Budgeting

We are continuing to budget Dave Ramsey style and use the envelope system. It’s so hard to budget this way because you want to send every spare dollar to debt. But, realistically, if you do that, you end up repeating the vicious cycle because, even when paying off debt, you need to buy “stuff”.

Our new budgeting cycle begins tomorrow and over ½ of our normal salary is going to envelopes. $300 is going towards food, (that’s more than usual because of our family May birthday parties which I will pay for half of), $300 towards gas, $100 towards our car repair envelope, and then $100 each into our hair care, clothes, and school envelopes. In fact, due to this, our payment towards our credit card is only $90 of our normal budgeted salary. (It will actually be more because The Husband has over 10 hours of overtime from our D.C. trip that is going to be on this check. That money is saving our bacon this month!)

For the last couple or few months we have been funding all of our budget categories and we are starting to see progress. Many of our envelopes are starting to carry over each month, which is nice because one month we might not need to buy much using our “essentials” envelope and then the next month we might need toilet paper, paper towels, dish soap, dog food, and razors!

The envelopes actually got to the point where I felt like I was carrying around too much cash. My wallet was pushing holding $1500+ dollars. Last week, I reduced the amount of cash I was holding in each envelope to $100. I created additional envelopes (that stay at home) that are labeled with the same names as the envelopes in my wallet. Anything over $100 for each envelope in my wallet, I took out and put in the new envelope that stays at home. (I know this is convoluted. I hope this is making sense to readers.) I kept the running total of each envelope going so I know how much money is actually available in each category, but I don’t have nearly as much cash on me.

In all our years of trying to follow Dave Ramsey, this has never happened before. I’m hoping to keep funding envelopes so as to charge less. For each envelope, we are going to choose a maximum amount that, once we reach, we will stop funding that envelope until we dip into it again.

Our car repair envelope is doing very well. For the last several weeks, we have decided that any money left over from our gas budgets would go into car repair. Eventually we would like to build that up to $2500. Right now, it is sitting at right around $1000. We will continue to budget money into that category, but until after our road trip this summer, any extra gas money is going to be directed into savings for gas on our road trip. Then, after our road trip, extra gas money will go back into our car repair fund until it is up to $2500.

Now, our only envelope that restarts each week and we can snowball towards debt is food. Most weeks, we don’t have much money left over, but every little bit helps.

I’m constantly hashing out numbers in my head to try to figure out how much money each envelope should “stop” at. I don’t want to leave too much money in any envelope that we are wasting opportunities for debt repayment, but I also don’t want to have too little money in our envelopes for the things we need.

These are the numbers I’m leaning towards (right now) for each category.

Essentials: $300

Hair: $300

Clothes: $500 (still toying around with this number… clothes and shoes can get expensive!)

School: $300 - $400

Kid’s Activities: $500 (I waiver a lot on this category, too, because our kids’ activities can get really expensive.)

Actually, for the first time (maybe ever!) we are carrying over money in our envelopes, mostly because we are actually funding them now. In some of the envelopes we are very close to meeting our “limit”.

And here are the numbers they are currently sitting at.

Essentials: $163

Hair: $200 (but $300 tomorrow after I pull out money for this budget period)

Clothes: $0 (but $100 tomorrow after I pull out money for this budget period)

School: $100 (but $200 tomorrow after I pull out money for this budget period)

Kid’s Activities: $300

That’s where these numbers will sit until next month when we add some more money to these envelopes or we dip into them for needed purchases.