The wife and I recently have been putting together a budget. We've been married now for 6 months and felt it was time to start looking at where our money goes. Its not that we've squandered a lot of money, but we're setting some goals as far as savings and in order to meet those, need to get better about where our money goes.

That being said, wanted to throw it out there for conversation.

1) How did you set up your budget? Do you track your budget with software? Quicken? Money? Do you use an Excel Spreadsheet? Do you write it down by hand?

2) What tips have you found helpful in budgeting? For example, Dave Ramsey suggests setting aside cash at the beginning of each month on a couple of the items you struggle with as far as spending. So now, we've stuffed an envelope each month with cash for "Going out to Eat Money". We also each get an envelope for "Blow Money" which is for whatever we want to spend it on individually.

3) We've been doing this for a couple of months now and its been tough for me. I buy a lot of stuff on Ebay. I got to thinking it would be easier if we had incentives tied into it. If we hit a certain number in savings we double the "blow money" for a week...or if we got a bonus, raise, etc.

2/19/2007 5:23:37 PM

shit.

thanks for reminding me.

2/19/2007 5:26:45 PM

we use excel for our budget

We just make it a point to have sections for misc money and try not to go above it


they key is making yourself stick to it....we have been using one for about 3 yrs now

2/19/2007 6:57:03 PM

I had a budget going

But then I realized it was easier to just live as frugally as possible while still having fun, and I've saved a ton doing it.

2/19/2007 7:55:34 PM

I'd say it depends on your personal spending habits as to how you budget everything. What may be true for a large (or even majority) of the population may not be true for you. Similarly, spending habits different from person to person, and what one person may consider a must every month another might look at and question. Bleh, anyways, all that to say, specifics are something you are going to have to work out yourself ... nobody can say you can only spend THIS amount on food every month, or THAT amount on entertainment, etc. Depends on what is important to you, and how much you truly have to spend.

1) Excel spreadsheet but I need to look into software that does this one of these days. Regardless of the method, organized planning is helpful. When you are broke as hell, it can be a lifesaver.

2) Have $X amount automatically deducted from your paycheck into a savings account for investments. Its not touchable. Have $Y amount set aside for personal (not joint, personal) spending. If you are salaried, get used to only getting a certain amount per paycheck so things like eBay don't go out of control.

3) ^And what he said. Live frugally, but if you want to enjoy yourself, do it. Just don't do it so frequently the term "frugal" no longer applies.

2/19/2007 9:37:38 PM

We use MS Money for the budget. What we did was get several months worth of bills and figured how much money was going out every month and looked at how much was coming in. Then what's left over at the end of the month goes into savings. When we have a little cushion in savings we'll pay off the car then student loans with the extra cash. We almost never go out to eat, I take my lunch every day to work, and we buy what we need at the grocery store.

My bro and sis in law have a rule that if there is something they see out and would like to buy it AND they have the money to buy it, they wait 3 days. If they still want to get it and feel justified they get it.

2/19/2007 10:38:57 PM

i have all of my monthly expenses automatically drafted.

i have all of my savings and investments automatically drafted.

the rest is mine to do whatever i want with, guilt-free.


and you can get better advice than what Dave Ramsey has to say. He says some dumb stuff. Furthermore, putting money in envelopes and all that shit is more complicated and less failsafe than it needs to be, and it still misses the root of the problem: most people spend first and save what's left. you need to treat savings/investments/debt payments just like a mortage/car payment/power or water bill. Determine your goals, then figure out how much you need to save/invest/pay off each month to achieve them, and then make it a top-shelf priority.

THEN you can blow money on toys, restaurants, etc (and it doesn't matter how much, because everything is covered. conversely, not busting your "play" budget doesn't mean shit if you still aren't meeting your saving/investing/debt reduction goals.)

[Edited on February 20, 2007 at 10:13 AM. Reason : afsdfad]

2/20/2007 10:05:36 AM

i use quicken

I set mine up as follows

i make X every 2 weeks. From X, A is taken out by Taxes and such (they take about abut 12 bucks less a week then they should, but what are you gonna do with that one), B is taken out for my 401k (fairly high, brokerage link 401k ftw), C is taken for insurance. My take home pay per 2 weeks is a consistent Y

Y is where i start my budgeting in quicken. I have created sub-accounts in quicken to move the money around in so i can account for all of my spending.

