Tuesday, January 24, 2012

Because I suck at keeping to my budget

When I got pregnant I realized I literally couldn't support a child with the sorry excuse for a budget I was living with. I had messed up my financial situation a few years before by getting into too much credit card debt for me to dig myself out of making minimum wage and am still working on putting all those pieces back together. But, I am the proud mother of a 15 year old tornado who has clothes and food and 3 teddy bears and more books than we could read in a whole afternoon. 

I first kept a meticulous budget in an excel document and then when I lost my computer the only thing I didn't have backed up somewhere else was said excel document. So now I've moved on to the new spreadsheet program in Google Docs. I must admit, I am very impressed. I haven't used the spreadsheet program in over a year because it used to suck, but now it has all the BASIC functionality of Excel and has some nice user-friendly tools too. 

However, I also keep two bank accounts now and can't seem to stay on top of what is where. I still don't make much money, though I'm doing better than minimum wage, and I have been reading The Simple Dollar, which is very inspiring. However, I know I still need something more. 

Enter The Cash Envelope System I found on A Bowl Full of Lemons. The original idea came from Dave Ramsy, who I don't know anything about yet but I know the lady from ABFOL swears by him, so I am going to learn. The cash wallet is part of a much larger system that I am in no financial situation to undertake right now. However, this is very much what I am missing in my finances.

Here are Ramsey's Steps for establishing your own envelope system
  1. Budget each paycheck.
  2. Divide and conquer.
  3. Fill 'er Up.
  4. When it's gone, it's gone. 
  5. Don't be tempted.
  6. Give it time. 
What does all this mean?  

For me, who has a semi-sporadic  paycheck, it means that I need to have an established budget of what I need every month and I need to budget every paycheck. When I get my check before I spend a cent I must fill in the correct amounts and adjust the amounts in my spreadsheet. This way I can divide and conquer the money that comes out automatically and the money that will go into my envelopes. Then comes the scary part for me, fill up the envelopes with cash. This is scary to me because I just had my car broken into and my computer stole and the thought of loosing an entire pay periods worth of money is mortifying. However, I also know that I can't keep track of the balances on my debit cards (I have 2, not 134) so this is actually very important to me, a visual learner. That way, I can see how much I've spent and how much I have left and then when it's gone, it's gone. It's that easy. 

My biggest mantra as a teacher and administrator is that you must establish expectations and then follow through; rules elevate the pain of an emotional decision. Therefore, I won't need to be tempted to spend another $2 on a Diet Coke when I don't know how much is left in my account. Also, it's important to not be tempted to beg, borrow, or steal money from other envelopes: this defeats the whole point. I will admit that this will be the biggest challenge for me. 

Finally, I need to give it time to figure out how to make this work in my life. As you can tell from reading my blog (I changed the title and template again today) I am very comfortable with the idea of tweaking things until they are right. I am also making some other HUGE changes in my life right now and feel pretty good about the prospect of a more organized, peaceful and financially secure future.

But, some of this does freak me out. For example, buying gas with cash is a pain when I have Odin in the car with me all the time. But, really, this is only half true. His daycare is half way between home and my work and every work day I spend just as much time in the car alone (and able to stop for gas) as I do with him in the car. Really, I just use this as an excuse because one of the irrational things I hate most in life is pumping gas, so I tend to wait until I am on fumes to fuel up. 

But this is all about making better choices and not making any more excuses. So this is the perfect way to do that. 

I get paid next Tuesday, and this is going to be an unusually large check. So I am going to spend the next week working on the logistics and then jump off with this on the 31st. 

I'll let you know how it goes.

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