5 Reasons Why Falling off the Budget Wagon Sucks

It’s no secret that Dave Ramsey lives in my house. Even if we don’t have a budget set for the month, he’s still in these four walls. Here’s the thing about not having a monthly budget, he’s here in a not fun way. I know it’s a reflection of his principles and our belief in them that causes the guilt, but man, the guilt. I’m too afraid to look back to the last month that we actually made a budget, but I’m pretty sure it’s been a good six months. Here’s the thing, some months (most?) it worked in our favor. Meaning, we didn’t spend more than we would have wanted to. That doesn’t mean we don’t still feel guilty.

  1. Guilt. Even when you don’t spend too much money, you still feel guilty that you spent any because it wasn’t accounted for and tracked. I think, for the most part, when we don’t create a budget we get in each other’s heads and go into extreme savings mode. We assume that since we aren’t tracking the money, then we don’t have it to spend. Which in turn makes more guilt when you do spend money. Money that you probably have to spend. But, you don’t know that because you didn’t create a monthly budget. You see where I’m going with this?! When you live like no one else, you can’t turn it on and off. You have to commit and be diligent.
  2. Miss goals. We’ve missed some family & financial goals over the past few months. The irony is that it’s not because we spent the money. It’s because we weren’t focused on our monies or goals. We could have started projects sooner, but we were in this self-inflicted feeling of not having any money. We didn’t realize that our savings had reached the point of moving forward with the project. When we got antsy to move on projects, then we had to spend extra time going over every dollar and figuring out if we really could start. Just because we saw the money, didn’t mean we hadn’t missed something else over the past few months. It wasn’t a complete setback, but it still took a lot of time and mental willingness to move forward.
  3. Inaccurate spend. There have been a few changes to our normally line items over the past few months. For instance, we’ve spent the past six weeks carpooling and are driving a shorter distance. We have absolutely no idea what our gasoline budget is for the month. One, because we aren’t sure what an accurate amount was when we stopped budgeting. And, we didn’t do a budget last month so we have to do some research on spend last month to predict this month. Again, time wasted. Another item is our grocery spend. We’ve been buying most of our groceries out of the organic section and with it being summer we’re going through a lot more fruit. This is another item that has been ongoing for quite a while and we don’t know where it’s at. Each monthly budget is based on the past month and then things coming up this month. We can’t accurately plan without knowing how these line items have shifted. More time wasted.
  4. Failed savings. We said this winter that we needed to start Quinten’s college savings fund. It’s July and we haven’t done it yet. Nor have we investigated to see if we’re doing the same thing as we do for Maximus. It’s one of those unchecked items that continues to linger in the background. Adding to the guilt in item one. We rarely move money from one savings account to something else, so even though we’ve been saving money that could be for his college, we haven’t been. We work under the philosophy that the accounts stay as they are and money doesn’t getting taken out of them. If we want something new, we add it to the goal list and save up for it. Or, we look at our monthly spend and add it to the current or next month. {This philosophy is probably what makes us end those non-budgeted months with more in savings than we thought!}

As you can see, we’re spending July getting back on track. We’ve put our Excel budget spreadsheet on hold and are testing out a new budget app that we put our monthly budget into and then track our spend. So far we like it. It helps us see what we have left to spend on each line item and I enjoy seeing the pie charts of categories. July is always a tough month because of summer life and Maximus’ birthday. We know it’s coming, but that unexpected extra spend always gets us. Like, how much should we really spend?? We’re 4 1/2 years into this financial journey and we still have a hard time staying focused. I can tell this is going to be a lifelong journey!

What are your tricks to staying focused on your budget?

Monthly tracking and budgeting

I love talking to people about Dave Ramsey and budgeting. I’ve been having a lot more of those conversations lately and I think it’s for a reason. Not only is it helping others, but it’s helping me get the “intensity” back. Bryan and I have a renewed excitement towards our budget and our financial dreams. Our financial dreams have been the topic of many conversations lately and each conversation propels us that much further. Who would guess that money could get us excited?! {Not in a materialistic kind of way, but in a way that maps out our plan to pay off our house!}

Here’s what our monthly budget process looks like:

Monthly Spend Tracking

  • At the beginning of each month Bryan tracks our expenses from the previous month. We look at previous months to see if there are trends in over- or underspending. We decide if we need to adjust those amounts or if we need to tighten the shoestrings a little. 
  • Next, we move our goal savings money from our checking account into our savings account. Usually we have to recalculate the amount because we almost never use all the money we budget in a month. Technically, that means we need to keep working on the budget to create an accurate budget. Since it involves us not spending all our money, we don’t worry too much. It’s kind of nice to have extra money go into savings!

