This week has been rough. I hope we never have another year in which M’s birthday, Valentines day and Chinese New Year are in the same week. Add two snow days to the mix and I am one worn out mama.
But let’s get down to business anyway. This week Mr. A and I started our Dave Ramsey online classes. As we watched the first video, the differences between Mr. A and myself could not have been more obvious. Mr. A* sat up straight in his chair and attentively filled in all the dumb blanks in the workbook. I, on the other hand, played with the IPOD, posted on Twitter and fidgeted in my chair. (The only other class I can remember taking was a swing dancing class oh so many years ago. Mr. A took notes in that class too…NERD.)
We have watched three videos and so far, we are pretty familiar with the material that has been covered (use cash, don’t use credit, have an emergency fund that is never used). Even though we know that the principles are right, both Mr. A and I have balked a little at the implementation.
We are people who use our credit card for almost EVERY SINGLE PURCHASE we make. This has worked for us, because it lets us track all our expenses. We pay the card off in full pretty much every month too. We don’t carry a balance. Mr. A particularly likes the points we get for our card which put money into my retirement account.
In other ways, though, using the card for everything doesn’t work for us. We admit that the credit card allows us to cheat on our budget. Our worst areas for cheating are groceries and restaurants. In theory, we have a $50 a week family restaurant budget, but one good sushi dinner or dim sum brunch blows through that without a second thought. We also are susceptible to the slippery slope of lunches out. Both Mr. A and I are supposed to get $10 a week, but we regularly go over that too (especially Mr. A with business lunches). And Target? Target is like a money black hole. Can anyone get out of there spending less than $100?? (Obviously, a lot of people can, but *I* have a hard time doing it on a regular basis.)
One of the first baby steps in the Dave Ramsey program is to create Basic Quickie Budget. I am assuming this will be used soon to figure out our 3-6 months of living expenses for our emergency fund, but for now it was just a good tool to get our conversation started.
You know me, always willing to share a little TMI, so I am going to post our Quickie Budget here (with Mr. A’s permission). This isn’t what we spend every month, but it is a pretty good approximation of what we think will be an average month without cutting back.
If TMI makes you uncomfortable, look away now. Also, please refrain from criticizing our line items. I know there is a lot of fat that can be trimmed from this budget, but we are trying to get a good starting point to work from.
AmFam and Mr. AmFam’s Quickie Monthly Budget
School Loan Debt $ 667
Rent $1100
Utilities
- Electric $ 131
- Water $ 40
- Gas $ 91
- Cellphone $ 116
- Cable** $ 135
Food
- Groceries $ 495
- M’s school lunches $ 40
- Mr. A’s work lunches $ 80
- AmFam’s lunches $ 60
- Restaurants $ 250
Transportation
- Gas & Oil $ 175
- Repairs & Tires $ 200
- Car Insurance $ 115
Shopping
- Clothing $ 200
- Target $ 200
Other
- Life Insurance $ 75
- Preschool Tuition $ 135
- Entertainment $ 120
- Chinese lessons $ 120
- Other lessons $ 40
- Medical*** $ 400
Minimum Total Monthly EXPENSES: $4,985
I know, I know. OMG, we spend so effing much MONEY. And this would be our beginner GOAL budget. Sometimes we spend even MORE. GACK! It stresses me out just looking at this list.
After we worked out our budget last night, Mr. A and I decided we are going to begin the transition to using cash for the items we know we cheat on: Groceries, Lunches, Restaurants, Target, and Entertainment. We are going to make the transition a little at a time, though, because we usually budget Mr. A’s paychecks to pay these bills after the fact rather than pulling the cash out before hand.
To get a little more cash on hand, we are going to start out with a month of radical no-spending. I usually do that every January and June, but we didn’t do it last month because of the move.
So there it is. Our beginning point. We want to get started staying on a regular budget before we start cutting things out and feeling deprived. Getting used to cash is going to be HARD. I never, ever have cash on hand. Not even a few dollars.
I know this will be good for us, even if it is challenging at first. It is in my nature to be a money hoarder, but it is easy to ignore those impulses when the plastic is so readily available and I rarely see the final bill (because Mr. A handles that end of our finances).
Here we go.
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*who I must admit is more than a little skeptical that he can learn anything from Dave Ramsey
**Cable/internet/landline/tivo
*** L’s beautiful but very expensive eyes.
We did the same thing that you guys did a few years ago. Now 2 kids and a few minor big things later we’re back in CC debt. Not a lot but enough to make me hyperventilate and so yep we’ve been doing the cash thing for the last few months. Amazing how cash doesn’t let you cheat (though i have found myself having to transfer money a couple of times since we cheated too much). We don’t have a true emergency fund and so right now all things are at a minimum to build up somewhat of a fund.
