Manage Your Money Pre-Challenge Post: On Paper On Purpose

Hello all! I hope you are all excited to be taking part in the first ever Manage Your Money Challenge here on Enemy of Debt. If you have not already signed up, please do so now. I am excited to be working beside you on this. Now before we get started I want to say this. I do not inherently love budgeting. BUT, there are a lot of things that I have to do in life that do not thrill me but are necessary. So I do them.

Budgeting can be simple, hard, boring, exciting, or as my good buddy at Budgets Are Sexy puts it; budgets can be SEXY! Believe it or not, the sexiness comes from knowing you have a plan, and watching the fruits of your labor develop into success. That is definitely sexy.

I recall times while we were paying our debt off, that I was actually excited to sit down and figure out the budget. Why? Because I couldn’t wait to see how much money would be put towards our goals and desires! That excited me! It should excite you too, but if it doesn’t, give it some time. I have found that when budgeting, you have to get past the “awkward” phase, which is when things seem chaotic and certainly frustrating, before you can really appreciate what having a budget can do for you. Dave Ramsey suggests that this phase lasts about 3-4 months, and I agree with that, but also think that some people may need a little more time. The key is not to give up.

Before we get started on Monday, I want to go over three things I think are very important, in helping you rock this budgeting stuff. I want to add that I will not be using this Manage Your Money Challenge to tell you HOW to spend your money. I want to focus on YOU having a plan, that is it. How you spend your money is up to you, and should be based on your own families goals and desires.

REMEMBER: To be eligible for prizes for each week you will need to participate in the comments section of each Manage Your Money post. The prizes giveaway starts officially next week.

Budget Your Money On Paper, On Purpose

ZERO-BASED BUDGETING

No matter what budgeting system I use, I tend to adapt that system to allow me to use the zero-based budget that I have come to know and love. What is a zero-based budget? Put simply, it is a budget where you “spend” your money for the month until it is ALL gone. In other words, if your income is $5,000 per month, you would tell every single dollar where to go until you reach $0.

So pretend that you already have your income for the month in your hand. Spend it!

First Task: Spend March’s income until you spend it all.

SPEND IT BEFORE THE MONTH BEGINS

No matter what budgeting system you decide to use, you should always have a very simple budget on paper to work from. Once you do this initially, the rest of the months should be easier since for most people, month to month expenses generally stay the same with few exceptions.

Second Task: Spend your income on paper.

***Task one and two can be done together.

FREE POCKETSMITH (8 EVENT BUDGETING)

Comment from Jo:

“So far so good. Already had a paper budget which made input easy except I am struggling a bit with the 8 event limit as it doesn’t really allow for a detailed financial snapshot. Any suggestions?”

My response:

Yeah I can see how that might make it a bit tough. The only thing I can think of at the moment would be to use the calendar to post categories.

  • Housing – Mortgage/rent/insurance/maintenance/repairs
  • Utilities – electric/gas/phone/water/sewage/internet etc.
  • Food – groceries
  • Transportation – fuel/maintenance/repair/bus fare/taxi/auto insurance etc.
  • Misc – Toiletries/medication etc.
  • Subscriptions – Netflix/blockbuster/cable tv etc.
  • Entertainment – eating out/fun etc.
  • Debt – credit cards/student loans/car loans/furniture loans etc. (if you had to borrow to get it should go here—except for mortgages)

That’s how I would do it under those circumstances, and I would track individual accounts and spending on my paper budget for the time being.

USING POCKETSMITH

I am still learning the ropes over at Pocketsmith, but I have to say I really like the visualization that using the calendar-based budget gives me. I have been able to combine both systems together in order to take advantage of spending my money down to zero, as well as using the visual instruments that Pocketsmith offers.

Now it’s time to transfer the paper budget done in task one and two, on to Pocketsmith.

  • Go to Pocketsmith and login.
  • Click on Forecast Calendars.

Now before you start putting in information for the month of March, you may need to input your starting balance in your checking account. Remember you want to spend ALL of your money on purpose. If you have nothing entered for the month of February simply add income on the last day of February, that reflects your balance that will rollover into March. You will notice that when you do so, the month of March will start out with that amount.

  • Add your income.

Next, you will want to create income for any day that you will receive a paycheck, OR any additional money that you will earn. If you get paid on the 1st and 15th, then go to those dates and click “create”. Click the income selection and enter the amount of your paycheck. ***If your paychecks are always different then enter in the amount you know you will receive, or make your best guess. Don’t worry this can be updated as you get your paycheck by simply editing the information.

  • Add all monthly expenses.

Now go in and click “create” for each of the days you have known expenses. I usually enter them in order of importance. Food, shelter, utilities, transportation, etc. (See example list below.)

  • Monthly grocery budget (recommendation: $125 per person)
  • Mortgage or Rent
  • Electric and Gas
  • Phone Bill
  • Water/Trash
  • Clothing
  • Transportation/Fuel
  • Household Supplies
  • Internet/Cable
  • Subscriptions
  • Entertainment
  • ETC.

For items that do not have due dates for them, like groceries, you have a few choices depending on your habits. Do you buy groceries weekly, bi-weekly, or once a month. (Is there a specific day?) If so, create the expense for that day. If not, pick a day.

Be sure to enter every single dollar you will be spending for the month of March into the calendar. The great thing about Pocketsmith is that you can set income and expenses to automatically show up for following months. In other words, you only have to do this once, with the exception of any small changes from month to month.

Third Task: Transfer your budget information into Pocketsmith’s Forecast Calendar.

