Creating a budget w/ student loan money

[WolfpackWife]

Probably a dumb question, but I've never done a line item, spreadsheet budget. When DH and I graduated college and both had good, full time jobs, we weren't married but lived together so we had separate accounts and split bills/rent 50/50. Now that we're married, we have a joint checking account into which my paycheck and his loan disbursement is deposited. Out of this account comes all of the money to pay rent and bills, etc. I do still have a checking account, but only because my credit card is linked to it and I can pay my credit card directly from my checking instead of having to write a check and send it in. I only transfer/keep the amount of money in that checking account that is needed to pay whatever amount I'm paying on my credit card that month (not sure if that makes sense).

It's time to sit down and really make a monthly budget. But since I'm terrible at math and pretty much all things like this, I don't know the best way to go about it. I bring in the same amount each month since I am salaried. His loans are disbursed twice a year, as you all are probably very familiar with.

So how do you create a budget for the amount you have each month? Do I take his loan disbursement and divide it by the number of months it is allotted for (for example his MS2 disbursement will come in July and the spring semester disbursement will come in January) and add my monthly earnings, even though there is like $15k sitting in our checking after the disbursement?

Or do I do it backward: figure out what we need each month and build in a little extra spending money and stick to that? How sad is it that I have no idea how to start this, when I'm sure there is a pretty easy way to do it.

[HouseofWool]

Have you read Dave Ramsey's books? I think for a beginning budget, it is a great place to start.

Look at your expenditures for the last couple of months to figure out your base budget and realize that you will need to adjust it after a month or two as you get a more realistic idea of what you are spending.

[WolfpackWife]

I haven't read his books, but that's a great idea. I'll pick one up, it sounds like a good place to start.

[HouseofWool]

And honestly, I can't stand doing a line item budget for every expenditure. Things that have to get paid, like the house payment, phone bill, they get paid. For things like groceries, I pull a lump sum out every payday and pay cash for those expenditures. When the money is gone, then so is my ability to shop. Either I get creative or I break the budget, but at least I am aware of where I am at.

[WolfpackWife]

And honestly, I can't stand doing a line item budget for every expenditure. Things that have to get paid, like the house payment, phone bill, they get paid. For things like groceries, I pull a lump sum out every payday and pay cash for those expenditures. When the money is gone, then so is my ability to shop. Either I get creative or I break the budget, but at least I am aware of where I am at.

That's also a good point--one of the reasons I've put off doing this thus far is that I can't figure out how to accurately account for things like groceries--we'll go to the grocery store and spend $30 and the next time it will be $100. That's a good idea--keep a set amount of cash on hand to use for things like groceries or gas or whatever else. There's no way I can ever predict or even set an average amount we should/can spend on groceries or gas each month. It totally depends.

[TulipsAndSunscreen]

I don't know that I agree that you can't predict gas/food. Unless its an outlier month, our costs for those things are pretty consistent within a 50 or 100 dollar range at least.

I track things pretty closely on mint.com and on my own spreadsheets but i think it was really eye opening for DH to see the debits vs our salaries every month. He was laboring under the delusion that if I quit my job and we didnt have to have our nanny and we went to IBR for loans, we'd be fine on his salary. My sheet brought him back to reality very quickly.

[HouseofWool]

The point isn't that each trip to the store is the same, but that your average expenditures for groceries are fairly stable month to month for most people.

Truly, read some of Dave Ramsey's stuff, even if you don't implement all of it, it is a good place to start. I don't have separate envelopes for all of his suggested items, but I do have a grocery one and one for gifts. The gift account is just a separate savings account rather than cash and I transfer money as needed. (DR is a huge proponent of using only cash.)

[TulipsAndSunscreen]

(DR is a huge proponent of using only cash.)

Which is actually one reason his system doesn't work for me. I like the idea in theory but with how our expenses are, we can't pay all of our early month bills and have anything left over for groceries, etc. We live on credit in the first half of the month until the second half comes in. We live within our means but all of our damn bills come out at the beginning of the month (annoying! and I've tried to change that).

[alotofyarn]

I'm a big fan of mint.com - it pulls in all of your money from various accounts (including loans) and tells you how much you bring in and how much you spend on various items. When we're actually doing well budgeting, it's very helpful.

[ladymoreta]

And honestly, I can't stand doing a line item budget for every expenditure. Things that have to get paid, like the house payment, phone bill, they get paid. For things like groceries, I pull a lump sum out every payday and pay cash for those expenditures. When the money is gone, then so is my ability to shop. Either I get creative or I break the budget, but at least I am aware of where I am at.

Me too! Me too! (Only, I can't let myself have cash. I'm very, very bad with cash.)

What worked for us in undergrad and medical school was to put all the financial aid disbursement into a savings account. We would transfer money from that into our checking accounts each month (you could also do twice monthly if that's easier). It helped us not to just have a huge sum of money immediately available and trying to keep track of it for 6 months at a time.

[WolfpackWife]

What worked for us in undergrad and medical school was to put all the financial aid disbursement into a savings account. We would transfer money from that into our checking accounts each month (you could also do twice monthly if that's easier). It helped us not to just have a huge sum of money immediately available and trying to keep track of it for 6 months at a time.

That is a good idea...especially for us. I found it's too easy to get both confused and out of control when you wake up on a Tuesday in August and all of a sudden you have over ten grand in your checking. Babe, didn't you need new tires? You found that pocket otoscope you need on sale? Etc., etc. It snowballs. We are good enough about money in that we don't just buy frivolously but we have found ourselves having over-spent earlier in the semester and have to tone it down. Evening it out with a budget would really help out with that.

[MsSassyBaskets]

Count me in the group that hates having a line-item budget. I use Mint.com to track spending and make sure nothing gets out of control, but between our wedding last year, various trips, car issues, moving, etc. every month is an outlier in some category. My paychecks are the budget. Once they're gone, they're gone. If we manage to spend less and there's money left over, I transfer it into reserve when the next paycheck comes. Big checks never even hit the checking account, they go straight to savings and then are portioned out as needed for emergencies like the plane ticket for my grandpa's funeral, or for planned expenses that are outside of the normal budget, like the second car we got last month. I use two savings accounts - one for the usable "reserve" at the same bank as the checking account so that transfers are instantaneous, and one at ING (Capital One now, I think) that holds the long-term savings and it takes several days to transfer money out of it. No rash decisions allowed.

[SoonerTexan]

Track with Mint for a month or two ad you will get a good idea if where you are spending. It's painfully eye opening

[WolfpackWife]

These are really great tips. I have an account with Mint.com but it is really really out of date. I think putting all of his disbursement into a savings account and primarily working with my paychecks, and transferring as needed will work best for us. We are also trying very hard to pay down both of our credit cards (I have 2, he has one, but we just paid off the entirety of one of mine so..yay!) so we have made the mistake of throwing too much money at those too early in the semester and finding ourselves short later on. We've got to be more consistent, but I didn't know a great way to do that when you have a lump sum just sitting there. It was too easy for me to see the large amount of money instead of what it was realistically over the months it was allotted for!