Some Practical Steps We Took Toward Budgeting: Part 1

Before Dani and I took Financial Peace University, I knew next to nothing about budgeting. Even what I thought I knew about budgeting was actually nothing because, let's face it, I was still broke.

If you're looking at starting a budget for the first time, or maybe refining the one you've got, here are some of the steps we went through to form the budget that we use today. Keep in mind that forming our budget took about six months of strategic planning, and trial and error. Point being: there's no "one size fits all" budget, so you need to take the following as little more than a guideline and then mold it to suit your financial needs.

1. We started by figuring out our monthly, after-tax income. Then we made the decision that, no matter what, we wouldn't spend more than we make. No matter what, we wouldn't dip into next month's income. This is actually a pretty essential decision to make. America is a "buy on credit" culture, but if you're ever going to be free of creditors and debt you've got to commit to spending only what you have.


2. Next we looked at our bills—electricity, mortgage, phone, etc. We totaled these up and subtracted it from our monthly income.


3. The next thing we looked at were the not-so-regular bills—or what we call "Rollover Expenses." Things like car registration, license renewal, and insurance, bills that don't necessarily come around every month, but they WILL come around. We figured up the total annual expense of each of these things and divided it by 12 so we knew exactly how much to set aside each month. The money for these expenses builds up, or "rolls," into an account dedicated to paying off these expenses.


4. Once our essential expenses were covered we looked at what income we had left and decided how much we wanted to allocate for things like entertainment, restaurants, and gifts. Christmas, birthdays, anniversaries—these are expenses that come up year after year, so we should be planning for them just as if they were a car payment. If, like us, you want to buy a Valentine's Day gift for your spouse this year, decide as a couple how much money you want to spend on gifts and then be intentional about setting aside a little bit every month to cover it.

But, above all, no matter how you form your budget, keep it simple. Dani and I try to keep our budget to one sheet of paper that we can go through in about 10 or 15 minutes once a week. Any longer than that and our patience begins to run thin—with the budget and each other!

Keep pinchin' :-)

Food for Thought: Envy After Christmas

The day after Christmas is fun as I get to scroll through my Facebook posts and see pictures and watch videos of my beloved friends and family members enjoying their Christmas mornings. (One of my closest friends posted a video of his one-year-old son discovering the joys of a new Whoopee Cushion. The hilarity that followed was enough to make anyone lol!)

As I scroll through the posts I see other friends and acquaintances tearing open gifts and sharing love and laughter. Some people have Christmas trees surrounded by mountains of presents.

For the penny pincher it can be hard not to get envious. Don't get me wrong, Dani and I had a wonderful Christmas. We shared many great gifts with each other and our family, and we never forgot the real reason for the season, which I think is a key point in preventing us from feeling jealous of those who have a lot more.

It's important to remember, too, that some of those people with mountains of presents under the tree had to acquire mountains of debt to get those gifts. They may be happy for a few moments on Christmas morning, but come January when the bills start to arrive they might not feel so festive. On the other hand, I'm sure there are many families who buy lots of presents and can afford them just fine, while others may have carefully saved throughout the year and landed lots of good deals... but that's neither here nor there.

If you find yourself feeling underwhelmed by Christmas, and perhaps a tad envious of those who have a lot more than you, I'd like to challenge you to consider just how much your heart is truly fixed on the real meaning of Christmas. It's so easy to get caught up in the shopping and the wrapping and the gifts and the craziness, and when that becomes your focus than the things of this world have taken precedence over what should be a glorious celebration of the birth of our Savior Jesus Christ.

Keep pinchin' :-)