Good luck with your new financial undertaking! Can you re-explain what is your radical month of no-spending?
It isn’t complicated, we will just try to avoid any expenses that are not absolutely necessary. Unfortunately, M’s birthday party is this weekend, so I may have to wait until after that.
our budgets is very very similar, except right now your school loan debt is our car payment/LASIK payment (which will drop to just car soon) and we’re not spending much on medical.
we should do this along with you. i will talk to scott about it tonight.
Yes you should. I like the online format, but it doesn’t put us in a room with people who are challenging our excuses for not following the program 100%. It would be good to have a real life person to bounce ideas off.
We try to use our credit card for everything, because 1) we like the record 2) we shop a lot online 3) we don’t like to carry cash. We pay of our bill every month without fail.
But, it’s still true that using a credit card doesn’t constrain your spending the way cash does. There’s a psychological component — cash looks like it’s leaving your purse; charging doesn’t. But, there’s also the physical limit of a cap. A lot of people think Ramsey’s cash thing is silly, but I think it does affect spending behavior.
One way to get the affect yourself might be to use mint w/ their budgets? http://www.mint.com. Then, if you checked it every day, and looked at how you were on your groceries budget, you could cut yourself off, the same way Ramsey expects people to, when they run out of cash.
(Mr. A takes notes at on line lectures. A nerd indeed.)
PS: All our budgets are way higher than yours, if it gives you any comfort.
I forgot to mention Mint, but we do use it. That is what we used to figure out how much we are spending on different categories.
The unfortunate thing about me is I am completely unwilling (and possibly unable) to monitor our finances every day without going crazy. That is why Mr. A took over paying the bills. I am terribly unorganized with paper/accounting AND money is a trigger issue that puts my stress level through the roof. Just typing that budget made me feel freaked out. I think with cash, it would be simpler. Either we have money or we don’t.
PS: I think that if you’re routinely over-spending a budget (i.e. A’s business lunches) you need to think hard about whether the budget is being set unrealistically. True you shouldn’t spend money you don’t have (the SNL video is funny). But people also have to be realistic about their needs.
In this version of the budget, we were trying to be realistic. Our old imaginary budget had Mr. A on a $10 a week lunch budget that was never respected. We both think $20 a week should be enough for him to get adequate networking without being ostentatious.
PPS: I think that the world would be a better place if more people shared information like this, so that people knew what reasonable expectations were (rather than having expectations based on the mythical lifestyles of people on television, where people with one income have huge kitchens and live in help).
If you want to get the points on your credit card but not use your credit card all the time, you could buy gift cards each month (paid for with your credit card) then use the gift cards instead of cash/credit cards to pay for things.
Wow, I really commend you guys for doing this. We’ve recently become a one-income family (in the Bay area!) so we’re also trying to spend as little as possible. It hasn’t been fun. But we gotta do it, so we’re doing it! And I am sooooo with you about Target.
I started using cash in my own system years ago. The interesting thing was that just gave myself $100 to start with and use it until it ran out. The plan was, when it I ran out, I would get $100 more. I never felt limited, or like I was under the thumb of a budget…but I was tons and tons more aware of where my money was going.
I think SEEING the money leaving my wallet was a really great thing. I have a habit of “moving money around” in my head (“$60 for a nice dinner out? Okay….I’ll just eat Lean Cuisines at lunch for X more days this month and that will make up for it.” You can’t do that when you’re using cash, not nearly as much.
My ex started doing it too…and we actually became pretty competitive about it.
The student financial planner who helps OSU students get a good handle on their finances actually tells them that setting a restrictive budget and *limiting* your spending is more like setting yourself up for failure (in their cases). She suggests that they “pay themselves first” (savings, food, etc..) and then their bills, and then really track their spending…keeping a log of everything for at least a month. Then they can see where the necessities and frivolity fall on that and make adjustments.
I still just use cash as much as possible.
We have logs of almost everything we have spent for the past year on Mint.com, so we are pretty sure this budget is close to accurate.
We just need to get out in front of our expenses instead of paying them after the fact (just like that pay yourself first). I think that will be a HUGE difference.
I think for me, cash will be good because I really like to save. When I don’t pay the credit card bill, it feels much more out of my control. Saving actual cash in my hand is an exciting prospect. I am a money hoarder at heart. Heh.
“money is a trigger issue that puts my stress level through the roof”
Yeah, these are important differences in the techniques different people come up with to manage their money. Money is not at all at trigger issue with me — so, for example, keeping daily track of my spending on Mint is a great way for me to keep on top of what we’re spending money on. I worry about credit card spending, that I think might be limited by cash. We’re in a fortunate state financially, though, so none of this is overspending. But, no one needs to spend money on things that they don’t really need or want, but that catches their eye when they walk through Target. I went to Target yesterday, and the number of unneeded items that found their way home is really worth reconsidering, even if we have the money. Stuffed flower stems $1 — how could I resist those; and yes, they’re fabulous, and the kids love them, but did we need them?.
