Tuesday, 21 March 2017

Working to a Strict Budget

March has been an interesting month. I've tried hard to stick to a really strict budget. I didn't fully succeed, but I've been pleasantly surprised by the fact that it wasn't as difficult as I thought it was going to be.

I think it helped that I got to that 'sick and tired' moment that The Former Mrs Jones talks about on her YouTube channel, that prompted her to get on board with Dave Ramsey's 9 Steps to Financial Freedom. I've had a lot of those moments in recent months and the penny has finally dropped.

I myself am not actually committing to Dave Ramsey's programme, as I don't really have a lot of debt to pay down and prefer to chart my own journey, but it is a useful tool to measure your success by and therefore every now and then, I do check where I am in relation to his steps.  Here's my not quite complete version of them.

1) £1000 Emergency fund
2) Debt Snowball
3) Save 3-6 months expenses
4) Invest 15% of income for retirement
5) Save for kids college education
6) Pay off mortgage early
7) Build wealth and give

I am personally taking an approach that attempts to tackle several of the steps simultaneously rather than in the order Dave Ramsey suggests. In this sense, I'm trying to save and invest for retirement and my daughter's education, keep funds available for emergencies and regularly give some small amounts of money to charity (in addition to my time volunteering at the CS)

(Please note, that I may have mixed the order of some of these steps to suit my own personal priorities. I also think there was another step about buying a car with cash, but as we own our car outright, I didn't include this one in my list. I'm not sure what the other missing one is though.  If anyone knows please enlighten me.  Again, it may have been one that didn't seem relevant, perhaps titheing, which isn't a particularly common activity here in the UK or at least I don't know of many people who do it. Please refer to Dave Ramsey on YouTube for the proper 9 steps in his plan)

Anyway, as I said, I'm not strictly following Dave Ramsey, but I am taking a lot of notice of Budget Girl who does follow the Ramsey plan, and charts on her YouTube channel, how she is paying down her student loan debt. In particular, I am paying attention to her detailed budgeting methods. She is very inspiring. I'm so enjoying seeing her debt go down each month. She truly deserves to be debt free for all her hard work and positivity.

She argues that the ability to budget is like a muscle, that grows stronger with practice and focus.  I like this analogy and find it does make perfect sense.  As a consequence, I am flexing that muscle in an attempt to build it up over the next six months.

Although in March I partially succeeded in sticking to a strict budget, I was still left feeling like I was treading water, if not going backwards and couldn't see to when the light would appear at the end of the tunnel, so on Sunday I decided to plot a strict budget for the next 6 or 7 months and see where it would take me.

I kept the Food budget at £400, Household at £50, Home £20, Me £25, LB £25 and Misc. £50 and tried to account for any known upcoming big birthdays, events, foreseeable expenses.  According to my calculations, if I stick strictly to this budget for the next six or seven months (until September), I should get where I want to be, in terms of being in control of my finances and living firmly in the black and within my means, rather than using credit cards and my overdraft to get by each month. (Although I do pay them off every month and never pay interest) This is a terrible habit that I've formed over the past 10 years and I'm trying very hard to break it and start paying for everything in cash or with a debit card. (Unless purchasing online, when I will still use my credit card)

In some respects, sticking to such a strict budget for so long seems a bleak prospect, but I think the built in small budgets for me, home and household should help me stick to it, as they do allow a little room in the budget to buy the occasional treat for myself or to enhance our home. I think I'm finally in a mindset to tackle this financial turnaround strategically and I'm going to do my darnedest to crack this thing.

Of course, there will probably be lots of things that crop up that I haven't accounted for, which will more than likely blow my budgets, but I'll just have to cross those bridges when I come to them. Having focussed on what I want to achieve, and having potentially created a path through the jungle of my current finances, I now just have to follow it to hopefully achieve my aim and the prospect is making me feel much more optimistic. I will be keeping a very close eye on my progress each month and I'll let you know if I'm sticking to the plan and achieving the progress I have predicted.  Wish me luck.


  1. I think steps 4, 5 and 6 are supposed to run simultaneously. It's step 2 where everything else stops I think, so you're still following the DR plan pretty closely.

    I still haven't decreased our grocery spend, in fact I think it's gone up! But next month we're going to apply a little creative deprivation so hopefully we'll see a little change.

    1. Good luck with that. If I don't buy enough food I get into trouble, as OH cycles competitively a lot now and gets very hungry due to burning off so many calories. I don't think he realises how much more he eats these days.

  2. I haven't seen much of the Dave Ramsey advice but from what you have listed it looks qute good to me. For us it is getting the bills down and the day to day spending that needs controlling. I am spending time at the moment looking at savings rates - quite depressing - I saw the interest rate on an old ISA of mine - it was 6.5%. I also had savings in the icelandic bank Kaupthing Edge with interest of 7.5% - imagine that - we were one of the lucky ones and got our money out before it went into cyber space. The same money now won't get more than 1.2% if we fix it down!
    I think you are doing great - making a plan is always a good start.

  3. I agree that savings rates are very depressing. I guess we're lucky that we have any savings to invest, but it's not much consolation when your money is actually depreciating due to the cost of living going up gradually.

  4. Well done for your effort!! I think half the battle is being willing to think about it. My husband is very aggravating and won't! I do ok though!
    He's also a cyclist and eats like a horse and he eats expensive things as snacks- things that I would contemplate spending a meal on!

    P.S. I tithe!x

    1. My other half doesn't like to think about it either, so I try to focus on my own for now and hope he eventually gets on board with it. I'm not sure he will though as he approaches things very differently. He's very organised, but doesn't future plan.

    2. p.s. Good on you for titheing. I admire your generosity, but I know few if any people that do it. I guess many people don't mention it but could be doing it.

  5. We have a new provincial budget coming up tomorrow, with proposed tax increases. I am leaving my grocery/pet/household budget as is until I see what things are going to cost.

    We are debt free and use our cards to get money back. You need to be able to pay in full every month or the cons outweigh the benefits.

    Once our home was paid off money was set aside for the boys education, and savings for retirement.

    Your plan looks very workable.

    God bless.

    1. I hope so. It will take a bit of will power though and self restraint.