I budget out the required money for:
Rent
Cable/internet
Average power +10 (and if i am over i just leave that money marked for power in case i get a high month)
Average water + 5 (same)
Phone (just avoid going over your minutes, its not that hard)
Student Loan
1/6th of my 6 month car insurance payment
1/8th of my furniture payment (12 months same as cash, pay off early, looks good on credit)
4.3x average weekly grocery trip (i make 1 trip a week, i took an average over 6 weeks, and thats my budget, a lot of people spend way more on food then they should and normally on unhealthy crap like cheese dip and cookies, try to avoid that)
4 tanks of gas @2.20 a gallon

This sum is R(required)

Next i pull out money for planed savings:
Automotive upkeep/new car fund
House fund (saving up a down payment)
Vacations and gifts (this to cover trips to the parents for holidays, 1 vacation a year, and Christmas/Birthday gifts)
General savings (to be used to need large ticket purchases, such as furniture, new computer, etc)


This sum is S(savings)

After that i budget for modest monthly entertainment.

1x trip for 2 to the movies
4.3x dinners out (1 a week)
$20 for alcohol for whatever
$20 a month for movie/game rentals/purchases
a small amount of misc personal crap money (going out to lunch at work, going out 1 night if a friends in town, that kinda stuff)

This is W(want)

if Y >R+S+W. anything left over is going to savings
if your Y <= R+S+W start cutting out of your wants, re-adjust your food budget (2 people can eat very good dinners for under 10 dollars, make sure you are not wasting food by making to much) Even if you can, try avoiding going out for lunch at work. Even if its to mctacohut, its still going to be 5-7 dollars a day, or you can make something at home the night before, or get some frozen lunches for like 2.50. Saving 2 dollars a day is going to save you 500 bucks a year.

Done not set your system up for extra 'blow money' set it up for extra savings. Your incentives here are to have a nice house/cars/standard of living and to retire at a decent age, without depending on social security.

One of the biggest things i have done to help save more is when i think about buying something I stop and ask myself if i am actually going to use it enough to justify the cost. One of the biggest ways i see friends blowing money is on ebay and sales. Yes its cheap and you are getting it at a discount, but if the only reason you are buying it is because you are getting it cheap you are pissing away your money. If you have been looking for it for a while and were willing to pay close to retail to start with and then you find it cheap, buying it might be a good idea, as long as you put the rest of the money you would have spent on it into savings and not do like my neighbor and go "well, I only wanted the 1 shirt, but it was buy 2 at get 1 free so i got 3 shirts" Yes, technically you save 33% on each shirt, but you spent 200% of what you planed to. Also, putting it in a physical envelope is just silly. 1 it means you have to have all your money in cash form, 2 it is easier for most people to track their cc/check purchases better then their cash ones. Which brings me to my final tip, save and record every one of your receipts, this will help you see where you money is going and help in your future financial planning.

Remember
Save/reduce debt
spend
save some more

2/20/2007 11:20:42 AM

I get paid every other week and here's how I work my system.

I total my monthly bills (rounded up slightly, like $100 for my cell instead of the $75 it usually is and so forth) - divide by two and have that amount deposited into a separate checking account used for bills ONLY.

I then take out for personal "rainy day" savings. My ESPP and 401(k) are taken out of my paycheck before it's deposited so I don't "budget" for these, they're just done, and I have the remainder.

The remainder covers 2 tanks of gas (I estimate at $60, even though it's usually $50 and I usually don't need a full 2), 2 weeks worth of food (bought at the grocery store ONLY) and any extra spending money (including meals out, clothes, etc, ANY other money I might spend aside from buying groceries or gas).

When the next pay day comes around I deposit whatever is left over into my "extra cash" account, used for larger or one-off purchases, or if I have a particularly expensive few weeks (like around the holiday season).

2/20/2007 11:45:56 AM

With regards to your questions, I've found that giving myself a "reward" every time I hit one of my goals (like getting 1 months bills in savings in an account that is harder for me to touch) is useful.

I've also struggled with some areas, with me it's travel. I'm the type the throw caution to the wind and travel when I feel like it and have the available funds (as is exhibited by 4 trips to England plus a year living there in the past 3 years, plus 2 to NYC this summer in the span of 3 weeks, a trip to the mountains on the spur of the moment and the current temptation to go BACK to NYC for a long weekend... soon).

I've had to take a hard look at my goals and at my current income level and curb my spending on travel. As much as I'd love to go to Raleigh 3 weekends in the next 2 months, go to the mountains for a long weekend as well as go to NYC and DC for a weekend each, it just isn't possible.

Once I find out my situation when my company closes this merger (Feb 28th) it will be a bit easier, but I've found that pitting my "wants" against my goals and having hard goals with definite rewards helps curb the "wants".