After these discussions, I’m usually toast and ready to end the conversation. I love my husband for his attention to detail. I need to change my expectations and know that these will be semi-long conversations.

Monthly Budget Planning

  • After we track our spending, I jot down things that I know are coming up that month. For example, gifts, events, parties, etc. I also look over my wish list of things for the house or personal items. 
  • Bryan takes the first pass at the planning. *See below for an example of our spreadsheet.
  • We sit down and review his pass at it and I add in the extras. Our budget usually doesn’t change too much from month-to-month. If we have extra money leftover, we decide what to move from the wish list or the goal list. We budget all of our money and agree on it.
  • Bryan sends me a PDF file so I know what amounts we agreed upon for the extra spending items.

We never started the envelope system because we felt that we could stay controlled when using our debt card. Recently, we decided to start doing it for fast food / restaurants. We wanted to control our spend because it was our worst offender. So far it’s working out well. With the cash, we can easily decide when we want to eat out. It has finally become more of a treat and we stay within our desired budget. {I hate the idea of eating away our money!}

Something else that we’ve started doing is reviewing the budget each week. This helps eliminate a lot of time for Bryan to track all of our spending each month. Instead, I’m writing down if I spend any money during the week and Bryan looks over our checking account and enters all the current spend. {Yes, my work is repetitive, but I like writing things down.} This does two things: helps us stay on track with what we said we’d spend and also gives us an idea of what we have left to spend. Another benefit is that we may realize we aren’t going to spend all the money in one category. I can look at the wish list and revise where I’m going to spend the money. So, instead of waiting until next month for new ink cartridges, I can buy them this month. {True story. I’m printing a lot of pictures!}

Goal Review / Planning

Once we agree on our budget, we immediately review our goals. 

  • We recalculate our goals savings account and look at our goal spreadsheet. On the spreadsheet, we have the savings amount and also the totals of each of the goals. These are big-ticket items such as a new car, furniture, maternity leave, or hospital bills. Items such as a new storm door or paint come out of our monthly budget. 
  • We get a good feeling for where we are on the big-ticket items and decide if there is anything we want to pursue that month.
  • It also helps us look ahead at items and decide if there is a better time of year to purchase any of the items.

This conversation usually leads to more brainstorming about things we want to do around the house or in our lives. Without a goal review conversation, we wouldn’t be on the same page. It really helps open up the door for communication. This is very important during this phase of life with a toddler and newborn. There aren’t a lot of opportunities to have conversations where one of us isn’t exhausted!

We’ve been using a budget for two years. There was a period of time, when we became lax, that we didn’t actively review our budget. We got into a rhythm and had a feel for how much we should spend. We were in a good spot in our journey and weren’t worried about every extra penny. After a few months, we snapped out of it and realized that even if we had a “feel” or weren’t spending too much extra, we needed to get back on track. We may have not been in need of that money, but we were wasting it. For us, a budget means we spend our money wisely so we can achieve our financial dreams.

Leger Budget

Leger Budget

What’s your budget process? 

Other financial journey posts:

Debt free!!

I wrote started writing about our Financial Peace University journey. It was something we half-heartedly started with little expectations. Our only hope was to walk away having learned something. Our class ended about two months ago and we walked away with more than just something. A couple of weeks after our class was over, we paid off  the last of our debt! In about four months we paid off a little over $20,000!

We walked away debt free! We walked away with a new outlook on life! We walked away with an intensity to move to the next step! For us, at that point, the next step was paying off our debt. Our old way of thinking would have been to pay off that debt two months earlier when we saw the end in sight. Instead, we created our monthly budget and knew that we would finish it off the following month. It was hard to not get overly excited and spend the money that first month. But, the budget taught us that we didn’t have that money to spend. It needed to be spent on other things.

