This post is linked to the weekly blog carnival Tackle it Tuesday. Click on the banner to see what everyone else is tackling this week. This post is also linked up to Two Cents Tuesday over at Not The Jet Set.
I don’t recall if I have mentioned the Living Like No One Else forum here yet. It is a forum dedicated to Dave Ramsey followers (boy does that sound like a cult or what!?) who are working their Total Money Makeovers (TMMOs). The Living Like No One Else (LLNOE) forum is free knock off version on the real TMMO forum that costs $$$ to join. When you go to the LLNOE homepage it really doesn’t give you a lot of information. I just took the plunge and signed up – and I’m so glad I did. It has really help me to get back on track financially and overcome my struggles with the farm finances.
A couple weeks back I made out a real, official, Becker Farms budget. People always stress the importance of having a budget: every dollar needs a name, tell your money what to do, if you aim at nothing you will hit it every time, etc., etc. The reason my last budget was made before we moved here was simply because I didn’t know how to do a budget with all the irregular farm expenses we have. Here’s how I’m doing it now…it may sound a little complicated but stick with me and you’ll see how easy it really is. If you’re working the plan yourself this might be boring for you.
I used a form similar to the Monthly Cash Flow Plan sheet posted here. I plugged in each monthly expense based on amounts I gathered from my Quickbooks reports. I also averaged out our yearly expenses (mostly insurance bills) by dividing the total due by 12 months. For example, we pay $806/year for Brian’s life insurance so for easy figuring I’ll set aside $67/month. After going through this process for every expense I could think of I had a pretty nice monthly budget completed.
The next step is key for me. I made up what’s called an Allocated Spending Plan. The first column lists each expense and the monthly amount needed. Then I added 4 columns, one for each paycheck we’ll receive this month. For example, the second column says “Jena – 11/10/09 Paycheck” followed by Brian’s paycheck in the third column and so on. We both get paid biweekly so we have 4 paychecks coming this month. Then every dollar of every paycheck gets a name. My first paycheck will cover groceries, phone, electric, insurance funds, pet food, gifts, and $10 of blow money for me.
So tomorrow when I take my check to the bank I’ll deposit it and leave in enough to cover the bills that come out of the checking account. I’ll get cash back to divide up into spending money for each category. The grocery money will go in a special spot in my purse. The pet food money will go in an envelope in our safe for Brian to grab when he buys dog food.
Now what about the unpredictable farm expenses that pop up and wreak havoc on the budget? Well I’ve started an Irregular Income Planning sheet for that. Basically I’m just listing the extra things that come up in the order of importance. So far this month we have $30 for semi antenna, $15.50 grain storage bill, and $133 we owe a guy to bale round bales for us. Whatever money is not spent in the regular budget will cover the irregular expenses.
The most exciting part for me is that if we stick to the plan we should have close to $1000 left over every month to go towards our current goal. Right now the goal is to finish the cattle building, then the lean to, then save for a semi trailer, then finally pay off our debt (except the mortgage). Of course some months the irregular expenses will be quite high and cut in to our extra money.
This way every dollar that is spent outside of the budget has to be discussed and agreed upon. We’ll be much more accountable this way. There will be no, “Well I think I’ll go to Jo-Anns and buy $20 worth of yarn this week because it’s on sale.” Or whatever. Because there won’t be money sitting in the checking account to cover it. I used to just wait until the end of the month and transfer what was left to savings. It is way too easy to spend money if it is just sitting in the checking account with no name!
I don’t expect things to go easy the first few months but I think we’re on the right track. We had a “budget meeting” last night and although Brian thinks I’m a total nerd (okay maybe the highlighter was a little much… on the 4 separate printouts I gave him) he’s happy with the budget and is glad we’re doing it. I love getting his feedback and really enjoy that we’re working together on this.
What about you? Do you have a family or business budget? How do you tweak it to work for you? Does it help you reach your goals? Or if you don’t have one, why not? Have you considered the benefits of having one?