Financial Hunger Games…we survived month 1

“Congratulations,” Clayton told me last Sat., a huge grin on his face and a fake microphone held to his mouth. “You’ve just survived the first month of Dave’s Financial Peace University. How do you feel?”

Honestly? Not bad. If pressed for a real answer, I’d say pretty empowered.

By far the worst part has been learning to use the Envelope System. Hands down one of the hardest things we’ve had to do in our marriage. And I know at least one of you is rolling your eyes and going, “Gee, how terrible. The hardest thing? Really? Sure sucks to be you…,” but it really was. Remember that part about having 11 years’ worth of financial arguments in 2 weeks? Very stressful times marriage-wise. (Of course I’m not talking anything close to imminent divorce here, guys. Just that it was tough wanting to strangle your partner 28 hours of the day. Let’s not get melodramatic…)

But it’s gotten easier. Every few days we get reacquainted with our bank account, sometimes have a come-to-Jesus with it when things don’t add up, and then fine-tune for next week. Finances have become an almost daily habit for us (in fact, we sit down every 3 days or so to do a quick bank account check up), and if you’d told me, 2 months ago, that I’d not only be balancing our checking account every few days but that I’d be looking forward to doing it, I’d have laughed right in your face. After I punched you, of course. And maybe kicked you while you were down, just for the hell of it.

Because, you guys? It’s working. That was Week 1. Now, at the end of Week 5 (because April was kind of like an unwelcome house guest, hanging on over an extra week because it was “having so much fun!”), we’ve managed to save over $400 on necessities (not even counting the money we allotted for our Emergency Fund) just by paying attention to the freakin’ money.

Yeah, you heard me. $400. And I’m not putting that number online because I want to flaunt it–actually the opposite. I want to empower you guys, if you’re wondering if this system is for you, if you’re in a financial sticky-place and kinda watching this blog to see how we do with it, if you’re starting to feel like saving money is more like herding drunk cats.

The Envelope System (which we learned about from Dave Ramsey’s FPU, but which he isn’t the creator of) is 100% about changing your behavior. And that is Really. Frakkin. Hard. To do. But it’s possible. It’s absolutely, positively possible.

A list of things I’ve wanted to buy and haven’t because I’ve spent my Blow money for the week (since starting the Envelope System):

  1. Entry for Tough Mudder in MD Sept. 8-9
  2. Move tickets for The Raven
  3. Stephen King’s The Wind Through the Keyhole (hardcover)
  4. George R.R. Martin’s A Clash of Kings (Kindle)
  5. 8 songs off Maroon 5’s album Hands All Over
  6. Pre-order of Charlaine Harris’s Deadlocked (Kindle)
  7. Movie tickets for The Cabin in the Woods
  8. Lunch out this week with an old co-worker
  9. Game of Thrones Season 1 on DVD

A list of things I would’ve bought with my debit card this month just because I wanted to (before using the Envelope System):

  1. See items 1-9 above.

Those would’ve come out to about $265 over the course of the month, completely for entertainment/whim. And that’s even factoring in the cheap way to get some of them (buying used from Amazon, going to matinees, etc.). That may not be a lot to you, but it ain’t a small amount to me.

So a recap of the month.

Lessons Learned:

  • When balancing our checkbook (or spreadsheet, whatevs), don’t just reconcile the current tally with the bank account. Also keep track of how much we’re saving–we keep track of this in our spreadsheet by having a column for the estimated numbers and tallies for the actual numbers spent:

