Budget Friendly Stepford

My last post was 11 days ago! 11 days!! Time is just getting away from me more and more often now that Little Darling is so much more mobile. We spend way less time sitting on the couch and way more time playing and crawling all over the house. The bonus of this is that I am much more active, the down side is that I am much more tired and spend a lot of her nap time catching up on house work or napping myself. I often think back to when she was first born and everybody kept telling me to sleep when she slept and I couldn’t figure out what they were talking about because I felt fine and she slept like 22 hours a day so I wasn’t even remotely sleep deprived… But now, whooo boy do I need more sleep in my life.

But enough about me! Lets talk budgeting!

If you are smart, which you are reading my blog so I don’t doubt that you are 😉 You will have a monthly budget to look at on a regular basis. We recently redid ours, and I got to thinking that there may be people out there who are unsure of how get started with their budget.. Never fear, Stepford is here.

The first thing you should do, is read up on Dave Ramsey. He will help you get on track. A lot of his information and teaching and books are geared toward folks who are hundreds of thousands of dollars in debt and are slowly sinking into bankruptcy. This is not our case, Wonderful Husband is, well, wonderful with finances and I like to consider myself a pretty frugal female so we never really had much debt other than basic car loans and school loans and the mortgage. We were fortunate enough to have very financially conscious parents who taught us how to spend and how not to spend, and we received one of Dave’s books as a wedding gift from a financially conscious friend.

With Dave’s 7 baby steps, the first thing you do is put $1000 into an emergency fund in case something goes wrong while you are in the middle of the program. Then, you halt saving and investing and start putting all of your extra money into your debt. It sounds scary, because you are always taught to save save save, but think of how much money you are wasting by paying interest on all that debt you are carrying around! By taking a few years to pay off debt faster, you can easily re-save all your money afterwards. Think of it as you can put $100 into your savings and $100 into your debt for a year and come out still owing debt and having savings, or you could put $200 into your debt for a year and come out debt free and ready to devote all your extra income to savings! We were lucky enough that when we decided to do Dave’s program we were both working and both had savings accounts. That put us ahead of the curve on a lot of steps.

Everybody’s situation is different, but almost everybody can benefit from doing a budget and a “debt snowball”. Before we even did a budget, we did our debt snowball. We took all of our debt, and listed it from smallest to largest and then again by interest rate. For example, I owed almost $28k on my school loans still (and my poor diploma is gathering dust in a closet), with an interest rate of 5%. But Wonderful Husband had a truck loan of only $3k with an interest rate of almost 11%. For the debt snowball you pay off the smallest balances first. You pay the minimum on all the other debt and throw all your extra money at the smallest balance, when that is paid off, you move onto the next, and the next, until all of your debt is paid off except for the mortgage. In our case, we were able to clean out my savings account except for the $1000 emergency fund, and I stopped contributing to it, and within 9 months we had both vehicles, WH’s school, and a large portion of my school paid off.

When we did our budget, we did it a little backwards because we knew that I would be quitting my job soon to stay home with Little Darling. I didn’t even factor in my income and did our budget off WH’s alone. The best way I found to do it is to get into Microsoft Excel.

Once you are in Excel, you can list all of your expenses. Make sure you don’t forget anything. Here is everything I listed in our budget:

  • Mortgage
  • Water
  • Sewage
  • Electric
  • Gas
  • Cable
  • Internet
  • Phone
  • Groceries
  • Household items
  • Baby stuff
  • School
  • Garbage
  • House insurance
  • Car insurance

Now, some of these are not all paid monthly, our garbage and car insurance are paid annually so I put them into a separate column. Once you have them all listed you can go into the Formula tab of Excel and choose to Insert Function. You want to select the cell at the bottom of your amounts and choose it to display the sum of all the amount cells. So if cell B2-B14 have the $ amount of your bills, click on cell B15 and insert the Sum Function. It will display the totals of what you spend monthly on bills. Again, I have two columns, one for monthly and one for annually. Once I have totaled the annual bills, I insert another function into the next cell down and have it divide by 12 to show how much money we need to save monthly in order to pay our annual bills so they won’t sneak up on us (this is the monthly savings for annual bills).

Once you have the totals of all your bills and exactly how much money goes out each month, you need to get your annual income, This one is difficult for us because Wonderful Husband is paid hourly so we just worked off the lowest check he ever received so we would have more money left over when he gets more overtime.

The best way to find your salary if you don’t know it, is to take your paycheck and multiple it by 26, because you will normally get 26 paychecks a year (sad isn’t it? seems like you should get paid more) For example, if your paycheck is $500 every two weeks then you want to do 500×26= 13,000. So you are taking home $13k a year.

Multiply your paycheck by 2 to get your monthly take home (500×2=1000).

Now anyone following along will notice is that 13,000/12 doesn’t equal $1000. That’s because it will equally divide the 13,000, when in reality there will just be one month or two months a year that you get three paychecks instead of 2. For the sake of your sanity, go with the lower amount of $1000 a month.

So now you have your annual income and your monthly income! Yay!!

Now. Select a cell underneath your annual and monthly incomes, insert function, sum of your monthly bills+ monthly savings for annual bills.

You should have your annual income, your monthly income, and your monthly budget all in one column now. And you can probably see where you stand, but lets get it on paper.. select the next cell underneath your budget, insert function, subtract monthly income-budget.

That’s how much money you have left.

HINT: the incoming should be HIGHER than the outgoing. If it isn’t, you will have a negative number here.

For example, if you are making 13,000 a year, 1,000 a month. Your monthly budget needs to be LESS than 1,000. If it isn’t, its time to make a change.

Doing a budget, is a great way to stay on track and know where every penny of your money is going. You work hard for that money, don’t let it slip away, and don’t give it away for free!

If you need help, or are interested in learning more, please feel free to reach out to me! I love helping people save money and find their footing to get back on track with their spending! I hope this post was helpful, I know that teaching Excel can be really hard, and it is difficult to explain it without being able to show you all. I have faith that you can do it though! Once you know exactly where your money is going, it is much easier to make good decisions about spending. Do you really need that Starbucks coffee? Or could you maybe brew yourself this month?

Good luck everybody!


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