Starting the Journey towards a Budget

I’ve been rambling about lessons learned about money here and here.

After coming to a place where we HAD to get more creative with our money. I decided to find out where the money was going each month. Something had to be wrong and I needed to find out what it was.

I had to find a way to pay MORE than the minimum payment on our debt.

I decided to save Every. Single. Receipt. For a whole month. I emptied my hubby’s pockets every night and saved all the little candy bar and coffee receipts. Every time I ran to the dollar store or the thrift store or rented a movie or went to Target, I saved the receipts. Every time we ran to the Grocery store for food, every time we filled the car up with gas, I saved those receipts too.

Then I added up each receipt and was stunned by the total. We were basically spending every single “extra” cent we had. Even if we had a birthday money check from a grandparent one month, all of that would get spent too. Whatever came in, it usually went out. Even if we managed to “keep it tight” one month, it would disappear the next month when the car needed an oil change.

We never spent more than what we had (we had learned that with the credit card) but our bank account was usually pretty close to empty by the end of the month. Now that I think about it, that was what usually stopped the spending, when we realized the bank account was empty!

It was incredible how much money was disappearing each month. I though we were living frugally, after all, we never bought designer clothes, or gourmet food. We didn’t go out to eat at Steakhouses, or stay in Hotels, or hang out at Amusement Parks, (not that any of those things are bad, we just weren’t in the position to do them.)

I had always figured that we needed to pay the bills, and then buy the things we needed every month, and then we didn’t have to feel guilty buying a few things for pleasure, there was nothing wrong with having fun, life would be pretty boring if we never did anything for ourselves.
I had never realized how fast all of life’s little pleasures add up. Now I knew where all the slush fund was disappearing too, and it was embarrassing.

The amount we were spending on fast food, coffees, beer and candy combined, was almost as much as we were spending on groceries. And was I really spending that much on Groceries? How on earth did it add up that fast? What on earth were we eating at home? Considering the amount of times we had eaten at McDonalds that month, not all that much. Anything left after all of our purchases, was usually spent by the end of the month on clothing, household items or car maintenance. If something else came up last minute (like a repair of some kind) we usually ended up using the credit card again, and then we would pay it off the next month (or two).

After dissecting all of our expenses, we decided to put together a budget based on the things we actually needed from the receipts. We decided to be pretty strict for the first couple months. No more coffees, no more candy bars, no more beer, no more clothes, no more household items, no more eating out, no more Target or Thrift store or Dollar store shopping.

After Tithe, Rent and Utilities, we would need Gas for the car, Insurance, Food and Diapers. We decided that we would limit our “fun” expense to a fixed amount of money for Movie Rentals, and if I was able to stretch our disposable diapers long enough with cloth diapers, we could spend that money on something else too. (A great incentive to keep at the cloth diapering thing let me tell you!)

I typed up every single item we had bought at the grocery store, how much each item had cost, and how many of them we had gotten over the period of a month. I found about a third of our grocery money was going to convenience foods, like cookies, candy, frozen fries, Gerber Toddler meals, chips, breads and juice. We were also wasting money on new cleaners that I didn’t need, but wanted to try because they looked cool. No more “cool” cleaners. We also decided to stop getting all paper plates (I have a dishwasher, so its not like it even adds to my work that much), napkins and towels.

After lining up all the amounts, we found out that if we stuck to the budget, we could double the amount we were paying towards our debt every month!

It was an exciting idea, but what a hardship! I couldn’t imagine living without all the little normal things that I had been buying. And what if I didn’t feel like cooking? Now we wouldn’t be able to go out to eat. I was sure this was going to be so so hard!