    • This serves several purposes: 1) it helps us keep track of where we over-/under-budgeted, so we can properly adjust for the next month so that 2) over the course of several months we can identify trends in our spending, and 3) we get small (sometimes big) motivators when we see that we saved money, even if it’s just a few dollars here or there (because remember, I’m all about the tiny motivators everywhere I can find them).
    • Incidentally, I modified our spreadsheet so that it showed a starting monthly balance of $1K partially because it makes the numbers trend easier when it dips, and partially because showing the actual number is TMI even for me. We did some nifty equation-ing in Excel so that the Running Tally columns auto-calculate (because I abhor math). The Saved column is set up similarly so that it it always shows the difference between our estimated spending and what we actually saved (or over-spent, though thankfully that’s been minimal). The Running Tally (Budgeted) column is helpful because we can see where our bank account will be at its highest and (more importantly) its lowest, so we can make sure we have enough to cover our financial butts when bills roll around. The Running Tally (Actual) is what we use when we reconcile against our actual bank account number–the last number in this column should be what’s currently in our bank account.
  • Get a partner to balance the budget with. This has been essential since there’re often instances where the numbers don’t seem to add up right. Clayton’s good for catching why the numbers are off (like “Oh, it’s because this bill went through on the 5th instead of the 13th, like we’d planned…”), and I’m (apparently) good at catching the mistakes when our Excel equation-ing isn’t correct (like the row numbers are mis-entered or the + or – in the equation is off).

Where We Thought We’d Fail (and Surprisingly Didn’t):

  1. Not taking lunch. This was largely due to our past failures at this because being forgetful is our mortal flaw. However, it turns out that when you’re playing a game with yourself to see how much you can save in a week, you become a lot more motivated to remember things like lunch. Mostly our past issues with this centered around a lack of preparation, so we made sure the night before that we’d have food for tomorrow’s lunch. We made sure we had clean containers for it, and sometimes we packed it the night before (put our Rubbermaid containers of whatever right on the front of the shelf so we’d see it when we opened the fridge in the morning). Having food to take in the house (as in, you plan for  meals and grocery shop so you have the food in the house to prepare) has gone a long way, too, since we can usually whip up something quick if we forgot to prepare it the night before.
  2. Not budgeting enough for things. By making minor adjustments every few days, we’ve managed to stay on top of most surprises. We got that $400 I mentioned earlier simply from over-budgeting, which I think is the natural trend when making a budget. You’re like “Ooh, I really don’t want to be caught without gas money later…I’ll add an extra $50 there” and then find out you only end up using $40 in gas anyway. A few dollars here and there really add up over the course of the month, so don’t discount them.
  3. Not reconciling the account frequently enough. We’ve discovered, through trial and error, that 3 days is the perfect amount of time to go between Budget Meetings. It’s long enough to let things process (in the spreadsheet pic above, you’ll notice the “P” in the Pending? column to show that a payment has left our hands but hasn’t cleared the bank yet) but short enough that we only have a handful of account actions to have to deal with (so we don’t have 20 different things that went through that we now have to trace back). Doing the budget every 2-3 days usually means we only have to take about 15 min. to do it. Sometimes it’s even been as simple as a 5 min. process, which meant that we sat around for another 10 min. looking at each other doubtfully because we didn’t think it should’ve been that easy.
  4. Spending into next week’s Blow money. This has been a challenge but it only took us doing it once to realize that it really sucks and should be avoided at all costs. Sure that $25 thing seems totally worth it this week, but I promise you that next week, when you’re splitting the remaining $5 between two people for 7 days, you’re not going to think it was worth it. Trust me on this–I’ve done the research.
  5. “Borrowing” from one envelope to pay back another one. The moral here is to stay inside your envelopes. There’s a reason you’re picking this system up: you overspend in areas you shouldn’t! It’s easy, easy, easy to “borrow” in this fashion, and you should also avoid this one at all costs because it completely circumvents the point of this method. When you run out of money in one envelope, don’t take money out of another, even if you think you’ll “pay it back” from another envelope or from next week’s money. It’s not worth the juggling and this will bite you in the butt. It’s bitten us several times, though thankfully, not hard enough to ruin the week. (Like, this was a butterfly-bandage sort of wound, not a 4-5 stitches sort of thing, but still…it hurt.)

So that’s where we’re sitting a month into it. We’re feeling pretty in control, we’ve surprised ourselves both with how much we were overspending and with our capacity to save money, and we have our sights set on our next financial goal: Baby Step 3, which is to save 6 months’ worth of expenses in the bank. We’re excited about doing this–like, high-five worthy kind of pumped up–and we’re confident that we can do it. Having control over your money, however long it took us to get to this point, is a damn amazing feeling. I highly recommend it.

