Budgeting Tips to Get out of Debt and Build Wealth

OK, I admit it– I am a geek.  I work with computers all day, every day.  When I’m not working at my day job, I’m creating web sites, blogging, or running an online sales business.  I have degrees in aerospace engineering and computer science, and have spent my entire professional career writing software algorithms for everything from space travel to computer backups.

Despite the academic credentials, the idea of writing and sticking to a budget has never been easy for me.  When I was single, it really just wasn’t that important.  I’d choose to charge something on one of three credit cards basically on a whim, and would pay at least the minimum due, and maybe a little more.  I was basically treading water– paying bills on time, generally with an idea to get rid of the student loans and credit cards in a few years.  I was able to charge and pay off the occasional vacation with friends or a visit home, and that was good enough for me.

After I got married and started a family, I realized that the whole budgeting thing is a lot more important.  I wanted, and still want, to be able to take care of this part of our family’s life.  I want to be able to pay the bills and have money in the bank for our needs, with a plan to take care of some of our wants.  But, without a written budget, there is just no easy way to communicate the situation to your spouse.  Talking about what’s due and what’s in the checkbook helps, but without knowing how much you should spend on groceries this month, it’s hard to make decisions without going further and further into debt.  So for the first 7 or so years of our married life, we sunk financially lower and lower.  It wasn’t healthy on many levels, and it had to change.

This year, we finally decided to take care of the budgeting problem.  After a few fits and starts, we came up with a system that is working.  We are still fine tuning the process, but having a process has allowed us to achieve some measure of peace and direction, financially.  As a computer professional, I decided that physical paper envelopes with cash is not the way to go for me.  Call me obtuse in this area, but I really like my debit card and don’t see a reason to vaccuum out my checking account each payday and divide the cash out.  That said, I really like the idea of identifying the spending realities in each category.  So, our system had the following requirements:

• Perform the function of envelopes (Spending limits, allocations) without using cash
• Plan for recurring bills, mortage payments, dues and subscriptions, etc.
• Construct a plan for communication of virtual envelope balances that will work anytime, anywhere.

The next few articles in Funderbudget will explain the system I’ve been using, in detail.  I’ll go through our initial planning, tool usage, forecasting, and tracking.  The budget is a powerful vehicle to tell your money where to go and hopefully there will be something here to help you harness that power.

Posted By: Uncategorized by rocket_scientist