Now many of you know that Luis and I are very different….let’s just say it, we’re complete opposite, even when it comes down to money. Using Dave’s terms I’m the nerd and he’s the free spirit. So achieving our goal to pay off debt was no easy task….so how did we do it?
The keyword is the “B” word….yes, the budget! The most dreaded thing for the free spirit and the most exciting thing for the nerd (yes….i consider reviewing and monitoring my budget a hobby…one of my leisures!). Before we took financial peace university Luis and I had a “budget” but it was more of a very lax/flexible budget. If we were in the red, we would just make a note to use our credit card for the deficit. However, after taking FPU and having a goal in mind (get out of debt and build wealth) we had to treat our budget different and more seriously. So….ever since mid-2010 we’ve had a budget committee every first day of the month. In reality, we have two…one closer to the end of the month to see where we stand and set raw numbers for next month’s budget. Then on the first of the month we set the budget for the month (now….remember that I enjoy monitoring our budget so every weekend I take a couple of minutes to review and then talk to Luis if I think we’re going over or if we’re doing great!). Also, if there’s an emergency the budget committee chair will call for an unscheduled meeting (I’m the budget committee chair…we have elections at year end and I always win!)
Now….this sounds simple enough right? Every month you meet for a couple of minutes and set that month’s budget…that’s pretty straight forward…or is it? Not the case when we first started! I wanted to save it all and Luis wanted to expand our misc amount to the hundreds! I lost count the number of times I threatened to close our joint checking account and open my own account and just split the bills! However, we worked through it and we now rarely have money fights….now, is Luis still a spender? YES! Am I still the saver? YES! But we both have learned to work together towards a common goal. We both get spending money at the beginning of the month (I’ve saved most of mine and have about $850 and if you ask him at the end of the month he probably has about $10 left). The key has been communicating and both of us being discipline enough to stick to our budget….we tell our money where to go at the beginning at the month and then our budget tells us where our money should go as the month goes by.
I will warn you….the first couple of months is not easy! And you will make mistakes…you will underestimate the amount you spend in one category or overestimate. Luis is not necessarily a planner so the first intense fights were because of that….he would get birthday invitations and wanted to get everyone bday gifts but we only had budgeted $30 for the month and we had $5 left. Well, month after month we would both get frustrated because he was ruining my budget and I was ruining his social life! However, as we worked together I learned to be a little more flexible with the budget (I would move some money from one category to another one to allow for flexibility) and he started planning better. At our budget committee meetings he gets his phone out and looks at bdays for that month so we can budget for this properly.
Now that we have Gracie, although she has no idea what we’re doing yet we sit her in the office with us as we discuss this month’s expenses and this month’s savings goal. For us it’s important that she sees us doing that so that it becomes a natural thing for her to do as she starts her budget in her early teens.
Although budgeting is key to winning with money, it’s important to remember that everything worth fighting for will come at a price. So, for us to achieve our goal not only did we budget but we had to sacrifice a lot! What did we do? Stay tuned!
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