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Baby Steps: Make A Budget

December 19th, 2008 Leave a comment Go to comments

If you don’t have a budget, you will never get out of debt.  Just winging it on how much you spend on things doesn’t work — otherwise you probably wouldn’t be in debt right now.  And you will not get your budget right the first time, or likely the second or third.  It will be frustrating, but the general consensus is that it takes close to three months to get a good, working budget.

Pencil and paper, or on the computer, either is fine.  I did our first rough draft on paper and after playing with it a bit, put it into a spreadsheet.  Google Docs is pretty good for this, as you have access to it anywhere and can share it with your spouse.

I set ours up with the following sections (borrowed from Dave Ramsey) :

  • Charity
  • Savings
  • Housing
  • Utilities
  • Food
  • Transportation
  • Medical/Health
  • Personal
  • Recreation
  • Debts

Under each of these sections you will want to have entries for specific things.  For instance, under food, I have Groceries and Eating Out.

Here is a sample copy of the budget sheet I use: Budget Sheet

Using this sheet, you get a running tab on how much you have left to budget, or have to cut.  There’s likely lines you won’t use (like domain names,) which you can rename to be something you would need.

Account for every dollar.  You are going to be wrong to start, but it’s better to not have a slush fund to pull from, except your blow money, which is what the name says; money you can just blow.  With extra money, you will be tempted to overspend your categories, and probably by more than you have left over.

Next up: The envelopes.

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