Budgeting Blunders

So it turns out I am REALLY bad at budgeting. Actually, what I’m really bad at is FOLLOWING a budget.

Actually, I already knew this. I’ve never been able to stick to a budget. It’s never really been a problem in that I’ve always had enough (or almost enough) to cover my expenses but now things are dire and I really need to figure out how to stay within a strict budget or we are headed toward financial ruin.

I should have learned all this before. We’ve never had much money and sadly I’ve always spent most of what I’ve made. It’s because I’ve never followed a budget that we don’t have much money now to fall back on. I’m learning the hard way what happens when one is not financially responsibility. If it weren’t for Mi.Vida’s inherent frugalness we’d be totally effed right now.

The thing is, I’m not angry or upset about the money situation. I just REALLY need to figure out how to keep myself within our new budget and honestly I don’t really know how to do that. You might think, just DON’T SPEND MONEY. And of course it seems so simple on the surface, but I am failing miserably at it. I’m definitely making better decisions and not buying nearly as much as I would have, but I’m still buying things that in reality we don’t really need and I’m buying them because it FEELS like we need them.

Take my making space project. I’ve been meaning to buy drawers for under our bed for ages and I finally did, spending $120 at IKEA to buy four big drawers for under our queen. Now it’s easy to argue that those drawers were a legitimate purchase, seeing as I always intended to buy them (they weren’t an impulse purchase) and they will greatly help us organize/maintain organization in our house but the reality is we don’t really have that money right now (okay, we absolutely do not have that money right now) and really we probably should have filled a bunch of trash bags with clothes, shoved them under the bed and called it a day.

So this is where I have a hard time, not buying the things that feel like important purchases, the things I wouldn’t think twice about before. Sure it’s been hard not to buy a few things for the baby but I KNOW that I don’t really need them–they would just be nice to have–so I can say no to them, even though it’s hard. It’s the other things that I feel like we need that are harder to say “no” to. That is what I don’t know how not to get.

Groceries and food are another thing we really have to change our habits on. Right now we buy pretty much whatever we want at the grocery store. I don’t really buy snacky foods or desserts but Mi.Vida sometimes does and there are other things we buy that we don’t really need, like parmesan cheese or certain kinds of cereals. I have an idea of what we should be spending on our groceries and I know how much less that is than what we generally spend but I’m not quite sure how I make that change. Do I just abstain from anything “frivolous” the next time and see if I hit my goal or do I painstakingly add up the amounts of everything as I’m putting them in my cart to make sure I’ll stay under my allowance. I know once I have an idea of what I can get I won’t need to do add everything up before check-out, but is tallying it all up the first few times the only answer?

I honestly don’t know. If anyone has any tips on how to start living within a much stricter budget I’d really appreciate hearing them. My plan right now is to take out $200 in cash every two weeks to live on that. Everything I spend money on (minus gas and groceries) will be paid for in cash. If I do need to use my card (like on Amazon) I will pay myself with the cash, putting it away for the next week. I can’t really afford to spend $100 a week on “everything else” but I hope to start with that and then next month cut it down to $75 a week and then finally to $50 a week. I worry if I start with $50 I will be doomed to fail and I will abandon the whole thing so I’m giving myself a little leeway in the first month.

So yeah, I’m really struggling with this new budget. I know this has always been one of my biggest weaknesses and I REALLY want to finally learn how to do this. The reality is, I absolutely need to. The last time we were this short on funds we had A LOT of savings to fall back on (and we blew through a significant amount of it). Now we don’t have those rainy day funds, in fact by the end of my maternity leave we’re going to have VERY LITTLE saved at all. If either of us lose our jobs we’ll almost immediately be in danger of losing our house. So yeah, things are not looking good and we need to step up and do a LOT of work to make our new lives financially feasible. I just really, really REALLY hope we can manage it.

Basically, I refuse to be the weak link and the cause of our financial demise. I will learn how to do this. And if anyone has any tips on how to save money on the essentials, PLEASE SHARE THEM! I’m really clueless on all of this and I could use all the help I can get.

Have you ever had to drastically change the way you spent money? What do you do to stay inside your budget?

