Thursday, April 24, 2014

Episode 3: Almost There

As I mentioned in Episode 2, we have a binder that is full of all our different "accounts" AKA check registers that are filled out as if each category is an individual account.  So, you first will need to calculate how much money per pay check will need to be deposited into each account in order to pay that specific bill.  Once you've established that, you can then add up how much money will be needed each pay check in total for the different accounts.  For example:

Mortgage:  $250/p.c.
Energy:  $75/p.c.
City:  $25/p.c.
Garbage:  $25/p.c.
Cable:  $50/p.c.
Vehicle Payment:  $200/p.c.
Cell Phone:  $75/p.c.

I'm aware that there are more categories than that, but this is just an example.  So, you'd total that up and you'd get:  $700/p.c. for all the bills that need to be paid.  Let's say you get paid $1100 on each pay check.  That would then mean:

$1100 (your pay check) - $700 (the amount of money being deposited into each account every pay check)=

$400 left over that didn't need to go into any bill accounts

That being said, here is where you'd budget anything else you deemed to be important.  Here are a few examples of the additional/extra accounts that may be of value to you:

-Groceries (food is a necessity but you can always bend your spending here)
-Fuel ('s a necessary evil)
-School (dues, supplies, book orders, teacher gifts, fund raisers)
-Clothing for kids (they grow too fast!!!)
-Gifts (we estimated how much we spend on each person in the family for both Christmas, Mother's and Father's Day and birthdays.  We then added extra to cover weddings, going away gifts, random up lifting gifts, parties, etc.)
-Gifts for our kids
-Entertainment (this would include going out to eat, movies, etc.)
-Vehicle Maintenance (duh, this is self explanatory)
-Medical (just in case you don't have a flex account OR if you've run out of money in your flex account)
-Sports (extracurricular activities also fall in here, registration fees, t-shirts)
-Home Improvement
-Charitable Donations

You get to decide what you need or want to budget for your family and your needs.  This is where you allot x amount of dollars for each additional account.  Some of these accounts, left untouched, will really accumulate over time.  Let's say the 'School' account still has $100 in it at the end of the year.  You could either use that money for something else, bulk up a different account, or just keep on adding to it for the following school year.  It's completely up to you.  This is where the fine tuning would come in over the course of the budget.  In my case 1.5 years of tweaking this and that.

Full disclosure:  I've only been under budget in the 'Groceries' account twice in 1.5 years.  Yes, I'm serious. I know exactly why this happens as well.  When the ads come out, we've already done our shopping for that given week, so if something is on super sale that we feel we need to stock up on, we do.  How do we solve this problem?  Stop stocking up.  Spend less of the budget to cushion for stocking up.  Grocery shop after the ads come out (this one is just not feasible due to schedule).  There's always going to be a solution...I just need to follow through.  So, what if we go OVER budget for a certain account, such as the 'Groceries' account?  That's up to you but here are some options:

-Take money from another account to cover the over spending, in turn you would leave another account with less money.
-Slash spending on the next pay check on groceries.  Let's say you allot $200/p.c. in 'Groceries', but when it's time to deposit that money, you're already -$25.  Add in the $200 leaving you with $175 for that 2 week period until you get paid again.
-Transfer money from savings to make up for the loss.  This one is the one I don't recommend.  While it'd teach you a lesson by seeing your savings go down, I'm a fan of putting money in savings and NOT touching it.  Easier said than done.
-Up the amount that's deposited into that account every pay check.  If you're noticing that you can't keep it under budget, then maybe it's time to reevaluate the allotment.

One of the goals of this kind of budget was for me to find a better way to save more.  Well, this is where the "saving more" can come in.  Example:

$400 (what was left over from your p.c. after depositing money into each account)-$325 (the amount of money you allotted for your "extra" accounts) =  $75

That's $75 that can go directly into a:  savings account, toward a vacation, towards purchasing a large item like a vehicle, pay down a loan, etc.  Again, this is just an example! 

I'm also a huge advocate for paying yourself first.  Meaning, set up a direct deposit into your savings every pay check.  Even if it's $20, it's still $20 that's going directly into savings.  Something is better than nothing!!!

I really hope this is all making sense.  It does to me when I'm reading and writing it, but it's my budget.

Until Tuesday!!!

*Starting next week, I will be blogging every Tuesday and Friday.  Say goodbye to Thursday bloggin'!*

**This is my first blog post that doesn't have a picture.  Sorry!**

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