The Spending Plan: Budgeting for Non-Budgeters

I also have difficulty with the rigidity of a budget, I’m not one to be comfortable planning every aspect of my life so thoroughly, like you I need more flexibility.

So I do a kind of loose budget – itemizing all of my debt payments and savings contributions and then giving myself a weekly allowance for all my expenditures: food, clothes, transportation, entertainment, etc. That way if I spend too much on one area I know to cut back in another.

Then I itemize all of my spending in a spreadsheet. This is what I find most helpful as it helps me keep a close eye on where all the money is going, it also causes me to stop and think before spending any money, asking do I really need that?

I have began using a similar method. I have had problems in the past keeping my Quicken/Money up to date so have resorted to just an excel spreadsheet for tracking expenses and spending forcasts. I have seperate sheets set up for tracking categories. I have a sheet that lists our current debts, associated interest rates, monthly accrued interest and an amortization schedule.

There is also a sheet that allocates our spending for the next 3 months, basically utilizing all of our guaranteed income, based on a 4 week month. This results in about 10% wiggle room or buffer if we dont stick to our plan.

I have another sheet that tracks our checking account, We have been using this account to pay for everything except the $100 discretionary income we take out in cash each month. I have found it easier to use this type of register. I add purchases and bills to it every other day, and forcast the upcoming expenses also. This sheet has all of our projected expenses incorporated and sorted by date also. If we make a purchase and I dont remember the exact amount I put in the estimate, and when it clears our online register I make the correction and change the color of the text to mark it as ‘reconciled’. If I see that we have a large buffer in our checking account I will send out an additional payment to a debt.

I am also getting our Quicken synced up but have recently started from scratch and it is taking some time.

My wife and I are hoping to be out of debt in 5-7 years but we have a battle ahead of us. We currently owe ~$95,000 in debt. This does not include our $119,000 mortgage balance, which we intend to pay off aggressively too.

Our income is not exactly inline with this amount of debt. Only a portion of which is credit card debt ($6k). The majority of the debt is the result of an upside down vehicle loan ($22k), a foreclosed vehicle deficit ($15k), IRS obligation ($10k), Student loans ($20k) and medical bills ($12k) and loans ($10k). Our income is $80,000 per year combined. I work a full time job and we both own small businesses so hopefully at some point this will increase in the next 5 years.

My point in posting this is really to encourage others to not give up. Our focus is not on the debt but on building wealth for the future.

Set a goal and achieve it and then set another goal.

Prior to marriage, neither my wife nor I were financially responsible. We both brought quite a bit of debt into the marriage and in the three years we’ve been married, we’ve been trying various ways of budgeting and reducing debt but nothing has really had a long-term effect.

This idea of a spending plan is the first one to really give me that ol’ lightbulb above the head reaction. I’m eager to give it a try.

Interesting. I use a ‘budget’ though I don’t see it as being all that different from the ‘spending plan’. I start each month with a spreadsheet with all income and spending categories listed. I put my income at the top and start allocating it to expenses until every dollar is planned. I also use Quicken to track every penny that I spend and I adjust the budget weekly (if needed) to keep everything in balance.

For me, this is really empowering. i do understand that it isn’t for everyone. I think the key is to do SOMETHING and not just spend the money in your checking account until it is gone. Whatever you call that, just doing it puts you way ahead of the game.

I am absolutely terrible at budgeting and sticking to it. The idea of a spending plan seems much more feasible and may just lead to me getting out of debt and into the black for the first time ever! At present, I tend to spend and spend once my paycheck hits my bank until I have nothing left and then I live on fresh air until next month’s pay. I download my bank statements every month and then import them into Metalogic but never take the time to actually look at the results. Also, this software requires fairly accurate initial budgeting and I just don’t seem to predict my budget anywhere near as accurately as required. I live in hope that a Spending Plan will be easier to create and stick to.

Nice writeup! It’s funny that all my life I had thought I was pretty good with money, when I’ve been a miserable slob with it in reality. I’ve finally realized that based on my career and effort, the life I’m making myself live because of my mismanagement and poor decisions is pretty sad. Fortunately, I think I’m starting to “get it” a bit more, and have begun the first steps of turning things around. One of my biggest issues is tracking expenses, and I may need to look into Quicken more, as my system obviously hasn’t been working that well. Always a day late and a dollar short.

I look at that and I think it looks fabulous, on paper. I can’t do that. We paid off both our vehicles since January, that is and extra $700 a month and we still can’t make it. We have 7 kids and the expenses change all the time, then everything we own breaks down, all in a 4 month period. Seriously, the dryer, the car, the washer, the fridge, the van, the other car, the furnace. And I still have to feed and clothe seven kids and put them in sports and pay for school supplies and field trips and school lunch.
I know, we should have had an emergency fund, but we lost all that, including retirement money due to a crappy situation at my husband’s work where he took a “temporary” pay cut with the promise of a raise, which they didn’t give him. So we sucked it up and went through everything for 2 years waiting.
All that to say, how can I make a plan like that and deal with life as it hits us?