23 responses

  1. I am in the same boat – HOWEVER, it is opposite. I am FRUGAL and my husband likes to spend money. With baby #2 coming we DESPERATELY need to maintain our budget. Let’s hope I can drill it into him in the next 6 months!

  2. I like your idea of starting with $100 a week and then tightening of up over time. You’re right that you’re doomed if you start with a smaller amount. I would be doomed anyway.

    When I bought my first house (alone), finances weren’t lining up like I thought they would. I had to tighten things up quickly and drastically. My new house got nothing but temporary paper shades and even those seemed expensive. Things were not good or easy, but that was when I created my very first REAL budget and I got used to it, and now do great with a budget.

    My budget is super manual and in excel. I use the same template each year. I have a “budgeted” column on the left, and an “actual” column on the right. I setup the budget before Jan. 1 each year and then never modify it. NEVER. I then track every single actual expense and see how I’m doing each month. It takes time, but then I use that years actuals to set the next years budget. I analyze where I failed, where I succeeded, and modify the budget REALISTICALLY based on what we actually did.

    I don’t think a budget works unless you include EVERYTHING and not just your own spending. My budget is for the entire family. You need to see where every penny is going to be able to logically decide where they should be going.

    I love doing this stuff!

    • This is great advice. “I don’t think a budget works unless you include EVERYTHING…” is where I’ve failed. I do try to budget for the family, but I don’t track the things my husband spends on that are his alone and I also leave out some of my stuff too (i.e. I bought a lot of coffee out this week because I am exhausted…its only $1.40 a cup, but it adds up if I do that X times a month/year, and then I wonder where that $50 went)

  3. Courtney, wow! I had no idea people did that for their personal budgets! That sounds like a lot of work. But very responsible of you.

    I can’t even think of $100 of stuff I could buy in a week that wasn’t gas or groceries. Clothes? We need lots of those.

    Anyway, coupons. Comparison shop at grocery stores – we have an Asian market near us that’s cheaper, and a cheap produce store. Buy stuff on sale, buy produce in the reduced section (if you have one) or day-old bread. Or buy bulk items. I signed up for something online at CVS that’s been sending me lots of CVS ExtraBucks (this was accidental, I don’t remember what I did). I wouldn’t buy less food, because you’ll probably just eat something else.

    Also compare gas prices, of course. Our local grocery store has a gas station and we get discounts on gas for buying groceries.

    I’m bad st staying within a budget, too, but good at being generally frugal.

  4. I’m horrible with budgets too – so you’re not alone. I love the idea of cash on hand. It’s a lot better, gets you thinking more about what you buy.

    So, I can hear the voice of my husband, who got this saying from our financial advisor…”want vs. need” That’s where we are currently. Yes, I would love to have steak…and organic fruit/veggies…but the fact of it, for us, it’s not a health issue, we don’t need it…so we stick to the regular stuff. Just by doing that, we save almost $50 on our grocery bill. Then add in the regular stuff that you’d typically buy organic…and go normal. Except milk…I’m not willing to budge.

    Also buying in bulk does work for most items. 10 gallon olive oil…maybe not. Big bag of Almonds…yes.

    You’re headed in the right direction!!

  5. I basically do as Courtney does too. Or at least a version of that. Mine has been in excel as well for the past 6 years, but I also have this new program on my Mac that makes pretty cool graphs which I find fun. Such a geek!

    Anyway, aside from tracking what you want to do versus what you are doing like Courtney and I both do, my advice to you is: consolidate your accounts. From what I can tell having two separate accounts like that is basically three times the work. You have to track two separate sets of budgets, expenses and paychecks, and then the interaction between the two. Consolidation means all of that is just one set of accounts to track, expenses, etc. Good luck!

  6. Two resources for you.

    1. Quicken. You know how tracking calories makes you more aware of what you put in your mouth? Well, like Courtney and Kelly say, tracking $$ makes you think twice about your $$. You track all your income and expenses in Quicken, and it will also help you make/track a budget — BY CATEGORY. So you can see WHERE you’re overspending. You set your budget according to your priorities, spending more on the things you value — and that’s all right. You can periodically see how you’re doing, like the equivalent of a weigh-in. You can track separate accounts via Quicken.

