If you never learned how to do a budget in school.. a Primer

[SoCalDem]

In case there are people who never had an opportunity to learn.. here's an easy way to do one

First, be sure you SAVE all your bills, so you can get an average..


Here's what I taught my kids about budgeting

Use the same bill each month as the "wrapper", to keep all the month's paid bills inside it.

Write the check# and date & amount on the part you save, so you can easily locate it if you need to.

Rubber band each bundle monthly..

For instance:

Whatever your previous year's electric bills were..add 'em up & add 15%..then divide by 12..
repeat for all your recurring bills

A legal pad is plenty..but you could use excel on your computer or you could spend money for Quicken

Just add up the 1/12th portion for all your fixed bills (list them)

Don't bother figuring in some things.. like entertainment/clothes etc

We're after basics to start with..

Now list the NET (what your actual check is) x 4

(I know some months have an extra payday..but 4 a month (or 2 ) is the basis I use..

Subtract the TOTAL for your fixed bills..

Fixed bills are:

rent/mortgage
water
car payment
student loans
gas
elec
phone
insurance(s)
cable
internet
child care
child support/alimony
trash pickup


What you have left over is your discretionary income

What is discretionary income?

It's money you CAN adjust.

You can drive less to save on gasoline
You can eat out less
You can buy cheaper food
You can eliminate entertainment spending

Whatever's left over, divide into fourths.. That's what you have to spend each week. for EVERYTHING...

You'll notice that there is nothing in the list so far for savings or food or gasoline or car repairs or emergencies.

If you have a car, you can be assured that something WILL go wrong with the car from time to time, so it's always a good idea to put at least $50 a month into a separate savings account, so that you will have it if you need it.. If you are lucky and nothing happens, then you just have extra money,.

there is also nothing in the budget for credit card payments. If you have them, list them by the HIGHEST interest first..PAY THEM OFF FIRST...and put the cards away.. Do NOT carry them with you , and you'll cut down on impulse buying.. That 25% off sale is useless if you pay 18% interest and carry a balance..

Round UP.. If your bill is $75.65..(and you can afford it) pay $100..

It's nice to get a statement showing that you have a credit and do not owe.. especially if that month happens to be Nov or Dec

If your bills add up to more than you bring in, then you need to start cutting stuff out or get an additional job that's ONLY to pay down debt..DO NOT USE THAT EXTRA MONEY FOR ANYTHING ELSE, OR YOU'LL NEVER BE ABLE TO QUIT IT..AND THEN MIGHT NEED A THIRD JOB

If you ever have a dispute on a bill, write down the name of the person you spoke with, the date you spoke to them, the time..and notes about your conversation.. It usually takes a few calls to get things straightened out... and if they know you are paying close attention, you will get faster resolution of your problem.

Check the DUE DATE of each bill..every month.. They are changing the dates all the time now, and you don't want to pay a late charge larger than your bill..

If you pay by mail and do not pay them as you get them, subrtact 4-5 days from the due date and write that date on the envelope where the stamp goes....Put them in order,, first due-to last..


Got any other tips for the folks who are strggling with how to do a budget??

Add them on :)

[Wickerman]

1. Damn, that was good

Wish you'd been my parent! Doubt that would've worked, but I probably wouldn't have struggled there for a bit when I first went out on my own.

[TeeYiYi]

2. Bookmarked and recommended . . .

. . . Thank you SoCalDem. ;)

TYY :kick:

[samdogmom]

3. Did you forward this to Hillary's campaign? It seems they need a lesson or two...

they're quite in arrears on paying their bills...they could use the help! Maybe you'd be a better finance person than whomever they have on staff right now.

[Mountainman]

4. Make an excel spreadsheet,

In the first row across the top put your paydays and below it the amount you will take home.
In the first column list the things you have to pay like car loan, house payment, electric etc. In the next column list the amount. Spread the amounts across under the date your paycheck will cover them.

Include amounts for food, doctor, gasoline and other payment you have to make. Add the amounts and subtract the total from your take home. Hopefully you have a positive number. If not adjust the discretionary spending until it at least breaks even. For a real accurate spreadsheet change the estimate amounts to real amounts after you pay things.

[central scrutinizer]

5. pay at least the average amount every month for seasonal bills

My gas bill in the summer is usually under $15/month. But in the winter, it can go up to $200. So, I budget $100 every month for the natural gas bill. That way I build up a several hundred dollar credit during May-October when I rarely need to heat the house. Then I continue paying $100 per month during the winter and the credit starts diminishing. Eliminates the shock and feast or famine effect.

[SoCalDem]

6. Don't you LOVE it? I do that too

But then we, have the extra money..We're on level pay, and I still pay extra.. Our settlement month for gas & elec is Nov, so I always make sure to pay extra..This year we had ZERO due for gas AND electric for Nov, Dec, Jan & Feb..:)..and I have an electric crddit of about $400 so far..for when I need the AC..:)

and YES I know I'm not getting interest on it..but interest is pretty damned puny these days, and I'd rather have the credit :)

[NMDemDist2]

7. we just switched from a every other Friday payday to every Friday Payday so I had to adjust

what I do is write which bills need to be paid on each week on the calendar at my desk. For instance, I pay the electric bill and the car insurance the first week, the water bill and the phone bill the 2nd week etc and they are written on the calendar on every Friday.

