Budgeting
Another New Tool: The Mini-Budget
A Mini-Budget is used to spend irregular income such as tax refunds, bonuses, and inherited money. It can also be used to budget for a home project, wedding, or other event.
Here is how it works – let's say you are going to be having a wedding. Lord knows how much money we can spend on a wedding! The average is OVER $20,000! It strikes fear into every dad who has a daughter. It strikes TERROR in every dad who has daughters!
Anyway, let's say the budget is $20,000. SPEND THE MONEY ON PAPER FIRST!!! You are MUCH MORE LIKELY to stay within the budget if you actually think through the expenses IN ADVANCE!
So you pull up the Mini-Budget form (link is later in post) and spend the money on paper FIRST.
You can see that the $20,000 has been spent 100% on paper. The chances are GREATLY INCREASED that this family will not overspend on this wedding (if you call $20,000 not overspending – ouch!).
See how it works? GREAT! What do you need to budget?
Get a copy of the MINI-BUDGET tool HERE.
Why I am such a big fan of cash envelopes
I am a HUGE fan of cash envelopes because they are a key reason that Jenn and I started winning with our finances.
Here is how we use cash envelopes:
Every month BEFORE the money comes in, Jenn and I work together to spend all of our money on paper. We FORCE our money to behave by making it follow the INCOME – OUTGO = EXACTLY ZERO formula. This usually takes less than 20 minutes per month!!! After we have completed the budget, we figure out how much needs pulled out for the cash envelopes.
How do we decide how much to put in cash envelopes? Well, it is something that has been developed over time. We have learned that there are certain categories that we are more likely to impulse on. These categories are where we are quite likely to overspend if we use the debit card. As a result, we pull out the amount of cash that we budgeted and put it into a labeled envelope.
Here are some categories that Jenn and I use cash envelopes for (because these are categories we could overspend otherwise):
GROCERIES
DINING OUT
CLOTHING
BLOW MONEY
ENTERTAINMENT
Think about these categories for a minute. It is pretty easy to go crazy and overspend these categories isn't it?! By using cash envelopes, we KNOW FOR SURE that we will NOT overspend. We will only spend the amount we budgeted!
Guess what? I have never overspent a cash envelope in 4 years!!! If I were using a debit card, I can guarantee you that I would have overspent at least 24 of the past 48 months!!! Why? The debit card doesn't allow me to keep a running amount of how much I have left to spend for each category. The cash envelopes? – Yeah, I can just open it up and count. Presto! I immediately know how much I have left for the month!
Try it! If you are nervous, try just one envelope – GROCERIES!!! It can quite possibly change your life!
First-Time Budgeting
Wow! I remember our 1st-ever budget. My fine bride, Jenn, came into the living room with this scrawled out budget on a piece of lined paper. She had been trying to get me to budget for the past 6 months or so, but I was not playing along! 
You see, I thought that budgets were controlling, restricting, live-in-a-Maytag-refrigerator-box pieces of trash. I wanted no part of that!
STOP! There we were, ME managing the money, with $4.13 in our checking account and our credit cards run up with a balance for the third time! There we were, 105% financed car, 100% financed truck, and nothing in our short-term savings account. There I was, B-R-O-K-E, and in COMPLETE DENIAL!
Folks, I can not write it strong enough! I was B-R-O-K-E and telling my wife, "NO!" to doing something different! At that MOMENT, something happened to me that changed my life and marriage forever. I turned off the TV and looked at the budget she had drawn out. It was amazing! It actually balanced without incurring any additional debt!
LIFE-CHANGING does not describe the next few minutes. I moved on into the computer room and started entering the expenses into Microsoft Excel. As I was putting together the formula to subtract expenses from the income, I realized that all of this time I could have been managing my money with a 1st-grader's math ability. INCOME – OUTGO = EXACTLY ZERO! After a few minutes, we had a budget that was EXACTLY ZERO.
My life and marriage have been changed forever because we discovered that a budget is NOT restricting! It IS controlling! It is YOU telling your money what to do! It allows you to pay off debt, save up for known, upcoming expenses, save money for emergencies, and fund your dreams.
The first budget – yeah, it was tough. Not everything went according to our plan. I mean, every month we were spending an enormous amount of cash at Wal-Mart and really did not know what we had spent it on. As a result, month one was a little tough. Month two – that was a bit easier. Month three – that was even easier.
Listen to your feelings as I write this next line: We don't worry about money ANY MORE. We did something different. We applied God's word and Grandma's advice to our money and our lives have never been the same.
You CAN do this! You CAN get through the 1st month's budget! What have you got to lose?! Click on "TOOLS" at the top of the page or click HERE to download your FREE budget form and get started!
Financial Learning Experience!
Last night was simply amazing!!! I had the opportunity to teach the tools that Jenn and I used to obtain financial freedom to over 350 people! It was awesome!
I was able to swim in credit cards last night. If anyone has a picture of that, I want it! It was totally unplanned, but it just felt right.
I was able to show people how to calculate their debt freedom date. You can do it as well! I have loaded the Debt Freedom Calculator under "Tools".
I was also able to show people how to spend all of their money on paper before the month actually begins. There is POWER in putting this plan TOGETHER BEFORE the month ever begins. You can obtain a blank budget and start doing this for your family as well. Just click on "Tools" above.
We took the time to write out the reasons we want to be financially successful and write down goals that we want to achieve. For many people in the room, it was the first time that our dreams were written down on paper! For many people, it was the first time in years that they have been able to even dream!
We calculated how much money we will need in our retirement funds to be able to retire, and once again we observed the power of compound interest. It IS the 8th wonder of the world! $100/month for 40 years @ 12% annual growth is $1,176,477. The money invested is $48,000, but the value is $1,176,477. WOW!
At the end of the Financial Learning Experience, everyone completed a survey. I wanted to share some comments that were made because they have rocked my world and are THE REASON I do what I do.
What are you going to do as a result of what you learned tonight?
- Do a budget plan with my husband for the 1st time in 32 years. (WOW!)
- Work on our finances together
- Change our lives
- Start tonight
- Plan a financial goal tonight
- Calculate my debt freedom date
- Start investing
- Share with my wife
- Work with my husband on our finances
- Make a budget
- Share the information with husband and children (wow!)
- Sign up for the 5 week class
- Stop adding new debt
To those who attended the FLE tonight, THANK YOU! I am so PROUD of the HUGE step you made tonight to learn more on how to improve your finances. This was a HUGE step. Do you know that over 690 people signed up for the FLE, but only 350 showed up. Why? Because it is TOUGH to face the dragons! This is emotional.
Never stop pursuing education about this! Don't give up after one month of budgeting. The 1st month is the toughest. You CAN do it.
Thanks!