The Whiteboard Budget
So I am the last person that should preach to anyone about the benefits of having a budget. Up until a few months ago my budget plan was either, “Oh crap, did I pay that bill? Nope…” or “Oh crap honey, we don’t have enough money for our bills and the occasional (not even often) stuff we want to do. What now?” Really sucks, really stressful, I don’t want to go back. Before the oh crap phase was me putting all our bills into a google sheets doc (I really love using those) and running the budget out several months. Nice in terms of planning, not so nice in terms of I’d have to change everything around every time something came up in our lives and I swear that happened more often than not. Actually it still does… Also my husband really wasn’t a fan of the google sheets aspect as it was too big, it was conceived in my mind so I understood what I was doing but I couldn’t make him understand what I was doing so eventually it was tossed off a cliff.
Now, while he’s still not an overall fan of budgeting, he does check the whiteboard budget semi-regularly and understands the system we have in place. It occurs to me as well that while everyone should have been taught the benefits of budgeting and should have one in place to hopefully save their sanity down the road it is something that either a lot of people were not taught or something that wasn’t practical in all situations. I know there are times where you get caught in a loop that makes a budget just about the furthest thing from your mind, I can’t say I’ve fully been down at that point but I hope someday everyone who is there can make it out.
Some background as to why the budget my husband and I are doing suddenly started working so well is a few months ago I was talking with my youngest sister about some of our budgeting woes (like eating out…way too often) and was trying to figure out how to get everything on track. I knew my husband and I needed a budget but I couldn’t figure out a way to get one set up that was easy to maintain and read as well as maintaining the budget going forward (I am a master at starting things and not finishing them or only continuing for a short period of time). Both of us work full time plus both our kids are in football, life never really slows down. Anyway, my sister mentioned something that honestly made setting up a budget really click for my husband and I after we discussed our problems with eating out too often, she told me she’d looked at the numbers before and based on the number of times that she and her husband ate out they could have taken a trip to Scotland around 3 times in 5 years (for context they live on the West coast).
3 trips to Scotland…in 5 years…based on how much they eat out.
Now I didn’t look at the what trips we could have taken based on how much we’ve eaten out but I’m definitely thinking we could have been ahead on a lot of bills, paid off some old debt, and also likely flown the 4 of us to the West coast for a visit a time or two in the last few years. I did want to preserve some amount of sanity however since I have precious little left so instead I opted to just look at the difference in how much we were bringing home after taxes vs how much our monthly bills came out to be.
At this point the difference between our joint net income and our bills is about $1000. That can either be a lot or a little depending on what you are trying to do but even with that amount we still felt like we were constantly out of money and not able to do anything but pay bills and stay home. While my husband and I are homebodies we do occasionally like to do things outside the house plus the kids of course love going out and doing things but it just hasn’t been possible with how we had been lazy when it came to our budgeting. Let me tell you I didn’t shut up for the nearly 2 hour car ride back from Maryland when I realized that difference, I know it shocked my husband as well but I’m pretty sure he wanted me to shut up about it after a bit. Anyway, based on my sisters suggestion of one way to look at our budget and what was or was not working for our ‘Oh crap’ budget (everything?!) we now have a budget set up that works for both my husband and I. We have it written on a whiteboard so my husband can see it easily and it’s easier to keep track of new information such as car repairs. So far we’ve been maintaining our Whiteboard Budget since the revelation and we’ve managed to get caught up on several bills that we were behind on and have only one or two more to go before everything is caught up and we can start looking at getting ahead or putting money into savings. Let me tell you it’s been a long, hard road from there to here (mainly in our case paved with lots and lots of bad choices) but we are nearly there and the shock that we received was well and truly needed.
Ok, so on to how to get to a point where you can set up a budget, maintaining it obviously is something you have to do for yourself but hopefully if there’s a big enough mental shock effectively you can get into that mindset without much trouble.
Step 1: Make a list of your net income and frequency of pay. If you live with a spouse or significant other make sure to include both of your net incomes and frequency of pay so you know how often money is coming in and how often you can put money towards bills.
Step 2: Make a list of your current bills, their amounts, and when they are due. Initially my husband and I only included specific bills on our list such as insurance, car payments, rent, etc. On our final budget that is on the whiteboard we do also include a line item for gas/food so we pull that out each time we’re paid and have enough to last us until the next paycheck.
