Comments on: Why traditional budgeting is WRONG

By: Bargain Babe » Going on a spending moratorium

Bargain Babe » Going on a spending moratorium — Wed, 17 Jun 2009 16:57:01 +0000

[...] spending moratorium. I’ve done a good job paring down my discretionary spending with my forward-looking budget system. Is it useful to cut back [...]

By: My First Budget: Drafting a Plan for Discretionary Spending | Lock in a good rate.com

Mon, 15 Jun 2009 16:49:00 +0000

[...] How do you track your spending against the budget? If I used the envelope system, I’d allocate the actual cash to each account before-hand. But what if I don’t want to have that much cash around the house? Is there a good way to keep track of current spending in each category? Should I carry a notecard with my monthly spending on it? (That seems to be what Bargain Babe recommends.) [...]

By: Michelle

Michelle — Sat, 13 Jun 2009 13:43:20 +0000

Potluck is definitely the norm – and most folks do ask what they can bring, which cuts the cost a LOT, but even just the meat/main dish and the paper products (napkins, plates, etc) were killing my food/household supplies budget. Plus DH has NO problem increasing the guest list with a few phone calls – usually to his bachelor friends who aren’t as potluck-savvy as our couple friends…Dh’s gotten better about asking them to bring ice or paper plates/etc, but he’s still got a learning curve (which I hope the new budgeting plan will help). He’s the extravert-spender in our home…We are trying to get out of debt, but at the same time, there are things we don’t give up – like enjoying our friends and apparently, backyard parties!

By: bargainbabe

bargainbabe — Thu, 11 Jun 2009 21:36:08 +0000

Michelle, sounds like you have a great system for throwing parties. Do you ever ask guests to bring a dish or chip in? I find friends usually ask what they can bring and are happy to buy chips, meat, beer, etc. Pot-lucking makes a difference!

By: Michelle

Michelle — Thu, 11 Jun 2009 18:44:47 +0000

One thing I did recently was to separate out my food-family budget from my food-entertaining budget…DH has a very bad habit for our budget, but it’s his personality, so I made my bed there: he is the most social person I’ve ever met! He invites people over for spontaneous dinner parties/barbeques all the time! Probably twice a week we host from 1 to 7 extra…and you can imagine, my baseline grocery budget is set on our 3 person household. So anytime we bbq chicken for a crowd, the price of that entertainment comes out of DH’s fun money and back into the grocery budget. I hate to be a harda$$ about it, but DH has no concept of what it takes to provide food/beverage for these events…Anyway, tracking categories (or not) is definitely a personal thing!@

By: bargainbabe

bargainbabe — Thu, 11 Jun 2009 17:02:19 +0000

Michelle, you bring up a good point. I have to eat something! I never spend the same amount on groceries, however, because one month I may be traveling and make fewer trips to the grocery store, or another month I may have a big party and spend extra on groceries. If I budget a fixed amount I’ll underspend or overspend. Tracking those fluctuations is less productive for me than including food in my discretionary spending. This way, I’m really motivated to get the best deals at the grocery store because the more I save the more I have to spend on other items.

As for behavior modification, the behavior I am trying to modify is spending more than I have! By setting up a system that allows me to clearly track the dollars that are NOT accounted for each month, I can easily achieve that goal. I don’t care to set minimums for every category because outside my absolute necessities and fixed fills, my expenses vary wildly each month.

I appreciate your suggestions and will keep them in mind. Budgeting is very personal and it sounds like you have a slightly different system. If it works for you, stick to it!

By: Michelle

Michelle — Thu, 11 Jun 2009 13:44:51 +0000

I find it almost ridiculous that groceries don’t rate as “absolute necessities and bills” – what, you survive on air? Yes, you have discretion in how much you spend, but unless you’re on military deployment with mess privileges 7 days per week, this basic amount for this category must be included in your necessities budget – even if it’s at a fixed modest amount. Your index card is a modified/simplified envelope system – just bucketing all ‘discretionary’ costs into one category. It’s a good basic idea, but a real benefit of budgeting is behavior modification – analyze what you spend and perhaps find control points and leaks – if you don’t go back to that card and review where you’ve spent your money, you’re not in a position to forward project effectively the ‘minimum’ discretionary amounts for future periods, especially if you consider groceries to be discretionary. Just my opinion…

By: Weekly Roundup: Checking Out Ally Bank Edition | Frugal Dad

Weekly Roundup: Checking Out Ally Bank Edition | Frugal Dad — Thu, 11 Jun 2009 10:05:36 +0000

[...] Why Traditional Budgeting is Wrong [...]

By: Allen

Allen — Tue, 09 Jun 2009 00:08:49 +0000

I completely agree with this method. This is the method that my wife and I use and it is working out very well for us so far. To not be tedious we re-evaluate and remake our spreadsheet only once every 6 months, having only to make minor changes to it in between.

By: Caitlin

Caitlin — Mon, 08 Jun 2009 12:55:17 +0000

I've tried the forward-looking budget thing with the YNAB (you need a budget) software, but I found it the same as every other budget software in that entering data is tedious and boring. If it's boring, I'm less likely to do it and more likely to forget (which means next time I remember, I have even more boring data entry to do). The index card is a great idea! Another handy way would be a PocketMod. I <3 my PocketMod, but I never thought about using it for budgeting until recently.

By: Lil

Lil — Mon, 08 Jun 2009 12:54:55 +0000

Great post. This is exactly what I do too and I find it works so much better than the traditional way.

By: Jamey

Jamey — Fri, 05 Jun 2009 08:45:42 +0000

Great post – really useful. I can see myself tracking my expenses on an index card, but not sure about my husband. I’ll try!

Cheers!

By: Carrie Robertson

Carrie Robertson — Fri, 05 Jun 2009 05:17:09 +0000

Julia, this is so helpful…we are cruising in the same financial boat, but I have NEVER seen budgeting done this way, and I just had a major A-HA moment…
Can’t wait try this out! Thanks Julia, awesome blog…

By: bargainbabe

bargainbabe — Thu, 04 Jun 2009 22:36:07 +0000

Glad you are going to try it, Simone! Let me know how it works.

By: Simone

Simone — Thu, 04 Jun 2009 21:56:25 +0000

Wow I love this idea. I will definitely try it. Right now we’re trying to budget with my husband’s income (which can vary) and my unemployment. This seems like a much easier plan than figuring out a set amount for things like gas. Because how do I know how far I’m going to drive each month. Unexpected things come up!