Every person is different though, what works for you and your wife may not work for me and vice versa - good luck!

2/20/2007 11:49:49 AM

if you do it my way, you can spend money however you want and not feel bad about it, because everything responsible you need to do with your income is done before you can ever even get your hands on it--all that you have see is your "play" money (unless you go pulling money out of savings accounts or selling stocks to buy toys or something).

just make sure that when you set up your savings/investments/debt payments (if applicable), you budget enough for them so that you can truly consider everything remaining fair game to blow on whatever you want.

2/20/2007 12:01:39 PM

Good advice posted. Thanks.

And I agree TheDuke. I try to read up on a lot of different financial philosophies and Dave Ramsey does have a lot of bad ideas when applied to my situation. I think he is very good for people in horrible debt that have little control. I'm not in that situation.

Our budget is a little more complex than having to add up the incoming and subtract what we want to put to savings and bills and pocket the rest for ourselves. My wife earns a very good salary but it is 100% Commission. I make the same on a bi-weekly basis. So we pretty much have to determine a budget at the beginning of every month. We use the envelope idea after seeing that we were spending about $100/week eating out. The envelope solved that.

We do have things automatically deducted. She hits the 401K max about halfway through the year. I give 25% to my 401k each paycheck. We each have traditional IRA's. We have a brokerage account we put savings into and draft to the brokerage from our money market account. We have goals to reach at the end of the year with all the savings, but its hard to budget for the year not knowing what are combined income will be.

[Edited on February 20, 2007 at 1:08 PM. Reason : ;]

2/20/2007 1:07:13 PM

^^
How do you handle variable / unexpected costs every month? "Rainy day" /contingency account as a part of savings?

[Edited on February 20, 2007 at 8:28 PM. Reason : .]

2/20/2007 8:28:29 PM

I'm a jew, so it's never come up.

2/20/2007 8:47:12 PM

I just try and stick below $50 a day going out on food and alcohol.

the rest balances out.

2/20/2007 11:06:08 PM

^^^ I have a couple of months' salary in savings, and add $250/month to it (doubles as my house downpayment fund). also usually keep a few thousand in checking.

if shit gets worse than that, well, I do have about 10-12k worth of credit card limit--half of that at pretty low interest.



all but the biggest unexpected expenses come out of my "money to blow" in the checking account. like, I had to pay $3,000 for a lawyer a few months back--I put it on my credit card at 6.24%, then paid about half of it off immediately. paid the rest off a few weeks ago...but then I wanted to buy a stock (GRMN), and my checking account was hurting bad (from the lawyer, trip to NC, child support, etc)...so I pulled $1200 out of savings to buy some shares of it (I've put $1200 back into my savings now, though, with part of a $3,000 profit from selling my car)

of course, now I owe $1675 for vehicle tax on my new car (wasn't expecting that--FL doesn't just tax you on the difference in price between your old and new cars, or pro-rate the amount you paid on the old one for less than a year--they hit you for the full 6% on both vehicles, even if you only own them for a day).

again, though, that just comes out of my "money to play with". I was about to order $1350 worth of go-fast parts for the new car, but now that'll have to wait.

_____________________________________________

^^^^ yeah, your wife being on commission complicates things somewhat. you could still take the same approach, but just keep more money in savings/money market to dampen the variations in your income (just remember to build the savings back up during the good months, and not party with ALL of it! you could set a limit on what you need your savings to be. say, $10,000...any thing above that amount is yours to play with. when it drops below that amount, your priority would be to build it back up to 10k asap.

another thing you might could do is have your salary go strictly towards paying bills/savings/investments/etc, and have the "play" money tied strictly to hers. just thinking out loud...don't know if that would work for you.

[Edited on February 21, 2007 at 8:51 AM. Reason : asdfas]

2/21/2007 8:47:08 AM

i agree with the whole, just live frugally and save money. if you want to do something, feel free. you arent going to break the bank. i save X amount and then spend whatever i feel like and save the rest once my next paycheck comes in. ive always got money left over, it just varies. allows me live the way i want, but still save a good bit.

2/21/2007 9:22:17 AM

best of lucky figuring it out, the 100% commission is a bit tricky.

perhaps you could determine an "ideal" budget based on her average income per month, then plop the extra into savings in months she does, well, use that extra when she doesn't have a stellar month and move some funds from that account when it reaches a certain limit, ie: if you find that you have $5000 in there, move $2500 to savings, that way your "rainy day" fund is still at a healthy $2500 (for things like fixing cars, home improvements, etc), you (hopefully) still have a 3-6 month salary account and you can use that $2500 (or whatever you decide) extra to either go on vacation or do something else with. That way your monthly income stays fairly static, you still have an easily-accessible rainy-day fund and your budget can remain the same?