Step 3: This particular step is more for the long term health of your budget so in the initial phase of setting up a budget it can be skipped, it is important to do though at some point so make sure you come back to it!
Decide what you are trying to accomplish overall: are you trying to pay off old debts that are holding you back, are you trying to start an emergency fund so you aren’t caught in a bad place if something happens, or are you trying to save up money to buy a house, go on vacation, start a new life, etc. The possibilities are endless but do need to be considered for the long term aspect of your budget. For example my husband and I would like to have enough free money that we can occasionally choose to go out and do something without putting off bills, we would like to have an emergency fund in case something comes up, we would like to be debt free, and we would like to save up to buy a house. Some of these goals are short term things that we are working towards and some of these goals are long term. The most important goal that we have nearly accomplished was getting our monthly bills back on track so the extra $1000 or so in our budget can be put towards an emergency fund first, going out occasionally, and becoming debt free. I am planning to wait to buy a house until we are debt free from other debts like old credit card bills, hospital bills, etc. That way being debt free initially allows us to grow our credit score and put money aside for a down payment so we are in the best place overall to purchase a house, essentially this is a very long term goal for us at this point.
Step 4: Ensure your list of expenses is lower than your list of income, if it is not there’s a few ways you can correct this such as lowering expenses or raising your income. Below are a few examples of things that can be tried but I will have to explore them further in a later post.
Step 4a. Lowering your expenses has several possible methods and probably more than I am thinking of. Depending on what your expenses include here is a list of a few ways you may be able to save money monthly:
You may be able to switch to a different cell phone plan that costs less, my husband and I switched to a pay as you go type cell phone plan that costs $45 per month including taxes for 2 phone lines. This is for unlimited talk and text, we do not have data on our phones at this point although we do have Wi-Fi at home. I believe the base cell contract we had with Verizon was around $140 or more per month (not including device payments) so this is saving us $100 per month at the moment. Eventualy we do plan to get data on our current phones as well as switch back to a normal cell company but this is allowing us to pay off debts we have currently. We also just got a mailer recently regarding a different internet option that will potentially around $35 per month cheaper for the first year and $15 per month cheaper the second year.
Along the same vein you might be able to find a cheaper insurance company with similar services, trade in your car if you have a newer one with higher monthly payments for an older vehicle with lower monthly payments, or find ways to make your home more efficient so you use and pay for less electricity. Another option, although I do not have direct experience with this side of it, would be to find a roommate if you are renting or rent out a space in your house if you own. Any of the options discussed here do come with their own pros and cons as well as you may not be able to save much money for a drastic reduction in services so the change may not make sense to do, these are things that you would have to gauge for yourself in working on your budget. While some things will save you more money than others it’s still good to look at all of your options to see what will work for you.
Step 4b. Raising your expenses can be more problematic depending on what else is happening and your location. This is something I will have to explore further at a later point as well.
Step 5. Make it so. Now comes the point where you have to take the information you’ve gleaned from answering the previous questions/writing down the information and you have to make it work for your situation. No two situations will be the same but the basic bills that most people pay are going to be relatively similar. Sometimes budgeting does come with some truths that have to be faced in terms of what we need to spend our money on versus what we want to spend our money on. There are some examples below of how my budget looks on the whiteboard (I use black marker to make mine, I just gussied it up for the post) to hopefully give you a better visual as well:
One thing I want to note is my husband and I do not currently have credit cards, now we’ve had credit cards before and those ended badly for us (this was prior to the budget) including some of the cards and medical bills going into a default type status. We’re going to work on cleaning those up over time however we needed to have the budget set before we could actually tackle those. Working towards being debt free and the best way to tackle that beast will be a post in and of itself. Additionally the Halloween decor and electric can opener are one time additions to the budget, we actually didn’t get Halloween stuff on this paycheck so will have to look at it for our next paycheck.
Hopefully this breakdown helps you to understand the need for a budget as well as some things that can be done to get you to a point of being able to set one up. Feel free to ask me questions in the comment section below or email me directly if you don’t feel comfortable asking the question on here. I do not have data on my phones so depending on the day responses may take awhile for me to get to!