Paying Bills- A reality check
When we have money, I spend it. I usually don't just go blow it, but spend it on what I call "high priority wants" that I have been putting off because the budget is tight. The problem is sometimes we have money in the checking that really needs to be saved for bills and needs later in the month. My husband gets the larger part of his pay once a month, so this makes cash management even harder for me. When he gets his "big check" I feel like I have the money to spend. Many months we have found ourselves scraping through because we didn't keep enough money back to pay "needs" later in the month.
Over the past year, I have tried some different ideas. This is what has worked best for me. When he gets paid (big or little checks) I sit down with all the bills. I put them in order by date. Then I schedule them all by their due date (even the ones that aren't due yet or I don't have the money for yet) with electronic bill pay. (If you don't use electronic bill pay, just write out all the checks. It will accomplish the same thing.) Then enter them into Quicken, changing the enter date to match the date it will come out of the bank.
By doing this I have an accurate picture in Quicken of where we are for the month. For example, this week Tim got his first "big check" of the season. It was larger than we were expecting, and I felt like spending! I didn't go crazy but the purse strings did loosen a bit. This is ok, if we really have the money to spend, but did we? I was avoiding sitting down with the bills, and receipts because honestly, I didn't want to know where we really were. Another tip PAY THE BILLS AND ENTER THE RECEIPTS IMMEDIATELY! Last night, I finally sat down with them. It wasn't horrible, we didn't blow it, but things are still tighter than I was expecting. It was a needed reality check.
By handling the bills this way, I also have to keep a close eye on the checking account. I have scheduled bills before the money has actually come in. This may seem like a big negative, but actually I like it, because it forces me to pay attention to the finances. If money doesn't come in as expected or some other bill comes up, it is very easy to go in and change my scheduled payments. I rarely have to do this though, because I am more aware of what is going on in our cash flow.
It is a big mind game to convince myself of the reality of our finances! Enter receipts right away. Pay bills on pay day and schedule all the bills for the month.
Labels:
budgets,
frugal fridays
3 comments:
I struggle with this too since my husband has a base salary and gets commision once a month too. (that's what his old job did and I'm assuming that's what his new job will do when he starts). It is hard to budget that and this is a great tip, thanks!
Hi Stephanie - I just found your blog via the Carnival of the Recipes and have enjoyed reading it. I admire that you are working on getting a handle on your finances, because trust me, even if you had lots more income if you don't manage it you will always end up broke just before the next paycheck. It was how I lived for years. That's because I would pay the bills and see what was left, and knew I could spend it which I did but always ended up spending more than I expected.
I do have some advice to help you out, hopefully. You mentioned in another post that you mean to create a budget but just haven't done it yet. Believe it or not, it is really easy to create. Just don't initially think of it as being something used to tell you where you can spend money. Create one just so you can see where you actually spend money.
I originally looked at Quickens budget feature and took about 5 seconds for me to say "forget that!". I just usesd a simple spreadsheet and listed the bills that came due each month. Housing, electric, insurance, TV, etc. Those amounts are pretty fixed and stay pretty much the same each month. Then came the variable amounts such as gasoline and groceries. I estimated those by looking back through Quicken and seeing "about" how much I spent each month. I totaled all of these known and recurring amounts, then subtracted it from my expected monthly pay. The difference between the bills and income became "discretionary" spending for my "high priority wants". What it meant was that I had $200 a month discretionary to spend outside of the "usual" bills. Once I knew that and started tracking the actual spending each month, I slowly accumulated the bank balance to afford the bigger things.
Okay, so I wrote a lot more than I meant to. But really, what a budget does is it shows you where you are spending money, not where you are allowed to spend it. And by tracking spending within the spreadsheet I could see where to focus on cost cutting efforts.
I hope that helps some. If you are interested I can send you a "dummied-up" spreadsheet so you can see what I mean. Just email me.
Michael
Michael,
I tried to leave a comment at your site, but couldn't get the verification to work!
Thanks for the visit and your gentle nudge about making a budget. We have used Quicken's before, but you are right it is complicated. I probably need to do a simple spreadsheet budget. My husband's income varies so that throws a loop too. I probably need to figure the budget at his average to lowest income and then apply any extra to debt reduction!
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