Wednesday, December 23, 2009

BS 1.6 – The Dreaded “B” Word

Please note – FPU only has 7 Baby Steps. I have added the “sub-steps” because I feel that they are important to the overall process.

It’s Our Money

Prior to succeeding with FPU, there is a mindset that married couples have to have – they are not a Joint Venture. A JV is when two companies join for a common venture in order to maximize resources. Your marriage is NOT a Joint Venture. But, if you listen to the words that they use, it makes you wonder:

“Her money, my money”

“His paycheck, my paycheck”

“My account, his account”

God declared you one. That includes everything: it’s our money, our paychecks and our accounts. I have to die to this every time I start to think that I can do whatever I want to do with money. Cindy and I have a trust with each other that is based on three years of doing this program – I will not break that. It doesn’t mean that those attitudes do not slip in, it means that I have to recognize those thoughts and adjust them.

Singles generally do not have this problem. However, they generally have to find some means of being accountable so that they do not spend everything.

Let the Money Know Who Is In Charge

Once we have agreed that all of the money belongs to us, budgeting becomes easier. Most people absolutely HATE the term budget because to them, it represents restrictions and the inability to simply be spontaneous.

Let’s define what a budget really is: it is a imperfect instrument that you and your spouse agree to that tells your money who is in charge.

I like that definition. Why? Because I included the word “imperfect.” No matter how well you budget, something will come along to wreck it – that’s what is known as Life (thank goodness for that Baby Step 1, right?).

Also, I like it because Cindy and I have to agree to it. I generally prepare the budget, but I leave flex room in it for Cindy to tell me about what other family needs exists. We symbolically pinkie swear that we will keep to the plan.

Go Spend All of the Money

Making a budget is not complicated. You really do not need computer software – you need several pencils, a calculator and a yellow pad.

At the top, you write sum up all of the income generated in the family. Along the side of the paper you write all of the categories where you usually spend money (gas, food, entertainment). Finally, you put money in each category until you have no money left.

You spend all of your money on paper prior to the month beginning. Now, that is just the plan. You have to have another page on your budget that tells you when you are going to spend the money.

Along the top, where you have your total income, make some more columns. These columns represent when you get paid and you are going to write the total take home in these columns. Finally, you divide your categories between the total number of payment columns, making sure that you do not overspend your take home.

Easy Cheesy Math that you learned by the time you where in the third grade.

Unexpected Benefits

Here is a secret that everyone in FPU learns– your first budget…it isn’t going to work. That’s ok, because a budget is imperfect: you probably never really thought about how much you need for gas.

But once you get to your third month, things make a lot of sense. In fact, I noticed that I was drinking half of my budget in coffee. Starbucks didn’t taste quite as good once I saw this, and I added a category for Starbucks onto the budget so that I managed how much I consumed.

The first budget, Cindy and I panicked simply because we had too many categories and was trying to fill all of them up with what we wished we made, not with what was actually needed. Now, we know what we spend on Food, Restaurants and Gasoline. And, sometimes, yes, we have to “rob” one category to supplement some spontaneous opportunity (in our minds, Red Robin is a valid spontaneous opportunity). We simply decrease that category and increase the other and we are done. We both agreed to change what we had previously pinkie swore to not change (this is known, in FPU parlance, as an emergency budget committee meeting).

Because of the level of communication that takes place when executing on our budget, that trust I spoke about early has developed between us. It did not exist before: we had some really great fights when we discovered that there was too much month left at the end of the money.

And once we started telling our money what to do, it stopped talking. It stopped saying “Good bye.” On average, most people “find” money in their budget and feel like that they have been given a raise.

That’s really cool, because this getting out of debt thing that we go to FPU for in the first place is going to require that we tell the money who is in charge.

Online Tools

Several of my FPU members have really liked using the Gazelle Light Budgeting Tool. It is simple, but it also helps with the math (I still stink at third grade math).

If you are better with addition and subtraction, these forms may be helpful. The instructions are on the form – just a hint though, you do not have to fill in every category. There is also a form for Irregular income as well.

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