MS Money is an easy program to use, it's cheap (compared to Quicken) and it works with Excel so I recommend it over some of the more expensive accounting style programs. it has lots of tools and charts that help plan your savings etc too. They offer a free 60 day trial download so you can check it out. You can get very technical on where the money goes, or lazy and put them all under "household" or "misc" Take some time to set it up well and it will give you great charts on 'where did the $$$ all go??'

http://www.microsoft.com/money/default.mspx

I don't carry a checkbook at all, I buy laser printer checks (you can get a ton from Costco cheap) and use Money to print all the bills, that way it's easy to just pull up the vendor to see what you've paid them and when. Handy to have if there are disputes or issues. Money will also connect to the bank if you want it to, but I don't use that function and will balance your accounts. I can grab a couple checks to stick in my purse if I need them. I can then attach the check stub to the bill and file them by vendor in the file drawer in my desk

I have a set section of my wallet (right next to where I keep the cash) that I put all my debit card receipts when I go shopping, that way it's easy to grab them to enter them in Money. I put any recurring debits (such as my monthly DU donation) to automatically post 3 days before Skinner takes the cash. For big bills (such as the quarterly home insurance and taxes) I have Money automatically post that 30 days before it's due, so I can plan for it. But the virtual 'savings' I have had written out every week covers (see below) it fine and it's a good cushion to have in case I run short one week.

I have Money set up to automatically write out (I 'transfer' it to savings, but don't actually move the money) a set amount out of each check and have the checks automatically show as a deposit each week. Since the checks are the same amount every week, it saves me time every week. I also have it set up that hubby's checks are divided so that 10% goes into a separate savings account every week. If I don't 'see' it I can't spend it LOL. If your company offers direct deposit they probably will let you divide the payments to more than one account. You can do either a set $ amount or % depending on what you choose.

one other thing I do is divide the month by 4.3 to get the weekly totals that way I'm not short

:hi:

[SoCalDem]

8. We have direct deposit weekly and I pay online

so I just plug in the amounts & dates & let 'er rip..

I am so lazy these days :)


I use my ATM for everything, and still write them down in a check register that I keep in my desk :)but I never have to total it:) or balance it:)

I was a bookkeeper for many years, so I almost feel guilty not babalncing a paper statement :)

The months with the "extra" payday, I just spend a little more fun-money:) we have no car payments or credit card debt:)

[NMDemDist2]

9. we have one car payment, but no mortgage or CC debt

June 2009 and I'm done

:bounce:

we'll need another car by then, but I plan on paying mostly (if not all) cash for the next car

:hi:

[NMDemDist2]

10. as for paying bills online, my bank charges $9.95 a month for that service

I can buy a lot of stamps for $10 and some of the bills I can hand deliver when I'm in town without adding anything to the miles on the trip.

So I keep the checks around, but I got like 5000 of them for about $40 at Costco, they'll last me for years!

[SoCalDem]

14. We use Wamu & it's free

So is our Union Bank account & our provident bank account

you should shop around:)

[NMDemDist2]

15. I like my local bank, but when it's time to order checks

we're switching to the local credit union

[EFerrari]

11. I can beat that for simple.

I married and had 1st kid as a teenager.

And my husband wanted me to manage the money -- me -- who'd never even balanced a checkbook in my life. (He was very young, too. lol)

So, I got one of those spiral notebooks that have pockets. We labeled each pocket with the name of a bill. Then, we printed below that how much we had to put in the pocket every week to have enough to pay the bill at the end of the money and also, what day of the month the bill was due.

Talk about your cash economy. :)

Looking back, it worked really well. When the bill came due, I'd either pay it in cash from the pocket or deposit the money and write a check. The receipt for the paid bill went right into the pocket.

And it was all laid out, right there, in that one noteboark.

[tavalon]

12. Wow!

This 44 year old has always had trouble losing bills (a mind like a steel seive, I tell ya!). I like that one!

[roguevalley]

13. I copied this whole thread on a sheet. thank you all for your wisdom.

[SoCalDem]

16. you are very welcome.. n/t

[TeeYiYi]

17. Keeping it kicked . . .

DU has many financially savvy members, as evidenced by the numerous helpful posts to this thread and the daily stock market threads. This kick is for those DU members, myself included, for whom a prowess with money is less honed. Thanks again, SoCalDem.

TYY :kick:

[SoCalDem]

18. My friends used to laugh at me when I told them my boys

took turns balancing the checkbook.. but they all learned about money early on..

They also realized that Dad's paycheck was not as big as they thought it was, once we started subtracting stuff :)

[TeeYiYi]

19. Kick . . . nt

TYY :kick:

[BlooInBloo]

20. I usually just wait until they turn something off before I pay my bills.

[Zynx]

21. If you have the room to save or invest, do it before you spend a dime on anything

in the course of a month or a bi-weekly pay period. People always say they'll save what they have left over at the end of the month and then don't have anything left over.