Let me explain.
For the majority of my adult life, starting in college, I was always broke. I didn't manage my money well at all. If I had it, I spent it - because that's what you do with money, right?
There were a few years, before I got married the first time, when I was somewhat responsible with money. I didn't have anything in savings, but my bills were getting paid and I could go out and buy stuff whenever I wanted to, but that was about it.
Throughout my first marriage, we struggled. The kids came quickly, and so did the expenses. We lived beyond our means, and it was hard to catch up when we fell behind. I have always been incredibly anal when it comes to balancing a checkbook and so ours was always balanced TO THE PENNY - which saved our asses when we had to live for 2 weeks with 38 cents in the checking account. But, I knew that nothing was going to bounce because we had that 38 cent cushion.
Fast forward through a couple more kids and two divorces. I wasn't working, but I still had bills. I sold anything that I owned in order to pay the utilities. I had payment arrangements out the wazoo in order to keep the bill collectors at bay. It was survival of the fittest to the nth degree - but we had food and we managed to survive.
And then my second ex-husband unexpectedly passed away. Through the fog immediately following his death, I was instructed to contact Social Security about benefits for Daniel....and I found out that we both qualified. We were within days of being homeless when we received our first checks - I hesitantly deposited them and paid our rent for the following month, and then sat down with the bills.
With that money, I was able to pay our bills. I was able to pay the rent and the utilities and buy a newer, more dependable van. I contacted anyone that I owed money to and set up payment arrangements and got everything paid off (eventually).
Now, a few years later....I have a system. As I get the bills, they get jotted down in my datebook. Just an abbreviation for the bill itself, and the amount due on the due date. That way, everything is laid out in front of me. Then, when we get our Social Security (towards the end of the month), I sit down and I pay every. single. bill. for the month. I write checks for what I have to and pay the rest online, but after about an hour or so, everything is paid. It's done. And what I have left is what I have left. With that money, I can go to the grocery store or whatever else I need, but I know that whatever is leftover is it.
Most of the time, what I have left has to last for 4 weeks, but every few months it turns into 5 weeks (we get our payments on the 4th Wednesday of the month) so sometimes things get a little tight on the 5 week months - but I've kind of gotten used to that. I balance the checkbooks every few days, and then I average it out to see how much money I have left "per day" until the next payment comes in - I have a dollar amount that I am comfortable with, and if I go below that amount, then I know that I have to reign in the spending a bit.
I got lucky this year and I ended up getting a much bigger tax refund than I had expected (thank you, full-time crappy job) and that helped immensely - it all went into the savings to use for unexpected house expenses and whatnot. Any "extra" money that I get goes into the savings - I can still access it, but it takes a little bit of effort because I have to actually transfer it before I can get to it to spend it. If I happen to get any "extra" money - it goes into the savings also. At this point, the savings is strictly earmarked for house and TMOART:14 expenses (if you don't know what that is, you'll have to stick around to find out). And for the first time in my adult life, I am actually looking into investing in some CDs in order to stash some cash just a *little* bit farther out of reach, without being totally unobtainable in the event of an emergency.
In a nutshell, that is my budgeting strategy. It works for us, but it may not work for anyone else. I still struggle with the idea that my bills get paid because my ex-husband died, but at the same time I constantly remind myself that "it is what it is" - and I make sure that I make the best possible financial choices that I can for my family.
you go girl! You are doing great and have a system that works!! Good for you and your kids!
ReplyDeleteFirst, huge huge congratulations to you, NSM, for working so hard and digging your way out of debt! I've been through it and I know exactly how much it sucks and how very hard it is to dig out!
ReplyDeleteOne time I went to a free bill budgeting help company consultation appointment, showed them a list of my monthly bills and proof of my income, and after messing with her cute little calculator for a while, she looked me straight in the eye and said, and I quote, "This can't be done. Either reduce your debt or increase your income. Have a nice day." And I was pissed because I had to spend money to take the subway to the appointment! I had been juggling those bills and that income for a year or so, so I knew it could be done if you were very smart and careful. And you have done that too, and succeeded!
Just FYI for your readers, I dug out a little differently and a system evolved that I still use today. It's simple, too. I use an Excel spreadsheet on the computer but you could write a list out by hand instead if you don't want to use Excel.
I made a list on Excel of every single expense I had every month including groceries, haircuts (when I could afford them), gas for the car, etc. I put the list in chronological order by bill due date, entered the name of the bill, the amount due and the due date. I left blank spaces for food and things that I had to spend money on, but not a set amount of money or not every month. I even dreamily put a blank space for Savings, even though nothing went into that row for a long, long time.
I contacted all of my debtors and asked them to change the due dates on my bills so they would be about a week after my two paydays a month. (I too was on Social Security, but disability payments, which I also felt guilty about!). Surprisingly most of the creditors agreed to change my due dates. I just had to work around the others, but it was critical that I set it up so no payments would ever be late.
Then I split my Excel list into two parts, listing all the bills I would pay out of my first monthly check on one list and the bills I would pay out of my second monthly check. Of course, I calculated first to make sure my check would cover the bills due that next week. I also had to take that into account when I was figuring out what due date I wanted a bill to fall under! I then knew precisely how much I'd have to pay toward bills in each of the two sections of the month. It was great! I could also, then, figure out if anything would be left. Like NSM, I made sure the bills got paid first and just lived on whatever was left.
Once I knew what I owed for bills every month, I could figure out what was left, if anything, and then I could choose how much to pay for food and the other listed items that were left blank on my spreadsheets. I used the exact same spreadsheet every single month, because it had everything listed, and only a few things that changed from month to month (the blank spaces!) And I sat down and, using my spreadsheets, I paid bills twice a month (a week after every payday). And every payday I looked longingly at the Savings blank and thought "someday!".
There is one thing I did that, I'll admit, was very, very hard and I didn't know when I started if I would be successful. What was that? Get ready! I cut up ALL of my credit cards! I lived for TEN years with NO credit cards! I had created a mess of my financial situation and I knew I was responsible for that, and I had to take my lumps while I dug my way out. My rule was, if I didn't have the cash to buy something, I couldn't have it. It was painful at times, but I got used to it and it worked.
ReplyDeleteI did discover that a person needs ONE credit card for dire emergencies. I lived 2,500 miles from my family and if there was a death in the family or some such thing, I had to have a way to buy an emergency plane ticket home. It was NOT an emergency if the cutest shoes I ever saw were on sale somewhere.
So that was my system for surviving on very little money and working my way out of debt.
As things eased up some, I got small cost of living raises on my income once a year, I eventually paid some things off (freeing up money to pay extra on other bills) and I usually got small tax refunds.
Once in a while I would sit down and do the math to figure out how much more I'd have to pay on a bill to pay it off sooner, and I'd adjust that on my permanent spreadsheet and make a little bit bigger payments. Eventually I paid off everything.
When I got my first credit card after that, I chose an American Express card because you have to pay it off in full every month. That also kept me from making large purchases because I knew I'd have to pay for it the next month. I thought of it as borrowing money from myself for a month. LOL
When everything was paid off, I did make some mistakes! I bought a few things I shouldn't have and spent more than I should have because I was so excited about having money again. And credit cards. But we all learn from our mistakes and I just went back to my "system". I hope this helps someone! Best of luck!
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ReplyDeleteIt’s really hard to think about how you can survive until the next payday, thinking about the expenses that you have to face. Or on how can you survive with such a limited resource if it arrives late. But at the very least, it made you wiser on handling your finances. And developing a good system for budgeting really helps with keeping track of things. Thanks for sharing your story!
ReplyDeleteRebecca Cross @ Advanced Accounts