Start your budget at 1,000 and pretend that is your zero so as your approaching 1,000 slow down your spending.

About #69, large non-monthly expenses…

I’ve found that planning for large fixed expenses that only occur a couple of times a year (i.e. fuel oil, car insurance, etc.) is the most difficult part of budgeting. How do you plan for those big expenses that occur yearly? Do you handle these similar to saving up for a car?

The method I use, and which is simple enough, is to open a separate savings account. Figure out how much you spend on these expenses *per year* (my advice is to also make a list) – last year’s bills are great for this! – then split that sum up per month, or week, or whatever is most convinient for you. Basically, every time you get paid, you set a fixed fraction of the total yearly sum aside in this separate account. For example, my non-monthly expenses add up to about $3000 US per year, so I set aside $250 per month for the sole purpose of covering those bills.

Then, when you get a bill that is on that list you made, you take money out of that savings account to cover it. To begin with you will almost certainly have to add money from other sources, but after something like half a year to a year, this account will be self-sustaining and you won’t have to worry about even large bills coming up, because you know that you have the money set aside for them.

The hardest part is to not touch this money for other purposes, so make sure to put it in an account that is out of sight.

Some complain that they don’t have enough and that they can’t make it on the income they have. Living on $43 a month has not been an easy thing to do, but I have lived this way for the last ten years.

I made the decision live on this drasitcally reduced income knowing full well the consequences. Many people have asked me how I did it? I may save that for a book, but the short answer is not something most Americans like to hear–you don’t do anything, you don’t have anything (except the bare basics). There was no money for a phone, so I went without a phone; no car, no travel, no cable, no internet. In short there was no amendities of any kind. Why did this kind of life appeal to me? That too has a long answer, but I wanted to write. I love writing and I am a pretty good artist too. I did it because I wanted to live the life I dreamed of having–of being a writer and illustrator of my own books. My dream came true. Those six books and drawings and illustrations to accompany them did materialize and I am very proud of them. The one thing I needed though to turn them into something profitable was money. I needed money to send the manuscripts, contact an agent, do all the things that one does to get published. I have yet to find a publisher or an agent, but I am confident that one day my books will reach the market.

It was only two weeks (early July) ago I realized that my job as a writer was done. Well, at least as far as the goals I had originally set for meself. I had not been in the workforce for a long while, but I obtained a job as a school bus driver.

I am committed to solving the problem of getting an agent or publisher. If I have to obtain two or three jobs, then so be it. My task now is to become published. Maybe one day I can go back to being the full-time writer that I was born to be, but for now, I want to pursue publication.

Before I go, I wanted to take a second and thank all the people who have been there for me. In many ways my goals would not have been accomplished without their emotional support. The decisions I have made has been hard on some of them, and for that I ask for your forgiveness. You have understood what might have seemed crazy at the time. All of you have my deepest appreciation and heart felt thanks. Maybe one day I can make it all up to you by flying us all to Hawaii for a week of fun. I imagine that would be a great time. I pray for a good publisher.

Thanks for letting me share in this post. I wish you all well in whatever endeavors you take up, and wish you prosperity.

Take care.

PLEASE could someone please tell me how to figure out Quicken! I’ve done the online tutorial and still am clueless. We’ve used it for years to keep track of cleared checks – where they went — and present a printout to our accountant at year’s end, and that works fine. But I am not able to use any other features, really. No one else here has complained about it, so I guess my Tech IQ is just very low. The balances of accts. are never correct, everything is all wacko and wrong. I am tempted to just buy 2009 and completely start over, like a fresh program…should I do that? Probably, it would just export the old info into the new, I suppose, and I’d still be all off. I have done an online search for Quicken “tutors” or trouble-shooters; I wish there were someone trustworthy that I could hire to come over and just re-do the whole thing; fix it all, set up my accts. and budgets and make it all look right. It seems very complicated, and I’m exasperated. I think I’ll try http://www.Mint.com. But, and I know this sounds silly, I really like the colors and style and layout of Quicken. I upgraded to ’08 recently hoping it would magically resolve other problems, but of course, it didn’t. I know it’s me, not the program. I just don’t understand what to do to organize it. Still, where to get help? It’s seems too much and cumbersome and detailed to call and ask the company, and I feel dumb. I think I’d enjoy budgeting if I could just figure out how to get my info/acct. all straight on Quicken.

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