It’s still a struggle to sit down and plan out the monthly budget. The first constraint is always finding the time to both sit down and work on it. We like to work on it together so there’s accountability for both and we’re both a part of the process. We’ve found that having one person work on it and the other review just doesn’t work out for us. The second constraint is finding the motivation and energy to work on it. When we do have time to sit down together, the last thing we want to do is work on the budget.

What we need to work on…
Creating a better process for creating the budget. Instead of picking a day around the beginning of the month, we need to work on it during a weekly budget meeting. Second item: start doing a weekly budget meeting!

Cash only?
A concept that we learned {but didn’t follow…shhhh} was going to cash only. No more credit cards. We followed the no credit cards concept. We shredded and pulled them out of our wallets. We struggled with the idea of carrying so much cash on ourselves or in our house. After a recent vacation when our debit card number was stolen from a Chilli’s in the Houston airport {BAM! Internet wrath!}, cash is starting to sound a lot better! {Since this happened to us, I’ve talked to countless people who have gotten their numbers taken. Disgusting! I’ve also recently heard of others who have been to the Chilli’s and had this happen. I hope these people get caught!} We didn’t switch to cash like most of our class did, but we did keep track of the debit card spend.

What we need to work on…
Moving a little closer to the cash only concept. We’re both into the idea a little more and understand the concepts behind it. We’re both less likely to part with dollar bills than slide our card {that apparently anyone can copy}.

Next up on our baby steps list is to save a 3-6 month emergency fund. Our goal is the six month fund and we are both excited to get that item knocked off the list. Now that we don’t have a car payment each month, we hope to have this task done around Christmas time. We’re also able to reevaluate the cash flow and determine if the extra house payments we’ve been making are appropriate. The class taught us to pay off a mortgage loan in 15 years. If our house is paid off when my son is 16, well, that would be awesome!

If you’re considering taking the Dave Ramsey Financial Peace University class, I highly recommend it. If we stop following the steps, we still walk away debt free! For that, I am thankful that we took the class!  

Other posts:

{Financial Peace University} Debt Snowball

Debt snowball.

Dave Ramsey’s debt snowball lesson is simple. Start with your smallest debt and attack. Once that debt is paid off, take that payment and apply it to your next smallest debt. It’s a snowball effect. One payment added to another. The unique aspect of this approach is that you aren’t getting rid of your highest interest payment. To most this goes against your core.

Dave developed this method because a person gains momentum. Get rid of one debt and the adrenaline starts flowing. The thought is that you get excited about tackling the next debt and you put everything into getting rid of another!

I thought it was a feasible way to attack debt. In fact, I got excited just listening to the lesson. Before the class, we had some small things to get rid of but thought we should focus on our car. Instead of making headway, we felt like we were swimming in circles. After watching the debt snowball lesson, we refocused our efforts and got rid of our small items. We had one big target {minus the house} to look at. Dave says to put all your money into getting rid of that debt and that’s what we’re doing. {Don’t forget, this is after you’ve done baby step one.) I am excited to say that our next goal is almost complete!

If I walk away from the Financial Peace class with nothing else, I will proudly announce that we have made some awesome financial decisions that have led to a much happier financial life. When starting the class, I was worried that a budget would mean we’d lose our life. I was afraid we’d become strapped for cash and feel like we couldn’t spend money. Instead, we’ve become more conscious of where our money is going and have concentrated on becoming debt free!

Financial Peace: Week 4

Thoughts from the zero budget lesson:
A zero budget is HARD! We’ve still got a week and a half left and we’re still on track, but it’s getting close. I never realized how many “things” pop up. A friend wants to go to lunch, a group gift, a trip to Wal-Mart, a bachelor party, and on-and-on. Things pop up and things add up. It’s going to take a lot of prep work at the beginning of the month to plan out different ways we’re going to spend money. But, I’m glad we’re doing it!

This week…

This week’s lesson was Dumping Debt. I was excited to hear this week’s lesson because I want to get rid of our car payment. (In Dave Ramsey’s steps, debt doesn’t include your mortgage.) Dave talked about a lot of stuff that I already knew about – loaning money to other’s can lead to strain on the relationship, credit card companies make a lot of money off of people, playing the lottery isn’t a wise decision, and banks make a lot of money off of people.

