Budgeting Tips from The Trenches

Last week I wrote a post about our financial situation. There weren’t a whole lot of public comments either here or on Facebook, but the feedback I received privately was overwhelming. I got emails and direct messages. People came up to me in person to talk about the post. Some were congratulatory, others thanked me for my honesty. Some offered their expertise to us as we go forward and some even said they were inspired to make changes themselves. Clearly, admitting where we were and how we got here struck a chord with people.

Knowing all this, of course I feel compelled to share more. Being honest is hard. Being honest is scary. But if I know that my writing about our story can help other people either stay away from our mistakes or get themselves out of similar ones, then I will write all that I can. Nothing would make me feel like this whole mess was worth it more than knowing my bone-headed decisions actually lead to some eventual good.

Now, I’m no expert, but I have spent the last five years destroying some debt and learning how to keep from racking it up again. I can give you all I know and it seems the best place to start is at the beginning. I’ll spare you the details of the spiral that got us so far in the hole, but I will tell you there was nothing huge until the end. We built up credit card debt through small, barely noticeable purchases like diapers and new towels. Quite simply, we lived beyond our means, not lavish vacations and fancy cars beyond, but just enough beyond that it eventually caught up with us and we weren’t able to quit until we were way behind.

One our our biggest mistakes was that we failed to realistically budget. Oh, we sat and “budgeted” often, but we never were fully honest about our spending, mostly because we weren’t conscious enough of it to know exactly where our money was going. So, when it was time for our move, we factored in things like moving trucks, first and last month’s rent, but we forgot the paint we’d need to touch up our house or the hundreds of dollars in packing materials we’d need to move two states away. As you can imagine, when we first faced our debt, we were a bit mystified at how it got so bad so fast.

When we got there and we quickly went from people with 800 credit scores to people who were suddenly dodging creditor calls and robbing Peter to pay Paul’s bills, we had to get real with what the heck we were doing.

We wrote down everything, from train passes to the lollipops at the grocery checkout, for one month. I nagged The Husband to tell me every detail of his day when he was at work. Luckily, his response was to quickly just quit doing anything but work from 7-7, so he wasn’t too hard to track. However, we did find that when it came to “work expenses” he spared no expense. If he had to buy it, eat it, clean it or read it for work, he did, without thought or question to the budget. As for me, anything having to do with kids passed my radar without notice. I would pause before every purchase for myself or my home. As a reformed compulsive home-decorator this was a huge step. But for some reason, when it came to buying anything for my kids, I’d throw it in carts without a second thought. I swear I bought them food at every single stop along the way during a day. Ridiculous, and without that money diary, probably would have, completely unconsciously, gone on forever.

Now that we were armed with our realistic spending profile, we could create a real budget and then stick to it. We saw where we could cut and we made those cuts. We got creative with how we spent. Most importantly, we tuned in to our lives in a way we never had before. Paying attention to the way you spend, much like paying attention to the way you eat, forces you to really know how you’re living your life and that was our first step to living a rich life.

Do you know your money story? Are you aware of where every penny goes or do you find yourself marveling at the bank statement and credit card bills every month? Take the Money Diary challenge and start writing down your monthly spending. Then share with us what you learn and what you may change.

Cheers!