Budgets

How many of you have strict budgets you adhere too?  Do you use envelopes to save for certain things like a grocery envelope, clothes envelope, etc? 

I've never used the envelope method but I know people who do.  I think I'd just borrow from the other envelopes if I needed something.  I'm bad like that. 

Heck, just on Tuesday at a crab feed meeting I was paid cash for some Girl Scout Cookies I'd sold and not 5 seconds later I turned around and handed that $40 to another person to pay for a crab feed ticket for a neighbor.  My neighbor will pay me back but see how that money went in and out so fast?!

Many times Todd and I have tried to stick to a budget. We'll lay out our monthly goals, do well for awhile, then eventually fall into our bad habits. 

For example, we don't balance our checking account.  Who does that anymore?  Now that we have ATM/Debit cards and rarely write checks, I never truly know how much is in the account "for real".  I can go online and see how much is in the checking account or have my ATM give me a balance receipt, but we have certain bills automatically deducted.  Car insurance, mortgage payment, gas and electric, DirectTV, Netflix, FastTrak, school tuition, etc. At any given moment any number of dollars can be removed. Sure, the biller has told me in a letter when I set up that automatical withdrawel, which day they'll be taking my money, but do I have that information written down somewhere that I can access it?  No. 

Truth be told, we live above our means. Thankfully we do have retirement stashed away in 401K plans.  A percentage comes out of our paychecks before we even see the paycheck.  My company has a 401K plan, 401K match program, an ESPP (employee stock purchase plan), flexible spending program, all of which I take advantage of each pay period.  By the time I see the net check deposited into my checking account, the amount is severely pilfered.   

Something else we do which we've found is very helpful for us, is to set up our property taxes and home insurance payments to where they are taken out with our mortgage payment.  They're held in an escrow account and paid out by the mortgage company at certain intervals. 

In addition, we pay our mortgage bi-monthly.  So, if on the 2nd Friday we get paid, then the following Monday the mortgage (with all the above listed home deductions) comes out. The bonus to this payment schedule is since we're making an extra payment a year our principal goes down faster.

Still, with all I've mentioned we aren't great about sticking to a budget for things like vacations, food, clothes, hobbies and health and beauty costs.  We really need to improve these areas. 

If anyone has a great system they use I'd love to hear about it.