That is it for today folks! This is the most important part as it will make your budgeting experience go a lot smoother. Usually the first part is the most time consuming so keep that in mind before you second-guess your decision to do this. :) PLEASE use the comments section of this post to ask questions or offer any kind of support for others taking this same journey. Let’s build a community around good money management. Let’s start now!

Related Articles I Have Written About Budgeting

OTHER MANAGE YOUR MONEY POSTS

  1. Manage Your Money Sign Up
  2. Manage Your Money Pre-Challenge Post: On Paper On Purpose
  3. I Love You…Like A Blogger!
  4. WEEK ONE CHALLENGE: Manage Your Money – Wants Versus Needs
  5. WEEK TWO CHALLENGE: Teamwork, Accountability, and Kids
  6. WEEK THREE CHALLENGE: Death By 1000 Cuts
  7. WEEK FOUR CHALLENGE: GET OUT OF DEBT!
  8. BONUS CHALLENGE: Think Ahead and Stay Determined
  9. FINAL POST: TBA April 1st
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About Brad Chaffee

19 Responses to “Manage Your Money Pre-Challenge Post: On Paper On Purpose”

Read below or add a comment...

  1. Barbara says:

    Done. I had to squish a few items as the free subscription only has a limited number of entries. I'm all set up with a paper copy of my March budget.

  2. Laurie says:

    I have never budgeted outloud before.(Smile) This is what putting it on PocketSmith feels like. Generally I scribble down the bills for the month, round them up, add them up and subtract from balance in checkbook. I look forward to a different way of budgeting as I’m craving for a “savings” account and ultimately a down payment (or full payment) on a new/used vehicle. Pray I can make it through the “awkward” phase.

    • Brad Chaffee says:

      The awkward phase will go away, and you will notice the more you do this budgeting stuff, the more money will become available. It’s just like getting a raise because you are tracking everything. Most people find all kinds of money when they simply track their spending. I do however hope that I may be able to talk you out of buying that new car, especially by going into debt to do so, but I will leave that alone for now since this is about budgeting and not about debt. I will say this though, you could do better for yourself by buying a gently used $3,000-$5,000 that will not depreciate in value as fast. Ooops, sorry! I just couldn’t help myself.

      If you ever want to talk about it let me know, or I could point you in the direction of some terrific posts on the subject. ;)

      • Laurie says:

        lol Oh Brad, when I say new/used, I mean new for me but definitely used (or pre-owned as they say now). I’m driving a 17 year old used Dodge Caravan and my husband chuggs around in a 16 yr old Ford Tempo(also bought used), so it’s only a matter of time.
        If you can point to terrific posts on buying used cars, point away!
        thanks.

  3. Kathleen C says:

    Working out my budget. I’m the only one at the meeting – as a single mom with kids getting ready to fly the coop and a mom that lives with her, I’m the only one that has to do this. Makes arguments easier – I always win! :) However, it makes shared concern and decision making a little bit harder with no one to offer another point of view. My sister (also a single mom, though not with the mom living with her thing!) is going to be my ‘budget buddy’ when she gets back from her travels… so I may have some adjustments to make. Also, having some issues figuring out Pocketsmith – but I’m sure I’ll get there.

    • Brad Chaffee says:

      Kathleen, just know that there are lots of single moms out there going through the same thing you are. Single parents have it rough because like you said you have no one to hold you accountable or offer up alternatives and solutions. I would suggest that you maybe talk to a close friend that would be willing to chat with you about difficult decisions or could call in times of great strain. When you find yourself impulse spending or simply buying something you really do not need, give that person a call. When I started FPU and my wife was in Nursing school I went through the class myself. My wife was on board but not as much as me because she wasn’t listening to the lessons and stuff I was coming from Dave Ramsey. it helped me to have an accountability buddy, in fact both of them from FPU are doing this challenge. Okay well one is one the fence but definitely one is. LOL

      If you would like to maybe pair up with one a participant of this challenge I would strongly suggest it. That’s why I am trying to get people talking and sharing during this challenge. I want this to be as much about community as it is budgeting. Good luck and as always, email me with personal questions you may have or share anything you like in the comments section.

      Thanks for stepping up to the plate when things seem to get tough. Single parenting is a tough job so I have a lot of respect for you and whatyou are going through. Remain strong, and the tide will start to change to favor your goals and desires.

  4. Jo says:

    So far so good. Already had a paper budget which made input easy except I am struggling a bit with the 8 event limit as it doesn’t really allow for a detailed financial snapshot. Any suggestions?

    • Brad Chaffee says:

      Yeah I can see how that might make it a bit tough. The only thing I can think of at the moment would be to use the calendar to post categories.

      Housing – Mortgage/rent/insurance/maintenance/repairs
      Utilities – electric/gas/phone/water/sewage/internet etc.
      Food – groceries
      Transportation – fuel/maintenance/repair/bus fare/taxi/auto insurance etc.
      Misc - Toiletries/medication etc.
      Subscriptions – Netflix/blockbuster/cable tv etc.
      Entertainment - eating out/fun etc.
      Debt – credit cards/student loans/car loans/furniture loans etc. (if you had to borrow to get it should go here—except for mortgages)

      That’s how I would do it under those circumstances I guess, and I would track individual accounts and spending on my paper budget for the time being. I wish I would have known about this specific issue because I bet this is going to frustrate enough people to keep them from continuing on. I am going to post an extra article covering this issue on Wednesday or Thursday.

      Let me know if that works. I am sorry about this minor issue. Thanks for sticking it out! :)

  5. Michele says:

    I have my bills and paychecks in for March…. It seems like I am leaving something out, I will go over it again…

    Does anyone know why Pocketsmith has extra calendars? I should have named the default calendar that I am currently using.

    I am going to have to try to find the time to really sit down and read Pocketsmith. It looks like a great program.

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