How do you start a budget?  Budgets are simply keeping track of how much money is coming in (income) vs. how much money is going out (expenses).  At the most basic level, it is: Income minus Expenses.  Then, whatever money is left over, you can put towards whatever you want, whether that’s paying off debt, saving for a house, saving for retirement, or any other financial goal you may have.

Why Budget?  It’s important to budget so you are in control of your money, and you know where it is going each month.  This is especially important if you have a big goal that you want to accomplish, such as paying off your debt as soon as possible.  To see our debt-free journey, go here: Debt-free Journey.  Budgeting was difficult for us at first because it took a while to organize our finances and figure out exactly where we were spending our money, but once we began doing it monthly, it became easier and easier.  Now, I can’t imagine not making a budget.  Even when we are done paying off our debt, we will use a budget so that we can reach our next goals, which will be saving a 3 month emergency fund, then paying off our house, then saving, spending, and giving.  To see our financial plan, go here: Our Financial Plan.  We have been using a budget for about 3 years now, and this is what it looks like currently:

August Budget

EXPENSES

Bills

• 1^st – Rent                                             $738
• 3^rd – Cell phones                              $  92
• 16^th – Gas                                            $  19
• 18^th – Electric                                     $  87
• 30^th – Internet/Cable/Modem   $  49

=        $985

Other

• Groceries                                             $400
• Gas for car                                          $250
• Recreation                                          $    0
• Misc                                                       $  25
• charity                                                  $  25
• blow $                                                   $    0
• clothes                                                  $    0
• Fix car (starter)                                $200
• Doctor appt                                        $  30
• Family bday gifts                             $  40
• Mexico plane tickets                      $1250
• Bachelorette/Bachelor party     $150
• Roe spayed/groomed                    $140
• Friends visiting                                 $  60
• Trip to Georgia                                 $150
• Get passports                                     $200

=    $2920  

Loans

• 12^th – Direct Loan (J)                       $397
• 21^st – Direct Loan (K)                       $220
• 25^th – Sallie Mae (K)                         $max payment (see below)

=  $617                                           

Total Expenses:                               $4522

INCOME

• 3rd – Paycheck =                               $1900
• 10th – Paycheck =                             $1800
• 17th – Paycheck =                             $1900
• 25th – Paycheck =                             $1800
• Craigslist                                               $  150

Total Income:                                     $7550

minus Total Expenses              -   $4522

                                                          _____

                                                           $3028

Plus $ in bank                              + $ 600

                                                          _____

Total money left over:                  $3628

So, this month we will have $3,628 left over to go towards our Sallie Mae student loan.  This is less than what we will pay from here on out since we had a huge expense this month (i.e., paying for our plane tickets to Mexico.)  Our goal is to put at least $4,000 a month from September to November 2012 towards Sallie Mae and at least $5,000 a month from December 2012 to September 2013.  We plan on being completely debt-free in 1 year, 2 months!

What big financial goals would you like to achieve?