    2. The book Your Money Or Your Life. (http://www.amazon.com/Your-Money-Life-Transforming-Relationship/dp/0143115766). It changed the way I think of $$. It’s really a store of energy. I expend energy in ways that result in money coming in, and then I can spend that stored energy on what’s important to me (or not important, if I’m not mindful).

    With me out of work, the answer to your question is yes. We have had a sudden change in the availability of $$ to spend.

  7. Oh I feel ya! We just had baby #2 in May and I had to tighten our finances to make everything balance (baby 2 is 20 months). I’m not gonna lie, it’s not been easy since #2’s arrival, but I have some reasons that made things harder for us (don’t we all??!).

    First, we put some significant expenditures on credit card before baby was born (necessary car repairs and a fence for our yard to keep toddler in). I don’t like to carry cc debt, but I didn’t want to use savings–that needed to be available for my maternity leave (I took the full 12 weeks but only 8 were partially paid for). Then we bought a mini-van and took on a car payment (our other paid off car would not fit 2 car seats). And last, I have medical bills (unexpected c-section for baby 2). These all eat into each month’s overage.

    I manage our family finances with a budget in Excel set up for every pay period that details what every penny is earmarked for that pay period. Then I maintain 2 checking accounts: 1 that does nothing but house all the money earmarked for paying bills so does not get touched and the second which contains only cash available for household spending (groceries, gas plus any “extra” money that can be used for eating out, clothes, etc.).

    Once the money dwindles or disappears in account 2, that’s it. I’m out of cash til next paycheck. That second account is what really keeps our spending in check, so that would be my advice–you could set up a mat leave/part-time work budget. (Like you, we buy whatever we want at the grocery store, so we’ve really been working on that lately.)

    I do, however, budget money for savings and that goes into a savings account. We put a deep dent into savings with my mat leave (but worth EVERY penny to have 12 weeks off!) and now I have to divert budgeted savings to pay the c-section bill each month, so savings won’t be getting built back up. I’m counting on next year’s tax return to get us back into black.

    But honestly, I think most households live just a few paychecks away from losing a house. All it takes is losing a job or a massive medical bill (even if you have insurance!) to eat up whatever cushion one might be lucky to have and there goes the house with it. (I should point out we live off one income. My husband is the stay at home parent by choice–any income he would make from working would be eaten up by child care costs, so we found it financially better for us for him to not work.)

    You can do it!

  8. The first thing we did was set a budget, and I tracked it, but we never made adjustments to it. Now, we have both Quicken and an elaborate excel spreadsheet to track all income and all expenses. I update the excel spreadsheet a few times a week to make sure we’re staying on track. Doing this has made me more aware of where we are financially so that I know whether or not we have room in the budget to purchase a new camera.

    As for dealing with the need/want issue, that’s really hard. Gus needs pull-ups. We need toilet paper and soap and toothpaste. I don’t need a new pair of pants or a new shirt or that book that I can get from the library. To stay within our budget for groceries, we really limit how often we eat out, we do meal planning for a week and use that to make our grocery list. We price compare at the grocery store (I do pull out a calculator to compare unit prices), buy non-name brand things when we can (if the quality is the same). There was a time when Jon suddenly lost his job. We went on an immediate spending freeze. We didn’t stock up on things at the grocery store. We would question each and every purchase to determine if it was a NEED. What helped with this was knowing that he would eventually find another job and the super tight spending freeze was only temporary. As for spending freezes that may go on longer, it’s just questioning every purchase (if I buy this today, I won’t be able to buy that new shirt I need until next month).

  9. You might want to use Mint.com. You don’t have to consolidate accounts, and it tracks every bank account and credit card you both have. And it’s free. It does all the fun graphs, tracks by purchase category and is quite informative. But if you do that, I would use your ATM card and not cash each week, because it will detail out every purchase you make, which helps track spending.

  10. I’m the same way with budgets and totally got myself into a hole when I was single and just out of school. When we bought our house and were house-poor for a few years, we did the weekly cash thing. It helped a lot. Good luck!

