2/10/12

Financial Friday: Update


This month we made a budget and have been keeping track of our daily expenses. Here's the first update.

The good news:
My husband is in sales, so this month instead of blowing his commission check on junk or a fabulous European vacation, we paid off a huge chunk of our credit card debt. We thought it would be a good way to kick start our new lifestyle! That, coupled with a few other things we've gotten rid of (bye bye cable) we have cut this month's expenses by $552! Yay!

Now the bad news:
Here's a few examples of where we are at on Day 10:
We've spent . . .
83% of our General Merchandise Budget
77% of our Entertainment Budget
47% of our Grocery Budget
43% of our Restaurant Budget
16% of our Laundry Cleaning Budget

If we continue this way, we certainly aren't going to make any real progress on our outstanding debt, and have a huge pile of dirty smelly laundry. I'm feeling disappointed and embarrassed of our spending habits. I didn't even think we were spending that much!

The good news is the month isn't over and we haven't hit 100% in any categories! I have a fridge full of groceries. I have enough toilet paper, detergent, paper towels (bad habit), and soap to last us the month. I'm giving us five days to get back on track. Five days is nothing! Only problem is that Valentines day falls in that time period, and I forgot to budget for that. But it's ok. I'll just have rush deliver these sexy pink fuzzy handcuffs! Solves that problem on so many levels for only $3.29!

But seriously, once you started keeping a budget, how long did it take for you to actually accomplish your spending goals? Did it take you a month or two to figure it out? Or are we just over spending idiots?

Have a good weekend!






This post contains an Amazon Affiliate link. 

40 comments:

  1. I'm a little behind on reading your blog this month, so I just read about your budgeting attempt and progress so far, but still wanted to comment :)

    My husband and I just finished paying off $55,000 in debt in two years (making between $75000-85000/year) and we used a modified version of Dave Ramsey's plan. By modified, I mean 1) we had more than $1000 in emergency funds because I'm a worrier 2) we still have credit cards for large expenses but only when we have the cash to pay them off immediately and 3) we dont do cash only--we found ourselves spending MORE money. This is all just to hopefully inspire you and let you know that you just have to find what works for you.

    Also, advice on being behind on your budget: you may have set your sights too high for the first month. Try taking your budget down gradually. Take it from someone who used to have Starbucks everyday: it's a lot easier to go from 5 days/week to 2-3 than 5 days/week to once. Now I only have it once a week, but I had to take it down slowly. Good luck with your budgeting, and I'll be checking in!

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  2. Being on a budget definitely takes discipline. For me, the biggest thing was awareness. For years I was budgeting based on my best guess of what I spent on different things, and once I actually tracked it I realized my spending habits were much different. With that awareness I was able to create a much more realistic budget that I actually manage to stick to most months now. I also think it's important to build in a little bit of luxury, no matter how tight things are :)

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  3. It always takes a few months to iron out good, solid amounts for each category. The easiest way to do it for us has been splitting all bills in half - half comes out of each paycheck. That way we know the money is always there. As for the categories where it's easy to overspend (miscellaneous purchases like toiletries, for the house, etc., food, clothing, and eating out) I carry cash for all of those. Some months we ran out early, but we've never overspent in those categories, which is great for peace of mind.

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  4. I could hardly believe the difference it made in my paper product purchasing when we switched to cloth napkins! It's worth it. :) Props to you for being intent on sticking to your budget.

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  5. You know alot of people are in these situations for different reasons. Here in Australia, I gave up my fulltime job to extend our family of three to four and although I love being a stay-at-home-mum I miss having my own income. So for 3 years we went on prepaid mobiles, shopping local, cooking at home, library memberships, public schools etc - just so we can eliminate as much debt as possible and allow me to stay home with our youngest. It's no joke when I tell you that childcare fees in Australia are ruthless. Some people are beyond pleasing, our child loves going to school and enjoys his friends and teachers but my Mum is still disappointed that he is in public school and not a Christian school. We pay $20 per year compared to $2,000.00

    At the end of 2011 we've finally seen the light at the end of the tunnel. To celebrate we took a family trip for Christmas week - it was the best Christmas our family has had! The way I put it to my partner is "Three years of hard slogging is much better than 30 years."

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  6. What you track, improves. So keep at it!

