Many years ago The Husband and I took Dave Ramsey's Financial Peace University, FPU, through our church. It was life changing, although for us it didn't stick right away. Remember, we got out of debt just to get back into debt. We are doing much better now: still in debt, but working a plan to get out of it; and NOT adding to our debt each month. I'm not always able to attack our debt with as much vigor as I'd like, because we aren't gazelles, but our debt load decreases (at least a little) every month.
Now that we are back on the payoff-debt-wagon, we have gone back to Dave Ramsey's envelope system; in fact, I actually use the Dave Ramsey FPU wallet. (PS I love it! It has 6 envelopes, a coin pouch, and several extra tracking sheets for when the envelopes run out of room.) It's actually this one! And I love it! It works great for my purposes and is small and light enough to fit in my small purse, but plenty big enough to hold everything I need. (PPS This is not an affiliate link. I just really like the wallet!)
As a public school teacher, I get paid once a month on the last working day of the month. The Husband gets paid every other Friday. My paycheck pays our mortgage, usually our cable bill (yes, I'm into personal finance and we still have cable,) my daughter's dance tuition, and anything left over usually goes towards the credit card that we pay off monthly.
The Husband's paychecks cover everything else: internet service, utilities, cell phones, (at least) the minimum due on our credit card that still has a balance, and it funds all of our budget categories.
Our budget categories are: food/groceries, gas, car repair, essentials/miscellaneous, clothes, hair care, school, and kid's activities. For many people, that's too many, but for us it works. Some of these are sinking funds where the money continues to add up and others start over every pay period. (I'll write a later post about what we do with that money. Also, you might have noticed, there is nothing there about home repair, home owner's insurance, or car insurance, we handle these a little differently too. Again, another post for another time.)
We only have a couple of budget categories that start over every pay period, those are food and gas. We budget $250 for food every two weeks and $300 for gas for the same amount of time. Sometimes we use it all, sometimes we go way over and charge the difference, and sometimes we have "left over money". The rest of our budget categories are sinking funds. Their balances continue to grow. None of these envelopes ever get too full because, in all honesty, I don't fund all of the categories with enough money they need over the course of the year, but usually it's enough to get us through.
Many people think we have "too many" budget categories, but they work for us. Each category we have, except maybe with the exception of food and gas, was created because when I looked at what was really busting our budget every month I realized it was something we were always having to pay for. The most recently added categories are school and kids activities. One way or another we were always having to pay money towards those things. Now that we have them in our budget, we are more prepared each month to pay for the things we need.
As I was writing this post, it became more and more long winded so I decided to break it up into two posts. This being part 1 where I explain a little bit about how we budget. In my next post, I will explain exactly what we pay for out of each envelope.
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