So I have a little confession. We don't operate on a budget. At all.
Don't get me wrong, we try to be frugal about stuff, but if you ask me what our monthly budget for groceries is I couldn't give you a real answer. I can tell you how much we spend on utilities and other fixed recurring expenses, but the discretionary stuff? Nope. I can't even tell you how much we spend on our dogs (other than it's a lot).
Instead, I like to keep my eye on the big picture. I've already mentioned that we pay ourselves first. Each time a paycheck hits our account, money is automatically taken out and added to each of our multiple savings accounts. Savings becomes a no brainer. Money is there when we need it.
Then I have every possible bill we can on autopay. Mortgage. Electricity. Cable. Car payments. Student Loans. Autopay. Autopay. Autopay. Autopay. Autopay. I hate to write checks and worry I would forget about them anyway. Autopay is an electronic kiss from the gods.
And finally - and here's our dirty little secret - we put every other expense on our credit card (Dave Ramsey would be appalled). We each have a card connected to one account for a cash back card that I monitor. Instead of tracking a dozen different budget categories and making sure they're each in check, I know how much we can afford to pay off at the end of the month. I only need to remember one number. If we start to get too spendy, we cut back on everything and are more aware next month.
And here's the only reason this system works for us: we always pay off our credit card. Every single month. I haven't paid credit card interest since I graduated college.
The nice thing about this system though is that we rarely hit our upper limit. We're lucky enough to be at a stage (finally!) where we don't think too hard about purchases. We're naturally thrifty enough that we don't overspend. Consequently, we end up with some nice leftover money each month or two.
After the big credit card bill is paid, and I leave some cash as a buffer in our account, I often find extra money that just wasn't used on anything. And then that money, the leftovers that we didn't take the opportunity to spend when we could, gets to go towards other big money goals. For a long time that was our emergency fund. Now, it's our second car payment (and maybe more decor purchases?).
And that's the long story of how I just paid another grand on our car. Only $4,519 to go.
p.s. This is a system that works for us, there are many other - and I can admit - possibly better methods for managing your money. Do what works for you!
Don't get me wrong, we try to be frugal about stuff, but if you ask me what our monthly budget for groceries is I couldn't give you a real answer. I can tell you how much we spend on utilities and other fixed recurring expenses, but the discretionary stuff? Nope. I can't even tell you how much we spend on our dogs (other than it's a lot).
Instead, I like to keep my eye on the big picture. I've already mentioned that we pay ourselves first. Each time a paycheck hits our account, money is automatically taken out and added to each of our multiple savings accounts. Savings becomes a no brainer. Money is there when we need it.
Then I have every possible bill we can on autopay. Mortgage. Electricity. Cable. Car payments. Student Loans. Autopay. Autopay. Autopay. Autopay. Autopay. I hate to write checks and worry I would forget about them anyway. Autopay is an electronic kiss from the gods.
And finally - and here's our dirty little secret - we put every other expense on our credit card (Dave Ramsey would be appalled). We each have a card connected to one account for a cash back card that I monitor. Instead of tracking a dozen different budget categories and making sure they're each in check, I know how much we can afford to pay off at the end of the month. I only need to remember one number. If we start to get too spendy, we cut back on everything and are more aware next month.
And here's the only reason this system works for us: we always pay off our credit card. Every single month. I haven't paid credit card interest since I graduated college.
The nice thing about this system though is that we rarely hit our upper limit. We're lucky enough to be at a stage (finally!) where we don't think too hard about purchases. We're naturally thrifty enough that we don't overspend. Consequently, we end up with some nice leftover money each month or two.
After the big credit card bill is paid, and I leave some cash as a buffer in our account, I often find extra money that just wasn't used on anything. And then that money, the leftovers that we didn't take the opportunity to spend when we could, gets to go towards other big money goals. For a long time that was our emergency fund. Now, it's our second car payment (and maybe more decor purchases?).
And that's the long story of how I just paid another grand on our car. Only $4,519 to go.
p.s. This is a system that works for us, there are many other - and I can admit - possibly better methods for managing your money. Do what works for you!
I love auto pay! I have almost every bill set up with auto pay too. Unfortunately our utilities bill (water, sewer, gas) doesn't have an online pay option, which is too bad. We kind of operate with a big picture budget too. Every couple of months, I go through our bank account and tally up the money we spend in each area (groceries, home projects, restaurants/entertainment). So I have a rough estimate of what we spend, and we keep a loose estimate in our heads each month. If we feel we are eating out a lot, then we cut back back for the last half of the month. It seems to work well for us.
ReplyDeleteSounds like a good system! I hope you're collecting some good points on that credit card!
ReplyDeleteWhat a great system. I think the best part is getting all the rewards back from the credit cards.
ReplyDeleteKristi - That does similar. Every now and then (very rarely though) I do a rough rally of where our money goes. Usually I just discover we spend too much on food and the dogs ...
ReplyDeleteCathy & Pitties - we use a cash back card, it's really nice to see that money hit our account!
I love auto pay :) We have our bills and savings set up that way. We also put everything on a card that earns us rewards and then pay it off.
ReplyDelete-Kari
http://dogisgodinreverse.com/
Sounds like you have your stuff together. =) I'm not naturally thrifty, so a budget is all that could work. Before we got married. hubby was the same way. But, he never spends money so that worked for him. =)
ReplyDeleteWe run our finances the same exact way! Pay ourselves first, autopay everything, and then put everything else on our credit card (the same one you posted a picture of!) that is paid off in full every month. It WORKS! But we are conscientious buyers in general. The extra usually goes toward travel or home projects, or long term savings.
ReplyDeleteKudos to you for meeting your goals :).
I always like to see systems that work for different people. It sounds like this works great for you guys. I am with you on autopay....it makes things so much easier!
ReplyDeleteAutopay autopay autopay. Love it. It sounds like I run my finances in just about the same way you guys do. I watch the credit card and pay it off in full every month. However, what I REALLY need to start doing is having it auto-deduct from my paycheck into savings, instead of paying myself AFTER I pay off the credit card. Good idea.
ReplyDeleteKim - Yeah, not spending money is an easy (although un-fun!) way to stick to a budget ;) Finding something that works for you is the most important part!
ReplyDeleteJennifer - We use the same card then! Love love love my Amex Blue Cash!
Amanda - Working in the savings first can be a little daunting. In the beginning I was always worried that we'd save too much too soon and not have enough to pay our actual bills. We just started with small amounts and worked our way up as we got used to it. It's fun to see the small amounts build up!
You gotta do what makes sense for you! I think your plan sounds really smart!
ReplyDeleteLike you, we pay off our credit card every month, and to make sure we can we need to keep an eye on how much we spend on food and "non essentials" since it can get out of hand. Some months we spend very little while others it's a bit excessive (to put it nicely).
We also do the direct pay (before we even see our paychecks) and auto bill pay is my b*tch. The only check I ever have to write is for our HOA!
I have tried to get our grocery spending on a budget, but that's really hard. Mint.com and I are struggling to get it under control! But paying everything on a cc? I've been in too much cc trouble so I can't trust myself. But if it works for you, what a way to get cash back!
ReplyDelete