How to make a budget?

iVillage Member
Registered: 09-05-2011
How to make a budget?
8
Wed, 03-14-2012 - 5:35pm

Hi All,

It's been a little while since I last posted. I'm finding myself a little confused here. I thought I knew what I was doing but now there is a little curve ball that has been thrown our way. There is a really good chance that in a few months we may be moving out of state for my husbands work. I'm at a loss now for what to do. The budget I planned to use needs to now be reconfigured. I want to try and get as much cash saved as possible before the big move but I also want to get our HUGE debt paid down. So I need some advice on a few things. 1) when we sell our house should we use that money as a down payment for a new house or should we use it to pay down some debt (we are about 40,000 in debt not including our mortgage or student loan) or should we keep it in the bank and use it for a down payment on a new home. At first I thought we should bank it and use it as a down payment so we wont have to rent but now I'm wondering if we can even get a loan for the house with the debt we have. 2) I need some layouts for a budget. I'm not sure how to get started when living "frugal" We pay all of our bills but we are not great at planning meals. I get lazy I guess or tired I should really say when I stay at home with my 2 small boys. If anyone has a sample budget plan for a layout of one they wouldn't mind passing on I would love to look at it. I'm ready to get started!

Thanks All!!

iVillage Member
Registered: 07-24-2001
Wed, 03-14-2012 - 6:41pm

I'll be interested in what others advise . . .

My first thought on your home equity and what to do with it is: how much equity do you have?

iVillage Member
Registered: 05-08-2006
Wed, 03-14-2012 - 9:04pm
If you are moving to an area you are not familiar with, I think it makes sense to rent for a year or two until you find out more about the area. There can be tax ramifications f you don't pay mortgage interest, so you might want to run your tax numbers as a renter and with a mortgage to see what it means for you. If you can rent month to month without a lease, then that gives you the flexibility to look for a place that is really right for you. And I don't see the market or interest rates going up anytime soon. I think the key to making a budget is writing things down. Pull out a year's worth of your checking account and credit card statements, and categorize your spending however it makes sense to you. I have monthly things that never vary(my mortgage), those I pay every Month but the amounts go up and down(electricity is one for me), and things I pay quarterly and annually (real estate taxes, insurance). If your quarterly/ annual stuff come out about the same every Monty, you can just allocate a certain amount of money, but uf they all come in the same few months, that s where sinking funds come in - setting aside money in the months with a few bills for the months with a lot. If you charge things like gas, groceries, clothes, you can get a sense of your cost their from your credit card, but if you pay cash, then you have to track every penny you spend in cash for a month or two to see where the money goes. Watch for things that buy you nothing - late fees, fees for using ATMs outside your network, parking tickets. To me, that is just wasted money. Also look at what you spend on stuff like coffee, chips, candy..a dollar here and there adds up, and can easily be replaced by 'bring your own' Call every credit card you have a balance on (unless the interest rate is zero) and tell them what a good customer you are and ask for an interest rate reduction. Don't think this s a favor to you, act like you deserve it. Talk to at least three people before you give up. When you have done this for every card, start over and call again. Consider moving credit card balances to low or no interest deals, but only if you can pay them off. Call the cable and all phone carriers, and ask for deals. Do this in rotation too. Consider lowering your insurance deductible, but only to an amount you can afford to pay if you have a claim. Ask about discounts. Call other companies and get rate quotes. Switch if you are comfortable, but don't compromise on quality. Challenge yourself to put in time a couple times a week doing meal planning and prep. When the super market ads come out, look at the price of things and decide what are the best deals for the week. There are probably 20-30 items your family uses all the time - cereal, toilet paper, soap, canned goods. Get a notebook and write down what you pay for those items, then watch for them to be on sale (after you move) and buy ahead. Know what is really a bargain, and take advantage of it. Once you know what you are spending, then it is a case of balancing the income and the outgo based on your family's priorities. A roof over head, food, transportation to work are usually high on people's list. Some people have TP have cable. Some people get by with Netflix and the library. Some people save for vacations, some for retirement, some for education. Only you know what you value, and your budget should reflect that. If the outgo can't be brought lower than the income, then you can consider new job, better job, second job or back to the outgo and balance again what you have to have versus what you want. A budget is always changing as life brings new surprises...but I think you will get further with a plan than not. Best wishes sJ Set a
iVillage Member
Registered: 11-14-2008
Thu, 03-15-2012 - 1:24pm

Hello,

I went back to your original post and read this one of course.

iVillage Member
Registered: 08-24-2007
Fri, 03-16-2012 - 8:02am

Hi sahm4myboys,

Nice to see you again!

You've already gotten some great advice, so much of what I have to say is reiterating other people's posts.

Kate


empty purse

Community Leader
Registered: 08-25-2006
Fri, 03-16-2012 - 1:35pm
My quick answer is first, track your expenses for an entire month. Every penny you spend.

Take the suggestions from here and take what will realistically work for you and your family.

If the spending plan is too tight, you will get discouraged if anything unexpected comes up, or feel like you never get to do any thing fun, etc.

I am very detailed oriented, which can cause me to obsess. So I actually keep a pretty rough plan.

I have yet to figure out how to cut back any more on groceries with a man in the house. And my DD participating in activities is a priority for me, and cable is important to my SO.

So again, track for a month, then take what you can realisticly follow through on.

As far as the house, I would be tempted to rent before buying in a new area with so much debt.

Good luck!
Serenity
iVillage Member
Registered: 12-31-2010
Sat, 03-17-2012 - 7:02pm
Lots of unknowns here in order to give any advice. Like Karen said the type of debt matters, but I do agree with a prior poster in that renting in a new area for a year can help you find some real gems in the area and not have to grab the first house available.
As far as a budget, we do a zero balanced budget, we predict what is coming in each month and line item what is scheduled to go out. We have a grocery budget I take out in cash, that is all I have to use for all groceries, eating out, etc. If I don't have any cash left, I can't spend it!
I take out $400 every two weeks, $100 for gas, $200 for groceries and $100 for spending - I use paperclips to divide it, but by then end of two weeks I might be robbing one for the other category to stretch where I need to. You can start with one amount for these categories and if it is too little, you can adjust the budget moving forward.
Don't like carrying $400 in your wallet, put $200 at home until you need it.
It is really empowering to use cash and you can also honestly tell your kids, we "can't go to fast food tonight, we are out of money." It helps them learn money is not available on a limitless card.

I have done budgets for a lot of people, you can always email me at marketingvirgo@yahoo.com and I can help, totally privately.

Oh, right now I would not be too aggressive on your bills, just pay down slowly, but save as much as you can for the move at this point so you can deal with unexpected issues, because they will come up.

Also, your current house might not sell as fast as you think. I MADE THAT TERRIBLE MISTAKE and bought a house in 2002 when I was moved, without my original house being sold. Eighteen months later, still not sold and the job I moved for was not what I expected. Please use my mistakes and take things slow with regard to a new purchase.

Good luck with all the changes ahead of you, it can really blend your family if you work to make it fun and roll with the flow having fun learning about a new area, new culture and meeting many new people.

-Marie
#Marie
iVillage Member
Registered: 12-04-2004
Sun, 04-01-2012 - 12:40am

My first thought was that I live on a budget, then I thought again and thought what budget? My DH is anal in record keeping so when he is gone I have to be anal about recording every penny spent, not once but twice... The paper form and the computer form. Quick plug we like our Microsoft money program it is a great tool. That said it doesn't do anything that you couldn't do with a pencil and paper.

First what do you (or since your like me, what

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iVillage Member
Registered: 11-18-2008
Wed, 04-11-2012 - 5:36pm
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