Thursday, November 3, 2011

{Money Smarts} Our Budgeting Basics

We've always had a budget, but staying on track has been a learning curve.

I'm sure most of you are already in on the basics--you know your monthly income, you know your expenditures, and the second needs to be less than the first.


So, first, income. Since the hubs is in school and I stay home with the kiddos, we have an atypical situation for people our age. Our income comes mainly from three places:

  1. A stipend from the Air Force (we are doing their health scholarship program, which means they pay for school and a stipend, and we pay them back with 8-ish years of service during and after residency),
  2. A scholarship (but this obviously isn't a dependable income source) and
  3. A small student loan (which gets broken up monthly).
None of these things alone are enough to support a family of four, but we've worked out a budget based on these income sources that should be fine. A few factors have contributed to our inability to budget without the student loan, mostly my undergraduate loan payments and our car payment.


Expenditures we've been working on. At first we tried to live an intensely frugal lifestyle, but we noticed that after a couple of months we'd both feel this pent up tension, which usually ended up in a big financial splurge. Not good. So over the past couple of months we've come up with a number of categories and numbers that will keep us honest (so to speak) but still keep the reigns on the spending. We have a LOT of spending categories, but it makes it easy to track stuff without putting anything into a "miscellaneous" category. If you're interested, here they are:
  • Jamie Student Loan
  • Health Insurance
  • Medical Expenses (Dr. visits, Rx, etc.)
  • Rent
  • Car Payment
  • Car & Renter's Ins
  • Gas
  • Groceries
  • Baby/Kids (Supplies/Diapers/Wipes/Clothes)
  • Cell Phones
  • Internet
  • Utilities (Water, Trash, Sewage)
  • Electricity
  • Play Money - Steve
  • Play Money - Jamie (we each get an "allowance" each month)
  • Dates
  • Family Outings
  • Gifts/Christmas
  • Household
  • Tithing
  • Fast Offering
  • Netflix
  • Gym Membership
Our Strategy

In theory, I love Dave Ramsey's cash envelope system, but it just doesn't work for us. The structure would be fantastic, but we'd miss out on other money saving opportunities--which for us is points (or miles, depending) on our credit cards, which help pay for us to fly cross-country to see our family. I also have a Target card, because I shop there a ton and it gets a 5% discount.

So right now we mostly use credit cards, except that Steve likes his "allowance" in cash. We pay off the balance each month so there is no interest charge. And I track everything on a kind of intense spreadsheet I made. When we stay on budget, this works really well for us. If we can't get it together over the next month or two, though, we might have to try switching to cash only, just to get ourselves focused.

So here's where we're starting from. If you haven't already told me, I'd love to know your take on budgeting. :)

1 comment:

Elyse and Steve said...

I've gone back and read through some of your posts. You have a lot of good advice. Thank you for sharing! I really like BYU's finance course. I've actually been doing it for quite awhile, I won't tell you how long. It has been very helpful. Here is the link to the class: