I’m deep into the frugal genre again and loving it. I feel more like myself. I have let everything go for a while and, as a result I’ve gained weight and debt. Time to do something about both. We’ve gotten ourselves into a doozie of a spot here and it feels good to be on the road to digging us out.
I worked my budget thusly: I started with our average income. Since Hubby has been working much overtime, it has varied the last few months. I took an average per paycheck and deducted $150 to be on the safe side (some weeks will be better than others and overtime isn’t always available. Usually it is, but not always). That’s the income I am working with. I deduct all of the bills that are due before the next paycheck except credit card debt. I deduct the minimum on that at this stage. Once that’s done, I have the bills paid.
Now comes the wiggly part. I have an idea of how much my family spends over the course of an average paycheck. If you don’t, you’re going to need to track your spending for a while and/or go through whatever you’re using to track your money and figure it out from there. Count all of the money taken out as cash as well as everything else. (Here is where you track your spending; keep track of every penny you spend in cash for at least a month. then continue) Put it all into categories (gas, groceries, dining out/ordering in, housing, auto – including categories for service and insurance -, that sort of thing) and see where you stand. It will be eye opening. Take stock and prepare for some wiggling.
As I said, pay all of your bills first. What’s left is what you have to work with. It may be a lot or it may be a very little. You need to allot enough for groceries. Now, don’t just write down what you’ve been paying because I guarantee it’s too much. Write down 3/4 of what you were paying to start with. That’s a reasonable goal for the first little bit. You’re going to be changing the way you shop. after that’s done, write out what you think you’ll need for transportation costs: gas or bus fares or whatever. You’re gong to be combining trips whenever possible, but for now, just put what you’ve used in the past.
So, now you have the real necessities taken care of: bills, groceries, transportation. Now, with what’s left over – if anything – you can decide how much extra to pay to your debt. Leave yourself enough money to pay for incidentals (a new outfit for an interview – from the consignment shop -, the oil change that you forgot about, the kid’s field trip that comes up at the last minute, that sort of thing) and a little fun if you can manage it. I have an idea of how much we can comfortably cut here. The rest goes to the debt. Any extra money that comes your way goes to the debt. Any money over the average amount that you calculated goes to the debt.
Here’s the not so fun part…if you’re not left with anything or you’re negative, you need to figure out ways to cut your spending. We don’t have cable TV; we got rid of it a couple of years ago. We have Netflix ($7.99 a month for streaming TV) and an antenna that we bought for about $30 that really just gathers dust because we generally only watch Netflix. We stopped all magazine subscriptions. We cancelled our gym membership and I work out (when my ankle’s not busted up) at home. If you must have a gym membership because it’s the only thing that keeps you sane (I understand), try your local community recreation center – some have pools and weight rooms as well as cardio equipment – they’re dirt cheap and may meet your requirements. Ours is only around $15 a year (but they don’t have a pool). If not, there are super cheap gyms (Planet Fitness here in the U.S. is $10 a month with no contract, if I read their advertising right) out there for a no frills experience. Stop getting manicures and learn to do them at home. Stop getting that $5.00 coffee and buy a French press and make your own. No more trips to the vending machine , especially for bottled water! Bring your own. Whatever you can think of to cut out some spending.
As your grocery spending comes down (as you shop generics, combine sales with coupons, and build your meals around the stores’ loss leaders), your disposable income will go up. If you are really hurting for money this is a great thing. You’ll have more wiggle room. If you had disposable income before, now is not the time to give yourself more. Try to stick to your budget and put as much as you can toward your debt. The sooner you get out from under your debt, the less you will have paid overall, and the more time you will have to enjoy your money.
I don’t have set amounts or percentages for you because everyone’s situation is different. You will know how much you spend and how much you can afford to spend. If you want to get out of debt, you’ll stick to a stricter budget and find ways to save money, if you are happy where you are, then your budget will look a little different. No one wants to crawl deeper into debt though, so everyone should have a budget. Mind you, I am someone who has disposable income to work with, so this budget may not be the best one for you if you don’t. We are pretty comfortable and don’t have to scrape to get by. That’s why this budget works for us. There is always some left over after bills and there’s usually enough for us to be comfortable and still send extra to our debt as long as we don’t go nuts. This is a very loose budget and you may benefit from a more detailed one if you are scraping to get by or overwhelmed with debt.
As we need to tighten our belts, the amount of incidentals money gets smaller and smaller. That’s the money from which we draw to go out to eat or buy toys for the kids as well as deal with field trips and the like. We have a little money put by for emergencies – which I highly recommend before tackling your debt so that one small emergency doesn’t sink you right back to where you were. And I have made sure that we have enough in the budget so that we can eat and have a little fun while making room for debt repayment.
That’s it. My budgeting plan. I advise planning out the whole month and sticking to that plan as closely as possible in the coming months. Things like planned doctor’s visits or car repairs will throw the budget a little off, but get right back to it as quickly as you can. If you had an emergency, rebuild your emergency fund ($500 – $1000), then go back to paying off debt with that money. Not too terrible, was it?