Friday, September 11, 2015

simple life - the B word

Yep, the B word. No, not that one. Budget!

I know, I know. Many think budgets are boring and take away the fun, but I've found setting up and sticking to a budget has been really freeing.

A budget is telling your money where to go instead of wondering where it went.
-John Maxwell

For me, a budget means freedom. Freedom from worry and stress over money. Freedom (eventually) from being stuck in a job I hate just because I need the paycheck to pay off debt. Freedom to spend knowing it won't affect my ability to reach my financial goals because I've planned ahead. I'm blessed that my only debt is my mortgage and I've already been able to fully fund my 6 month emergency fund which certainly buys me peace of mind. Things happen, it's good to be prepared! Now, I'm working on paying down that mortgage with a plan to be completely debt free before I'm 50. At that point, I'll have no big payments. Now that's freedom. =)

Each month, I look forward to doing my budget. Yes, really! I love sitting down and figuring out just how much I can throw at my mortgage the next month after paying my bills and putting money into retirement and savings. =) And I love watching the mortgage principal amount shrink as I inch closer to being truly free.

A good budget takes a couple months to figure out and needs adjustment every month to allow for things like birthdays, holidays and those bills that don't come due every month. A budget doesn't mean you can't spend on fun things, it only means you know where your money is going ahead of time so there are no surprises when the electric bill comes due.

I've chosen to follow a cash budget for all but things like my mortgage payment, utilities and gas (because it's just easier to pay at the pump). Everything else, I pay with cash. I know I spend more carefully with cash than if I was using my debit card or especially a credit card. Handing over cash just feels different. I no longer use credit and closed my last credit card account after refinancing my home back in February. I'm not concerned about my credit score; I have no intention of ever going into debt again. Yes, emergencies arise, that's what my emergency fund is for. =) I fill my envelopes for each category early in the month and when each is empty, that's it... no more spending until next month! This means I  keep track of what I'm spending as I shop which limits my splurges on things I don't need. I mean really, who wants to get to the cash register and not have enough to cover your purchases?!

This doesn't mean I don't splurge at all. I just plan for purchases ahead of time, making the conscious choice to spend rather than trying to make up for a splurge after the fact. Much less stressful. Last month, I bought myself a new crafty toy and did so completely without guilt. Starting my new job left me with a bit of overlap and extra money coming in. I debated throwing it all at the mortgage, but ultimately decided that I would be happy spending part of it on something I normally wouldn't plan into my monthly budget. Most of the overlap went into beefing up my emergency fund a bit more, but a smaller amount was spent on a serger. =) I have no regrets. Each month, I pull cash out for food, pet expenses, hobbies and clothing (lumped together since I make some of my clothes) and I also fund a miscellaneous spending envelope that I can choose to use on whatever - not everything needs to be planned. That's what works for me to keep my spending in check while still having fun money. =)

A budget has also given me more time. I've often heard it said that a budget will make you feel as though you've gotten a raise. It sounds silly, but it's true! I no longer obsess over working overtime to earn more and more money. I know I'm just fine on my 40-hr paycheck and can meet my financial goals without sacrificing having a life. Life is too short to spend 60-80 hours week after week tethered to a computer working. I'm so much happier with my 4 day work week and plenty of time to do the things that bring me joy! =)

For almost a year, I've been listening to Dave Ramsey's radio show. If you're interested in a great plan to get out (or stay out) of debt, check him out! He gives really good, common sense advice on money and has a lot of free information on his site as well as a free budget tool at EveryDollar.com that I've been using for several months now to plan my zero based budget each month.

Do you plan a monthly budget now? If you do, how has it changed your spending? If you don't, try it out and see if it makes a difference for you too!

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