– Original date: 2019-04-01
– Labels: Budgeting, Camper
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I used three techniques for budgeting, and I want to share them with you so that you can also make your dreams come true. Well, that’s if the only thing that is stopping you is money. If you’re too scared to take the jump, I can’t help with that.
On Dec 15th, I gave a man named Charlie $500 as a deposit to hold onto my Shasta (named after her second owner). After this, I sent money each month until I paid the balance in full. That meant by the end of March (which was my deadline) she was mine to start remodeling. But how did I do it? I was on short-term disability, earning 60% of my income (before taxes), so it wasn’t like I had a plethora of money.
- Step 1: Create a Budget (and Stick To It) With Envelopes.
I don’t mean in the traditional sense. After all, if you could budget, then you would, right? Get out your calculator, your bank statement, some colored pencils/pens/markers/highlighters (whatever you have a multitude of colors in), and some envelopes (use the ones provided in bills – no one sends in payments anymore).
- Step 2: Find Out Your Expenses
First of all, if you have a Bank of America or Mint (or any other budget tool), this will be much easier. Gather your bank statement and using either colored pencils, pens, highlighters I want you to go through and make categories. They can be anything you want.
For example, mine is:
- Utilities (this is my phone bill, rent, etc.) Anything that is a bill like rent, mortgage, house insurance, etc. should go in this envelope. Label it whatever you want – “adult crap” is a personal fave.
- Car (this includes, gas, my toll tag, my car payment & car insurance)
- Food (self-explanatory, but this is groceries AND dining out).
- Shopping (it means what it means)
- MISC
That’s it. I kept it simple. Assign each category color and highlight through each one. In the end, every single transaction that is an expense will have a different color depending on the category.
- Step 3: Find Out Your Income
It’s easy to focus on the hard stuff, like where does it all go. But how do you make money? That should be listed on your bank statement as well. After all, all of your income should be the only transactions not colored in on your account at this point. You will need to know how much you make each month a little later.
- Step 4: Put Aside A Set Amount Of Money.
You can see how much you spend on each category. Is there anything high on the list? You have cable tv, Netflix, amazon prime, and Hulu for your subscriptions, but do you need them all? Pick your most used and get rid of the others. “Trim the fat” as they say, wherever you can, and it will make the next part a lot easier.
Now, I only have three envelopes: Food, Shopping, and Misc. I keep the amount needed for my bills in my bank account, and that is it. I never use my debit card except when I am going to the bank to withdraw money, so it stays in my lockbox, so I don’t use it. Anything that isn’t being set aside for utilities gets removed from the bank and put into my envelopes.
Since I am single, I allotted myself very minimal amounts PER week because I get paid weekly. Food has $50, Shopping has $10, and Misc has $20 for the whole month. If I overspend $50 on food this week, I’ll borrow from the MISC envelope. Anything that I go over each week from each pocket goes into the MISC envelope, and at the end of the month, all but $20 goes into my lockbox. I then take all the surplus and make a payment.
Similarly, if you’re a family of four or you get paid bi-weekly or monthly, you will want to adjust your amounts. A family of four cannot eat on $50 a week unless you’re growing your food or someone comps meals.
One thing I should be honest about, I do keep on me a credit card. It has a small limit but is there for emergencies only (and no, I don’t mean, “I forgot my envelopes,” or “it’s more than I allotted for” – I mean genuine crises). If something surprises me (like a flat tire), I am not terrified of being set back.
Consequently, not everyone can do this; maybe you’re trying to pay down credit card debt as your goal. That is okay because you can create a “rainy day” envelope. Some people may want to keep only their “adult bills” in their bank account, set amounts in the envelopes, and then the rest in savings. Some may put anything besides their “adult bills” evenly divided into their envelopes, and what they don’t spend goes into savings.
You need to set up your system in a way that works for you. Customize it so you set yourself up for success. For instance, I’ve heard people freeze their credit/debit cards in a ziplock in their freezer or cut them up. I put mine in a lockbox. Whatever works for you – do it.
- Step 5: Track Your Progress
I write on the back of my envelopes. You can print out a piece of paper and fold it up and stick it in with your cash. Do whatever works for you and then track your spending. I like to stick the receipts in there with the money. Then at the end of the week, I stapled them together and put them into a file organizer. Each month has its tab, and all my receipts are in there. If I need to return something or if the IRS ever audits me, I will be good to go.
In addition to this (because that’s only one of the three techniques I mentioned), I borrowed an idea from another budget-savvy person. I saw them on youtube, but I could not find them again to credit (just wanting to be clear that it isn’t an original idea from me). Anyway, the idea is not to spend on certain days of the week. This person recommended two days a week, but I did it for three.
Before having the envelope system, I overspent like crazy as a coping mechanism. The envelopes were good, but I needed something more. So to curb spending and help me stick to my budget, I implemented an embargo on expenditures Tuesday through Thursday.
Enacting this plan allowed me to do my weekly shopping and fill up my gas tank on the weekend after I got paid, it forced me to eat out less (which I was GROSSLY overspending on) and to stop impulse shopping. Have an urge to go out and get a card for someone at work on Wednesday? Oops, have to wait until Friday to purchase it. Don’t feel like making dinner? Must eat leftovers because you can’t spend any money until Friday. It has been an enormous help.
Lastly, you will want to evaluate and adjust each month. You may have a tax return, or you may have to pay taxes. If you have kids in school, you know every August they will need back to school clothes. These are the one-off significant increases or decreases to the amount you have available to you. If you’re making more, you need to be saving more. If you’re making less, you need to plan for that by looking at what you’re saying should be in the envelope and what you’re spending.
As an example, if you are putting $50 into your MISC envelope but you only use $10 month after month after month, stop putting $50 in there. Put $20 in there and put the other $30 into the food envelope (or spread it out evenly in the different categories). But whatever you do, do not force yourself to stick to this super rigid budget. That isn’t going to motivate you when it fails because it will if you don’t adjust.
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