Anyone else love that song?! 🙂
LOTS has been going on around our house and I just haven’t had the time or really felt like blogging. Back in April my Grandpa passed away. A week later Jeff’s Grandmother passed away. That has really taken a toll around our casa – however, seems I like to be busy while I grieve and reflect… so A LOT has been accomplished! And my Grandma Frankie is here for an extended visit which has been lots and lots of fun to have her around.
I’m excited to share our improvements to our hall bathroom (um, hope you weren’t holding your breath for that one since MARCH?!), dining room, living room, screened in porch, and front porch. Hah! Looking at that list makes me feel so crazy. What on earth makes us tackle these insane projects?! Geesh.
Anyway, before I get to the improvements around the house – J and I have done something CRAZY (not like that will surprise many of you…) We’ve implemented a cash budget. That’s right. CASH. We’re so 1950. And lucky for you, I’ll be sharing all the ups and downs of this budgeting system.
We’ve employed the values our parents helped instill in us and some knowledge obtained by listening to Dave Ramsey to come up with a solution that will (hopefully) make our money work for us even harder than it was before. We’re debt free except the house – so you won’t see any car payments, credit card payments, or student loans on this list which frees us up to use 100% of our money towards things we own (or are working on owning… the house)! We also have an emergency system in place of about 6 months of expenses just in case somebody in our house lost their job.
Here’s the breakdown of how we’re working this new system.
Literal CASH Categories:
– Food/Eating (7%) – This category includes groceries, coffee, fast food, etc. You eat it, you pay for it with food/eating money with ONE exception – dates. Dinner/Dessert dates may come out of our food/eating category OR our fun money category. This is up to us.
– Clothing/Needs (5%) – clothing of any kind (wanted/needed) and things like shampoo/toothpaste/etc come from this category.
– Fun Money (4.5%) – anything we deem fun. but no lying and saying buying gas or groceries is fun. because its not. and if we’re working this hard to SAVE our money, its nice to have a little spending cash to enjoy together.
Here’s how this works. We pull out money allocated to different categories on the day we get paid (for us thats twice a month – 15th and last day of the month). This does involve going to the bank and requesting a specific breakdown of 20’s 10’s 5’s and 1’s. (Truthfully, this is something that makes me feel somewhat weird… but if thats what it takes to make our money grow – so be it.) I divide up the cash and paper clip the various categories with a colored paper clip (green for clothing, purple for fun, blue for food, etc). And I’ve found that I need a little sticky note along with the clips for now until I get used to which color represents which category.
So what happens once the money is gone? NO more spending in that category for the month. None. Zip. Nada. And no borrowing from other categories. Really makes you put things in perspective.
Our figurative cash categories are below. Same rules apply as above. Once the money from a category is spent… no more spending. However, we will pay all bills on time and in full so if we find there is not enough being allocated we’ll have to rearrange the percentages to make sure we’re meeting all our responsibilities. We’ve dubbed these categories figurative cash b/c we can easily pay online via bill pay/direct deposit/check.
Tithe (10%) – This is the FIRST thing that will be taken care of. Lucky for us our church has set up tithe thru the internet so no more forgetting the check book or forgetting how much we were paid.
Housing (39%)- We can directly pay our mortgage online and we actually are going to be paying half on the 15th and half on the last day of the month. Just because it’s easier for us to manage with this new system. In the future maybe we’ll just put half away in savings and then online bill pay the entire thing at the end of the month. They don’t charge a fee, so it really doesn’t matter. Just what fits well with the budgeting system.
Utilities (5.5%) – We averaged out our bills throughout the year so first we pay whatever utility bills have arrived in the pay period. If there is any money leftover it goes into our standard savings account and I track it on our spreadsheet. In more expensive months (like July/Jan) I will pull the extra needed and subtract it off the spreadsheet. If we find we’re collecting quite a bit extra in this category we’ll just transfer some of the money into our standard savings and I’ll record it on the spreadsheet.
Retirement (7%) – 15% of our income goes to retirement. 6% is taken directly from J’s check and matched by his company, HP, for his 401K. So out of what we take home, 7% is allocated to a Roth IRA. It is AMAZING to look at how it will grow over time. Check this out if you don’t believe me.
Savings/Investments (10%) – Savings is where our money goes if we’re planning on spending it in less than 5 years. Mostly this accounts for home improvements, future car purchase, trips, etc. Investments are longer term and we haven’t really gone too much into the investing world… yet!
Medical (2%) – For us, our medical insurance is taken out of J’s check so our monthly allocation is VERY low – enough to cover contacts and the occasional Dr appt. For now this is just fed into our standard savings account and I’m tracking it on a spreadsheet.
Transportation (10%)- This is our confused child. 🙂 We COULD draw out cash for gas/oil changes/maintenance/etc. but because of convenience and comfort (who wants to go into the station when its dark?!) the gas is paid with the DEBIT card (sayonara credit cards!) at the pump and then the receipt is wrapped around debit card secured with a paper clip so that I can track and make sure we don’t go over our transportation fund.
As we go along and figure this out things will adjust and change. I’ll try to document some of the bigger things on here. I just want to know we’re being wise with our spending and that our family and friends will benefit from the things God has given to us.
This took quite a bit of emails, excel spreadsheeting (new verb, my idea tyvm!), and the right circumstances to actually finally push us to actively use this system. We’ve been going for a week now. Not long, I know. But it hasn’t been too hard to quit the debit card. And we have used the credit card for a home improvement project… but only b/c we KNEW we had the money to pay for it already. And I’m actually saying ‘au revoir’ to said CC at the end of this month. Pay the bill and cut the card up. Then it won’t tempt me next time and I’ll just write a check from savings.