One of our big (big, big BIG) goals for 2014 (and the following years, if necessary) is to get out of debt.
Actually, we once lived debt-free. It was awesome. And then? Life happened, as it usually does…we were moving, and in order to move, had to sink a very large amount of money into our home for repairs. We borrowed from everyone we could borrow from to cover our expenses, and that started a downward spiral back into the previous amount of debt we’d just escaped…and then some.
Slowly, and half-heartedly, we’ve been clawing our way back out of this hole. But it’s slow going, and the light at the end of the tunnel just isn’t that bright…it still feels so far away, we can barely see it! It’s hard work.
This past month, we’ve re-engaged. It’s still a long road ahead of us, but with a little planning, and managing, and some serious looks at our income and expenses, it feels mostly manageable.
Today, I’m going to share our system and a free budget printable, too. Budgeting is where it all starts…and ends.
Budgeting takes some time – it’s not easy, especially if you’ve never done it before – but it’s worth it. It’s also something you constantly have to stay on top of, or it will get away from you (I tell you, it’s shocking how quickly those “little” trips to Starbucks add up). We have a spreadsheet that we are constantly updating and manipulating as unexpected expenses occur (no matter how hard we try, we can’t foresee every expense headed our way). If you’ve never budgeted before, though, the most important thing is to just sit down and figure out your income and expenses.
Here are some tips for creating a family budget:
- Go through your last couple months of bank statements really, really closely. How much *did* you spend at Target and Starbucks? Having an idea of your spending patterns will make budgeting easier and help you create a more realistic budget.
- Get the whole family involved.
- Put money aside in your budget each month to create an Emergency Fund. Trust me…not only will you use it at some point, but it will also help you to keep on track each month as it can absorb some of the unexpected expenses you’ll find yourself facing (medical bills, a flat tire, etc.). If you’re not sure how much to put in your Emergency Fund, aim for $1,000.
- Give yourself a buffer for unexpected expenses. Not the *big* unexpected expenses you’d tap into your Emergency Fund for, but rather expenses that pop up kind of last minute, like a birthday party you need to buy a gift for, or a trip to the cupcake store because one morning you wake up and realize you can’t live a second longer without a cupcake. You can pad your budget’s current categories with a little extra cash (add an extra $20 to Food, for example), or create a separate category (“miscellanous,” for example) for these little expenses.
- Remember that budgeting doesn’t mean you can’t spend money on things you want – it only means you’re designating a certain dollar amount to those things, and that you’re going to stick to that amount. Charles and I give ourselves some cash each month to spend on things we want (for me, clothes…for him, beer). We also budget a small amount towards decorating our home, since we’ve been here for 2.5 years and STILL have big, blank walls and partially furnished rooms.
- Budget for the year…not just for the month. You know Christmas is on December 25th every year. You know that if you are taking a vacation in July, it’s not going to be free. Figure out those costs *now* and then budget for them each month accordingly.
- Use cash. We use cash for everything that we can use cash for. Groceries? Cash. Saving up for a trip? Cash. Going to the movies? Cash. This is kind of a pain, because it means we actually have to go to to a bank to get cash like we did in the old days, but oh it is so worth it. You will spend so much less when you’re paying with cash! Cash works best if you have an envelope for each spending category (an evelope for food, one for gifts, etc.).
- Remember that budgeting is a work in progress. I used to get so, so upset when we’d come across an expense we’d forgotten to include in our budget, or when we’d make an unexpected trip out to dinner with friends and blow our budget the first week of the month. Now I realize that those things are going to happen, and that a budget should be fluid…it’s always going to be changing, and it doesn’t need to be set in stone.
Our budget is a complicated spreadsheet we’ve been using for years that takes into account our cash flow, when bills are due, and all that other fun stuff (fun…hahahaha).
The place to start, though, is with your expenses and your income.
This budgeting printable (just click on the image above) will help you figure out how much you’re actually spending each month, and how much you’re making. There’s room to add your own expenses to the budget (mine has things like “Horses” and “Ballet” added in, and I’m sure you have some unique expenses, too).
We follow Dave Ramsey’s Financial Peace program, and I highly (highly) recommend checking it out if you’re looking to get out of debt, get your finances on track, and plan for your financial future.
And speaking of planning for your financial future and getting out of debt, next month I’ll share a bunch of great resources for just those things.
Do you budget each month?
Also…if you blog, check out my post on creating a budget for your blog – complete with a blogging budget printable (of course!).