Comments: Do you budget or smudget?
Cyndi Finkle, Los Angeles
My husband and I create a yearly budget, but we do not track every single expense monthly. We do put away monthly “savings” (college, vacation, private-school fund), and we spend wisely throughout the regular months. Two months out of the year, we do “no spend” months — which is our key to budgeting, saving, spending and balance. During our “no spend” months, we buy only fresh fruits and vegetables and pay bills. We reset out spending habits by going on a financial diet.
Mike Veny, New York
I track every single expense down to the cent using QuickBooks Online. This keeps me honest and gives me clarity. As I’ve gotten more clarity, my stress has gone down. At the beginning of the month, I look at my “Budget vs. Actual” report from last month, make adjustments for the upcoming month, and also create a budget for the same month next year. This way, I don’t need to cram and do an annual budget in January. Here’s to budgeting!
Teresa Dalmia Beard, Overland Park, Kan.
I set a monthly budget and track my expenses. A lot of it comes from raising two children as a single parent in my 20s and it has just carried over through the years, even though they have both left the nest and I am now in my mid-40s. I am almost a fanatic about it. I subscribe to Credit Karma to keep an eye on my letter score, currently at a “B” but I’m pushing for an “A”! My budgeting is carried out the old-fashioned way — a good old Excel spreadsheet. Every single bill I pay every month is listed with a due date, the amount, the original balance, remaining balance, the interest rate if applicable and the website link so I can pay it online for free. All of my bills are split between my two paychecks.
At the bottom of my spreadsheet, I list out all my revolving credit by the credit limit and what the balance on each card would be at 40 percent, 35 percent and 30 percent utilization along with my current outstanding balance. That way I can calculate a total utilization to see where I stand. I am very diligent in reviewing my budget and constantly make adjustments as necessary.
Sharon Anthony, Columbus, Ohio
We started working on a budget in 2007 as we neared retirement age. We wondered whether we could afford to retire. We started by posting everything we knew about from the checkbook, then my husband and I wrote down everything we spent in cash on the calendar to keep track. We did that system for three years, then got tired of writing down the cash. Since we had gotten used to trying to charge everything so we could keep track better, we just allocated a certain amount of cash each month based on what we had been spending.
By finally getting the info down in a budget format, we relooked at everything and made decisions on things we really didn’t need, things we could replace with more reasonable options — like cellphone service, basic phone package, cable, etc. Each month the two of us post all of the info on our budget and see how we are doing. We are pleased to announce that even though we have finished paying off our mortgage, we found many other things in our budget to reduce or eliminate, and we have reduced our budget in half since 2007 and have lived under our budget every year to have more money for our savings. Yet for me, I don’t feel like we have changed much of anything. Our lives are not that affected. We just have a better handle on how we are spending our money.
Bethany Mooradian, Seattle
Since I was 19 (I’m 35 now), I’ve tracked my spending. I keep a day planner and write down how much I spend, on what, and if it was paid with cash or credit. After the first year of tracking, I realized it didn’t matter how much I spent if I didn’t know how much I took in, so I started tracking my income as well and ran monthly, quarterly and yearly reports. I know exactly how much is coming in and going out of my accounts at any given time. If you were to ask me what I spent or how much I made on July 19, 2005, or Jan. 3, 2008, I could tell you. Yes, I’m that, umm … meticulous. You’d think that this mindset would lead me to a career in accounting or other kind of finance industry. Nope. I have a degree in puppetry (yes, puppetry).
Because puppeteers don’t make that much money, I’ve become “Queen of the Random Job” and do everything and anything to make ends meet. (As) a small-business owner, I do have some debt, but I manage it quite well, paying it off in regular intervals. I find that knowing where I’m at financially at any given moment gives me great clarity and focus when planning my needs versus my wants. Anyone who has multiple sources of income or varying debt, really needs to track their spending. It’s kind of like going on a diet — you need that “before” picture to shape your goals and plan.
Megan Mayo, Allen, Texas
We started budgeting in January 2010. My husband totaled his car, and we had to borrow money from his parents to help pay the difference because we weren’t prepared. That combined with the student loans we had (thank goodness we didn’t have any credit card debt!) was taking a large portion of our paychecks, and we decided we needed a plan. A friend told us about Dave Ramsey and we went to Financial Peace University.
Every month, I write down on paper every penny we will earn and where it will go. Everything extra goes to pay our debts. I even have sink accounts for items we might not purchase every month but might get a sudden big bill on like car repairs and medical emergencies. I have two checking accounts — one for our monthly bills and one for these sink accounts — so the money doesn’t get mixed up. I also have a separate savings account for my mini “emergency fund,” where I keep enough money to cover the deductibles in case something happens to our house and both of our cars at the same time.
It’s like we got a raise because now I never worry about having enough money to cover items like new clothes or a water heater because we have money saved. We started January 2011 about $41,000 in debt and now we only owe $18,000 (not including our house), and we don’t make a lot of money. It’s liberating!