Sunday, January 13, 2013

Finance 101 - Our story and the dreaded "Budget"

The dreaded "B" word!  BUDGET!!  Honestly, when I was living at home making some seriously good money for an 18yo, I didn't budget.  I sure as heck wish I did now!  I could have SAVED so much!  Probably could have had enough for a good 30% down payment on a house!  So why didn't I do that?  I was focused on what was the now!  I was focused on me!  Now that's not to say that I didn't do things for others or charity, but the bulk of my money went toward my wants.

When I got married, we still didn't have a budget.  I don't think I balanced a checkbook the entire year.  But we somehow lived within our means.  Now I'm not saying that it works to live life that way.  And we found that out after our 1st son was born and I had a spending issue that got worse.  I used it as a way out.  I was at home with a baby, hubby had the only car.  My family didn't live here and I was new and didn't have many friends.  I used the internet and shopping to fill a void.  This was the biggest of the bad choices.  It led to an amount of debt that we were struggling with.  We hadn't heard of Dave Ramsey at that point and so we didn't have even the most basic of  financial plans ready.  The most basic thing is to have a budget.  We found this out when we went to a lawyer for bankruptcy.  At the time we felt it was the best way out of our problem.  It was something we really struggled with though.  We knew what the Bible said about borrowing and not paying back debts, but at the time we didn't see a way out.

Bankruptcy was the most humiliating thing to have to go through.  To have to get a lawyer, admit I was stupid with my money, then have to sit in a room with your lawyer in front of a man who asks you about 20 questions and feel really guilty about the fact that we borrowed more than we could repay.  We agonized over the choice to file or not to file.  We agonized at the end.  At the time we thought we were ruining ourselves.

It was after we went through bankruptcy that we wound up hearing about Dave Ramsey & Financial Peace University.  It was being offered at our church.  We started going.  It was really good stuff!  We made it through about half the class before we discovered we were expecting our 2nd child and I was so sick I couldn't go anywhere but work and home.  Needless to say, we didn't finish.  But we did get a wealth of information.

But that didn't prevent us from having some issues again.  We were trying to do the "Baby Steps" out of order.  That is not advisable.  There is a reason the "Baby Steps" are in that order.  So we made up a budget.  But honestly, writing it on paper is not our forte.  If you have ever been through FPU then you know there are 2 kinds of people.  The Free Spirit and the Nerd!  :)  Now my husband and I are both nerds.  But I am also the free spirit.  (hence all the retail therapy)  As nerds, we utilize spreadsheets.  Microsoft Excel is our friend.

Our spreadsheet started out so simple.  I would change it every month.  Now, it holds a year's worth of data.  It has 3 tabs.  1 shows the whole kit and caboodle.  Every expense that is going out is on this tab.  It has the formula's so all I have to do is adjust my expenses costs on that page and when I do, my new total of what's left of my husbands paycheck for that pay period.  The 2nd tab is where I estimate how much my husband's paycheck is going to be.  I put in his hours (80 cause he gets paid weekly) and any overtime.  It also takes out deductions (healthcare, taxes, etc.).  The taxes are kind of an estimate so the paycheck varies anywhere from +/- $5-$10.  It's not perfect but it works for us.  Tab 3 lists our debts.  Smallest to largest.  This is the order in which we are working on paying them off.  We plan on being debt free by fall of 2014. 

We have a plan and goals.  It's not going to be easy, but worth it!

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