Tuesday, February 16, 2010
I thought I would share what an ordinary payday looks like for us. We have been using this same system for about 2 years so it seems like such a boring topic...but some out there may find it interesting and hey who knows....maybe even helpful
We got the term "Our Line" from the cash flow planning DVD by Dave Ramsey. There is a funny part in the video where he shares a conversation he had with a debt collector. The debt collector was doing his job of harassing him for money owed. He explained to the debt collector that he simply fell below the line....The line of their budget...the bottom line. The debt collector at first said "What, are you kidding." and Dave said...."Do I sound like I am kidding?" There was silence then the collector said quickly "Well, how do I get above the line?"
I found this amusing, but it did give us the idea of creating our line. Now this is not quite the same meaning. Dave believes in giving every dime a place to go. We are just not that detailed oriented. Perhaps if we were we would not be in debt again:) But despite racking up debt from our household renovations last year..this system truly works for us and did even while racking up our debt.
We decided on needed amounts of money for our family. I get $300 every two weeks. I am expected to purchase our groceries, household needed items, clothes, and anything else I wish out of this money. My husband gets $200 every two weeks. He takes care of misc stuff out of his....windshield wipers for the cars, items for our computers, his lunch (which is quite cheap..they have a cafeteria at his work and most of his lunches are under $2.00 total..he takes his drinks and snacks to work plus oatmeal) He also will pick up stamps or mail items we need to mail and if we are low on an object like milk he will stop and pick something like that up now and then.
Our children get strict allowances. We feel this has worked out really, really well! Most people looked shocked when they find out that ALL of our children get allowances...including our 2 year old. We feel we benefit from this more than people realize. Our 2 older boys get $20.00 every two weeks and our 7 year old gets $10 and our 2 year old gets $5.00. Now hear us out on this. We buy NOTHING for our children except birthday gifts and Christmas gifts. They also have forced savings amount. I provide minimal clothing. I may explain our allowances in a more detailed post later.
So we are taking out of the bank every payday exactly $555.00. We make sure there is it least $200.00 in our checking account. This amount is to cover our gas in our cars plus misc. things such as a copay at a Drs. office or the occasional surprise thing that pops up such tickets needed for some event at church. Or we have to pick up medicine and my money or my husband's money is nearly gone. So it is our catch it area. There is often money left over in our account from paycheck to paycheck and that is fine cause it gets rolled over in out debt repayment. This is an area we work to communicate on. We do not debit without discussing it unless absolutely necessary. The only exception is our gas...who likes to pay cash at the gas pump! Eeek...I know I don't.
So our line is $755. We make sure we have $755 in our account left when we do the bills. We pay the bills, we see that we have $1,035.00 left over. So after the necessary bills are paid that amount minus our 755 is what we have to either put in savings or pay on a debt. Then my husband withdraws $555 and bring this money home to divy out. Granted this is not the way most people would proceed with a budget. Perhaps we should be more detailed, but truthfully this what works for us. We are comfortable with this system. I truly spend less with cash. I am always counting the groceries out in my head as I walked through the store. I always make menus out before I shop. I buy just what we need and extras only when the needs are met.
I do have one envelope in my wallet. I call this my clothes/entertainment envelope. I try to put $50 of my $300 in every two weeks. I do my best to not spend this and to let it grow. Currently some of my kids need shoes so I am hoping to grow this to $100 next week and then to buy three of my kids pairs of shoes. I hope to find a buy one get one 1/2 off sale.
This system truly saves a lot of grief. We really don't have to have a budget meeting too often. My husband knows our line. So when he sits to pay the bills...this is what we both agree on. Bills get paid and sometimes there is money for savings or debt and sometimes weird bills pop up and take that money...such as Dr. bills or a serious need such as tires for our cars or some other necessary but large household expense. Lately we have paid the minimum on our one credit card and just worked on our savings. This has seemed slow growing, but I know it is all we can do unless we give up things that we have not felt like giving up. The year we paid off our credit cards before...we gave up cable tv, cell phones (we had prepaid only) and we had no gym memberships. I know we could do that all again...and who knows....my husband may want to do that all again. He truly hates having credit card debt. There is one more thing that may help us pay it down sooner...if he gets his bonus. Usually he gets about $1500 a year in bonus money. We do not usually see this till June. But that would certainly help!
Well, I hope this long post was helpful to some. There are ways besides extremely finite budgeting that can work..I truly feel ours is one of them.