Wednesday, January 19, 2011

The Cash Budget

Craig and I have never really had a budget. We were always extrememely frugal in our first years of marriage, and seemed to live well on very little money. It was only once the kids came along that we seemed to start spending too much money. Still, we never had much of a problem. As time has gone on, though, our money just hasn't seemed to go as far, and we have found ourselves living, for the most part, paycheck to paycheck. The problem is always our credit card bill. We have always used the credit card for everything in order to earn points; however, it has become problematic in that we can't seem to figure out why the bills are so high.

After trying to write out a compartmentalized budget and stick to it last year, we realized that we are disorganized and this is too difficult for us. So, starting at the beginning of January, we are using a cash budget for everything but the major bills/payments that we have on auto-pay with the bank. My budget covers the family groceries, gas for my van, household items for things I deal with (not home projects that Craig is in charge of, for example, but batteries, toilet paper, diapers, etc.) and fun. I put cash in four envelopes at the beginning of the month, and it seems that I will make it to the end of the month on what we designated as my budget--apart from the extra $50 that Craig gave me from his budget so that I could take the boys roller skating and buy some fancy grocery items that Craig wanted to make dinner with. So here is what I have realized, nearly three weeks out:

There is always going to be something "extra." This month it was paying for the boys classes for the next couple of months, break dancing and magic. That right there was $170. But I am sure it is always going to be something.

I have come to rely upon spending money as a way of entertaining the children. We go to Target to buy toilet paper, but we buy fun snacks and a toy from the dollar section, too. We go get ice cream. We walk to downtown and stop at the candy shop. We go out to eat. We go to the dollar store. We rent a movie and buy pizza. None of this is extravagant, but it adds up. I've felt a little trapped this month trying not to spend this kind of money.

I engage in recreational spending. I go to Target for diapers and buy myself some new yoga pants and earrings. I throw a new outfit for Silas into the cart. Even at the grocery store I will buy "fun" items or new beauty products to try out.

I've done really well this month looking for free or super cheap entertainment (family night at the community center, the dollar movie house) and avoiding extra expenses at the grocery store. It is hard, but I think I'm getting the hang of it. I'll report what our menus have been and how much we are saving at some point here. When I told my sister about this, she said, "You've always liked a challenge." And I guess she's right.


AKmamaOf6 said...

This helped us a lot. We have slipped back into the credit card purchases a few times, but in general cash works best for me too. I started buying more of something all at once too to keep in the garage. It helpes when I don't have to run to the store as often. If I'm not in town I can't spend anything, if I go to town we eat out or get coffee or get extra yummy groceries. Good luck!

lindsey said...

I need to do this too seeing as I am a huge over spender. Target is the worst. If I could avoid Target completely, we would be much better off! Good Luck!

so yung wilson said...

Good luck. Not spending money is hard.

We're in a similar situation 'cause I'm jobless. And I don't really care for cooking or baking from scratch. But I am better about products. I have what I like and that's all I buy now.

Troy just told me to get myself out to the corner and get some money.

Anonymous said...

Awesome! Good luck! Can't wait to hear what menus you've put together...

Sofia Britts said...

Talk about budgeting, huh? I read an article a while ago that it's okay to spend on fun but you can use it as a reward for yourself for keeping up with your budget. I think it is fine to rely on credits if you have some high-cost spending. The envelope system is still very effective as you take control of small expenses. It's a matter of prioritizing, though. Good luck!