The most important take-away I had from the class was that banks do a great job marketing. You’d think I would have noticed that since I work in the marketing field. But, I had never realized that banks are marketing their products. Sure, I knew that’s what credit card companies were doing with all of their direct mail pieces. But, the housing market? Major marketing campaign! The car industry? Not just dealerships that are marketing us. What a great industry to be in. Society does a lot of the work for them! I grew up only knowing that when you buy a house you have to go to the bank and get your credit approved. When we were planning a wedding, we went into the bank and sat and waited while they ran our credit. We held our breath while they checked to see how much money they would loan us. We were excited once they told us. Wow, they didn’t have to come find us; we walked in and told them we wanted to give them our money. For the next 30 years. The.Next.THIRTY.Years. What a great business to be in! A few months later, we walked out with a 30-year mortgage. In that mortgage, we saw how much we’d be paying in interest over the life of the loan. Bryan was sick to his stomach about it. Our realtor told him not to look at that number. Ignore it, she said. It’ll only make you feel worse. And, buyer’s remorse is completely normal for the next few days. So, since that’s the norm and the rest of society is doing it, hang tight. {I realize that I may sound like a hypocrite because we bought an expensive house. I’m not saying I regret it. At this point in the lessons, I’m not sure I would have done it differently. I just realize that the banks have the upper hand and we help them keep it there.}

So, while we can decide to make extra payments on our mortgage to get rid of it quicker, there are also other ways to be smart about debt. We can pay off our car as quickly as possible, by focusing all of our extra money into it. And we can start saving for another car so next time around we can pay for it in CASH! Does this seem reasonable to you? Here’s why it is to me. We wouldn’t be buying a new car because it loses 70% of its value the first four years. {I did know that it wasn’t a good deal to do this, but I never realized it was that drastic!} So, instead we’d buy a nice, used car for a more reasonable price. What if you want a brand new car? Well, if you’ve got the money in the bank, then it’s a good deal for you because you can afford it! It’s not a good deal to give banks or car dealerships even more of our money. We already know they markup the price of a car. To add more interest on top of that isn’t a good deal for us. It makes the car more than we thought we paid for it. I’m so excited and fired up to pay off our car! Before we took the class, we wanted to pay it off in the next year so we could use that extra money to save up. Except, before the class we were thinking about the fantasy world of saving up that money for another car. But, we talked about using it to put down a good chunk on the car or just getting into the routine of always paying that out for a car payment. We weren’t thinking about using it to save up for the entire purchase of a car! Because, without Dave, we probably wouldn’t really be able to do it.

We can stop giving credit cards our business. Studies show that people spend 12-18% more when they use a credit card instead of cash. I don’t have a hard time believing this. When you use a credit card you don’t have a clear vision of how much money is being taken from you. If you have cash, you might be more likely to hold on to it because it’s tangible. The same goes for debit cards. I know this to be true for me because over the years I’ve spent less time balancing my checkbook and more time swiping my card. I play catch up when I sit down to do the bills. I’m looking forward to the new system! I look forward to not putting anything on a credit card and spending in real-time. My old philosophy was to put things like gas or “extras” on the credit card. I put day-to-day living expenses on the debit card. That gave me a false image of how much money we had. Instead, I’ll keep it all in real-time so I can see it all coming and going. I’m looking forward to class next week because we’re going to cut up credit cards! I’m looking forward to taking the “plunge” and breaking up with VISA.

Four weeks in and I look forward to all the other things Dave will teach us. A lot of it is common sense, but that doesn’t mean it isn’t useful information. I’m excited about taking control of our finances and making them work for us instead of falling victim to them!

Financial Peace, Week 3

Our third week of Financial Peace University was about a cash flow plan. It’s about doing a zero budget. That means that you budget all of your money. All. Of. Your. Money. You plan where everything goes, down to the last penny.

The general budget was easy. Like I’ve said, we’ve done that before. We spend X on the mortgage, Y on utilities, and Z on groceries. When we had that homework, we just had to fill in the sheet from our information on the computer. Easy as that.

