Sunday, May 20, 2012

Baller On A Budget: Janna's Budget Breakdown!

In appreciation for helping me reach our first goal on our Facebook Page, I am now going to teach you how to be a baller on a budget! Don't ask me how I learned this, because other than the desire to be financially stable- I had no direction.  As a matter of fact, before I met my husband, I was livin' the high life.  I had very minimal bills in college, so most of the money I made went to fun in the sun and traveling wherever I wanted, whenever I wanted. Yes, I was one of "those people" that had college paid for, but I also worked hard to get scholarships, had sometimes up to three jobs, and NEVER asked my family for money. It wasn't that I couldn't ask them or that I needed to work three jobs; It was that I had an innate drive to work hard and play harder.  I feel very blessed to have that drive.

Fast forward to the end of college and the beginning of our relationship, and life started getting put in perspective.  At this point, I had NO DEBT. I had credit cards, but they were paid off regularly, and obviously no student loans.  Will, on the the other hand, was a totally different story.  He had the student loans, other loans, credit card debt, AND was helping to support his roommate that got laid off. I'm not gonna lie- that all scared the bejeesus out of me, and made me want to run.

To be honest, he was probably better off than most guys our age, but to someone who had no debt- It was quite off-putting. So guess what? We started cutting back.
GASP. We sacrificed? Yes. Because that's how you fix it.
It's not like we didn't have any fun, we just found cheaper ways to have it.  I remember a lot of Publix picnics, and you know what? I will forever hold those memories fondly in my heart. At this point we didn't know anything about budgeting, but we knew that we had to cut back.  It doesn't take a genius to realize that if you are spending more than you make, you are going to add to the debt, and in order to lessen the debt, you need to spend under your means. Unless your game plan is to win the lottery. Sorry to burst your bubble, but that ain't going to happen.

So let's fast forward a bit. Within a year, we had ALREADY paid off all the credit cards and had a good hold on the loans. Gosh darn did that feel good. Then we realized that the older we get, the higher the bills were going to be. Not to mention- there was going to need to be a ring purchased in the near future and a wedding.  This is when we really buckled down.

At the time we were both making cash, so each week we would divide our money into two envelopes holding our savings and bills.  We had set amounts for each item of our budget (based on goals we set for ourselves), and then what we made ABOVE all of those goals was our "fun money". Let me tell you, that fun money feels like you won the lottery.  You don't have to feel guilty about it, since you are reaching your budgeting goals, and that is the best feeling in the world.

As time went on we became more and more streamlined, but our budget also began to fluctuate and change.  When Will enlisted, we had to become more structured based on a set pay and a real paycheck.  This means that the envelopes wouldn't work anymore.
So what did I do? I figured out how to adapt it to our new situation.
I took this:

And made one big list:
*This is not our exact list, but a generalized guide for everyone*

Rent/Mortgage $1,000
Electricity/Water $150
Gas bill $50
Groceries $300
Gas $400
Car Insurance $200
Life Insurance $30
Trash $15

Savings & Loan:
Student Loan $100
Investments $400
Savings $300
Vacation Fund $150

Extra Expenses:
Cable/Internet $105
Cell Phone $100
Total: $3,350

Now some of you may not invest or deposit into savings every month, which would subtract about $1,500, but then you might have other expenditures like car payments, daycare, tuition, home owner taxes, etc. Point is- you create your budget based on EXACTLY what you spend. In order to have a fully functioning budget it needs to be very specific.  You also need to know your BOTTOM LINE, which is how much income your household is bringing in each month. If that number is smaller than the amount you are spending each month, then you are in BIG TROUBLE.
You will have to cutback, no ifs, ands, or buts about it. You basically need to subtract your necessities from your monthly income, and prioritize from there. I personally find savings and loans to be equally as important, so they were also initially figured in.

Let's say your bottom line line is $45,000 based on the Median Household Income:
$45,000/12 mo.= $3,750
If you apply that to the budget breakdown, that leaves you $400 in Fun Money. Woohoo!

Now what really happens when we apply this?
Well for us- this number wouldn't work for us.  We invest 20% of our income, and put another 20% of our income into savings, so THEN we subtract our necessities, and what is left is applied to our extra expenses.  We have a decent dual income, and I REFUSE to be the type of people that spend more the more we make.  As our income has grown, so has our savings and investments.

40%+45%= 15% leftover for Fun $
15% of $45,000 = $6,750...Sounds like a good time to me!

For you we will do it like a Choose Your Own Adventure:
Option A
If your  Monthly Bills & Savings are under your budget- AWESOME.
But then decide what you would need to do to invest and/or put more money in savings.
+You need to have, at the very least, a three month padding in your Savings
(which would = approx. $10,000)
+You need to figure out how much per month needs to be invested for your future retirement.
(A typical IRA maxes out at $5,000/year- $416/mo.)
Apply these new numbers to your budget and adjust accordingly.

Would you rather drink your Starbucks and get your nails done or have Savings and a Retirement?
Priorities people.

Option B
If your Monthly Bills & Savings are over your budget- CRAP.
Where are we going wrong?
Brand new cars, overpaying in rent, expensive hair styles, vacations that aren't budgeted...
You can get sucked into all of these things EASILY.
What you have to decide is do you like falling farther into debt in the hopes that you will eventually catch up, or would you rather lower your blood pressure by re-prioritizing.
I know that when we moved to Colorado- all of our savings went out the window and we hadn't begun investing yet, so I was a basket case. I knew that in order to de-stress and happy again, we HAD to prioritize. Now it has only been a year, and we are EXACTLY where I want to be.
Don't you wish that you could say that?