It might not work but it's worth a suggestion

2/21/2007 9:45:50 AM

Quote :

"i have all of my monthly expenses automatically drafted. i have all of my savings and investments automatically drafted. the rest is mine to do whatever i want with, guilt-free. "

I use the same method as well. simple, low-hassle, and effective.

2/21/2007 10:16:13 AM

Quote :

"you can get better advice than what Dave Ramsey has to say. He says some dumb stuff. Furthermore, putting money in envelopes and all that shit is more complicated and less failsafe than it needs to be, and it still misses the root of the problem: most people spend first and save what's left. you need to treat savings/investments/debt payments just like a mortage/car payment/power or water bill. Determine your goals, then figure out how much you need to save/invest/pay off each month to achieve them, and then make it a top-shelf priority."

I too just live as frugally as possible while still having fun, and I've saved a ton doing it.

2/21/2007 10:31:09 AM

i don't really feel like i live particulary frugally. i mean, i'm not stupid with money, but i pretty much do and buy about what I want to.

but i save and invest a shit ton (nearly 25% of what I make) right off the top, so I don't feel bad about spending the "play" fund on stuff, no matter how frivolous.

2/21/2007 9:25:23 PM

Where do you work at Duke?

2/21/2007 9:49:20 PM

Quote :

"i have all of my monthly expenses automatically drafted. i have all of my savings and investments automatically drafted. the rest is mine to do whatever i want with, guilt-free."

2/22/2007 5:45:45 AM

^^ USMC

2/22/2007 6:15:40 AM

I've used MS Money since graduation, to keep track of spending & account balances. I don't like their budget tool, however. When I moved, my rent changed from X to Y, but because I did not end-date the X payments...it shows X+Y as my budgeted amount for rent. I can't delete the X and so I can't use that tool anymore.

I budget against my net pay, after 401k contribution. I've got automatic debits for my Roth & my down payment fund. Any money I make from my part-time work is added to the emergency fund; once that's replenished, it will all go to the grad-school 529 plan. Getting my MBA will cost anywhere between $40k and $100k, so I'm pretty diligent about savings.

The important thing is to spend consciously on what you love, and economize on the things that aren't important to you.

2/24/2007 10:19:21 AM

Dave Ramsey, lolz.

2/24/2007 2:34:30 PM

haha, i just read the wikipedia article on him. what a nut. i knew he said some dumb shit, but i didn't realize just how bad he is. it's like he has no concept of opportunity cost.

2/24/2007 3:16:36 PM

perfect is the worst enemy of good

2/25/2007 3:59:02 AM

yeah, Dave Ramsey is only slightly less nutty than Robert Kiyosaki, the world's greatest finance charlatan.

2/25/2007 9:17:08 AM

^^ i've only read Rich Dad, Poor Dad, and I thought the overall message was good. it doesn't really get into any investing specifics that I remember. He has kind of an odd take on people owning their own homes or something, if I remember correctly.

2/25/2007 11:05:53 AM

Quote :

"he has no concept of opportunity cost."

Yeah, he fucking hates all kinds of debt. He'd advise paying down your mortgage even if it was 1%. Also, his advice for paying down multiple credit cards is just plain stupid.

2/25/2007 11:49:58 AM

perfect is the worst enemy of good

2/25/2007 12:30:22 PM

Ramsey is good for people who can't budget and rack of debt through lack of common sense. His plan allows those types of people to budget properly and attack manageable debt first. I think its a really good system for those that need it.

People who are good with their money would be foolish to follow his advice.

2/26/2007 6:07:49 PM

^concur, except amend last line to "people who aren't all fucked up with their money would be foolish to follow his advice."

[Edited on February 26, 2007 at 6:49 PM. Reason : and even then, i say learn a little about personal finance and have a tiny bit of discipline]

2/26/2007 6:48:06 PM

Don't have a 'budget', because I'm not out of school yet, and won't be for 3 more years, but the idea of automatically drafting all of it out and then having the rest for spending money sounds like a good plan.

