So many of the personal finance/get out of debt books that I read have unwieldy and complicated money management systems. Envelopes or separate checking accounts or separate ledgers for each expense category. I’m just not that disciplined and it makes me want to cry to even think about doing all of that. And I love paperwork and numbers. It just seems unnecessarily complex and confusing.
Hubby and I have one joint checking account (well, two right now since we are in the process of switching banks), one joint savings, and the boys have a savings account each as well. I opened a separate checking account a few years ago when I was planning on surprising my husband with an all expenses paid golf vacation for him and his dad. I was going to save the money and hand him the check card and tell him to have fun. But, that one sits empty at the moment. Maybe someday we’ll find a use for it.
OK, that was confusing. We have joint checking and savings accounts that we use to pay for everything. His paychecks go in and I portion them out. In our case, we have enough to pay all of our expenses and have some left over. So, first things first, we pay the bills. After that I start portioning out the money on paper. This is how I do my budget: bills for the pay period, grocery money, our preset spending amount, and the rest toward savings or debt. Right now it’s going toward savings for the kids’ tuition.
That preset amount is the one I want to discuss. After several years of tending to our accounts, I have a feel for what we like to spend during a pay period. All the meals out, groceries, haircuts, movies, or whatever, all come from the same fund. I try to set a reasonable amount aside for groceries, but, inevitably, we blow past it. In that case, the money comes out of the general set amount. Right now our set amount is comfortably enough to have enough for groceries and gas and some fun. I will be cutting back on that as we move forward. I’ll be watching my grocery money more closely and trying to actually stay within the budget I set. We’ll order pizza or go out less. Nothing incredibly drastic yet. But the cuts will happen incrementally so that we don’t all of the sudden feel deprived. I’ll go a little at a time until we feel that way, then move back up a step.
We stopped giving ourselves allowances because we realized that we actually spend less if we spend out of the general set amount. Good to know. I’ve made sure that the general fund is always less than the average of what’s left of the paycheck so that we always have some to put away (or use toward debt).
I read at least 20 personal finance books before I stumbled upon Dave Ramsey. Total Money Makeover is the program I use. I am not a fan of the prosperity gospel that he preaches, but the steps that he’s put together make sense. He even admits that it’s nothing new, that your grandmother used these steps, and that he just put them down formally in a book. I still read personal finance books to see if there’s anything better or that I can add to what I’m already doing. I haven’t found anything better yet. And, I’m much too set in my ways (that work for me) to start double ledger accounting or envelopes or separate checking accounts. It worked once, and it’ll work again. Anyway, I’m still reading personal finance books and, if nothing else, they are motivational with their stories of people who’ve paid off ridiculous sums of money.