Living on a Budget

The first step to living on less is learning to live on a budget. Actually, no matter how much money you make, I would advise everyone to budget. I was fortunate enough to have a father that taught me at a very early age how to budget my money. I can remember when I went off to college, he gave me an allowance accompanied with a detailed Excel spreadsheet. This spreadsheet explained to me in detail the amount of money he gave me each month and where he expected me to spend it. Any more money I needed or wanted would be up to me. This spreadsheet outlined the total sum of my income and broke down the total amount into several categories; rent, utilities, groceries, gas, and so forth. I knew each month where my money should be going.  I then enhanced this budget and met with my father to ask for help with an even more detailed system of how to budget my money.  For years I lived off of a spreadsheet that broke down my income and expenditures. I kept track of my expenses. It was at times cumbersome and I did feel a little dorky, but I always knew not just how much money I had each month, but I also knew where that money was going.When it came time for me to go on a trip or buy clothing, I could look at my spreadsheet and see if I had enough set aside. If I wanted something big I would create a new category in my little spreadsheet and figure out how much money I needed to save. I never went to the ATM to check my total balance. That could have been misleading. I would go to my spreadsheet and check individual balances for each category I had set up. Basically I had a bunch of mini-accounts that I had made up to total my true bank account.  

I had a system. It worked. I graduated college, got a "real job". My system still worked. I made more money and I got a raise. My system still worked. I got another job and another raise. My system....stopped?  I'm not sure why, but it did. I guess I was making so much money, I didn't think I needed it anymore.

When I lost my job in 2007 my income was cut off. My expenses however, did not stop. For the three month I was unemployed and I had no income, I foolishly kept my expenses the same. I was living so well that I had stopped doing the thing I was taught so young. I had stopped budgeting. I kept spending even though I stopped earning.  My first lesson learned during my journey of living more and less spending, was ...

ALWAYS BUDGET - NO MATTER HOW MUCH MONEY YOU EARN, YOU CAN NEVER BE TOO PREPARED FOR THE WORST.

Today's technology has gifted us with more than just Excel to help us learn how to budget our money. There are FREE tools out there that practically do the work for you each month. All you have to do is get started.

The first thing I did when I got in my pickle was to start up my old habit. I opened my laptop, kicked up Excel and started a spreadsheet. It was title "My budget". I looked back at my past several months of expenditures and was shocked to find out where I had been spending my money. How could I have been so foolish? I had been spending as though I was still earning!  As I set up my new budget to match my new income, I found I was in for a big lifestyle change. Nevertheless, this was the first step I took to learning how to live more on less.

I will continue to post more on how to budget properly and will be happy to answer any questions you may have. Until the next post, you can go get started by pulling your records. Look at credit card statements, bank statements, and anything else you use to pay for things. Look back, very closely at where your money is going. Try to put everything into a category. See how much you are earning and how much you are spending. Add it all up. It may take some time, but I promise it's worth it. Make a choice and get back in control!

Here are some categories to get you started.

Income
 - Paycheck
 - Bonuses
 - Interest
 -Anything else (Babysitting, Rent from a roommate, dog walking)

Expenses
- Mortgage/Rent
- Utilities
-Monthly dues
- Home or Renters Insurance
-Car Payment
-Car Maintenance
-Gas
-Groceries
- Dining Out
-Entertainment
-Pets
-Clothing
-Debt (Credit Card, Student Loans)
-Vacation
-Emergency Saving (Yes you should have a category for this!)

In my next post I will give you a sample template from Excel you can use to get your started. I will also share user friendly websites that do most of the work for you. Happy Budgeting, Better Living!



 

Back story - Why my blogging journey began -

In 2007, I was a thriving young woman in her late twenties making great money, with a great job, and living, what I thought, was the "high life". I bought whatever I wanted no matter the price, traveled to wherever I was invited no matter the distance, and went to any and every social gathering no matter the day of the week. I worked hard, so when I had the chance, I played hard. Then something awful happened. Something I did not see coming. Something for which I no plan. I lost my job. In an instant my life changed drastically. I had taken my paycheck for granted everyday and squandered away every penny without a thought. I had no savings. Even the big bonus I had earned 3 months prior, I used to pay off a large renovation on my condo. I had exactly enough money in my bank account to keep me afloat for 3 months. 3 months...