2/26/2007 8:17:23 PM

We definitely automatically draft out. Our bills are automatic, are 401k's are automatic, we pay the max on both IRA's with our tax refund, and we have a pretty decent chunk taken out to go towards the brokerage account every month. Problem is the leftover we have certain months when my wife does really well. We save a really good amount, but always feel we could do more. Especially if we have to switch to one income in a few years. Want to get a lot of the saving done now and let compound interest work its magic.

2/26/2007 10:18:11 PM

Quote :

"we pay the max on both IRA's with our tax refund"

Damn, you need to change your deductions.

2/26/2007 10:43:45 PM

^^ depends whose income you'd be giving up.

Try living on the income of whoever would be the sole breadwinner if your scenario pans out. Bank the other income.

2/27/2007 12:11:41 AM

i'm investing in my racecar...

2/27/2007 10:23:45 AM

yeah i'm funny.... i take my money and throw it in 4 directions when i get it..
and try to live off of $350/ month for day to day stuff.

2/27/2007 11:47:06 AM

Quote :

"Damn, you need to change your deductions."

No kidding. This was our first year married and we didn't get around to changing deductions. Had a huge return. We're working on claiming more deductions, but that has been a learning experience too. Is there a good way to determine how many you need to claim to come closer to breaking even?

2/27/2007 6:06:54 PM

I believe the irs has a tool you can use on their website. Don't have the link offhand.

2/27/2007 10:06:22 PM

http://www.irs.gov/individuals/article/0,,id=96196,00.html

2/28/2007 6:12:38 AM

my wife and I use an envelope system. we make sure we have every dollar going somewhere (Boys' clothes, cable, rent, my eat-out money, gym, etc.), and we take cash out each week and put it in the envelopes (in 5, 10, and 20 denominations). then, when we need/want something, we take it from the envelope associated with it. if there isn't any money in the envelope, we wait until there is. at the end of the month, we take the remaining money that we didn't spend in the envelopes and put it on the car loan. that way we'll pay the car loan off faster. we track everything with a self-written "budget" program in excel. we've also got a tracker of when we are going to pay off our debts with the plan we have. it helps to see the progress we are making.

http://www.cadovius.com/sample_budget.xls

2/28/2007 7:56:23 AM

What % is your car loan?

I don't think I'd like to have all that cash sitting in envelopes when it could be earning interest elsewhere.

[Edited on February 28, 2007 at 9:04 AM. Reason : added strikethrough, I just realized who made the last post...]

2/28/2007 9:02:54 AM

Quote :

"I give 25% to my 401k each paycheck. We each have traditional IRA's. We have a brokerage account we put savings into and draft to the brokerage from our money market account. "

25% into a 401k seems like alot. Do they match every dollar? Is there a reason you haven't went with a Roth?



so alot of you people draft your monthly bills (cell phone, power, insurance gas etc)...

do you set up a separate checking account, and have the companies automatically draft your amount due from that separate account? i would feel strange about giving any company access to my primary checking account...

2/28/2007 12:16:24 PM

If his wife earns a "very high" salary they might not be eligible for a roth.
I draft my monthly bills from my main checking account.
I try not to keep over $1000 in there.
Some of the automatic monthly drafts get charged to my credit card, so in case there are any problem I can dispute them.

2/28/2007 12:24:36 PM

^^ that's the way I do it.

I have direct deposits for 1/2 of my monthly bills coming from my main checking account to my 'bills' checking account (I get paid bi-weekly).

Both are free as a result (direct deposits for both checking accounts, one from my employer and one from the other account) and I have all my debits set up from that account.

I dont have a card for that account and can't write checks for it, so it works well for me as I can't spend the money in it when I'm out (not that it's a problem, but for some people it might be).

2/28/2007 4:22:17 PM

Yeah, we're not eligible for the Roth at this point. My wife has a Roth from before she landed her current job, so it sits for now and we both contribute to traditional IRA's. Will pick back up contributing to the Roth when we go to 1 income. If we can't afford to contribute from my salary, we'll draw from the brokerage account to pay the Roth and write it off.

We draft the bills directly from BOFA Money Market. They have good security standards in place, so I'm not worried about something happening. Beats the heck out of writing checks or establishing a 2nd account to contribute to in order to pay the bills.

Quote :

"I don't think I'd like to have all that cash sitting in envelopes when it could be earning interest elsewhere."

I don't know about his case, but for us, we're talking like $300 per week in an envelope. The interest on that for a month wouldn't be enough to justify not using this system. We save by having better limits set on what we have for the month.

2/28/2007 5:15:45 PM

I suppose. After reading Dave's advice about credit card payments I kind of lost all respect for him and his so called "tips"

2/28/2007 5:24:19 PM