Living Simply: Part 2: Write it Down & stash some away...

This is part 2 of my Living Simply series.
Now, you've hopefully stopped spending, and have taken a good hard look at where the heck your money is going. Now, you MUST write it down. If you are married you MUST sit through this together. It will not work otherwise. Use any paper. Do not run out and buy expensive ledgers, or computer programs to help you manage your money. You cannot manage what you don't have, and remember, in Part 1 of this series you ceased all unnecessary spending. A pencil and peice of paper. That's all. You need an IN category, and a category for every OUT you have. Ours looks something like this: (ours is broken down into a four week cycle, -more on this later- since that's how our money comes in. figure out what works for you.)

Paycheck:
Other Income:
Total In:
Mortgage:
Electric:
Water:
Phone:
TV:
Internet:
Truck: (we hope to pay this off soon, and be back to NO car payment)
Insurance:
Groceries:
Gas:
Critters: (if you homestead, this is CRUCIAL, we were blowing our budget every month till we figured this out...)
Savings:
Total out:
Leftover: (many people use a zero budget, and we do in theory, but we have $15 a week or so cushion, because the budget makes me want to be ill otherwise. Make it work for you!)

(the $ we put in savings is enough to cover oddball, irregular expenses like car tags, kids clothes, Peanut's medical ID, homeschool books, stuff that only comes up once a year or so, but still needs to be budgeted for. Figure out the total amount, divide by 52 weeks or 12 months, or whatever your pay schedule is, and THAT is the $ you should be putting back for "accidentals" every payday.)

Dave Ramsey also recommends you make a fun money category, so you don't blow the whole thing on a magazine or cup of coffee. HOWEVER.

Right now we're talking about getting things back where they should be. When we were at that point, we axed cable tv. Found a cheaper internet provider (you could even do without if you NEED to trim things down...) We "dated" in the living room after feeding the kids mac & cheese. Maxwell House makes decent coffee. Goodwill sells decent clothes. So does your closet. Wear what you have. Cell phones are a sore spot for a lot of people. We pay for a house phone, and have trac phones (pre-paid) for cell phones. No, my phone doesn't have a camera or internet, but it does make phone calls. Any charged cell phone will call 911 in an emergency. I also pay for Onstar. If we were really tight this might go, but since we often drive in remote areas with a child who might need medical help, we consider this to be money well spent. Like I said, make it work for you.

Anyway. Once you get it on paper, be sure you know where it's all going. Cut out anything you can, and then, no matter what, make yourself stick to your plan. If it works on paper it WILL work in real life, if you follow what you've planned.

The second half of this step is to stash some away. Use that leftover$15/ week or SOMETHING. (sell something, whatever you must do) to get $1000 put away ASAP. This is your EMERGENCY fund. Use it only in EMERGENCIES!! (such as a poisoned dog needing vet care!!) and as soon as the emergency is over, do whatever it takes ("Hi! Welcome to Wal-Mart!" or ""Would you like fries with that?") to get that emergency stash back.

Next time I'll explain our four week cycle budget better, and give some ideas on how to trim costs more. Thanks for reading!