Budgets suck.
There, I said it.
I know that there are many people out on the interweb claiming that Budgets are the way to go. Hell, J. Money even claims that Budgets are sexy. Whatevs. What you need is a Spending Plan.
In my opinion, budgets are like diets. Everybody knows they could use one. They know there will be sacrifice associated with having one. They know that it will do them good. So they trudge on, trying to be dedicated and not sway from their diet, err… umm… budget. But alas, one cheat day turns into two, then into four, then into “we really need to get on a budget and stick to it this time”.
You’re not alone. Especially if you are a spouse and/or a parent and have grown acustom to a certain lifestyle. The sacrifices necessary for a financial freedom type budget are huge. Even Dave Ramsey says so.
So what do you do? Do you stop living life for however long it takes?
I had some friends that did. They got married and literally stopped having any fun that required any outcome of money. No fun. Nothing. You would ask them to do something, they couldn’t because they were paying off bills. They sold all their cool toys to pay off bills. They basically sat around the house doing nothing, except paying off bills.
But they did it. They are debt free, or at least they were at that point in their life.
It was easier for them. They had just been married, both working, no kids, and they were both on the same page. The same boring page. But it worked.
However, when you have kids, and your kids are of the ages where they have their own activities, there is a snowball’s chance in hell that you will get them on the same bill paying, budget making, ramen eating, no fun page that you are on. And if you do get them on board, then you better budget in some therapy sessions for the little curtain climbers because they ain’t right.
So what can you do instead of a budget?
After all my expense tracking, which you can read about HERE, I began making a Spending Plan. There is no real difficulty in doing so. It’s not rocket surgery. You just have to list all of your monthy expenses, and determine when you are getting paid for the month and how much. Then you can separate the bills by the dates in which you get paid. You know, divide and conquer. This way you can plan out your money to ensure that you are covering the minimum payments on all but one. You should be throwing every other available centavo onto the bill that you are trying to make go away first.
The method of the spending plan is better because it allows for more fluid amounts, as it seems that the expeditures are rather inconsistant from month to month. A situation that had me always updating my budget.
That made for a lot of extra work.
What seemed like a great template for keeping all of your expenses on one sheet, actually turned out to be so meticulous that keeping up with it was a major job. You might say “Well, that’s how you ensure that you are following your strict budget.” I say that it just caused me not to want to open it up on my computer very often. Knowing that I had a bunch of work to catch up on when I did.
What I have now is much more fun.
That’s right, I said “Fun”. I listed all of my bills on a simple Word Doc. I tabbed out from each bill name and placed the amount of the minimum payment. Then I tabbed out from the minimum payment and listed the corresponding due date. And tabbing one more time to place an “X” next to the line to signify that I paid the corresponding bill.
Up top, I listed each of my pay dates. Each pay date is in a certain color. Then, based on the due dates of the bills listed below, I change the color of the bill listing to correspond to the pay date color. This way I know when each are due with which pay check.
But there’s a catch….
Often, the amount of money incoming, cannot handle the amount of money outgoing. This isn’t necessarily an income deficiency, it happen mostly when bills are all due on the same date or around the same time of a given month. The first and the fifteenth are common dates and if your check falls around this time, it has to spread extra thin to have any hope to cover the bills.
So what I do is, I list all of the bills in the respective color for the corresponding pay check down below. I keep them in color and format. I add the source from where the bills will be paid in the description. When all of the bills are spoken for by the respective pay check, I then move other bills in so that the next pay check is not overwhelmed. But first, I ensure to throw some extra cash at the “focus bill”. That’s the bill which I am making the largest payments to so as to pay it off the quickest.
You only have to update your spreadsheet bill amounts once a month
When you create the spreadsheet for the month, you list the bills and their amounts. Copy and pasting is the way to go here. Then you only have to update the amounts by a bit. Then, every time you go into your spreadsheet, you are doing so because you are paying something down and you want to “X” it out. The whole process takes much less time than a complete detailed list of every expense.
To ensure that you stay in your spending plan, you only allot yourself a certain amount of money for the extraneous things, like food and gas. Kind of like using the Envelope System, without the envelopes. Since you allocate all of your extra funds toward the bills, what you have left is designated for the food and gas. So just like having a small handfull of cash, you have a small amount on your debit card. The debit card is much more convenient to use than cash, especially at the pump. As long as you are aware of what you have to spend and how long you need it to stretch, staying within your spending plan with a debit card is just as easy as using solely cash.
The bottom line…
Whether it’s your budget or your diet, if it is too difficult and unmotivating, you won’t be doing it long enough to make a significant difference. So do what you must to keep your mind wrapped around not only your goals, but your method. Trust me, you’ll be much happier, thinner, and moving even faster toward your financial freedom.
Dave