Budget Tips

About five years ago, I began to realize what a dangerous thing an ATM card is. It was so easy to spend, and hard to track expenses. I would get to the end of the month and go to transfer money into my savings and discover I didn't have any to transfer. I couldn't believe it! Something was happening to my money! I began to add up all the ATM expenses and try to categorize them. I was SHOCKED at how much money I was spending, and how little accountability I had as I did so.

Knowing that life was changing dramatically due to divorce, drastically reduced income, and the loss of a business I had spent years building up, I decided life needed to change. I put my ATM card into the safe and set up a budget. I established a savings account linked to my checking account. I set up my bills to be paid automatically, and I set up automatic transfers into three separate savings accounts. Tithing and Savings came first, bills second. Each month I would take my check, keep part in cash and put the rest in the bank. The cash portion I divided up in a small portfolio...food, gas, clothing, eating out, entertainment, household expenses, etc. I was determined I wouldn't spend more than I had set aside.

It took me a few months to figure out what amounts were reasonable. Then, odd things began happening. I started to realize that I would go to Target and put things in my basket without too much thought. I would get to the counter and realize...wait, this book I want to purchase exceeds the $20 I set aside for books each month...do I take the extra from food? Or from household expenses? Or maybe I don't even need this book? And these cookies that were on sale...if I buy them, then next week, I'll be $6short on my food budget...can I live with that? If I buy this shirt Laine wants now, I won't be able to buy the shoes that Joe needs next week.

When the kids would beg me to go out to eat at the Plaza, I would look in our portfolio and realize I had $35 left in that budget category, and three weeks to go in the month. I would tell them what we had left and let them decide what to do. Most of the time,they would say, let's go home and eat, or get tacos from Del Taco.

In other words, spending money became not habit, but carefully considered decisions, not just for me, but for the whole family. I DRAMATICALLY increased my savings and reduced my spending by almost half. And more often than not, I get to the end of the month now and realize I have cash left over, which I then save for a rainy day. And given that my income from the sale of the business runs out next year, and I'll be starting back at college in January, and I'm launching a new business, I suspect we'll be having a few of those rainy days in the not too distant future.

I keep the ATM card in my wallet now. I pay for gas with it, and that's pretty much it. I'm grateful that even though it's been hard, I know I'm doing the right thing. I've paid off my credit card debt. All I have left are the house payments. I'm even working on those! I will pay off my house 11 years early at this rate. Of course, I know that rate of repayment will likely be drastically reduced while I'm in school, but I can live with that.