Starting a budget and keeping with it
My Story: Budget Diet
contributed by Heather in Washington
For the third month in a row, we found ourselves with more bills than budget, and like those months when there are too many parties and my waist line starts to grow, I found myself thinking, "Where did we go wrong? We are usually so careful with our money?" So just like I do when my waist line starts to get out of control, I put myself on a temporary "budget diet" to deal with the immediate problem of not fitting into our income.
When I diet, I go back to eating a set amount of necessary calories while leaving myself a small allowance of extra calories for "important expenses." For example, I would normally have a low calorie lunch at home, but sometimes my work requires me to go out to a restaurant that only serves high calorie foods, so I will use some of my "extra allowance" to cover that lunch without falling off my diet. I am still on track and I didn't need to over-share with my co-workers about my personal weight issues.
Our budget diet worked in much the same way. We paid all of our necessary fixed expenses and we left ourselves a small allowance for some "important expenses" that would have been very uncomfortable to have to avoid. In our case, these were presents for a couple of birthday parties for our children's friends that we wanted our kids to be able to go to.
The knowledge that finally taught me how to lose weight and keep it off was knowing how much food was really necessary. If you eat too little, then your body goes into starvation mode and you actually end up gaining weight instead of losing it! If you eat too much, you don't lose weight even though you may be eating much less. Instead, you just don't gain as fast. Finding what's just enough is key. The same thing is true for a budget. If you reign in your spending too much, such as not paying enough on your credit cards or paying a bill late, it doesn't save you money. It just increases your cash flow problem by increasing your debt. If you decrease your spending, but don't decrease it enough, then you decrease how fast your debt accumulates, but you still aren't decreasing your debt. Spending the right amount is key!
You can hear it coming, and the very thought of spread sheets, tracking, and deprivation makes you want to stop right here. You don't really need to start there. I bet you already know what you absolutely need to get by for a while. It's just a little less than you are really comfortable with. For us, it looked like this.
We knew we needed to pay our utilities, mortgage, and insurance. We also knew that we needed to buy gas for our cars and groceries. However, we knew that we could do without toys and treats for the kids and ourselves, new clothes, and those little home improvement items that we love so much for a month. We also knew that we could reduce our grocery spending by having a set budget, which for us was $50 a week for our family of four. That meant that we would be eating simply and dipping into our pantry, but other than not having our favorites all the time, we hardly noticed the change. We also took this opportunity to experiment with some money-saving strategies that we hadn't done before. We quit using our clothes dryer and hung our laundry on a rack next to the wood stove. It takes a little more discipline to do laundry every day since we have limited hanging space, but we also didn't end up with the big pile of clean laundry in the spare room that always seemed to be waiting to be folded. We also started reusing our bread bags to store my homemade breads and muffins in instead of expensive zippered bags. Overall, we ended up being happy with most of our "diet" measures. We were also glad to see that at the end of the month, we were back to living within our income. Knowing that it was temporary, just for a month or two, made it easier to try some things because we knew we weren't stuck living that way forever!
You can't stay on a diet for the rest of your life. Eventually you will lose too much weight or you will become too deprived and binge. The same is true with your money. There is no point in just saving money to have it. I'm sure there are those who will disagree with me, but money really has no value unless you have a purpose for it. Don't get me wrong. I believe in saving. I save for retirement. I save for our emergency fund. One of my goals is to start making car payments to myself again so that I can buy my next car debt free, just like my current one. But having a healthy relationship with money is a lot like having a healthy relationship with food. Eventually you need to look at what your body really needs to stay at a stable, healthy weight, and make a plan for how to eat regularly to stay there and be happy with your eating. Now is the time for budget sheets and tracking but not deprivation!
Just as nobody can live on a very restrictive diet forever, neither can we live with that kind of money diet! Think of your diet as a kick start or a short, clean break to help you transition into a more healthy, regular lifestyle. Then use that time to do two things. First, find out where the hole in your budget was. I thought I was doing pretty well with my money before because generally I was. I shop at thrift stores for most of our clothes, and I cook mostly from scratch. We are generally frugal. When I downloaded the budget worksheets off of Bankrate.com and followed the simple instructions, I found that some of the basic costs of living in my area had gone up at the same time that some bills from putting in our new driveway arrived. Caught between rising costs and a bill that I thought I had already paid, my budget got a little squeezed. So there's the problem.
The second thing we needed to do was to establish some spending guidelines that we could live with comfortably. The key word is comfortably! Deprivation leads to binges. So we created monthly spending categories for things that are important to us like home improvement. We are avid DIYers so we decided that we could budget $220 a month for home improvement with the idea that larger projects would take more than one month's money, which is okay since larger projects often take more than one month to complete anyway.
The first two things led us to a third conclusion. Since we do live in an area with a higher cost of living and relocating is not a good choice for us, we needed more income. We both chose careers that are flexible and allow us to parent our children without childcare. Both of our jobs are also altruistic so they don't pay real well. We each considered taking on an extra part-time job, but with two young children, that didn't seem real feasible at this time. Then the opportunity for me to get additional hours at my current job came along, so that helped us fill the gap until the children are older.
My weight is back within my healthy BMI range now, and our budget is moving back into a more comfortable spending plan. It will take a few months to fine tune our healthy lifestyle, but for now, I am enjoying fitting comfortably back into my clothes and I really like the new knobs I just got on sale for my formerly knob-less kitchen cabinets. Ahhh… comfort!
"My Story" is a regular feature of The Dollar Stretcher. If you have a story that could help save time or money, please send it by mailto:MyStory@stretcher.com
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