How we track our monthly budget

As I’ve been sharing our #debtfreejourney to #financialfreedom progress on social media, more and more people have been requesting to see how I track our monthly budget. I started sending it individually to each person that asked via Google but then thought, why not put it out there for all to see?

I must admit I sometimes felt silly sending it off because it is super simple. I must also admit that just two months ago it looked completely different with tables, a ton of colors and far too many lines. One day it just clicked: log the money coming in, log the money going out. We’re entering three months of officially sticking to our budget and with the new year approaching, I can tell you there will be slight changes made. I will be adding fixed expense lines for:

• our mortgage. I read that if you pay just one extra payment toward your mortgage each year, you’ll shave off 7 years! (on a traditional 30 year mortgage) I don’t know how accurate that is, as the book was written in the early 90s, but regardless, it has got me motivated to save! For this figure I’m simply dividing our monthly mortgage payment amount by 11 and saving that amount monthly so that in December we can make the additional payment.
• hair cuts. The beau gets these on the regular and I don’t… but I should. So I’m going to start saving now so that I don’t feel guilty when it happens.
• Christmas / weddings / birthdays etc: GIFTS! The beau and I aren’t big gift givers and for the holidays my family doesn’t exchange much, as we prefer time spent with each other over items bought just because we “had” to. In example, for Mother’s Day I took my mom to the Catskill Animal Sanctuary and out to a delicious vegan lunch in Woodstock. It was a perfect day out. It would feel good to be prepared for those special occasions, rather than feeling defeated when they roll around. And FYI, they are the same every year, ha! Christmas doesn’t just show up in August out of the blue…
• the occasional weekend getaway. Dave Ramsey says NOT to take a vacation during baby step number two but for how long its going to take us to pay off this debt, we’ll need treat ourselves occasionally or we’ll get demotivated. I know myself, especially when we start attacking our largest debts and it’ll take longer to see results. I’m not talking thousands each time, I’m thinking a couple camping trips in State Parks next summer, and possibly a weekend in the Catskills next autumn. Our honeymoon is already booked and paid for with cash: I’ve waited a year and I’m not going to wait any longer <3

That being said, here’s what our current monthly budget looks like and as a disclosure, many of the numbers have been changed (those highlighted in green and blue ARE actual numbers):

At the top of the spreadsheet, I list all of our income which includes our two salaries, earned commission from Young Living (yes, not only has this company been supporting my wellness for over 12 years, but it is also contributing to my financial freedom), rebates and any odd jobs I pick up for the month.

Next, I control where EVERY DOLLAR is spent. Many people think budgets are constraining or limiting, but that’s only if you tell it to be! I have two columns for expected and actual because some lines do fluctuate each month i.e. utilities, gas, essential oils, etc..

I prefer to have fewer lines in my budget because when we pay for something randomly, it stands out immediately. If it shows up multiple months in a row, I know it is time to add a line to our budget. The lines that are highlighted in blue are bills that we don’t pay every single month but are fixed on a yearly basis i.e. our water bill will always show up 4 times a year, so we plan ahead and set money aside. Same with our car insurance every six months, trash etc.. We’ll be bumping up the line labeled “inspections” and probably re-name it as “auto maintenance” because my car is ten years old and a newer one is not on the horizon until we’re debt free and I have enough cash in full to purchase one.

If you add up all of the fixed expenses, our hypothetical monthly cost of living would be $3,330. That’s how much it would cost to pay all of our bills in full.

All extra at the end of each month is automatically deposited toward debt, its that simple!

Step one of Dave’s plan is to set up an emergency fund just in case. Prior to us starting this plan, we were both making contributions toward savings. Now that our emergency fund is established, those monthly payments automatically get deposited toward debt, on the same day every month, as if it were going into savings. We chose to do this because we were already use to making those payments, there was no reason why we should be allocating it toward any other line item.

Now for some examples. In this first example, I’ve filled in our hypothetical total income for the month with some of our hypothetical expenses. You can see, we clearly have money left over at the end of the month ($4394.01) to deposit toward debt. Yes!

In this second example, I’ve added some examples of random monthly purchases we’ve seen that reduce the amount we’ve deposited.

The goal either way is to spend less than what you make or to LIVE BELOW YOUR MEANS. Case and point: if you’re struggling to figure out how to pay your rent / mortgage, then maybe you don’t need a brand new iPhone. Or a brand new car. Or the newest workout gear for the season. I’m not going to preach because your decisions aren’t going to effect my budget, I’m just going to tell you that I have been and will continue to live below my means because that’s the only way to see results. And if you still want all of those things but are struggling, then that means you have to find a way to bring more income into your budget plan. I’ll stop there for today.

Below is a snapshot of a budget that is lacking enough funds to not only cover the monthly expenses, but random expenses that do pop up.

So there you have it. It is super simple and easy to follow each month. Almost ridiculously simple. And if you aren’t an excel / Google Sheets pro, you can list this out every month in a notebook to keep track. I have tried Minted. I have tried EveryDollar. I have tried almost every app. available to budget but to be honest, I love my spreadsheet.

Another tip I have is to PAY CASH FOR EVERYTHING! Except for your monthly bills that you can pay online, pay cash for everything else. For example, at the beginning of the month I withdraw $400 cash and put it in my groceries envelope. Literally an enveloped labeled groceries. Every time we go to the market, we pay cash. When you run out of cash, thats it for the month, no more groceries. It has been proven that people spend less when paying cash because you literally see it leaving your wallet. If you’re someone who shops for new clothes on a monthly basis, then you have an envelope for new clothes. The same with entertainment, home repairs, and anything else you may wish to purchase on the regular.

As you can tell, I’m 100% obsessed with talking about this topic and could go on forever. If you have any specific questions about this post or anything else related to budgeting and paying off debt, feel free to comment and I’ll answer them in a future post. You’ve got at least two more years of these updates coming your way 🙂