Our Financial Journey--The Budget

Earlier this year I shared some of my New Year's resolutions and one of those resolutions was to become debt free by December 31, 2010. As I had shared earlier this week, on June 19th, Ciaran and I became completely DEBT FREE!!!!! No more medical debt, no more car loans, no more student loan. They all have been paid in full. We are very excited and feeling very grateful to an awesome God who led us every step of this way as He taught us (and continues to teach us) how to glorify Him with our finances and be faithful stewards of what He has entrusted to us.

So in our excitement, I thought it would be fun to share with you about our journey to becoming debt free. As Ciaran and I discussed how I would structure these posts, I realized this 16-month journey is so much more than just a quest to become debt free...it really has been an almost 22-month long journey devoted to getting our finances in order (as husband and wife) so we can honor God with what He has entrusted to us.

So having said that, I thought it would be fun to share in a 5 part series, the components of our financial journey so far. We're far from perfect in this area and we're continuing to learn as we go, but we'd love to share what we've learned so far. This series is going to be broken down as follows:

• The Budget
• Emergency Fund Savings and the Debt Snowball
• Cutting Expenses
• Building Momentum
• Freedom from Debt and The Future
  

So without further ado, let's begin at the beginning of our marriage...or rather the last week of September 2008 (we'd been married almost two weeks) when we had our first financial meeting as a couple and merged our finances officially. This was incredibly interesting because I don't know about all of you, but I didn't have a single financial class in high school or college to teach me how to manage money, so this meeting was something neither of us really knew how to conduct...we just knew we had to do it.

So first, I was very fortunate because a dear friend of mine (Jen) recommended a budget software to me a few years earlier called YNAB. Since I'd been using that for a few years, I just shared it with Ciaran at this wonderful meeting at the end of September, showed him the website and what I had learned from using the software and he said he was game to try it. So we merged our finances and off we went. That's right, no separate accounts, no hidden money, just every single penny we had between the two of us was laid before us in this budget.

The next challenge we faced was how to steward these funds within our budget. What percentage of our income should go to what?! So we started first with our tithe and then proceeded to monthly expenses: rent, utilities, food, debt payments, etc. and went from there, plugging in each number into our budget. We still had no clue how much we actually needed for the two of us for food or how much our electricity bill would be each month, so we just made a guestimate and plugged that into the budget. We did this until every penny was spent. [Please note that by "spent," I mean it was given a name/job so some money was put in a category knowing we wouldn't spend it that month, but it would be available in that category for future months or was money sitting in a savings account.] After praying together, we then closed our first budget meeting. That was it. It was that simple. We had no idea what we were doing, but we knew that many marriages end over financial issues, so we just purposed to get on the same page within those first weeks of marriage and off we went with it, prayerfully determined to figure this out.

The next component of our budget, other than spending every dollar on paper before the month (October) started, was a determination to track every penny we spent and record it in YNAB. This was the area that Ciaran and I were most reluctant. I had had great success with this during my single years, but I didn't have nearly as many expenses as I now was going to have. But we purposed to do it anyway. Note, we didn't purpose to "try," we purposed to "do," for a trial period of 3 months. If, after 3 months, it wasn't working for us, then we would try something else.

That was one of the greatest gifts for this financial component of our marriage. It was eye-opening to me as we would sit down and plug in our spending each night or week (if we did it every night before bed it would take about a minute or two and if we did it weekly, it would take about 15 minutes or so). [Now, almost 22 months later, we do this daily, for the most part.] This simple step opened the lines of communication between us with regard to finances and then as a by-product, we found ourselves calling each other if we were in the store and about to make a bigger than normal purchase, checking to see if it was "in the budget" if we forgot, or if we could reallocate any funds for any surprise expense we were facing. We also learned more about each other's interests, strengths and weaknesses through this process.

Ciaran and I had been good friends for seven years prior to marriage, yet I learned more about this beloved husband of mine in those three short months, than I ever had before. The oneness that we have in our marriage was deepened through this process of getting our finances together and the necessary communication that ensued. It has been so awesome and I cannot recommend enough the value of getting on a budget. I've heard many friends say that far from being a restricting tool, it has felt like they were given a raise when they sat down and starting making their money work for them instead of working for their money. A zero-based budget was the first step in our financial journey and if you're interested, I have a few links below to show options for creating a zero based budget. You can always just do one on paper, but I find it to be a bit cumbersome, so that's why I'm linking below some of the electronic versions.

-YNAB
By far my favorite and what we use! Clear interface, easy to use, free webinars for support, online tutorials, etc. Love it, love it, love it!

-Gazelle Budget Lite
Seems a good option if you are just getting started and want a very simple budget.

-My Total Money Makeover
With this paid subscription there is a budget tool within the site you can use. I like this budget because it shows what percentage of your income is going to each category right on the main interface of the budget.

-Mint
I've never used it, but have friends who testify that it works really well for them.

-Mvelopes
A lot of people defect from this to YNAB. It seems pretty good though...just not as good as YNAB in my humble opinion.

-And then of course there is the wonderful Excel spreadsheet. I used this before Jen got me hooked on YNAB.

All right, that rounds out part one of our financial journey so far. Be sure to check back on Monday, when I get to share with you the next component that comprised our journey to becoming debt free! Also be sure to post any comments related to what has worked for you if you use budgeting software. Ciaran and I love to learn and any wisdom you have to offer, we would gladly welcome!