Friday, May 2, 2014

Making and Using a Budget

If you have been following me, you know we just started The Total Money Makeover: Classic Edition: A Proven Plan for Financial Fitness (affiliate link for your convenience).  The first step is to build a budget.

I have never in my whole 33 years of life used a budget.  I had no idea where to even start with building a budget.  It seems amazing that I never learned this or figured it out on my own.  I would hear about budgets and just blow it off thinking it was for businesses only.

I was so so wrong!  I only wish we would have done this years ago because we could be completely debt free already and would be mostly attributed to following a budget.

First off I think it is one of the hardest things my husband and I have ever had to sit down and figure out together.  We have never really focused on our finances and just paid the bills as they came and spent what we figured we had.  That is obviously the wrong way to do the whole money thing and we had no idea what we were spending money on and I would stress out at bill time.

I have been the one who takes care of paying the bills and balancing the checkbook.  Balancing finances has never been my strong suit and I have a hard time doing this with any sort of distractions and I have had constant distractions since I had my now 5 year old son!  It is hard for me to get any time to just focus on one thing without worrying about 20 different things or getting interrupted a trillion times.  Needless to say our checkbook has been a hot mess for awhile.  So my first task was getting it balanced.  Now every time I pay bills I make sure my calculations match the bank's numbers.  It has been challenging for me to pay that much attention to it, but I know it is important.

Once that was balanced I used the Cash Flow sheet in the back of the Total Money Makeover and made an excel sheet based off of it.  After building a basic sheet we realized we will need a monthly sheet and a sheet for each payday.  My husband gets paid every week so we needed at least 5 sheets a month!

He rebuilt the sheets to all link together.  On the main budget sheet we had all of our bills for the month, the due date, total, and total income. That showed us where we were for the month.  On each weekly sheet we did the same information but only filled in the amount for the bills that were due that pay period.  After doing this we realized which weeks we needed to hold over money from to transfer to the next week or the next month.  It is amazing how much money we spend on extra stuff we don't need!  As part of the Total Money Makeover we are doing a debt snowball to pay off our debt so anything extra in our budget goes straight to that.

To give you an idea of how much unnecessary things we bought or did, at the end of our first full month budget we have around $800 left over to put towards our snowball!  This is the hopeful amount at this point because things do come up and since it is our first month there have been expenses we forgot to budget and things like that.  And keep in mind that this is cutting out pretty much anything extra such as fast food, eating out, going to the movies, everything extra.  It is definitely not easy but now that we know and see an end in sight with money organization, it is easier to sacrifice now to live better later.

I recommend to everybody to read his book.  If you don't want to buy it, check it out at the library like I did.  I am going to buy a copy too because I could read it again and again because it is so encouraging.  I also just read his Financial Peace Revisited and it clarified some things from the first book.

I hope you will work on a budget too.  If you search for a cash flow plan you can find a pretty good one.  You can also go to and find sheets there you can use.  Good luck budgeting!

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