Woohoo! I finished Week 2 of the 90 Day Budget Boot Camp! And I got that mistake purchase from last week returned…sort of. The tough part about keeping to a budget that works is following through. That was so frustrating. This place was out of my way, and it was frustrating, and a different Joy might have decided to keep the product, but the money I got back was worth the hassle. Following through is one of the toughest things about managing your money, whether it is following through to get a refund, cancel a service, or correct an error on your bank statement!
This week’s challenge was a doozy. We were tasked with creating a new budget – a budget that works! – accounting for income, planned savings, bills, groceries, other expenses, and even fun stuff. Thankfully the workbook breaks it down step by step, so you complete each task and check the box. You don’t have to finish it all in one sitting! Here are 3 simple steps I implemented during this week’s challenge. Stick around to the end to offer YOUR favorite tips budget tips which will be featured on my blog’s Facebook and Pinterest pages!
Disclosure: This page contains affiliate links. That just means that I may receive a small commission if you buy a product linked on this page. It sure helps towards paying off those student loans! For more information, please see my disclosures page.
This post is part of an ongoing series about my journey through the 90 Day Budget Boot Camp Workbook and my mission to pay off my debt. If you missed it, you can read about Week 1 and the money challenge here.
#1 Break Up to Break Through
The budget that works for you is going to make it easy to do the right thing. If you are working towards a really big goal – such as saving to go back to school or buy a car, or paying off a large debt – and you want everything extra to go to that goal, break up your paycheck. This works really well if you have direct deposit. Open a separate checking account or savings account for your goal. For this one, put it in a different bank from your regular checking account, so that it will be harder to “break” your budget by transferring money back and forth. Make sure you won’t be getting charged any fees. Most banks will let you avoid the monthly fee with a regular direct deposit (which you want to be doing anyways!)
Calculate what you need from each paycheck to cover your bills and living expenses, with a little buffer but not too much. Then, split your direct deposit so that the money you need for your regular expenses goes to your regular checking account, and the money you need for your goal goes to your new account.
What I Did This Week
As you know, my Big Important Goal is to pay off debt…lots of it. I opened up a new checking account (with a $200 bonus, yay!) at a different bank. I calculated how much cash I would need from each paycheck to cover my non-debt bills and living expenses, with a little buffer. Then I went to my HR department and changed my direct deposit, so that my set amount for expenses goes to my regular checking account, and the balance of my paycheck automatically deposits to my debt payoff account. Then I changed the Autopay for all of my debt-related bills to pull from that new account.
Breaking up my direct deposit is really going to help create a budget that works. Since the new account is completely separate, I won’t be spending that money elsewhere, and I know at the end of the month that any money left in that account can go straight to an extra debt payment.
#2 Make One Switch
Budgets that don’t work often fail because of roller coaster budgeting. We try to take on too much at once, go “all in,” and then crash and burn. A budget that works goes “all in” by making slow, sustainable, changes, and then be consistent with those changes. One of the steps from the 90 Day Budget Boot Camp Workbook this week was to choose one thing – just one, for now – to reduce or substitute. You don’t have to change everything at once. That’s the roller coaster budget way. Instead, look for the low hanging fruit: a bill or expense you have every month that you can cut back on. In fact, you may not even notice the cut back if you do it right.
Shop for a Better Rate
The easiest way to do this is to try to get a better rate on a service you already have, such as your cell phone, cable TV, internet, or even car insurance. Shop around and look for a better rate on the same service. Before you commit to the new service, go back to your existing provider and let them know your plans. Sometimes they will reduce their rates in order to keep you as a customer. My mom is a pro at this one. This budget step is awesome because you don’t even feel a loss; you aren’t missing out on anything. (Don’t worry, those changes will come, but we don’t have to tackle them all at once, right?)
Cancel Something You Don’t Use
Another way to do this is to look for a monthly expense that goes to something you don’t actually use. Sometimes, we sign up for a free one month trial…and then forget to cancel before the month is up. Or, maybe you signed up thinking you would use something much more than you do. Check your debit or credit card statement and look for a recurring charge for something you no longer use. If you don’t use it, cutting that subscription is a really easy way to create some more space in your budget.
#3 Take Your Buckets to the Bank
In this week’s challenge, the 90 Budget Boot Camp had me create funds (I call them “buckets”) for infrequent purchases or expenses. These could be anything from car registration to clothing to gifts to vacations. Many banks have unlimited free savings accounts that are easy to set up and transfer to online. I now have separate savings accounts for clothing, grad school, auto, as well as the emergency fund I had already created. I’m not ready to start contributing to all of these quite yet, so I picked two to set a small automatic deposit each month. I know that when it comes time to renew my car insurance next year, I will pay less because I’ll have the money set aside to pay it all at once instead of monthly payments. And I also know that I won’t go out and buy clothes until I’ve set some cash aside in that special account.
Bank Account Buckets
Open as many accounts as you need; that way what you see in your checking account is actually what you have available to spend, and you can easily see your progress towards each goal. These “buckets” or funds help you create a budget that works because the cash you are trying to save (the cash that you will need later!) won’t be sitting in your checking account begging to be spent. Instead, you’ll know exactly what you have for each purpose.
Gift Card Buckets
Another way to create buckets for a budget that works, for some expenses at least, is to buy gift cards. I bought a month’s worth of gas cards so that I know that money is already set aside. Since my checking account gets a little tight on this debt payoff mission, I wanted to make sure that expense was covered in advance. I also do this with Starbucks gift cards. As you know, we Cafe Scholars get our best work done at cafes, but if you are not careful, that cost can add up quickly. I set a Starbucks budget and buy gift cards for that amount. When they’re gone, they’re gone. (I have more tips on how to be a Cafe Scholar on a Budget here).
The Next 3 Steps
Now it’s your turn. What 3 steps would you recommend for a practical budget that works? Comment below and let us know. I’ll be featuring commenters on my blog’s Facebook and Pinterest pages, so be sure to include your social profiles so I can tag you!
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