What Budgeting Has Taught Me

Most of you know that I follow the common sense teaching of Dave Ramsey.  If you were not sure, you could have found out here.  My wife, Staci, and I have been budgeting pretty much since we have been married, almost 3 years.  We have looked at our monthly income, projected our expenses, and spent the money on paper (or Google spreadsheet).  I do not recall why we did it initially, other than it was recommended by Dave, but now, 3 years in, I see some added benefit to budgeting.

• When we budget together, we are forced to agree on our priorities in life.  I had a pastor who always used to say, "I can tell your priorities by looking at your planner/day timer and your bank statements." Staci and I are forced, every month to come to an agreement on where we invest or spend our financial resources.
• When you sit down and rationally plan your month ahead of time, your priorities change. 
•  My spending in golf has probably been the biggest change here.  I used to golf a few times per week, and since we started budgeting, I only go out on special occasions.  
• Another example is clothing.  This probably applies more towards Staci than it does me, but by planning out what we need for new clothing purchases ahead of time, we do not make impulse purchases that we regret later.  On the rare chance we do make a mistake on a clothing purchase, we have incentive to take the item back because our clothing budget is finite.
• When doing a 0 based budget, you cannot spend more than you make in a single month.  We have delayed purchases that we may have other wise jumped on earlier.  For example, the computer on which I am typing right now we had to save for.  With a credit card or in store credit we could have made an impulse purchase, but we saved for a few months, shopped around and got exactly what we wanted at a good price.  When you are spending future money it is easy to buy more than you need.  My sister, Jessica, told me that she was saving up for a Mac.  She wanted one for a long time, but now that she had the cash she wasn't sure if she wanted to empty her bank account for a computer (she already has a perfectly good one).  Saving up for something changes how you interact with it.
• When doing a 0 based budget, you also have to acknowledge that spending more on something also means spending less on something else.  We see this every month when one of us says, "we need to spend more on this" the other will say, "where is it going to come from?"  We can invest more, or pay down on the house more aggressively, but what will be neglected?

There is more, I am sure, but those are the biggest differences in the way I look at budgeting from 2007 until now.  What about you?  Do you budget?  If yes, why?  If no, why not?

Dave Ramsey on people with big money...

Makes you think...

What would I be like with $1M, $10M, or $100M?

Pres Obama's Weekly Radio Address

According to the weekly radio address, the stimulus has saved or created 1,000,000 jobs.

700,000,000,000÷1,000,000=700,000/job

Any of you making 700k/year?

Food For Thought

Litterally, food for thought. I'm sitting downstairs eating dinner which happens to be chicken tortilla soup, and thinking about things. I have recently realized that I am really into gadgets. This goes back quite a ways for me. I used to LOVE Swiss Army Knives.  Whenever we would go into a sporting goods store it was my favorite section/enclosed box.  In high school I was the first to own a pocket PC.  For those of you that don't know what that was, it was a smart phone without the phone.  Some people called them Palm Pilots.  The iPhone has been my most recent desire, but I have settled for the iPod Touch.  I chose the iTouch, because it comes without the $70+/month contract.

But there is something new on the horizon.  Or should I say something new on the Verizon?  The rub with switching to the iPhone is leaving Verizon and signing up with AT&T.  It would end up costing my wife and I probably around $50/month more than we pay now.  That is a lot of dough!

This phone runs Android, which is Google's operating system.  I use Google's suite of products, so this is very appealing to me.  Most importantly, it has an app for Google Voice, which means a GV account could run seamlessly on a mobile phone with all the features, and the same great cost.

Here's where thinking has to start happening.  There is still a cost difference.  First of all it would be $200 to purchase which is reasonable, but there is more.  Secondly there will be a $30/month charge for a data plan.  This comes with a 2 year contract, so the total EXTRA price for the phone would be around $900.

Where I come from $900 is a good chunk of change for no more functionality than I currently have other than mobile Internet. (aka data plan)  For example, that $30/month could go to support a missionary, buy food for a food bank, or feed a hungry child. 

I have a lot in this world, and live a very comfortable life.  Most people that read this blog (both of them) are also comfortable and not hungry.  I do not say this to condemn spending, I am just journaling some realizations I have come to.  I'm also not saying I will not some day buy a data plan for a mobile phone.  What I will say, is that I need to do a better job of looking at what I spend, determine if it is a need or a want and also determine if by passing on that want I can meet a need of someone less fortunate.

Health Care

Here is a great podcast on health care and one of my biggest gripes on the subject. I have had such a hard time figuring out the bills from the dentist, etc. that I have been hesitant to go back. I suppose that means THEY win. Anyway for a good look into this in detail check out Planet Money's podcast.