Ok, so in order to post more, and post more interesting things, I was going through my bookmarks to talk about some of my favorite sites.
One of my folders is Bills. Now, I now the title of this post is Money Mangement, but please don’t assume I know really anything about money or how to invest or anything. Joe and I contribute to retirment funds though each of our jobs, and have another one outside of those, but we really don’t know much about it. We give them our money and tell ourselves not to look at how much we are getting back from those now, as it is less than we put in, but that it will be better later when we retire.
What I want to share with you is how we manage our money everyday and pay the bills. This was especially important when I wasn’t working and we were only using Joe’s paycheck. So, two years ago I looked around the interwebs for a program that would do things for me, like track transactions, etc. Joe pays most of the bills, but its my job to move money around, etc, so I finally chose Mvelopes. Now, it has a free trial, but after that you pay for the service. We paid for 2 years of service right off the bat after the free trial, so I can’t remember how much it equals to a month. UPDATE: Our account is about to renew: $190 for two years- so about $8 a month. You can also pay for 1 year or month to month, but it comes out to more a month that way. If you want a free program, try Mint.
The reason I chose Mvelopes over Mint, however, is that it uses the Envelope System of money manegment. This means that you have Envelopes for various spending, and put money into each every paycheck, and when, say, the electric bill comes in, you take the bill money from the Electric envelope. This keeps you from using the Water money to pay the Electric bill, then not having money for the Water bill.
This system works well for us. Each paycheck (now that I am working we get a paycheck each week), I divvy the money into envelopes. Mostly, since Joe pays the bills, (from when it was only him working), his paycheck stays in his account and is used for all the bills, mortgage, cars, etc, as well as his personal expenses. My paycheck covers my expenses, and savings.
Now, the trick with this is have an envelope for everything you do. Our bill envelopes are: car insurance, electricity, gas, life insurance, Netflix, Phone, TV/Internet, Trash/Sewer, and Water. We also have Debt envelopes for the mortgage and the two car payments. For all of these, I figure what we usually pay each month on them, then from each of Joe’s paychecks, I put in half that amount.
We also have envelopes for each of us to cover eating out, gas, groceries, student loans, and things we each pay for each month (my Audible or Joe’s WoW for example). We also each get Spending money for whatever we need/want. If it is something consistent that is the same each month- it gets its own envelope. We also have envelopes to build up money to pay for gifts, pets, and car maintenance.
Now, when a bill or expense gets paid, and there is any extra money left over in the envelope, it gets moved out. Sometimes its needed to cover an envelope that didnt have enough money in it (if we eat out more often for example). Usually, it gets moved into savings or the Extra Payment envelope. Even if it is 32 cents- it gets moved. I also do this for most monthly things when the next paycheck comes in- keeping the same budgeted amount in the folder.
Doing this with the Extra Payment envelope let us pay off Joe’s student loans- I would just tack on the extra money each month to the payment we were making, and soon they were all paid off! Now, the money for his loans, plus the extra money can be used to help pay off something else. (like my student loans)
For savings, we have 2 types- general savings and specific. A specific savings we just used was for Vacation. We were able to pay for all but about $100 of our trip to MO using the money we saved up- which is good so you don’t worry you are spending the electricy money on coffee at Muddy’s. Also, with the general savings we can do things like buy a new tv without wondering how to pay for it.
I don’t love everything about Mvelopes- I don’t like how they handle credit cards so I don’t use that feature, and I don’t use the bill pay either since we do that through the bank- but I haven’t found anything I like more.
Any suggestions for other programs? Any questions on how we budget? Blog about how you manage money (for good or bad) and post a link in the comments!