so has our great interest rate. From 4.0% to .33%.  You did notice that has a POINT in front of it, didn’t you?

Once again, I’ve decided it’s time to regroup.

So for the past couple weeks I’ve been spending countless hours reworking the budget and the envelopes and even the bank accounts.  I’m purging all of our accounts into two.  One for our home expenses and one for Dave’s farm expenses.  The new account is currently earning 3.42%APR (down from 5.0+%APR, but this account is set up to try to stay above current CD rates at any given time).  It will be MUCH easier to keep track of “envelopes” having only one general account to operate from. And hopefully, it won’t take near as long to reconcile three accounts or to pay bills.  Simplicity.  It’s a beautiful thing.

I’m learning a few things in my research as well.  I had decided using Quicken to track envelopes (which I don’t think many people are doing) was a bit tricky, so I spent a week or two researching “budget software for the envelope system”.  I heard an advertisement for one on Shawn Hannity’s radio show one day and that piqued my interest.  I decided on a free 30-day trial of one called "MVelopes".  It does exactly what I wanted to do, but seems a bit cumbersome as well, plus it doesn’t track categories for taxes as accurately as Quicken does. (If you use it, PLEASE correct me if I’m wrong).  MVelopes charges a monthly fee – which is something I’d like to avoid since all this is about using our finances wisely.

If anything, I’m stubborn and set on figuring stuff out by myself, so after a few weeks with limited sleep, I ended up devising a way to use my current Quicken system having to make just a few changes and so far it’s working PERFECTLY! I can just hit a report button and see how much money I have in the bank at one time and how much is allocated to each envelope.  It’s simple.

Do any of you obsess like this over finances? Do you use financial software or budget similarly?  I’d LOVE to hear what you do and how it’s worked for you.

12 comments:

Kelly said...

You give Dave Ramsey a run for his money!
We have never really had a budget - it's more like one in my head but I have learned over the years to save up money for extras and emergencies. Being on one income will force us to look at things more carefully.

Kelley said...

I have used the envelope system, but have not used the software that you have mentioned. I have used MS Money for accounts at school. I have always had a rainy day account for emergencies. With my luck everything goes out in threes so I have to be prepared. I am so proud of you and impressed about how you stuck with this software and figured it out. You didn't give up. I am doing more bargain shoppings, saving first, cutting coupons, really making sure it is a need not a want right now. My husband and I owe a small business in Conway and the economy has been horrible for it. Hopefully things will pick up soon. No one wants to ship anything right now.

Heather said...

I read the title of this post and was like "ooohh...let's not!" ha!
We have used "envelopes" pretty much all throughout our marriage. (almost 9 years). Sometimes they are actual- where you cash out lots of money and put it in there for groceries, eating out, etc. and sometimes they are just "figurative" and we use the debit card but try to track it in the categories.
We are right now trying very hard to stick closely to a tighter budget and save more for long term as well as those "chunks of money" things that come up so we can be prepared. It is hard, though. I liked reading about your ideas!

Kayla said...

I really need to start doing something like this. Right now I pretty much just make sure I have my emergency money.

Kayla said...
This comment has been removed by the author.
Betsy said...

You are good, girl! Wow! Luckily for us, Steve is really good with money and he handles everything. He has one of those "money minds" that is always calculating and figuring out how to invest and save to get the most out of our money. I think everyone is going to have to re-think things with the economy going the way it is!

Becky said...

You go girl!!!! You have really been working your booty patootie off on this haven't you!

As far as a budget goes....aaaaa no! Tried it, doesn't work here. We have a savings/emergency fund and we are both fortunate to work for companies that provide us with 401k's. However, I'm not to sure how fortunate we've been lately with this, since the economy is in such a fix. However, hopefully it will get better.

I'm a spender and lately I have been cutting waaaaay back on my spending.

My youngest daughter Casey, is all about Dave Ramsey big time!

Susie said...

I guess I'm lucky. My hubbie takes care of all of this and I am so thankful. He uses excel sheets to keep up with everything. He's always looking around for higher interest rates which are basically non-existent. He is good at financial managing.

StitchinByTheLake said...

Unlike a lot of couples my husband and I have separate checking accounts. We started that when I was traveling in my work and needed to keep up with business expenses and just continued it when that job ended. We are each responsible for different things. We each have a budget that includes our particular bills, God's portion, entertainment, etc. This way I don't even know what he spends on hunting/fishing and he doesn't know what I spend on fabric! Though we have savings we also each "withdraw" money each pay period from where we keep up with our transactions and write it in the back of our checkbook. It's a sort of savings that is really in the checking account but that we don't allow ourselves to have access to. Our checking account pays a little interest so that helps. And when I have a big expense then I have that amount to work from. I guess it's sort of an envelope but just on the back page of the check register. :) I also keep up with God's money on a back page - I withdraw it immediately when I get paid and write it in on that back page. Then when I'm ready to give it to the church or to a charity I simply withdraw it from that page - another envelope. blessings, marlene

Courtney said...

You're major disciplined! I keep my stubs from paychecks I deposit but just have a checking & savings account.

My money from the theatre goes into the checking (after I pay my college and phone stuff) & money I make at the appliance shop and from reffing I put in my savings.

It's simple; but for now it works for me.

Tim said...

I will ask Carey to read this post. She's a CPA and works in the financial department of a HUGE petroleum company. Im sure she knows that program and would be happy to answer questions. Let me know if your interested.

Love and Prayers,


Tim

Kyla said...

ohhh... my budget. is. nonexsistent.

basically, i'm just paying my bills and keeping the rest in my bank account. with this new job, it will all go directly into a savings..