  11. I’ve heard great things about Mint—it automatically links your card, too, so you can see what you’re spending on groceries, gas, etc… I don’t budget but I really should. I just get “super frugal” when I’m trying to save and don’t buy anything for a while. And then I feel deprived and buy a bunch of stuff. And the cycle continues. I have a hard time figuring out how to save on groceries, too. My boys eat a TON (almost literally) of fruit. Fruit is damn expensive. It’d be so much cheaper to feed them twinkies. But I can’t rationalize cutting back on healthy foods (we only buy organic for certain things and I mostly bought non-organic fruit this summer) to save money. All this to say, I feel ya, and assume others have much better practical solutions than I do.

  12. We started with two changes – first we pick a monthly allowance for each of us (right now it’s back up to $15 with $10 earmarked for books, the other $5 for snacks/treats/whatever but I bet it will go back to $5 a month each shortly here) and second we took what we spend and made a post-budget to see where we were spending. Example: that $5 snack 3 times a week adds up fast, so we see that it’s a leak in the budget and we plug it by either finding a cheaper substitute or just skipping whatever it is. We try to buy in bulk and on sale (meat especially on sale and then freeze it for later use) for groceries and actually use everything we buy. After we did 2 weeks or maybe as much as a month of tracking expenses, we made a budget in something like Quicken and then at the end of each month we’d take our expenses (all receipts kept from cash purchases and card statements for the debit cards) and match it up to the budget so we could look again for places we could cut. It’s hard but doable. I think your first step of dealing in cash is a good idea because it limits your spending somehow at least.

  13. Your Money or your life…. get at Library and at least think about what is saying.
    Mint really helps you SEE where money is going .
    Both were mentioned above.
    Use your list skills to understand and see want versus need ~
    List what you are thinking of getting then write down why you NEED it, what other solution you could find, what 2nd had store might have it, what other cheaper re=purposed item you already have, how much the item of your heart’s desire will cost.
    THEN WAIT AT LEAST ONE WEEK and see if you still need it. (Obviously some things cannot wait a week~ but it if falls in this category write down WHY it cannot wait a week.
    Meal Planning works. And other places for food shopping than perhaps you currently use~ the Big Asian market for somethings, Food Mart type store if you usually shop at Safeway/Jewel. Or even the ‘Used Food Store’ where they sell dented cans.
    Check your local food bank and find out what their maximum income allowance is for their population and ask to see what is in a normal food box.
    Buy NO pre-prepared foods. Convert to Oatmeal from cold cereals, Compare prices and quantities of canned beans versus soak and cook yourself beans. Can you find dry milk and add water to it (CHILL THOROUGHLY AND pour into the container your family is used to seeing milk come from and do not go to non-fat dry if you are not already drinking non-fat!)
    Reduce your consumption of meats/fish /chicken to condiment quantities…. consider dropping the quantity of meat you use in a serving by one oz per person per meal until you hit your targeted goal….. I think that is 4 oz for an adult but will not swear to it.
    Figure out where the maximum of your food dollars are being spent.
    Eat down everything in your cabinet and refrigerator and do not eat out or order out. People vary on this… some have extensive cupboards of food, others very little so this varies. Use your chicken bones to make stock and soup.
    NO coffee or meals out… no prepared/packaged snacks. Scratch cookies are cheaper than grocery store ones, and homemade does taste better.
    Remember Little House on the Prairie and FEEL rich.
    Everyone wants to be indulgent of their children and self…. but back to Your Money and Your Life and think about if you are willing to sell your life and your beloveds in order to have the whatever. IS it really that important?
    Check out Uppercase Woman’s Blog as she is facing the same issues.

  14. Ok, so I put off for SO LONG trying the cash method because I was all in denial, like, ‘there’s no way I’d spend that much cash per week’. But of course I spend WAAAY more when I just blindly pull out my card for everything. So it’s been 2 weeks now of cash and I totally blew it this week but have forced myself not to buy anything to the point of biking far distances so as not to pay or parking. So I really think the cash thing is the way to go, and yes you gotta write that shit down, when you spend $.
    2 good resources: 52 bites (ebook) by Tsh somebody or other – google it – has good ideas about getting an ING account which allows you to actually have 6 separate accounts and you can transfer $ automatically into christmas, emergency, health, whatever. Also Dave Ramsey’s total $ makeover – a bit intense for the pressures in your life right now but might be good long term reading. I am trying and struggling with this too and the biggest step for me thus far was really admitting I had a problem and facing it.

