Living on a budget

A little background about me.  I grew up poor.  My parents divorced over fights about money and I was raised by a single mom who worked 2 jobs to support us. Money was tight, we lived paycheck to paycheck, there was never enough and at times it became very stressful, even to a child.  When Josh and I married, we decided one thing we didn’t want to fight about was money. However, this often meant we didn’t talk about money either.  We both had good jobs and we spent pretty freely.  Well as things happen, life changed.  We had our first baby and I decided to start working part time.  WOW, is that a shock to the system.  Part of the problem was I continued shopping and spending like I had a full time income. I honestly didn’t know how to budget.   This went on until baby #2 was born and we decided it was time for a change.  We began to realize our jobs might not always be there and we didn’t want to be held back by our debt, a house, 2 cars, student loans, credit cards, etc.  We decided it was time to set a budget and stick to it.  There are many budgeting worksheets and websites out there. We chose to follow Dave Ramsey’s Total Money Makeover. It was shocking, hard and life changing.  When I first sat down and starting filling out the worksheets I was overwhelmed. We realized we were spending freely, but never had money left at the end of the month for savings, extra bills, etc.  Then we saw how much we spent at Target in a week or eating out and it was enough to send me into shock.  So here is how we went about budgeting.

  1. Create a budget
    Choose a budget to follow.  We used Dave Ramsey, but I am sure there are other ones out there. We also used to track our spending before starting. This is where I saw Target and fast food popping up way to much.
  2. Allocate funds
    We were very realistic with our budget and allowed ourselves fun money, “extra”, etc.  We knew if we didn’t we would be miserable.  We separated out all of the cash for groceries, gas, extra, date night, personal, etc. and put them in labeled envelopes.  When I go to the grocery store, I take the Grocery envelope.  When the money is gone, it is gone. It doesn’t get to be borrowed from other areas.  This helped keep us on track, creating menus, buying necessities instead of wants.  Now in the beginning this did NOT always work, and we would borrow from other areas. But as time has gone on, we have adjusted some areas and learned how to cut back on others. Below is a picture of our file organization (bills to be paid, bills paid, tax forms) and our envelope system.
  3. Build an emergency fund
    This is so important to have. Before the budget we would dip into our savings a lot for unnecessary spending.  Then when things would come up like a home repair, car maintenance, or other unexpected expense we would put it on the credit card.  And you know where that gets you! Build this up before you start paying down extra on bills.
  4. Start paying down bills
    List bills by highest interest rate and start putting any extra money towards  those bills once emergency fund is funded.  Put any extra money along the way towards paying down these bills.
  5. Snowball
    This is a Dave Ramsey term, but it means once you pay off a bill, add that payment amount to the next bill. (ie.  You pay $100 a month towards Credit Card, once Credit Card is paid off, take that $100 and add it to the $150 you already pay towards student loans. Now you are making a $250 a month payment and paying down your debt much quicker).


These are just some of the starting points to creating a budget, but what is amazing is when you start seeing results. I remember when we finally got going and I started realizing we had so much money left at the end of the month.  It was amazing.  Thanks to our budget in less than 6 months we have paid off our credit card and a car.  This is not because we make a lot of money or have a lot of savings, it is because we have been dedicated to the process.  Don’t get me wrong, we have slipped and I have overspent at times, however, in those moments we revisit our goals and get back on the wagon.

Do you have a family budget that you stick to?  Do you use a program, an excel spreadsheet, or just watch what you spend?

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9 Responses to Living on a budget

  1. Laura February 13, 2012 at 7:03 pm #

    We are not sticking to a specific budget, just the one that says-if we can’t pay for it now-we can’t afford it now. The only debt we have is our mortgage but I know that if we sat down and allocated our money like you listed above-we would probably be a lot more careful of what we spent our money on-and probably have some extra! There must be something about Target-I can never leave there without a full cart and a few odds and ends of things I didn’t have on the “to buy list” ha!

    • Heather Stocking February 16, 2012 at 3:14 pm #

      I can’t wait until the only debt we have is our mortgage!! I love your philosophy on if you can’t pay for it, don’t buy it!! Such a great lesson!

  2. Ellie S. February 13, 2012 at 8:32 pm #

    We used Dave Ramsey’s TMM to become
    debt free. I can’t imagine going back into debt for something other than a house after how hard we worked to get out of debt. I have a little weekly spending money/blow money & try hard to stick to that amount. We’ve tried budgeting but now keep an eye on what we spend. We too use Have you ever heard of PerkStreet bank? Dave recommends them. Use your debit card as a credit card & get 2% back in rewards (I’m talking MasterCard gift card-real rewards!!). Anyway, we use PS & love it. Thanks for sharing & best wishes in getting out of debt! You can do it & it’s so worth the sacrifice!!!

    • Heather Stocking February 16, 2012 at 3:17 pm #

      Thanks for sharing. I will definitely look into PerkStreet Bank! I would love to hear how you did it. We are still working towards being debt free. But we are slowly and surely making strides!! It feels so good!!

  3. Emily February 15, 2012 at 11:56 pm #

    Great ideas! I love the picture of your “system.” I love seeing how other people stay organized. While we don’t really officially budget, I (the saver) really track & watch how/what/where we spend. If we DID have a real budget, I can’t imagine how much we’d probably save! Thanks for sharing!

    • Heather Stocking February 16, 2012 at 3:16 pm #

      Thanks, this system has helped me visually see where the money is. I am a spender, so I need all the help I can get 🙂

  4. Judy June 20, 2014 at 6:18 pm #

    Thanks for this article. I have reached the point where I realize my family desperately needs a budget. How did you decide which envelopes to create and put money into? What envelopes do yoyou have in the picture above?

  5. stacie September 2, 2014 at 6:47 pm #

    can you tell me, did you use TMM book to read or TMM workbook? just want to get the one that is best…thanks!

  6. Carrie Miller April 4, 2016 at 6:09 pm #

    Can I ask where you got your “frustrated budgeter” image? I’ve been looking for something similar. 🙂

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