Living within Your Means is the New Black

Two weeks ago, after opening a credit card statement that was just pennies away from inducing Frema's first heart attack, Luke and I decided enough was enough. After several months of obliging every DINKy whim, it was time to buckle down and actively manage how we spent our money. Our little starter house isn't going to buy itself this summer, and if we're so lucky as to get knocked up within the first few months of trying, securing ample living space for our future family of three has to take precedence over feasting on the barbeque lunch platter at Squealer's. Thus, our budget was born.

In my previous life as a non-married Ms., I followed a budget...sort of. Every two months, I would write down my anticipated expenses for the next four pay periods, with each check designated to a particular quadrant; I'd note any variables particular to that moment in time, like a sibling's birthday or upcoming New York and Company sale, and plan accordingly. I was very proud of this system and went out of my way to share it with my family, therefore demonstrating my ability to sustain my own livelihood sans gravy train. "Look at Frema bein' all responsible-like," I wanted to say. "So what if I don't bother to track how much of my paycheck I actually spend? I write numbers in pretty columns on company stationery. I am cool."

This time around, with more at stake than a new pair of jeans, I knew the only way to hold ourselves accountable to our financial goals was to create a spreadsheet and record each and every purchase we made, from the five hundred and eighty-five dollars we pay in rent to the four bucks we occasionally turn over to Dairy Queen for a Reese's blizzard fix. Tracking our expenses over the course of the month and entering receipt data on a weekly basis would enable us to know where we stood with our budget at any given time. It would also take the guessing out of whether or not we could afford another trip to Steak 'N Shake or a Nintendo Wii for my very patient husband. (Not yet, sweetie.) Numbers don't lie, and they certainly won't help you justify the burger and fries you're itching for despite having spent all fifty of the dollars designated for eating out.

Before delving into this new project, I consulted Molly, Queen of Excel Spreadsheets, for some ideas on what to include in my template; however, once left to my own devices (Luke could do nothing but observe me with morbid fascination, I think, seeing as I created our template the same morning we opened the credit card statement, and I was so sick over our lack of common sense that red anger spots actually danced in front of my eyes), what started out as a simple column for our monthly bills turned into an elaborate marriage of pay stub information and sorting options for expenditures by week and category.

(Click to embiggen.)

Some notes about the spreadsheet:

• Even though I record payments made on our credit cards, since the individual expenses have already been accounted for, they're not included in our monthly totals.
• I debated including ATM transactions, knowing Amanda follows this practice on The Naked Ledger, but Luke and I don't really carry cash that often, and I'm more concerned with what happens to the money once it's in our pocket.
• I don't know why I included a line for additional savings. We already dump half of Luke's paycheck into that account every two weeks, and it's a given that any month-end surplus will go into savings as well, but what can I say. It's pretty. I am cool.

Don't trouble yourselves with commenting on my freakness. Believe me, Luke and I are both well aware.

Before you judge, though, this template has really been quite helpful, providing us (read: ME) with greater insight into our financial habits. Spending $389.84 on groceries and/or household goodies within a twenty-eight-day timespan might not seem too terrible (although for two people it really is, who are we kidding?), breaking it down by week draws attention to just how often you're running for milk and bread at Super Target. Thanks to this spreadsheet, I know we spent more than a hundred dollars on such necessities in week two AND week three. Granted, some trips happened at the beginning of week two and others at the end of week three, but still. Not great planning on our part. What can we do to eliminate so many trips to the store? How often are we picking up things that don't quite need restocking?

(Also, in case you were wondering, our grocery/household budget is NOT $389.84. It is $225. Though it might as well be $389.84, since that's what we ultimately spent, budget be damned. And damn you, too, Super Target!)

Luke and I had already made the decision to save all of our receipts last month, so accounting for dollars spent before The Spreadsheet was easy, but the actual implementation didn't come until February 10th--almost halfway through the month--so I was a little nervous about our ability to stay in the black. We allotted fifty dollars for dining out even though we were already four in the hole, and that was before we went out to dinner to celebrate Luke's birthday, another thirty bucks even though we had a coupon for a free entree at Abuelo's. Plus, the Lumina crapped out on us again, as fourteen-year-old cars are wont to do, this time demanding a new battery and seventy-five dollar tow from Luke's place of employment, an ordeal that altogether brought us over our three-hundred-and-thirty-dollar category cap (gas plus oil changes for both cars) by ... three hundred and thirty dollars. I was positive we'd be on our hands and knees crawling to Fifth Third, knocking our savings account flat on her ass once again.

