Jeff and I are starting a new budget this month. Since I started teaching (here’s a shout out to the CCSU students in AC212-02 and AC212-06), I’m making some extra money plus my student loans payments resume in December. We thought now would be a good time to reexamine the budget and look at our savings goals. We’ve been really good about paying down our debt in the last few months and saving for retirement but our emergency savings and replacement savings are really terrible.
We also needed to make sure we had some money for ourselves. We would go through cycles where we were really great about the budget, paying things down and being cheap. After a few months, we would get sick of being miserly and start spending again. Then we’d clamp down and begin the cycle again. Recently I read Financial Peace Revisited by Dave Ramsey, which has a great budgeting plan in the back of the book. We filled out the new budget and started implementing it November 1.
We started an automatic savings plan with INGDirect so that we have $177.50 put into the savings account each pay period. I’m hoping to be able to increase this since energy prices are dropping. Of the $177.50 going in, here is the breakdown:
- Emergency savings $50
- Major house repairs $50
- Furniture replacement $2.50 (we pretty much have all the furniture we need but I would like new coffee tables some day)
- $25 on car replacement (Our current vehicles are six years old but we take really good care of them and I want to keep those cars until 2012. I think that is completely doable.)
- Vacation fund $50
I know it doesn’t seem like a lot but it’s a start. I set up a spreadsheet in excel to track how much is available in each section of the savings plan. I could have set up a bunch of savings accounts but that is too much of a pain. When interest is paid each month, I add a row and the interest is automatically split between the five categories.
The other thing I really liked about Dave Ramsey’s budget is the line item called “blow”. Blow is a bit of money you get each month for whatever the hell you want to spend it on. Our blow budget is $50 per month, so when we get paid on Thursday, I’ll run to the bank to get $50 cash and give half to my husband. This is in addition to your entertainment budget and eating out and grocery budgets. If you want a coffee, a manacure, a pack of gum or a pair of flip flops, use your blow money. You can also save your blow money for something bigger. I just like the idea of having $25 bucks in my pocket for whatever I want. When I get the money out, I’ll put it in a little envelop and track what I spent it on so I can post it here. I’ll also keep you up to date on how long the $25 bucks actually lasts.