Budget- Part 2

This is Part 2 of my 4 part series about how we started our budget and how we have managed to stick to it for the past 6 months and pay off 56% of our credit card debt.

After we listed all of our outstanding debt and the minimum monthly payments, we mapped out the due date for each bill on a monthly calendar. Then, it came time to make our budget.
Some people that I talk to about budgeting have a budget that stays the same every month, meaning that they take expenses that happen once a year and divide it by 12 to come up with a monthly allotment that they put aside. I thought about this method and decided it really didn't work for my family. With that being said, most of our expenses are constant month to month, but other things are just too much of a variable for me to commit to setting aside money each month. One thing that we do set aside each month is the money for our trash bill, which we get every three months.

Once we decided how we wanted to do our budget I opened an Excel spreadsheet. I left the box in the top left hand corner blank and started in the second box down the first column. I then added in a category titled INCOME, skipped a box going down, then created a column listing all of the bills that showed up on our calendar, plus trash. Once all of the necessities were in I went back and added in a category for groceries, gas, my blow money (money I am free to spend as I please throughout the month), my husband's blow money, baby, eat out, other and prescriptions. The final category is titled "TOTAL"

 In the next column over I title it by month and type in what our estimated income would be as a positive number then going down the column I write down an estimate for each category as a negative number. At the end of the second column I push "AutoSum" which is located in the top right box within the Excel spread sheet. I then drag the box all the way up to our estimated income (make sure it is included in the box) and push ENTER. This will let you know if you are negative or positive for the month. If I come up negative I adjust my extra categories listed above and if I have extra money I add it to the current bill we are paying off or decide if it should be placed somewhere else. For example, our excess income for September was used in the gas category because we went on a trip for a weekend and needed more money for our gas that month.

If you are looking to pay down debt the key is keep your income category consistent and use any access income to pay off debt. As I mentioned before I use any access that is shown during my estimate to adjust categories but any extra income that comes in during the month (extra mileage, selling an item, overtime, income tax, etc.) only goes to paying off debt.

The third column on the spreadsheet I title "ACTUAL". This is where I add in what we actually made/spent for the month. I use my previously mentioned planner to calculate what we made for the month and put then in the row for income (make sure this is a positive number), then I do the same thing for all of our expenditures (make sure that you use a negative number). Then in the row for "TOTAL" I once again use Auto Sum to see where I stand. I always do this the last day of the month.

Now, this is where it gets a little bit tricky, this is where I calculate our access income. Most of our categories "roll over". For example, we budget $100 a month for medical bills, some months this is only $20 and others it well over the $100 budgeted so what I do is take the access amount found in the TOTAL row and subtract out what would be left over and keep it in the bank account in case we need it in an upcoming month. I also note in the fourth column what the total is in that "pot" of money. All of the bill categories "roll over" and some of the extra categories do as well (Sam's Club, CVS- prescriptions, baby, blow money) because some time we may have excess prescriptions or baby needs that require us to use more money or I may save up my blow money to get my husband a birthday present or a gift just because. There are other categories that NEVER get "rolled over". The main two are OTHER and EATING OUT. If we are under in these categories the money is calculated into our additional bill payment for the next month.

Then, once I calculate all of the roll over and subtract it from the left over money at the end of the month I have gotten the amount that will be added to the payment of the debt we are currently trying to pay off. For a few months we were working to pay off a bank credit card so all additional money from the previous month was added to the most recent bill when it was due to be paid. This is just the system that worked best for me, and I am sure there are many other ways to do this.

Next, in Part 3 I will explain my bill filing system and how it helps keep me organized!