If you are nodding your head yes, then here are some ideas:
+Begin pricing things like Insurance, trash, cell phone providers, and cable.
We have cut $3,000/year by switching all of our providers or consolidating.
(That's more than half of your IRA!)
+Cut some coupons!
HELLO! It's FREE $ people!
I don't even clip a lot. I just go through and clip the ones I know we need and I save at least $5 per grocery store visit. $10 if you count buying what's on the store sale ads.
$10 x Your Grocery trips for the year= At least $240.
+Don't buy the newest car, upgrade to the newest iPhone every time they come out, or get pedi/mani's every two weeks. I'm sure some of you think I am crazy, but I think you are the crazy ones for allowing your life to be controlled by material things.
One time, I was chatting with my dad, and I added up what I watched my friends spend on Vices: Alcohol, cigarettes, mani/pedi's, fancy hairstylists/colorists, new technology, new cars, etc., and at MINIMUM I spend over $10,000 a year less.
Not to mention, I am not consumed by all of these "things".
It's freeing people...Try it sometime.
Once you have conquered your expenditures (I KNOW that you can do it), you can
 refer to Option A. That's your goal, my dears. Change your life.

Do you all think I'm crazy by now? If you even made it to this point....
I'm ok if you think I'm crazy, because I am happier and more at peace than I have ever been. I never thought that you could be truly "Financially Stable" without a six figure income, but I am happy to be proof that you can. Now I have to go plan for my next vacay in two weeks, which has already been budgeted for! That makes for a REAL stress free vacation.


Jamie said...

We tried the envelope thing one time... We lasted one single paycheck before we gave up :)

lesley: the dream tree said...

good for you having a budget and i envy you for that. i can't do it! we are choking on $100,000 in student loan debt, so maybe after we get that figured out we can try this. i may be hitting you up for some advice lady!

Alana Christine said...

What a great post! I plan to do some major budgeting once my MBA student loans start hitting. I was debating going on Dave Ramsey or something...

♥ ♥ Just a Girl in Love w/ a Soldier ♥ ♥ said...

This is a great post girl!! We sat down at the beginning of the year when I went full time with my job and set up ourselves a monthly budget and its the best thing we have ever done.

ms.composure said...

WOW...def some great tools!!
I learned at a young age to keep up with my money and to always save...and i am glad that i did!

Megan said...

Loved reading this!! We don't have any debt other than our house, thank you, Jesus! We have been working on prioritizing and saving lately! Thanks for sharing!

Nikki said...

This is awesome! I am a one income family of 1 so EVERYTHING is on my shoulders and I budget very similar to this! I am debt free and it is such an awesome feeling! Well debt free other than my mortgage and my car note. People do not understand how important it is to prioritize NEEDS vs. WANTS and once people do they would be a lot better off!

P!nky said...

Oh janna janna you totally rock! Thanks for sharing!



CeCe said...

I totally agree. It's not rocket science. Don't spend more then you make, don't get into credit card debt and you must save. I am the budget bandit in our house. I keep Mj on track by setting up the budget and telling him exactly to put aside into our joint savings. We both contribute to retirement accounts. He did just buy a new car. Oh my word!!! I'll not be doing that for a long time though.

Amanda said...

This was super helpful! So we'll definitely applying this now that we're moving to a new apartment!

Meghan @ More from Meg said...

Great post!!! You are so organized and a great planner - I am definitely going to try some of these tips! :)

Nicole said...

What really helped up prioritize, was my husband losing his 6-figure income job and getting a new job making half that. HOLY CRAP did we have to prioritize. We did cut out the frivolous things and haven't vacationed in awhile. We're on track now, but it's been hard! But we have really begun to look at how we're spending money, and really making sure things are a priority before buying them. And also still working on cutting down our monthly payments. It's a lot of hard work, but we're getting there! These tips are all very helpful :)

Kelly { MessyDirtyHair } said...

Well clearly this is speaking to me haha! This is so amazing girl how you can do this & stick w it. I am beyond impressed. This is a fabulous post!!! You're just fabulous!!!! I'm having another fun giveaway check it out lover!


Nicole said...

Haha, I'm like you, I came from being debt free except my car payment to my husband who has a daughter (and her mother thinks we can spend all our money on her, don't get me started) and some debt. I'm in the freaking out stage right now and trying to get us under control. He went from making $150K a year to definitely not that much by far! It's been a challenge! I wish he'd have been with me when he made that b/c I'd have whipped him into shape instead of letting him blow all of it and have NOTHING hardly to show for it... oy!

Cortney said...

I've always wanted to try this--just a chore trying to get my husband on board!!

Nicole said...

Oh those student loans. So far I've had none. But I doubt finaid will pay for everything (I can hope and miracles do happen, right?!)

jessica said...

I strive every month to make sure I don't spend more than I make. And when I get my bank statement in I always feel a little proud of myself for accomplishing it. It's definitely a monthly goal for me.

Sheila@TheFailteHouse said...

Wow - what a great read! This is something I am working on at the moment and trying to continually save. Thanks so much and awesome job with your own savings!

J and A said...

This is great! Thank you for posting this! You rock.

Hilary said...

Great post!! PRIORITIES PEOPLE! I love it. I set up my checking account to transfer a set amount of money bi-weekly around paycheck time and it's crazy how quickly it adds up and you don't even realize it's 'missing'.

Dani @ Wine Cheese and All The Things said...



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