  15. I did the envelope thing. As soon as my check went through I removed it all and put it into envelopes. PG&E, phone, rent, etc. I got money orders for all bills which was obnoxious, but at that moment was what I needed. A less drastic measure might be leave all money for known bills in the account and get cash for the rest, groceries, gas, whatever comes up. Once you run out that’s it, no further spending allowed. *shrug* It really helped me at the time.

  16. We have a six-year-old son, and my husband is a stay-at-home dad, so we live on only my income. I budget within an inch of my life, and to save money at the grocery store, I go to the store’s website each week and shop according to what’s on sale. I can download coupons, get discounts on gas from the gas station (it’s a Kroger), and get info about other special offers that we might be able to use. Based on the sales, I write out (this step is important for me because I have to really think about it–no winging it, or I always end up regretting it) a meal plan for the week, and I use things from previous meals in upcoming ones (for instance, if we have grilled chicken, rice, carrots, and peas one night, the next night I’ll use the leftovers to make fried rice, adding whatever else we like). I waste very little; we either eat it the first go-round, turn it into something else, or freeze it–even if there’s not much left, I can use it later (vegetables in soup, for example), or when I’m home for lunch I’ll have it. My son takes his lunch to school every day, and I usually pack one for me too (but not always–I build in $25/month for me to go out for lunch with friends or do whatever). If things are really tight, we do what we call going on austerity–we eat from the freezer/cabinets/etc and keep the buying to a minimum. For our family, including our Lab and our cat, I can feed us well (steak etc) for $90-$100/week.

  17. We’re in the midst of having to make some of these adjustments right now. It’s tough! Especially when our lives are so busy and there’s things like buying convenience foods or paying someone to mow our lawn that are more expensive, but save time.
    In terms of the grocery shopping, it seems like it would be possible to do a little “trial-and-error”–this week try cutting out the things that you think are frivolous and see what the total comes to. Or could you look at some old receipts and see how much you would save by cutting out certain things? Then you could do the math while at home on the couch instead of having to bring your calculator to the grocery store.
    Good luck figuring this out. I’m looking into lots of the suggestions above too.

  18. when we went down to essentially one income — my few hrs/month don’t add up to much, though every bit counts — we had to make some drastic changes. mostly we don’t go out or travel, with few exceptions. but if we could just curb our grocery bills we’d save a small fortune each month. trying to grow more so we buy less but even with shopping at TJs and costco, we still spend WAY too much on (mostly healthy and lots of organic) food. good advice above — except for powdered milk, because yuck.

  19. Have you ever heard of Gail Vaz-Oxlade? She has a couple of money management shows on TV here in Canada (maybe they’ve been picked up in the States too?), including “Till Debt Do Us Part,” “Princess” and “Money Morons.” She is very big on paying cash for everything (she usually has the couple cut up their credit cards in front of her) — allots “spending jars” with cash in each of them for the different categories of spending, & once the cash runs out, you’re done for the month. She also asks the couples on the show to track their spending.

    Dh & I spent more than we made for quite a few years, & racked up some credit card debt that we couldn’t seem to shake for a long time. :p Tracking our expenses was helpful — it didn’t always stop me from spending the money 😉 but at least I could see where it was going. I actually put all but one of our credit cards into our safety deposit box at the bank… that way, I had to really make an effort to go get them if I/we wanted to use them. 😉

    Unlike some of our friends & cousins, we didn’t go on any fancy vacations or buy a lot of gadgets & toys (still don’t). We seldom order in & eat out just once a week, on Saturday nights.

    Whenever we got some extra money, like income tax refunds or bonuses at work, we would keep maybe $100 to treat ourselves & spend on something frivolous like a bookstore spree or a facial at the spa — and then apply the rest towards our mortgage. When we renegotiated our mortgage, even if the interest rates had dropped, we asked to keep the payments the same. As a results, we managed to pay off a 25-year mortgage in 11 years… and once we did that, we started putting the money we had been putting toward the mortgage into a savings account.

    It’s not easy, but you have some good advice here!

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