Wealth consists not in having great possessions, but in having few wants.Epictetus
I have been putting off a budget because they are boring. It is also most likely the single biggest reason that I am broke. See, I have a spending problem, and a big one at that. Well, it used to be a big one, however the older I get the less I need. In reality, all I really want in life right now is to own my home, be debt free, and be able to go out once in a while. Everything else just does not matter a great deal to me anymore. Had I taken care of my future when I was younger, I would most likely already have these things. Maybe I will appreciate it more when it happens after what I have put myself and my family through, who knows?
The first thing I needed to do was to track my spending. I am great at tracking my debt and what I owe each month but tracking other expenses has been challenging. I decided to download my bank statements for the year and whoo boy! The amount of money we spend on going out to eat, or just to eat in general is staggering. Not only did I knot have money for food, so I used my credit card, but because I was not feeling the pain of using the credit card I was happy to spend around $1,000 a month of food alone. Forget about gasoline or other expenses that arose, this was just food! It was also little expenses, a lunch here and there, that added up over time. This was going to be a tough habit to break, but one that is necessary.
Starting in July, which will be my first budget, I will have $700 a month after my expenses for food and gasoline. I work from home, so we do not drive a great deal and gas for our two vehicles run around $100 a month – if that. Also, I wanted to add $150 a month to speed up debt payments, but $100 may be more realistic. That leaves me with $500 for food for July. My wife and I have made the decision that since we have a few thousand in our checking account, that at the beginning of each month we will take out $500 in cash from the ATM and that is the money we have for food. No more and no loss. Once that runs out we are out of luck. If we happen to only spend $400, then we can either have $600 for the next month or go out to eat.
This will ensure that we do not spend more on food than what we have budgeted for. In order to do this, for a family of 6 – all 4 children are teenagers – we are going to need to use coupons and really search out deals. When something is on sale, then that is what we are eating for that week. No more eating out and not as much snack foods. Things really have to be on sale if we are going to stick within the $500 budget.
Now, what do we do about other expenses that are not debt or food items etc.? That is going to be the trick because the use of our credit cards is no longer going to be an option. We will need to have some sort of savings in line to plan for those things. I am not sure how to conquer this yet, I am just happy we are in the positive for the month for the first time in our marriage. Having $500 for food that is not part of using a credit card is a big accomplishment for us and essential to us to stop running up debt.
If we simply do not ever use a credit card again and just pay the minimum payments on everything, then we will be out of debt completely except for the house in 10 years. If we then put all that money towards the home, then we would have that done in another 10 years. That would mean being debt free when I am close to retirement, which to me is a pretty cool place to be, even though we would not have much retirement funding. Most folks I know do not have any retirement funding and still have at least a house payment. So, just being debt free would be a miracle at this point, though I hope I can find the wisdom to speed up the process to becoming debt free and save something for retirement as we go along. Time will tell.
So, to sum up, I tracked our spending and found our biggest issue is eating out. The budget for July is $500 in cash and see how far that will take us. This will prevent us from using the credit card to pay for food and hopefully reverse our reliance on credit cards for our subsistence.