How do we budget? Honestly, we don’t really. Not anymore. Dave Ramsey says you’re supposed to sit down at the beginning of every month and make out your zero-based budget for the month ahead. Every.single.month. If that works for you, AWESOME! I honestly don’t have time for that crap. My time is much better spent playing with my son.
We started out with Ramsey’s budgeting form and, I’m not gonna lie, writing everything out was an incredibly horrifying eye-opener to just how many different places our money was disappearing. Since that initial written budget, which I folded up and carried in my pocket for the first several months, constantly checking it for areas of fine tuning, things have become incredibly streamlined.
My income is consistent; I work 7 out of every 14 days – 80 hours + 4 of scheduled OT due to working 12 hour shifts. With my night and Sunday differential pay, I can (and have, of course ) calculated with incredible accuracy how much I gross and net for an entire year. Divided by 26 (as I am paid biweekly,) this tells me what my base paycheck will be, assuming I don’t work any extra overtime…which I do from time-to-time.
Within a couple months of starting, we switched our budget over to a Word document to provide for easier tweaking, ongoing updates, and less paper waste; we put my base monthly net income at the top and line-itemed our expenses: utilities, cable/internet, cell phones, my wife’s Wells Fargo student loans, my wife’s federal student loans, and car insurance. These are the only things that HAVE to be paid from my net income. I work for the Department of Health and Human Services and we live in a house within a couple hundred yards of the hospital. It’s awesome! I get to walk to work and, with my employer being my landlord, rent is taken out of my paycheck. Never seen, never missed…and I don’t have to write a check.
I love automaticity!
For instance, we had to modify Ramsey’s idea of a cash envelope system due to the fact that we live in the middle of nowhere and the closest branch of our primary bank is an hour-and-a-half away. That’s not overly conducive to getting cash on a regular basis…unless we want to pay ridiculous fees at competitors’ ATMs. News flash…we don’t!
Enter Ally Bank. An online-only company, they offer interest-earning checking accounts (among other services), and have an awesome phone app that also gives you the ability to make deposits for FREE just by taking a picture of a check! This feature is awesome! My primary bank charges a fee for this service. For our “envelope system,” we have three accounts with Ally: Food/Gas/Clothes, Emergency Fund, and Vacation. Next, we take advantage of payroll allotments and our budgeted food money is direct-deposited into our Food/Gas/Clothes account and, instead of relying on going to an ATM for cash, we use the debit card associated with that account for our grocery shopping…although we are sometimes bad and utilize other money, as well . FYI…another awesome thing about Ally is that, although we haven’t used this feature, you can withdraw money from any ATM in the country and they will reimburse you for any fees charged due to the fact that they do not have any brick-and-mortar locations or ATMs of their own. *Please note that I am in no way, shape, or form compensated for this…Ally has truly been an excellent addition to our financial lives! What we have done with them is nothing special, as there are numerous options with a multitude of banks out there. This is just what is working for us. Take it as you may.
A second automated item I put in place was our Jeep payment. After some research, we refinanced it, cutting our rate of 4.5% in half to 2.25%, with a credit union I found that I qualified for as a government employee. The next thing I did was set up a savings account with the credit union, a payroll allotment to that account every other Friday, and that amount is then applied to our Jeep the following Monday. The greatest part of this, even better than not having to do ANYTHING from this point forward, is that paying it biweekly is going to save us a couple hundred bucks in interest! Double win in my book!
Now I’m sure you’re thinking we’re dummies for buying a brand new car; in our defense, we bought it in February of 2014, long before our personal finance enlightenment. We don’t feel bad though…we had wanted a Jeep Patriot for a couple years, absolutely LOVE IT, and it’s the car we brought our son home in from the hospital. Also, as we’ve told him numerous times, as he showers the back seat with Puffs (aka baby crack), we are never selling it and he will be inheriting it when he turns 16. Maybe…I really love it! I completely understand the financial reasons to not buy a new vehicle but, I’m gonna be honest, we’ll likely do it again in the next few years . I’m saying it here so as not to be called a hypocrite later. More on that future purchase later.
Wanna know another way to save yourself a few bucks? We have our car insurance premiums set up on a 6-month pay plan – the insurance company gives a discount (I think it’s about $40) for not having a monthly payment plan. Well, I don’t know about you, but I find it to be an irritating pain in the rear end to come up with the 6 month premium when it’s due. So, what we started doing about four months ago is we divvied up the premium by six, plugged it into our monthly payment system, and send the amount to the company as if we were on a monthly payment plan, while still saving the money by not actually changing the pay schedule with them. For the first couple months, they were sending us refund checks, which I simply shredded. When I called them to ask if this could be stopped so as not to waste the paper, I was told that it was an automatic, computer generated thing that couldn’t be messed with; however, we haven’t gotten a refund check in a couple months and they keep accepting our online bill-pay transactions…so I’m calling it a win! *Funny note…the customer service rep I spoke with and explained what I was going to do had a little *ah-ha!* moment and said that she would be starting to do the same thing.
Let’s see…what else? We cancelled cable back in April. We made a list of the few shows we really enjoy watching and discovered that they are all available on Hulu or on the internet. Even though they’re available, we haven’t watched the internet-only shows in months. Hulu is $7.99 a month and includes our favorite shows; we have also been utilizing my grandparent’s Netflix account, for FREE!, for the past few years. Guess what? We don’t miss cable in the least! And better yet, taking into account the cost of Hulu, cancelling cable saves us $90 a month! I wish we could save money on internet access but, unfortunately, that’s monopolized around here. The service requires a home-phone line, which is a complete waste of $11 every month, and equipment rental is tallied into the cost so I can’t save us anything there either. FYI…if you haven’t already tried Hulu and are considering it, please consider clicking on any of the hyperlinks in this paragraph. If you sign up through this link, you’ll be gifting us with two FREE weeks of service and we would be forever grateful.
That takes care of all the changes that we have implemented over the past year that I can think of right now. Now for the actual bill paying. We call it “Bill Wednesday.” I get paid every other Friday; at midnight Wednesday morning, I can check my paystub. From that, I write my net pay in my checkbook and then look at our budget. In the far-right-hand-side of the document, I list out the dates on which my paychecks are coming and, beside each biller, I list the number of paychecks that I will receive before the bill is due again. I don’t pay each biller on the same day every month; instead, I pay them on a revolving basis. This allows for no single check to be devoured by multiple bills all at once. Sometimes, a few billers may get paid, while other times, only one. Once the obligatory bills are handled, the remaining money is snowballed toward our debt. We usually hold on to a couple hundred bucks for incidentals, but otherwise it goes to work eating away at our debt. So, once I get my paystub on Wednesday, I schedule all this through my bank’s online bill pay system to send out the payments the following Monday (after payday) and, just like that, I’m done. As long as I’m not being my usually nerdy self and calculating, refiguring, or rebalancing our data, I can be done with our bills in a matter of minutes.
Our process takes any and all stress out of our financial situation and decision making. My wife and I never argue about money. She has, very rightfully, called me out for some dumbass decisions. However, 99.9% of the time, we’re too busy throwing up high-fives at our debt ass-kicking awesomeness.
Please Please Please…If you find yourself struggling with debt, budgeting, or would like to talk about changes you can make in your own life, reach out. We still have a lot of work to do in our own family but even small changes have made an impact on our situation. I would truly love to talk to you and help in any way that I can…or hear about ideas you have that may be of benefit to our family, as well.