To budget or not to budget, that is the question. hee hee hee. As a few readers here already know, I teach literature and spent far too long being an English major. I promise that most of my literary allusions will be more sophisticated, but I couldn’t resist the title or the opening line.
I have been budgeting since I moved into my first apartment in 1996. Back then, my take-home salary as a teaching assistant was $525 a month and rent was $210 for a one-bedroom apartment. That right there shows you how easy it was to fall prey to the student loan temptations! My budget was on a piece of scrap paper taped up to my refrigerator. Since then, I have always kept the handwritten budgets, complete with grand schemes to pay down my credit cards. Now, since you know that I have over $8,000 in credit card debt, you must be thinking that I’m going to say the “new me” is abandoning her budget.
Alas dear reader, I can not. I’ve kept a budget for so long that I would be terrified to abandon it. So what am I doing differently this time? Since 1996, the student loans enabled me to really run TWO budgets: the strict paper version and the very flexible plastic version. I ran up my credit card debt, paid it off each semester with loans, and vowed to stick only to my paper budget the next semester. However, my salary was always so low (I maxed out as a T.A. at $17,000 a year) and debt was always so convenient that the cycle continued. It even got one last gasp when I cashed out my 401k to move to Ohio. Again, the intention was to use the $6000 (I had only worked at a job with a 401k for one year) to cover moving expenses and clear my credit cards. When I got to Ohio, I found out that I needed to cover one extra month of expenses before my new paycheck would kick in, so that left me with some debt on the credit cards. In the past year and a half, that debt has mushroomed, clearly because I’m still mentally running two budgets: one on paper and one on plastic.
So here’s the change: inspired by what I’ve learned about Dave Ramsey’s methods, my savings accounts are now going to function as my “plastic budget.” I used my tax rebate to open an ING savings account with $700 to start the baby emergency fund. Ramsey recommends $1000, which I hope to get to after the wedding. My bank savings account is now my “fun” money for travel and clothes (my two big luxuries). Each month, $200 goes into the fun account, plus any leftover money from my monthly budget. This money can then be spent on any indulgence I would have put on a credit card. The gigantic difference is that it is money I actually have rather than money I am borrowing. Granted, I’ve only tried this method for six weeks, but it has been the first six weeks in as long as I can remember where I’ve truly spent less than I earned. For example, I bought a plane ticket to visit my parents in Missouri next month. I found a pretty good flight for $228, so I used $210 in my savings account plus $18 out of my monthly budget. Before, if I had just charged the ticket, I would have jumped on the $60 upgrade for extra leg room thinking that I deserved it. This time, since I was spending my real money, I passed on the upgrade. Hooray for small victories!
Now, you may ask why I’m giving myself a rather generous fun account, especially when I have to budget for a pretty big fun expense, our wedding. Basically, I have failed so many times in breaking the “two budget” psychology, that I know I have to cut myself some slack. Many bloggers have commented on the comparisons between dieting and budgeting, and I have to agree it’s really true. I’ve done my share of fad diets. They work for about three months, but are so restrictive that I always gain the weight back after those three months. I did Weight Watchers online several years ago and have been in my happy weight range ever since. I think their plan works because of the emphasis on overall health and the flex points. Every week, you get a few extra points for small indulgences. My “fun” savings is functioning like flex points. If I went completely Spartan and cut out all clothes and travel, I would fail in a matter of months (I know this from past experience). So, my financial “flex points” can help keep me on track.
Next up, I’m goint to create a page for my actual monthly budget, warts (like a gym membership I never use) and all! That way, you can check my spending against my budget and help keep me on track! Like I said before, this blog is all about accountability.