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the quotable dave {week 3}

Monday, February 21, 2011

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hello! i am doing a series of posts during our journey to financial freedom via the dave ramsey financial peace road. this is our third week - if you would like to read about the previous weeks click here! :)

last week i promised to show our budget and how we keep track of where our money goes every week.

first - our budget.

i love excel. probably a little too much for normal people to understand. i use it any chance i get. before the p.h. and i got married he had no clue how much money he spent on what so i whipped him up a color-coded budget so he could see how much money he spent at taco bueno each month. (that figure is slightly embarassing so i won't share...)

i believe that budgets have been given a bad rap. they are not strenuous activities made to effectively take your brain to the whipping post. they are really very simple and can be very liberating and eye-opening when you really don't know why you have so much month left at the end of the money.

for example... the p.h. and i spent $560 dollars on eating out in the month of january. i sat down and added it up. i was astonished and totally ashamed that we could just blow that much money and not even know about it!

anyhoo - to the goods. here is our budget:

i literally just saved the stubs to all of our bills and outgoing cash flow for the month of january. then i sat down and put it in a spreadsheet. it took all of about 15 minutes once i had all the information. completely pain free.

and now, we are in control of our money. we are telling it where to go instead of it just flowing out our ears without us seeing it!

personal finance is not a microwave; it is a crock pot.

second - how we keep track of where it goes.

dave ramsey suggests a couple of different methods of keeping up with how much you spend on gas, groceries, clothes, and general "fun" money. one of the more popular ones is the use of envelopes. you set your budget for how much you are going to spend for each category for the month. then you put that amount of cash in the envelope so that you have instant access to a controlled amount of money.

i don't like envelopes and i don't have any and i didn't want to buy any. i did have a plastic picture frame, some scrapbooking paper and a dry erase marker.

voila!
now i have a reusable budget "envelope" that was completely free. i just write down the amount we spend out of each category and keep a running total. simple!

money is a dynamic, flowing, ever changing being. we are prepared to make adjustments where necessary and cut back in some places if we need to. but having this to help us (and now having the entire blogosphere able to hold me accountable) really keeps us focused and heading in the right direction!

how do you keep track of money? are budgets easy for you? i would love to hear some other ideas!

disclaimer: i am not in any way affiliated with dave ramsey and there are just my honest opinions. i am not endorsed (ha - wouldnt that be nice!) and he has no clue who i am, no matter how many times a day i tweet him. i just think he has the right idea and think you should join in. all phrases in italics are from financial peace, revisited.
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