I spent those next three months going the through the stages of depression. Like most, I didn't go through these stages perfectly or in any specific order, but I did experience most of the stages. There was denial, anger, reflection, working through, and even hope.

http://www.recover-from-grief.com/7-stages-of-grief.html

Denial - I couldn't deny what had happened to me for long. I had in fact lost my job.

Anger - I quickly moved on and became stuck in the anger phase for the most part of those three months. What happened to me!? I was the victim. I wanted nothing to do with "Corporate America" again. I resisted the idea of ever going back to work. I felt wronged. All that hard work for nothing. No one really appreciated all that I had done. It was NOT my fault I lost my job and that simply just wasn't fair. I was angry. I was furious. These were many thoughts I was fighting through. I was also in denial of my reality. It was as I neared the end of those three months and my money was almost gone, that I decided to accept the fact that no matter how right or wrong I was about what had happened to me, I still needed a paycheck. I needed to stop playing the victim and take action. No matter how bad the circumstances, I was not a quitter. I guess the competitor in me kept me going. I would not lose! I needed to make a decision and get a job. I had to pay the bills. In order to move forward, I started looking back.

Reflection - I was desperate to earn a paycheck, but I still refused to go back to "Corporate America". I had started to realize that as much money as I was making, I was also ALWAYS working. I had a job that kept me on call 24 hours a day. If disaster struck, I had to be ready. I had to have my phone on me at all times. When I shopped, vacationed, and played, and even slept, I too had my phone. I can still remember a trip I took to Mexico where I spent the majority of the time checking in with work. My friends laughed at me and jokingly would say "Put your 'crackberry' away already". Yes, I had a Blackberry that I was addicted to and even during my free time I could not put it down. Even during my free time, I was hard at work. During this reflection, I constructed my next move.

Reconstruction and Working though - I would go back to work, but not to a place that would have me on a leash 24/7. I didn't want to lose control. It was my life and I wanted to feel like I had a say. I decided to go back to a job I loved when I was in college. I knew there was 2 things I love. Children and sports. Something so simple yet, brought me happiness. I went to teach gymnastics. I knew it would be a huge pay cut, but I was willing to find a job that would temporarily pay the bills, keep me happy, and bide me some time until I figured out where I wanted to be long term. It was also a job that I didn't have to take home with me. So I had done it. I went back to work. Success! I had a job that paid the bills and I had more free time to enjoy life. Finally I felt in control of my life. Finally was my chance to live more. I didn't have a job that would hold me back during my free time. However, much I my free time was costing me money and now I was making so much less. How was I going to make this work?

I did make it work and I am still somehow making it. Everyday I learn and grow a little more. Now I would like to share with everyone things I have learned over the past five years and continue to learn each day. I realize I am not the only one going through hard times. Everyone has their share of hard times and everyone could use a little help. Therefore, I blog. Learn how to Live More while Spending Less.

There are two main points to this blog.

The first is regarding money. Money may not buy happiness, but it is necessary to live. I want to share ideas, tips, tricks, and ways to use your money wisely so that it lasts longer. Over the past 5 years I have learned to live on a 60% pay cut earning merely $30,000 a year.  On top of this pay cut I have also decreased my credit card debt from $15,000 to $1,300. I wont take all the credit for managing this feat. I had the support and help of friends, family, and even professionals like Clark Howard.  I am still an amateur, but through my immediate connections, social media, and the good 'ol Google search bar, I am making it happen.

The second side to this blog is living more. Again, I know things in life cost money, but there are also things in life that are free.  Sometimes money just is not an option and times are really tough. Sometimes everything in the money part of this blog cannot be followed. Sometimes no matter what financial advice someone can give you, it's still not enough.  STOP! Remember there are things in life that money cannot buy and will still bring your great joy, peace, happiness, and serenity. This part of my blog isn't as black and white as the money segment. I cannot clearly guide you to believing and following the exact things I do. This part is based on who you are as an individual. What makes you smile and what makes me smile may be different. However, I hope to inspire you to discover or rediscover these things. I plan to share things that bring me joy; the priceless things that money cannot buy, yet still make my heart smile. I hope to inspire you to discover for yourself what priceless things bring you joy and also find a better appreciation for life!

May my journey inspire and improve yours. It's time to Pay it Forward.