Thursday, January 17, 2013

Family Budget: Getting Started

There are really two issues I'm looking to overcome in terms of the family budget: one short-term, the other long. The short issue has been finding time to sit down and actually write everything out. We got away from our old budget with the move, and between getting settled in, not knowing exactly what our utilities would be, and then various end-of-year gift purchases, we were looking forward to the new year as the time at which things would be calm enough to start planning again.

So, Issue #1 is pretty well set.

However, there's still that second bugger to think about: how are we going to keep to the budget?

This is where we get out of the theoretical realm of planning and into the real world of... well, the real world. I can lay out all kinds of plans and ideas for what's going to happen, but Unexpected Things do occur. In the last month, we had a just-under-$1000 repair bill on the Fit (not covered by the extended warranty; thank you very much, ToyotaCare) and are now trying to figure out what to do about the possibility of mold in the carpet in the basement, which we discovered after getting home from Christmas (the humidifier add-on to the furnace was improperly configured, and the last week of the year was the first time it was cold and dry enough to turn on).

But really, as much as these expenses come up suddenly, that's the reason why we have insurance (and an emergency fund of short-term savings). What I'm more concerned about is my own ability to rationalize small deviations from the budget under any number of guises--Well, we've been really good with money this week/Well, this is just a one-time thing/Well, we got that check back from the deposit to the gas company, so we can spend a little extra now.

Yeah, that's not right. Let's unpack these one at a time:

  • "Well, we've been really good with money this week" - No, you haven't. You forgot that you said that three days ago when you wanted to buy some extra steaks instead of just getting the chuck roast. 
  • "Well, this is just a one-time thing" - No, it isn't. Again, you're making this purchase in a very temporal kind of way, and you're not remembering that you've already used up your "one time thing" for the month already. 
  • "We have a little extra money this month, so we can spend a little extra now" - Criminy, are you even listening to me? You. Already. Spent. That. Money. It. Is. Gone. 
I may be overstating for effect, but only a bit. In fact, this kind of thinking was the problem that really drove me to create a budget in the first place. However, I was fortunate enough that once we had the budget in place, I was able to remember it well enough to keep my spending in line... most of the time, at least. 

Which is why I'm intrigued by the documents here at the link Sharon sent me a few days ago: Dave Ramsey's Guide to Budgeting. Though I haven't followed all of his advice to the letter, I have to say that Ramsey has been an inspiration to me, and the more I think about it, the more I think that a lot of the difficulties we've had have been when we deviated from his advice. 

I've been thinking about one bit in particular--the value of paying for things in cash (which is hard to take out of your pocket and hand to someone else), rather than with a credit/check card (which, if we're honest, actually feels good to hand to someone--it's like a little bit of magic that you use to buy something for yourself). He recommends literally putting cash in envelopes for each budgetary item (e.g., gas, groceries, etc). Of course, what I find the most interesting is the discipline angle he brings to it:
You don’t have to save up any money to start using the envelope system. Here’s how you do it. Let’s say you have budgeted $500 a month for groceries. When you receive your paycheck, write yourself a check for $250, cash it, and put the cash in an envelope. On that envelope, write “groceries.” No money—and we mean NO MONEY—comes out of that envelope except to pay for food at the store. If you go food shopping and leave the envelope at home by mistake, turn the car around and go back to the house to get it. 
Make sure to take enough money to cover your groceries for that trip. If you take $150 and you tally up a bill for $160, take some things out of the cart. Bring any change back and put it in the envelope. When you get paid again, write another $250 check. That’s your $500 for the month for food. If you want to go to the store but don’t have enough money, then raid the fridge for leftovers. 
I like discipline. Discipline is when your mind is able to overcome your brain and get you to do the right thing. The problem is that so much of discipline comes from outside sources. Of course, when it comes to you and your money, you have to be your own source. 

I've made a lot of beef stew. Usually I go with Anthony Bourdain's recipe for beouf bourguignon (holy crap, I just typed that out without having to check how to spell it first--I really do make this recipe a lot), though I've made a few improvements to it (yeah, I just said I improved one of Anthony Bourdain's recipes--and he can come talk to me if he has a problem with that). It's a great dish to make for a lot of reasons, and especially in the wintertime. But of all the times that I've made beef stew, you know which one individual time I really remember? 

Yep--the one I made from scratch during the big DC snowstorm a few years back. 

I remember it because of the weather, the fact that we were shut off from much of the rest of the world and I had to make something with the scraps we had left around the apartment. We had a few onions, the remaining half of a large container of mushrooms (from the previous day's stew), and a long narrow piece of chuck roast still marinating in soy sauce and herbs from the day before (yes, I really, really do remember exactly what it looked like under plastic wrap in the fridge). The reason I remember it so well is that every single piece of the experience was so completely different from how I had cooked prior to that. In fact, it's fairly safe to say that that was when my cooking really started to get serious (though there have definitely been other big moments as well). 

What does this have to do with the budget? Only this: shocks to the system can create big changes in behavior, either individuals or groups. Big, epiphany-style moments can leave major imprints on our psyches that change the way we do things. So think about it: what would you do it you if you got to the store and realized that you didn't have money in your budget to cover the groceries?

No, really, think about it for a bit. I've got some of my own thoughts, but we'll save them for tomorrow. And, as an added bonus: the first real task of the year!

1 comment:

Brooke Claudio said...

I agree that listing and monitoring your day-to-day expenses will help you set a budget for each category like food, transportation and other necessities. If you can get discounts or free coupons, avail of them. If there are sales, grab the opportunity and make the most out of them because it really will save you money. But do remember not to spend on things that you don’t need just because it’s on sale. Smart spending is the key to smart budgeting and saving.

Brooke Claudio