Friday, February 12, 2010

Live Like No One Else: Budget

(Don't forget to leave a comment on my 300th post to be entered to win the $20 Lowes gift card!)

I was looking through posts from last year and realized that I basically ignored something Jason and I did that has impacted our marriage in such a HUGE way. This time last year we went through a 13 week Dave Ramsey class called Financial Peace University.

We had heard good things about Dave's philosophy and found that a local church was offering FPU on Wednesday nights in January-March. We were dating (not yet engaged) and each in a good place financially, but we had no idea where our money went each month, and always felt "tight" with our money.

One of the first things Dave encourages you to do is make a budget where "every dollar has a name", meaning, if you make $1000, you have $400 rent, spend $200 on food, then you decide exactly where the other $400 goes - savings, charity/tithing, clothes, gas, fun money, etc. So we each made a budget and tried to stick to it. The first few months were hard because we had never really kept track of how much money we threw away by eating out all the time, but it got easier over time. Then when we got engaged and started thinking of MY money as OUR money, the budget began to change and for the most part, we actually began sticking to it.

The Dave Ramsey tool that we have found helps us the most is the "envelope system". Once you have determined your budget for each month, you take cash out for certain categories (we do groceries, restaurants, entertainment, and personal money) and put them in envelopes to keep with you at all times. When you run by a fast food place, you use money from the restaurants envelope and NOT your debit card (which is what I did every single time prior to this). When you go grocery shopping, you know that you only have a certain amount to spend, so you put back the extras that you don't necessarily need - this gets harder as the envelopes get lower; you really start to think about the purchases you're making. {One category we don't use envelopes for is gas, because - let's face it - if you need gas, you have to get it. And also, I really hate going inside to pay before I pump and all that, so there's one of our exceptions to the rule.}

I realize this is getting long, so in an effort to not bore you to death, I will try to wrap this post up and continue the Dave thoughts as a series.

We have finally gotten in a groove with our envelopes where every other Friday (the day I get paid) I go to the bank and fill up our envelopes according to that 2 week period (read: half of that months budget.. I know that's a "duh" but I wanted to point it out). At the end of the two weeks before I "re-fill" our envelopes, we take whatever is leftover (instead of adding it to the next 2 weeks) and we put it in our vacation fund. Now, we already have a budget set aside each month for vacation, but this is just an additional incentive not to spend as much during the month so we can put as much extra into it as possible!

This way of life TRULY works for us and has made us better stewards of our money, plus we are on the same page about most everything within our budget. It makes financial decisions easier because, hey - if it's not in the budget, we either have to move stuff around to make it fit, or it just doesn't happen.

I hope this sparks your interest and you take some time to look through Dave's website. I will most definitely be talking about this again because it has impacted our lives so greatly.

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