Budgeting

I am not proud to say that my husband and I are living at the edge of our budget. We decided to take a mortgage that was a little higher than we were comfortable because we found our dream home. When we purchased the house we knew we were going to need to purchase an SUV because of where it was located. During our process of making the decision to take the mortgage and purchase an SUV, we were not planning on having a child. We had tried for six years to get pregnant and were feeling like it wasn't going to happen for us. As fate would have it, we found out three days after signing the paperwork that we were expecting our first child.

As you can imagine, after trying for so long we were absolutely ecstatic! But now, we're working diligently to pay off our student loans, mortgage and the car payment, all while having the expenses of a newborn.

This is why I've started writing this blog. I want to chronicle our journey to getting out of debt. We're going to be setting financial goals and trying to meet them. We don't like feeling like we are living paycheck to paycheck and not able to save anything.

My first order of business was to complete a financial review. I went through our credit card statements for the last three months to find out where we are spending our money and where we can cut out spending. Then I completed a budget. This may sound daunting but just take it piece by piece.

We thankfully only have three credit cards and never use our debit card for purchases. So, I started with one credit card and went thru three months of charges. I separated each store or purchase type and added up each one for that month. I listed some categories I used below:

Example Categories:  

Walmart
Dinner out
Grocery
Gas Station
Car Maintenance
Pharmacy

You'll need to tailor the categories to fit your personal purchasing patterns. I did this for all three of our cards and then totaled all the categories up to find out between all three cards what we spent. When listing out all the charges, don't skip one 'just because it'll never happen again' be honest wit your budget and yourself. If there is an expense that you won't be making again put it in a generic category. For us, the generic one was the part we bought for the dishwasher, we won't be buying it again but it was important. So, I put it under household maintenance.

This will give you a base line of what you're spending and where. This is really important to see where you can "trim the fat" or how much you need to budget for essentials. Out of all the times I've tried to budget, I've found this is the most important step. Without knowing what is being spent and where it's going you'll never be able to stick to your budget.

There are tons of sites that you can get free budget work sheets or even some that you can buy. I've tried some of the free ones, but I've never had any luck with them. So, for me the fastest and best way is to just put it all in an excel spread sheet.

Once you've done this you're halfway there! Don't give up and don't stop. Now go through your fixed monthly expenses, fuel, gas (for your car), mortgage, rent, etc. Once you've got all of these written down and added up you need to list out any and all expenses you have that are yearly, bi-yearly or quarterly, such as dog licensing fees, insurance, water bill, sewer bill, etc.

For those expenses you'll want to separate them to calculate how much you'll have to save each month to make sure you have them when they're due.

Next I calculated our monthly income. Once I have all the numbers, I subtracted all the monthly expenses, including the amount needed to be set aside for the other expenses, and found the amount we have left over at the end of every month. This is the amount we have to put in the savings account or to make an extra payment on one of our loans.

I hope this helps you, not only get motivated but maybe help you to get over that hump to get yourself financially motivated.