Developing a Budget.

October 13, 2010

Ok, so if you’ve been following along (if you haven’t, feel free to start here, here, and here), you’ll know that Mr. Windows and I do not have a budget. 

In other words, we spend blindly.

Well, this is changing.

For a very long time I’ve been bothered by the fact that we don’t save as much as we could (arguably, could translates to should).  We spend, spend, spend–almost entirely on our credit cards with the exception of our reoccurring bills–and then pay for it.  This leaves us with the feeling that we’re living within our means (woot!), but sometimes I wonder if we really are.

So, I went to my credit card online banking website and clicked on the spend analyzer to see where I’m spending my dinero at (by me I mean we..Mr. Windows has his own card for this account).

Here’s what I got for this last year:

I did edit this for some privacy because the dollar amounts don’t really matter.  What matters is WHERE the spending is occurring.  Almost half of it has been in merchandise.

At first I thought, “What classifies as merchandise and why do I need so much of it?!”

So, I clicked on the “Merchandise” link and it showed me.  Turns out this category also includes all of my purchases at places like Walmart (food, household items, etc.), buying my computer, buying our new couch, and even our Netflix charges.

I have to say that I don’t exactly agree with how my credit card broke all of that information down, but it gives me a good place to see where we can realign some of our spending.

Since we tend to spend, spend, spend and then look at our bill and think “how the heck did that happen?!” I’ve decided to allot dollar amounts to our activities.

Beginning Oct 14–our next payday–and through November 10 (two whole paychecks, essentially) outside of our normal bill paying activities, we’ll have the following items to budget:

Eating out
Misc. Spending – Mrs. Windows
Misc. Spending – Mr. Windows
Entertainment (movies)

Everything else is worked into our budget with a finite number.  Right now I’ve allotted dollar amounts to each of these categories and we’ve decided to reevaluate after the first month.  Also, hopefully by then we’ll have some other changes to make because we might have our refinance procedures completed (fingers crossed).

If we stick to the budgets I’ve outlined on our spreadsheet, we’ll be able to put an additional $750 into savings with the potential to add more to another savings arena–like home projects, our vacation account, or paying down one of our car loans.

So, here’s hoping we can finally start living on a budget!


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