A cash flow plan. A zero budget. What? You want me to decide where EVERYTHING is going, at the beginning of the month? Ok, I guess I can do that. Except that meant we didn’t so much budget, but entered in how much we’d spent this month. You see, the general budget was done at the beginning of the month. But the zero budget was done after a few weeks, when we realized our budget might not hold out. So, we tweaked until we had zero money left at the end of the month.

The zero budget wasn’t hard to do. We had tweaked the general budget some to include all of our recurring monthly costs. But, we had never thought to plan out ALL of the money.

What we learned:

  • You really can figure out where your money is going if you do a zero budget.
  • You can budget for double payments on things instead of just talking about doing it.
  • You can decide each month how much money you want to save.
  • You get to change your budget each month. We had wondered about that before. We had talked about if we didn’t have any gifts to buy one month. What would we do with that money at the end of the month? The answer, you plan each month!
  • You get to change your budget every month!

I’m excited to see how this month pans out. We’ve already realized that we don’t always know about impending costs. Or, maybe we need to think a little harder. For instance, there’s a bachelor party at the end of the month. It’s not in our budget, but we do have blow money* that is there for that specific thing. We’ll know when we sit down to discuss April, that we really need to look at our schedule for the month to see if anything is going on.

What we’ve done to change our financial lives:

  • Double our car payments! After months of talking about it, we’ve been motivated to DO it! Looking at our zero budget showed us that we have the money to do it. We just needed to find motivation.

*Blow money – money that has been set aside to blow. Whether it covers an area that goes over, or is used for fun.

Financial Peace, Week 2: A Budget

I’ve decided to take you along on our journey to financial peace. Tune in every (hopefully!) Sunday night as I reflect on the week’s lesson. 

I’m reminded again why a budget is important. It’s not there to track where the money went, it’s there to plan where the money goes. It’s a chance to sit down at the beginning of every month and decide where the money will go. It’s a chance to talk about money, at least once a month. It’s a chance to decide, as a couple, where to give and take from. A budget is a lot more than “saving money.” It’s actually knowing what you’re saving and where the rest is going.

We’ve been on a budget plenty of times. There was a wedding (that could have been a really nice car), a house, living in a new house, buying a car, and having a baby. So, we know a lot about being on a budget. Except, all of those times involved seeing where the money was going and vowing not to spend it on extra things. When we want to save money, the first thing to go is eating out. We don’t go to restaurants much so I mean fast food. Life gets pretty hectic and fast food is a lot easier than cooking a meal after a long day. When we’ve been on a budget, we haven’t actually planned where all of our pennies would go. Instead we practiced thoughtful spending. Meaning, out of chance we happened to have saved money! 

We’ve been lucky (I used this word wisely) that our savings plans have been successful. We’ve been lucky that we have been able to buy what we want. We have been lucky that our way of budgeting reaped great benefits. I take pride in saying that we paid for our wedding with real money. We didn’t put things on credit cards to not be paid off for months. (We did use credit cards for some things. We used the Internet on a lot of things!) Yes, our parent’s contributed, but we saved our money and bought ourselves a wedding!

Now here’s where the confusion begins with a budget. We knew where our money was going and we saved for a wedding. {Awesome!} We thought we were operating under a budget. No one had ever told us to budget where ALL the money was going. No one had ever told us to budget exactly money into savings! {Light bulb!} Before Maximus was born, we mimicked Dave Ramsey’s cash flow worksheet and included the line about savings. {Go us!} But…we were just starting out so we were guessing on what our budget would look like. But that’s ok, he tells you it will take a few months to get it figured out. So, we gave ourselves that wiggle room. And we never looked back. We didn’t sit down the next month and review it. We looked at what we had spent and continued to “save.” Life was looking good because we were saving money. Our budget appeared to be working! You get the drift, right? We didn’t really understand the concept of a BUDGET. We knew the general meaning of it, but we were giving ourselves too much wiggle room. That wiggle room is what has kept us in this tetter-totter motion for so long.

I’m excited to get the real budget up and going. That means tweaking what was created long ago. Here’s to using the budget the right way!