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  7. When I first started budgeting, I had no clue what I was actually spending. Overall sure, but not for each category: food, laundry etc. It took a couple of months of just tracking my spending to figure out what my goals should be, where I should cut etc. I really don't budget too much anymore-I feel like when I did I got really good spending habits in place and those are carrying me through for now! My friends make fun of me-I just a pretty big promotion at work along with a bigger paycheck, and when asked what I was going to buy first, I responded that I have until April 15th to get last year's contribution into my Roth IRA! I'm only 27, what a dork! :) But at least I'll be a cheap dork that can happily retire early!!

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  8. it is SO HARD not to be an overspending idiot in NYC...my husband and are are THIS CLOSE to giving up our non-existent cable that costs close to $200 a month. We did give up a car, and that saves over $800 a month..that is a lot of taxi cabs!

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  9. Budgeting sucks. What helps us in the areas that we seriously overspend is to do an envelope system. We get $x out in cash each week and spend only that. It's easier to visually see, ok we really don't need this because we only have so much in the envelope.

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  10. In my experience, it totally takes time. I think the most important thing you can do in the first few months is track your spending accurately. It's terribly difficult to do, but so NECESSARY. That way you can figure out where you're really overspending and therefore where to cut back. You can't know how to utilize your money better until you know where it's really going. My hubby and I are still in this phase ourselves, but it gets a little better every month. Plus, we're making progress on paying off our debt. That's the most important thing! :-)

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  11. great job taking charge of your finances, it sounds like you're off to a solid first month! Do you ever use Soap.com for stocking up on essentials? I switched to using it because it's coupled with Diapers.com/Wag.com and shampoo, dishwashing detergent, dog food, vacuum bags, etc are so much cheaper and they deliver (next day!) for free. Anyways, it's been a convenient service & a way we've saved some $$ recently (i.e. the price on a jug of Tide at CVS is outta control!!!) We're trying to be better about eating in/cooking versus restaurants and take-out too.... in the city it's so easy to drop $50+ on dinner a few nights a week without even realizing it.... One of my favorite recipe websites lately is Epicurious.com .... I am *not* a cook and the recipes are reviewed & (so far) easy and there's healthy options, etc, so maybe worth a try for you guys too.... Oh and I agree with what a lot of people say about Dave Ramsey. We completed his Seven Steps to Financial Peace and honestly I sleep a ton better at night now.... and we do the Mint.com thing, but I honestly never check it and should probably be better about keeping tabs on it... I'm sure it can be helpful in so many more ways than I'm taking advantage of..... But I like paper and pen charting too. Something about writing it down validates the numbers for me.

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  12. You are spending idiots:)jk:)lol I think the top priority is to pay off interest/debt. That is exciting news about paying off a chunk of your credit card debt! The interest alone can kill anyone financially. People spend waaay too much on interest! If you stop and think about how much the item really cost initially....it would blow you away on how much you are now paying for that item. Another good thing to do is pay cash for used cars. If you can't afford to buy your car, don't buy it. Also, I heard a finiancial advisor say that he only shops in stores that do not have carpet. I thought this was interesting (if you stop & think about it...the places without carpet are usually a lot cheaper to shop in!).
    I think it would be easier for me to just have an allowance for the week (after you pay for rent,water,electric). For example, $100 a week in cash. Once you run out of the money, then that's it for the week. It's a tangible approach & not too complicated. Cutting back on all the extras is very important too.

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  13. It took my husband and I close to a year to figure out a budgeting system that worked well for us, and I'm so happy to say that we're finally on track. It's really hard, but our credit cards are now truly only for emergencies with no balances on them.

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  14. We just started a budget this month, but it's not as broken out as yours. Here's how ours works:
    My entire paycheck goes into the 'for paying bills only' account
    All but $400 of my husband's check goes in too. The $400 goes into our 'gas, groceries, gifts, restaurants etc.' account. That lasts 2 weeks. It's tight, but if on the last day we have $10 in there, I've succeeded.

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  15. Well done! We've never really budgeted, but I know that we spend way too much money on groceries and then end up getting take-out/going out to eat. I'll be interested to hear how you get on without cable. I would LOVE to get rid of ours. We do not watch enough tv to warrant to the cost of it, but my husband might cry at the thought of getting rid of HBO!

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  16. Congratulations on cutting so much out of your budget! It is so hard to be disciplined with all of that. When my husband and I first started budgeting, it took us about 3 months to figure out proper amounts and to retrain our spending. Keep at it!

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  17. One technique I've heard works well is to take a month or two and keep a jar of receipts and then just track how much money you're spending in what categories to get an idea of whats "normal" (mint.com is also a convenient way of tracking this if you're not into saving receipts). Once you know that you can have an idea of where you need to cut back or what you prioritize more and go from there. Once you get a realistic budget in place you just plan ahead and try to control yourself, that's all you can do. :) As long as you're making some progress on your debt and goals you can cut yourself some slack if you need to order pizza one night or spend a little more on groceries one month.

