Budgeting with Dave Ramsey

Favorite and I are decent with money.  We plan well enough to pay our bills, including an overage on our mortgage, and put a fairly substantial amount in a savings account.  But we lack when it comes to what's left over.  We don't worry about how much we spend at the grocery store or how many times a week we go.  We eat out a lot.  A.  Lot.  We spent money on our favorite recreational activities without giving them a second thought and don't really stick to any sort of budget.  We also have a credit card, but have committed to paying it off every single month no matter what (which sometimes means dipping into that savings we should be using for other things).

Short story?  We're spoiled.  And we know it.

When we first got married, we had no money and bills that were difficult to pay on Chris' salary alone so I became a budgeting guru.

Fast forward five years and I'm realizing I really need to invest more time in considering my budget for a couple of reasons:

1. Budgeting allows us to save a substantial amount of money comfortably.  We don't have to dip into savings and we can accrue an emergency fund (hopefully a hefty one).
2. Budgeting will give us greater freedom to consider housing upgrades (hello patio!  And deck!  And hot tub!  You get the point!).
3. Budgeting will allow us to add a third car so Favorite can quit trying to drive his gas guzzling farm truck back and forth to work.
4. Budgeting will allow us to honestly consider the worth of purchases so we can hopefully pay cash for larget purchases in the future.
5. Budgeting will allow us to give more freely to others.

I've considered Dave Ramsey's approach to budgeting for a while due to a weekly article I read (written by a local guy whose simple writing has really helped me to understand the concept of money).  But after reading this post from The Lumberjack's Wife, I committed to giving it a shot.  And before you ask, yes it is extremely shallow to start budgeting just to buy a new wallet.

But if you're interested in that sort of thing:

This is my cash envelope wallet from Melissa at A Time for Everything.  (A couple words on Melissa:  she was amazing.  UH-MAZE-ING.  She emailed me no less than three times to answer questions and even credited my account because I didn't read thoroughly and she didn't think it was fair to overcharge me.  I haven't gotten the wallet yet, but it shipped in record time--I should see it Tuesday--and she committed herself to customer service the whole way.)

Here's what I love about Ramsey's cash envelope system:  you create a zero-based budget (every dollar is allocated to something specific).  After creating your budget, you determine which categories are going to be cash categories.  For us, housing costs, utilities, savings and my school loan are paid online by using a debit card.  Also, medical bills are paid by check or debit card and I pay my car payment by check every month.  Those categories don't require me to keep cash on hand.

The categories we're focusing on regarding cash are these:

• Groceries
• Gas
• Clothing
• Personal
• Recreation

Every time Favorite gets paid, we get a certain percentage of that money in cash for these categories.  When the money in that category is gone, we're done.  For example, if we've allotted $150 for groceries for that pay period, once we spent $150, we don't grocery shop anymore.  My hope is that it will keep us from spending unecessary amounts of money.  (I work our budget on Favorite's pay schedule because he gets paid on the 15th and the 30th.  It get paid every two weeks so it's easier to work on his schedule than mine as his is more predictable.)

Of course, this new budget is also encouraging me to consider other money saving ideas. 

• Make a list.  I'm notorious for going the grocery store without a list.  That's going to stop, because I end up spending money on things I don't need.  Here's the deal:  I can't buy the cheapest item when it comes to certain things.  Favorite breaks out when we change detergent or soap so I don't play around with trying new ones.  We get what we get.  Therefore, it's necessary for me to consider how to save money on those items and in other areas.  A list is the best way to make that happen.

• Coupons.  I have no intention of becoming an extreme couponer.  I don't have that kind of time.  But it wouldn't hurt me at all to save the money I can by cutting the coupons available to me.

• Vinegar.  People probably wonder how I'm saving money with vinegar, but I have an amazing answer for you.  I no longer buy clorox wipes, rinse agents for the dishwasher, kitchen cleaners, etc.  In fact, that only cleaning products I purchase outside of vinegar are Windex (so great for cleaning hardwood floors) and bathroom cleaners (I haven't found an alternative to those yet).  Vinegar is a multipurpose product that costs under a dollor for a gallon; it's cost effective.  It is safer than bleach and does a better job of cleaning (particularly when it comes to mold--not even kidding...look it up).  It's completely non-toxic for anyone who is concerned about kids--no ventilation necessary.  It gets rid of weird smells, and when it dries leaves no after-odor.  It will leave your dishes spotless, up the ante on bleach in the washer by helping whiten clothes, and will even serve as a fabric softener.  When you calculate all the money I'm saving by avoiding the products I was buying previously, you might be willing to give vinegar a shot for a month.  (I mix it with baking soda to disinfect sinks, etc.)

I'll try to revisit this topic once a month or once every other month to let you know how it's going.  I truly believe the reason most people don't budget is because the process isn't simple enough.  My question is how much simpler does it get than alloting certain amounts of cash and spending until it's gone?