I’m impressed by how little you spend on bills. Does your gas bill include heat? Is it spread over the year? Because we pay waaaaaaaaaaay more on gas. Of course, that is completely out of our control which makes it seem like even more.
Yeah, it included heat, but we are on a year-round budgeting plan. We pay about $90 a month in the summer too. I think the same goes for our electric bill and air conditioning.
WOW. You’re really brave. You go girl! I enjoyed the comments to the comments, although I don’t have time to read everything right now. Gotta get the boys back to the cyber schooling. Sigh.
Anyway, this that you said right here: “I am terribly unorganized with paper/accounting AND money is a trigger issue that puts my stress level through the roof. Just typing that budget made me feel freaked out.” This? It would totally be ME!!! I can’t stand thinking of having a budget and I’ve always read your posts on not spending/saving money with great trepidation. Sigh. And right now things are really bad for us financially. Well, the best of luck with your new plan. You can do it!
Thanks for posting this – I love looking at other people’s budgets almost as much as I love looking at their houses. It’s a sickness. I’m kind of surprised at $2400 a year for car repairs and tires. Did you just have a bad year, or is this typical?
We always buy used cars, so our upkeep costs are probably a little higher than someone who has a new car. We have 2 cars, so that is about $100 a month for each car.
We recently had to buy new tires for the mini-van ($600) and will are due for a new timing belt in another month or two (probably $1000). It isn’t that bad considering we bought the van for $11,000 about a year ago (about 75k miles) and we expect it to last another three or four years. We knew those repairs were coming when we bought it. Our other car had only about 40k miles when we bought it two years ago (I think, it was also about $10,000) and it hasn’t required much beyond oil changes.
By budgeting $200 a month, we should be able to have money in savings earmarked for the car so a $1000 repair won’t set us back at all.
Makes sense, smart to plan ahead!
sheesh. I think we should move to Ohio where the utilities are so CHEAP!!
Money issues can be tough. I have been enjoying ‘Till Debt Do We Part” on CNBC. Two people working with the same money is a challenge – there are always a couple of different priorities and styles. Using cash has been so helpful to me, even if I do sometimes borrow from Peter to pay Paul. At the beginning of the month I take out my food, gasoline,gifts, household products, eating out, hair cuts, pedicures, and spending money. I then divide it into 4 weeks. Each week I put that week’s money in my wallet. At the end of the week if anything is left over it goes into the savings account. As I said sometimes I will take a little of next week’s cash and spend it this week but never do I take more money out of the bank. If the money is gone before the end of the month, I just become more creative about eating out of the pantry. I also keep a coin jar and one week I had to use the coins to pay for my bridge games but I still didn’t get more money from the bank. If worse came to worse I would have forgone bridge that week. Good luck with the budgeting!
Another aspect I have found using cash instead of credit is that I am much more likely to return purchases that didn’t/don’t work (for whatever reason) and I am now obsessive about keeping and filing my receipts. Just today, I took a couple of things back to IKEA as returns…nothing over $3.00 individually, but it added up to $14.53 back into my pocket! Woot!
I do think seeing other people’s bills is fascinating and does give a whole other perspective of what we spend our money on, what we value, and what we prioritize. Can’t wait to follow along each week with Dave Ramsey – you should start subscribing to his iTunes podcast. I love the fact I can listen to him M-Th and watch Suze’s Saturday show on iTunes – both for FREE! Another Woot!
This is just a quick question – How “christian-infused” do you find this program. All the people we know who are familiar with it have taken it through their church (we don’t have one) and are a bit too heavy into the whole jesus-god angle for our taste. Maybe it is just our area (Philly/SE-PA)..
Anything Dave Ramsey does is VERY Christian-infused, sometimes to the point of cramming it down your throat (for example, “the only way to financial peace is to walk with Jesus.” However, the printed materials don’t seem to lean as heavily in that direction, so you might want to look into his books if you’re interested.
#1- Dang your utilities are cheap!
#2- Looks like a good start.
You do need a budget to start with. If you don’t know WHERE you are spending, you don’t know where you need to cut back.
We have hit “that point” where we can REALLY save money again. (meaning we save a considerable portion of our salaries). With daycare costs, that was difficult.
Though the categories are different, our total spending is about the same: $1900 mort, $1800 daycare, $700 grocery, $300 utilies, DSL, $400 student loan, $100 car (we share one reliable 14yo corolla and take turns biking), 1500 savings. And tonight I spent $266 at Target, including buying a microwave to replace the one that died last week, as well as diapers, socks etc for the kids. Our household income is over 6 figures, we never eat out, and I am restoring a free piano myself for my kids-it’s mindboggling how hard it is, and I feel humble all the time about how much we have compared to many. We don’t do many extras, and I don’t know how low income families manage at all.