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  18. I think this is true to a degree, but... there are millionaires who don't budget and go bankrupt. I'd rather be in a lower paying job that makes me happy than a higher paying job that makes me miserable. People who are bad with money will be broke no matter how much they make.

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  19. We found one way to save money by accident. The month I had a baby, Mike did all of the grocery shopping and our grocery spending went down about $300! I thought maybe it was because we got more take-out but our dining was actually down too. It wasn't that we were eating less that month, it's just all of the cool little extras that I "have" to get weren't bought when I usually do the shopping.

    It's going to take some time to work out the kinks and adjustments will for sure be made. (For instance, you may eventually think it's worth it to skip going out to eat twice a month to get your cable back.) It's got to be so hard being on a budget in a place where there is so much to do! You're on the right track though and over the next few months you guys will find a system that works for you.

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  20. I also will recommend Mint.com. It has changed. my. life.! I was an out-of-control spender in college and had no clue of the value of a dollar. My husband and I saved receipts for a couple of months, but it didn't help (and was a huge mess). The visuals and bar graphs in Mint reeeally helped me. It showed me how much we could spend on date night and when I needed to slow down on grocery shopping. It also helps you compare spending month by month and even tells you what your net worth is. It takes a little time and research to set up and account, but totally worth it!

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  21. Bea's Blog is dedicated to reducing waste and that also includes reducing wasted money. There are lots of tips that can add up to big savings. http://thezerowastehome.com/ (start in the "tips" section).
    I'd try to cut disposables like the paper towel. The easiest way not to use it is by not buying it. Also homemade cleaning supplies are saving your family from toxic chemicals and saving a lot of money. Baby steps lead to big change ;) You're doing a great job already! Good luck

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  22. Reading these posts is so inspiring! My husband and I have been on this path for a few years now and it's easy to forget how far we've come. Thank you for the reminder and the consequent motivation!! I'm also trying to write about our finances each friday (debt free friday!) and today you inspired my blog post. Thank you!

    Here's the link: http://whatgnau.blogspot.com/2012/02/looking-forward-to-debt-free-friday-how.html

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  23. I am really frugal and usually gravitate toward Suse Orman's type of advice. It is usually really basic and cut throat. You might want to split your budget into two segments for each month, for each paycheck. It is a little more precise. Love this subject though! I am currently paying student loans, and that is where my entire first paycheck goes except for $200 groceries/gas. xo

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  24. don't be so hard on yourself. it takes time to break bad habits and develop good ones! you're taking steps and you'll get in the swing of things.
    we have a budget that we generally stick to but we are big sticklers for not carrying any debt (besides our mortgage) so if we can't pay for it in cash at time of purchase, we don't buy it. it's hard to pass up on things that you want, but once you start saying "no" again and again, it becomes a habit. And once you're debt free and living below your means, you can use that commission check for a trip to Europe without any guilt! hang in there!

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  25. Budgeting has been fun for my husband and me. Sometimes I do feel like I don't get enough "fun money" to spend on shoes or dinners out, but I always love signing into Mint.com and seeing the "You've reached 30% of your goal to buy a house". It's just amazing. I never in my life thought I'd have so much money (the down payment) just sitting in savings.

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  26. well said and so true. i need to dust off my resume and start the ol' job hunt again.

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  27. When I first got interested in personal finance (when I married my responsible hubby and was deathly afraid of ruining our newly joined finances) I read Suze Orman's The Courage To be Rich. I think budgeting is great, but if you have consistently been spending more than you earn, it takes a real mental switch to truly change your habits. That book did that for me. Good luck!

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  28. One of the problems that I had when I started budgeting was trying to anticipate every little thing at the beginning of the month (like Valentine's day). I ended up setting aside $100 in a miscellaneous category. At the end of the month, if I haven't used it, it goes to savings or paying off debt - I can't use it for food or rent, only truly unanticipated expenses.
    The real goal is to be one month ahead, so the money you make this month goes to next month's budget... I am still getting there. Good Luck - it is hard, but so worth it.

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  29. We've only just begun to get on budget after about 6 months of seriously monitoring our spending. We cancelled the cable, got rid of our car payment, and we intentionally use the central air/heat less, and make coffee at home. We feel super responsible in some of these moments (when we're watching a movie from the library or drinking home-brewed coffee in a mug on the couch), but I have to say the number one factor of helping us get on budget was MORE INCOME. It's counterintuitive but it's true.