However, by the end of the month, I found that we actually SAVED money. Three hundred and twenty-six dollars' worth of money that I want to kiss and hold in a tight embrace and never let go. Our saving grace? My recent tendency to pay off bills as soon as they arrive on our doorstep, even when there was a good three weeks before the drop-dead due date. There were no February expenses tallied for rent, either of my Sallie Mae loans, or the phone bill, which is the only reason we were able to come out ahead. With our new system, I'd like to get in the habit of paying bills in the same month they're due (after all, the whole point is to funnel money in our savings account, not get ahead on bills that have another twenty-five years before they're paid in full), so this shouldn't happen again, but I'm grateful for it now. Meanwhile, March is already looking pretty damn good because of our handsome tax refund, allowing us to pay for my BlogHer reservations and our car insurance premium without dipping into savings.

Are you totally bored now? I bet you're totally bored. Don't worry. Tragic Love Friday is on its way, even though this entry won't publish until 5:00 p.m. EST and I'm so afraid it'll get lost in the shuffle. Prove me wrong, Internet!

Comments

[Jessi]

This probably isn't very constructive, but I know of your love for the NY & Co. - they are having a huge sale right now - 50% off everything in the store! (You can justify it - see, it's saving!)

[Molly]

I am in complete and total awe!! The layout you have is perfect for the four week thing you were telling me about. Totally inspiring me for somewhat of a revamp on our sheets! I like how you have it laid out so exactly.

If I were brave I would track my grocery budget/actual to a tee. The usual budget works out to $500 per month ($50 included for diapers and pull-ups) but somehow looking at our statement we always hover nearer to $800. Maybe I don't want to admit to myself what it actually costs to feed our family of 4 in a healthy way. Sad, sad, sad.

You have totally inspired me!

[Katie]

Definitely not bored. Slightly jealous. I have a very similar system set up. I track our expenses on a sheet of paper each week. I have the first week's done. The blank sheet for the 2nd week is sitting in my bag now. We are nearing the end of the 3rd week and that sheet is also blank. I got discouraged when I blew the budget the very first week (I decided that I needed to take a HypnoBabies childbirth class, too bad it costs $250). I got discouraged again on Saturday. I managed to come up with a whole week's menu, and the grocery list only had 11 items on it! The bill should've come out to $60. BUT I decided to go shopping when I was hungry, and I spent $95 instead. I also needed a boom box to listen to the aforementioned HypnoBirthing CDs on. I got it for $25, but then I had to throw in a $20 DVD! Grr.

[Art Nerd]

How funny- I am also trying to budget more wisely for our little family. We want to buy a house by this time next year, so things have to change. And I won't be paid in the month of June (welcome to adjunct hell, btw!) and I need to have those expenses covered as well. I find that putting things on paper (or in Excel) really makes an impression- how much money I could be saving if I didn't blow a hundred bucks at (regular) Target when I get paid.

Budgeting gives me agita. Harumph!

[Lauren]

I might have just shed a little tear...not out of happiness for you of course (although yay for you guys...am jealous...no seriously...yay!) but because I just realized how much living in friggin Massachusetts really cuts into my whole savings plan. I mean $585 for rent...really??? And this is not the ghetto? Or rat infested??? Or like just A single room??? I pay more than double that for rent and our rent is cheap...CHEAP!! And this isn't even near a city! Just be happy for your geographical positioning on this lovely map we call America. (And while I do realize that there is the whole higher cost of living/higher pay thing, the Northeast [especially Mass] is actually taking some heat right now for the complete lack of balance on that equation.) But really, I do hope this all works out for you and Luke!

[Rachel]

I only wish I could be that organized when it comes to spending and saving money. Maybe once our home computer is back up and running I can create my own SS or use Microsoft money to help with saving and budgeting.

[David McNelis]

Heh. We are always going back over our finances. Chris, like you, does most of the bill paying in our house. Excel is great too...I used it to map out a couple of possible savings and car payoff scenarios.