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4 Comments

Filed under Dave Ramsey, financial misadventure, Financial Peace University, fun, milestones

4 responses to “Financial Hunger Games…we survived month 1

  1. Micki

    Rock on! I am intimidated by your spreadsheet and much prefer the ease of Quicken, but awesome saving, planning, and attention to financial detail. We have noticed some great positives and been more restrained since starting envelopes too (even though ours are virtual). Keep up the good work!

    • Yeah, we ended up using the spreadsheet for a few reasons. 1) We tried MS Money at one point (much earlier) and it wasn’t as easy for us to use. Admittedly, we also weren’t as motivated to keep track of our money like we are now, so that probably contributed to our frustration, too. But all I really remember is how non-helpful that sort of software was for us. 2) We’re cheap and now see no need to shell out $$ for new software when we can organize it ourselves. 3) But our biggest reason for using it now is b/c Using Excel also helps both of us feel like we’re contributing to the budget and its organization–Clayton’s good with numbers and likes to do many various calculations to determine diff. money scenarios (How much will we save for this example? If we save X amount for X months, how much will we have left over? Based on that number, how long will it take us to get to X monetary goal?, etc.). Typically he’s done this in Excel b/c he knows the equations to put in to calculate them AND it allows us to keep multiple number scenarios on the screen at one time (vs. just using a calculator). But his version of doing these important calculations are messy and ugly. However, my forte is in organizing and formatting, so I take his ugly spreadsheet tracking and fiddlefiddlefiddle b/c I like it and b/c it makes me feel like I’m doing important work on it. In the first few weeks of us getting off the ground with the Envelope System, I wasn’t contributing much mentally or verbally (b/c I’d decided it was too hard and checked out, thus causing so many of our arguments), but I COULD contribute by formatting things to be visually useful and better organized. Hence our spreadsheet.

      For someone picking it up cold, it’d seem pretty complex. But we’ve got it set up now to run the calculations we want, with minimal oversight, and it’s presented in a way that’s visually appealing (which makes you more accepting of it and more likely to use it). Now, this seems to be equal to the same amount of work it would take to get Quicken or MS Money set up, since you have to spend some initial time organizing and telling the software how to categorize what.

      Plus, the fact that we have to manually compare with our bank account (vs the software syncing up with it) forces us to pay more attention. This actually helps us, since we kinda need the forcing. Otherwise, our past history proves that we’ll slack off the first chance we get. 🙂

      • Micki

        I wasn’t meaning to disparage the Excel method. Excel is a very powerful product and I think it is how Eric was doing bills when we were first married. I actually used Excel to throw the numbers in and run budget scenarios too, I just then entered what I need to in Quicken because that’s the system I’ve been using for forever – I’m too lazy to study up on the formulas (even though I knew them in high school!). Whatever method works for you is what you should do. I know some people still pen and paper balance their checkbooks which sounds so time consuming, but it works for them. I’m glad you can each offer your talents to feel like a stronger team, that’s good marriage sense. Plus, using the software you have to its fullest potential is the essence of frugality, right?

        • haha No, I didn’t take it that way! I know many people who use Quicken and love it. We actually ended getting MS Money, I believe, b/c we were cheap then, too, and it was cheaper and almost comparable. I’m certainly not defensive about the spreadsheet, and if I sounded so it was accidental. 🙂 I’ve been frequently surprised (in good ways) at how other people are managing their money–their methods, software, practices–and more people seem to be mentioning it now that I’m talking about how we do things. I absolutely think you should use technology to your advantage, including whatever softwares work for you. Case in point: your latest blog post about the phone app. Even though you’d told me about it, it was neat hearing a more in-depth description of how you’re using it to managing things. One of the things I’m learning most from others so far (yourself included) is how many different avenues people can take to manage money. 🙂

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