I use only cash, and so does my husband. It is hard, but I know where my money goes. I allot about 30 dollars each month for shopping on the Internet–that money I set aside so it is “spent.”
I hope you will post about the radical non-spending. I think I could learn a lot from that. As someone who is looking already pretty frugal but looking to get better about money, this is quite inspiring! Thanks for sharing.
Regarding credit cards, I give myself a monthly credit card allowance of $200. This covers things like gifts, gasoline, clothes. I track my purchases and once I am close to the budget I cut back on cc spending. I think that credit cards are a convenience in terms of not carrying cash and tracking expenses.
It took 2.5 years and a second job, but I got our budget under control and all our debt paid off this month. It’s hard going cash only (or in my case, debit card only), but it can be done with discipline. The biggest ah-ha for me was budgeting monthly for those quarterly or semiannual expenses. Good luck on your journey
We try to use cash as often as possible. I have an eight year old and was reading on children today don’t get a good sense of money management since all they see is a card being swiped. My daughter has even replied to me “Just use the card” when I tell her we don’t have the money to pay for whatever toy she saw/wanted. We take $100 out in cash and she has to help track where its going throughout the week…
I don’t know if she is learning anything but we are learning that we eat out too much!
Krick
Doesn’t anyone use a debit card? Y’all are talking about how the options are credit or cash (as in like, dollar bills and stuff? Those still exist??) My visa debit card does give me bonus points for use (in my case, airline miles, but I do think there are other options.) So what you do is this: Set yourself up with a monthly spending budget (for non-fixed items. Fixed items like rent/utilities can all be direct deposited). Put that amount of cash in your debit card “cash” account (which helps if it is a separate account) + a small cushion of only $100 or so just so if you really screw up your math on the fly you won’t get overdraft charges, then only use that much money. You have to keep track of it because you won’t want to overdraft and also, the bank keeps total track of it for you. Maybe I’m just extremely lazy, but when I used to use cash more, I kept terrible track of it and just went to the ATM machine all the time as if it was a candy machine. A debit card works a lot better for me.
I don’t even have a credit card, yet because the debit is really just a visa card (works online, too) it reflects in my credit rating as if I do. Keeps my credit score good, and keeps me supporting 3 kids and myself in relative comfort for under $2500 a month. (I don’t have your student loans, but I do have $650 in insurance premiums…ugh!)
But, thanks for sharing anyway. No judgment here and it is always interesting to see how other people are dealing with financial stuff and makes me think about my own.
Your grocery bill is low. Our family is the same size as yours and our monthly grocery bill is at least $1,000. *Sigh* Our problem is we shop at big box grocery stores like Kroger’s, Sam’s Club and a couple of other Oriental markets. Your budget gives us hope to trim down on ours. Our total monthly budget is a lot higher than yours. *Sigh again*
You should add a section to your blog where we can anonymously post our expenses, get advice from others and follow along with you and budget!lol I like to see what others spend and how they go about budgeting. Last year I spent cash only for one month – it was incredible how much less I spent…I really thought twice about buying a lot of items I wouldn’t have given a thought to buying if I weren’t pulling cash out of my pocket to pay for it. I’m trying to get us on a budget but I really have no idea where to start. I guess tracking expenses for a couple of months would be good. Our monthly Visa bill (we put everything on Visa and get a few free flights out of it every year) is higher than the budget you list so the thought of even beginning to tackle our spending scares me! I’m awful with numbers, DH pays all the bills here…I have a real mental block for some reason! We are however getting old and I think we need to start adding to our retirement savings big time. Look forward to more posts as you take the classes!
ha! Honestly, that is too much work to set up a whole section, but maybe I could make a post about it and you could comment anon. Have you tried Mint.com? We use it to label all our credit card purchases so we can see where the money is going. It was intimidating at first, but once we got everything set up it was pretty manageable. I am sure I will talk about retirement savings as soon as we get to that section of Dramsey.
I looked at Mint.com after reading about it here but it doesn’t include Canadian banking institutions. I’m checking out various sites to find a good site to use…open to any suggestions!
How do you feed your family on 495$ for groceries? That is insane.
I’m impressed with your food budget. I only have one kid and we spend way more than that. Our budgets are very similar except we don’t have school loans but we do have a much bigger mortgage as we live in a much higher cost of living area. I’m doing a budget right now for the first time in a long time as we are finally getting serous about saving and everyone I read who posts about budgeting online is on a much more modest income than us so it’s hard to relate in some ways. It’s refreshing to see someone who is clearly middle class using real numbers. So thank you.