    Life is expensive and while I don't think we should be able to spend with reckless abandon, I think it's too bad that educated, hard working people have ended up in situations where they're/we're riddled with debt and are under-employed.

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  30. The beginning is the toughest - don't go overboard in making changes. Think of it as steady payments to your debt and not adding debt. So having a percentage of pay go directly to debt is easier than using his commission pay in big chunks and it will feel less invasive. You'll have to adjust your budget going forward until you find something that works. If you slowly get used to less coming in (b/c part is going to debt) you'll be amazed at how you can tweak that even more down the road.
    It's like training for a marathon - I'd barely be able to do 5k today, but if I go little by little I might be able to achieve it down the road.

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  31. I am always fascinated on how other couples manage their money, so thank you for posting this! My husband and I never had a budget or savings account pre-married life. We definitely struggled the first couple months of our marriage but I agree with Christina, it's definitely made us more creative and empowered. Setting goals and having support from each other really helps!

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  32. have you tried going through dave ramsey's financial peace? we did it a few months ago and it's changed our lives! we've paid off close to $10K and have saved almost $3500 since september!

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  33. Thanks for this and being so real & honest! Being on a budget is HARD.

    4 years ago I chopped up all of my credit cards and started a budget. I'm no Suzie Orman, but it took a few months to get used to. And within those four years I would have to readjust my budget with my various salaries. BUT by the end of this year, I will have paid off all of credit cards - bring out the kazoos!!

    It's tough. Sometimes it sucks! But it's made me more content, creative, and empowered. I'm finally feeling in control of this monster because I started saying "No". Hang in there!!! The first few months are the hardest!

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  34. My spending was never really out of control, but I wasn't budgeting my money for the right areas of my spending... I was paying off medical bills with more importance than my car loan... but theres no interest on my medical bills and there is on my car payments, so I just wasn't doing it right. Once I re-did my monthly budget, I saved it as a spread sheet and sent it to my work computer, my phone, everywhere so I always had it handy. All my extra income now goes into a separate checking account and I've figured out how much goes into that account each pay period... knowing my other account is strictly for bills and payments helps me really keep to my spending budget.

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  35. I've been struggling with budgeting for a while. My first problem is that we don't have a set income. There's no number to start with so I have to start with "these are our set bills" instead. My husband is a musician and I'm a freelance photographer. One month we will have great income and then months that are slow like December will be really low. I've been using Mint.com to at least get a visual and track where the money is going and see averages. I've also been trying to look at each bill and see what I can cut out. Our cable is in a ridiculous package that includes internet. I need the internet for work but since our lovely contract is ending soon I hope to cut down the cable part. I also just cancelled my unlimited text messaging for our iphones which saves about $40 and really isn't needed now that most people I message have iMessage. Small steps... Interested to read your updates.

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  36. I am not a budgeting expert, but perhaps your budget amounts are a tad unrealistic? If you want to have lofty goals, I say go for it! But if it's too depressing to be over-budget every month, then maybe start with larger amounts and work your way down. I think that's actually a wiser approach, b/c I, at least, tend to just give up as soon as I'm over-budget (who cares? we've already blown it this month!). Best of luck paying off that stinky debt!

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  37. Jessica R GarrettMarch 30, 2012 at 6:26 PM

    Hey Sharon,
    You guys rock! At least you're budgeting right? How many people do that?
    I saw someone mention Dave Ramsay earlier and I am a big fan. We attended one of his financial seminars and the greatest take-away we left with was: use cash. Everyone is different but for us it has made a big difference - I really feel it when I get a grocer $50 cash. Ramsay said it takes a few months to figure out budgets so don't get beat up about it. You've inspired me!

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  38. Wow. I am so scared of all this that I havent even made a budget. I think that my financial status is out of control, no doubt. Could you please tell me how you made your budget?

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  39. You are not alone! We live on a budge, and I can tell you it's tighter than ever!
    Don't give up, you will get use to it :-)

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  40. Oh man - budgeting, dieting, organizing, exercising - all things where it it's so hard to stay on course consistently - so I like to just think in 3 week chunks - long enough to feel accomplished, short enough to make it thru to the next point of evaluating goals for the next period - I also really
    feel like with the realities of both kids and NYC it is INCREDIBLY important to factor in the "mental health dollar" - ! Sometimes that well-timed cab, that splurge on sushi or that blinking heart purse in Chinatown actually enables me to buckle down and stick to my other goals BETTER -

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