The thing that we did at the beginning of the year, which I think is really helping this process and make it faster, was buying Quicken. It was $40-60 (intuit.com), and we were able to buy and install it online. The thing that makes it easier is its ability to download all of our bank transactions automatically...then we just have to categorize them.

I know thats another expense, but the way we look at it, our time at home is precious, and the less time we have to spend actively inputting data like that....it pays for itself in the first month.

Of course, some Banks (Chase) charge an extra $10/month to do the automatic downloads...but it still ends up making sense in our budget. Just a thought (it also does nice graphs and helps do budget analysis.

[Isabel]

No, not bored. I love this.

When you figure out what to do about the grocery shopping thing, let me know. I have that same problem. Except there isn't a grocery store in downtown (I order groceries online) and it just isn't working. I need a better system to.

HOORAY for saving money. Hooray for buying a house and hooray for (then being able to) having a baby!

[Erika]

"any month-end surplus"? I am seething with jealousy. We don't even have room for eating out in our budget (which doesn't mean we don't do it)...so good for you guys.

I am still not quite getting the spreadsheet. I may need remedial help. As it does every year, our tax refund has inspired me to stop using our (0% interest) credit card.

1 - Are your 401K, HSA, and savings contributions not automatically come out of your paycheck? I record bring-home pay so I'm trying to make sure we are on the same page here.

2 - For each of the variable expenses, do you keep a running weekly tally in each category? For instance, if you spend $5 on Monday at McDonald's, and then $7 on Tuesday at Chipotle, and nothing else the rest of the week, is your dining total for that week $12? At first I thought you were recording every transaction in its own little cell.

I have not thought about doing this weekly instead of monthly. It's a great idea and speaks to the control freak within me.

You worry too much about not giving your posts face time. I know I for one always check the next post to see if I've read it. You're definitely WORTH IT!

[Frema]

Great questions, Erika! Here are your answers:

1) Yes, those deductions come directly out of our paychecks, and we base our budget on our take-home pay. I just like to record those on the spreadsheet for the sake of knowing how much we're contributing to those accounts on a monthly basis.

2) Yes, we tally receipts for each category and enter one total for the week. There's no way we'd have room to record every single transaction.

[TasterSpoon]

If you sign up for auto-electronic-bill-pay for your repeater bills (like Cingular and utilities), they don't bill you till just before it's due so you never have late fees, you don't have to think about it, you get a record of it in your e-mail, AND you get to be earning interest on your own money until the last minute.

Also, keep just what you need in your checking account for bills and ATM/debit card. Put the remainder in one of those online-only savings accounts (like Orange or Citibank eSavings) and you get interest that's at least as good as CDs are giving these days.

Oh, I'm not a financial person. These are just things that work for me.

(p.s. I agree the "air time" thing doesn't matter. I always check to make sure I haven't skipped anything.)

[Lindsey]

I'm not bored. I'm not bored at all. I was actually thinking that I need to start doing something like this so I really know where my money is going (Starbucks, Target, eating out, etc...the first step after denial is acceptance, right? Or something like that). I am the queen of a few dollars here, a few dollars there kind of spending and then I wonder why I don't ever have enough money to make larger purchases on things I'd really like (art for the house, furniture). My point is (I think I have one anyway) is way to go! Can you send me a copy of your template? That would be so cool.

[Stacey]

I was NOT bored, or freaked out, by this entry. Why? Because you and my husband must be long lost siblings. I think I may have even caught him talking lovingly to his spreadsheet now and then. And he has a spreadsheet for EVERYTHING...all the credit cards, how much progress we're making on the mortgage, our monthly budget, my income from making cakes, etc. etc. I just assumed everyone did this!

[Stacey]

Oh, and he records EVERY SINGLE TRANSACTION. There is no grabbing a starbucks without him knowing.

[KC]

Since you linked back to this post in your current post, I'm commenting on it now for the first time, here in 2009 just to say - we have almost the exact same spreadsheet that we made up on our own and it was so helfpul (only we included percentages as well). We have been blessed not to have to live on a budget in the last few years but it is definitely handy in seeing whether maybe we need to start, analyzing what's been happening, and figuring out if we could live on 1 salary (which we can't :( ). Anyway - just wanted to say - I'm with you on this one! Good luck in your new 2009 budgeting!!!