How to get out of debt: Part 3

Who are you making this budget for?

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Who are you making this budget for? 

Again, a budget is not going to work as long as you are impulse buying, so if you haven’t already, please read Part 1: Stop Impulse Buying.

Now, is this budget for you, or you and your spouse?  Are you in this together, or separately?  If it is just you, then great!  If it is you and someone else, you need to decide if you are putting all of your money together or are dividing up the expenses.  We first decided that we were going to divide up our expenses, but we soon decided that we would pool all our resources and then divide up the tasks.

It took a few years for my wife and I to trust each other enough to have joint bank accounts.  Initially she had her expenses, I had mine, and then she gave me half of the shared expenses.  While this may work, this is not a model I would recommend, as someone always feels like they are paying too much and not getting enough of something.  Also, it doesn’t build trust, and a marriage needs trust.  Consider this one of those “you fall backwards and I will catch you” kind of trust building exercises.  You need to work together to build a budget.  That being said, I collected all the bills, debit slips, bank statements, and I added everything up and figured out how much we were spending on what, and made a preliminary budget to show my wife.

My wife was of course upset that she wasn’t part of the process, but I said that she could look over my shoulder while I was doing it, or she could look at this draft and give me feedback and I will go work on it again (she could look over my shoulder again if she wants 😉 ), that’s just the way I work.  So, she did ask questions, I answered, she gave me feedback, and I went back and reworked the budget a bit, and this happened several times.

I say all of this because I want you to realize that making a budget when you are used to spending freely, is a hard thing particularly when you are doing it for more than one person.  At least we don’t have kids to budget for, but we do have pets….  And you have to keep in mind that each person has different priorities, and you have to take that into account.

I made sure that my wife had a clothing budget.  It wasn’t much, I think it was $10 per month so she could save up to buy a seasonal outfit, but it was much bigger than my $1 per month.

Stop laughing!!!  We were very broke, and were overspending about $500 a month.  We had to cut back somewhere!!!  As it turned out, my wife made the decision on her own to put her clothing money into what became the general household / grocery account.  While I did break my budget down into every conceivable expense, what we ended up doing was consolidating a lot of them into the basic categories.

My Income
+ My Wife’s Income
= Total Income

Less Expenses:

Housing 10%
Car payments & insurance 8%
Electricity, Cable TV, Telephone, & Internet 14%
Auto Fuel 5%
Pets 10%
My wife’s budget for food, personal care, gifts, etc. 24%

That totals 71%.  So where does the other 29% go?  To paying off debt.  That’s right, we have almost (not quite 1/3) of our net income just paying the minimums on our credit cards, etc.  My budget is nonexistent.  Basically anything on my paycheque above what is automatically withdrawn from my account on payday, is mine.  It’s not much, and I try not to spend it.  The day before my next payday I put what is left into paying off bills.

So you might notice that I didn’t follow a lot of my recommendations in Part 2, but that is because everyone is different and every situation is different.  With 1/3 of our income going to debt, that throws out almost any chance of what most people would call a normal living.

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