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| The Basics | Battle your budget back into shape
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Household budgets don't run themselves. When yours begins to break down, don't run away -- roll up your sleeves and start getting it back into condition.
By MP Dunleavey
Editor's note: Columnist MP Dunleavey and six other women have come together online to strip away the myths surrounding money, lay bare their assets and liberate themselves from debt. Follow the quest for financial fabulousness of these "Women in Red" in Dunleavey's column on MSN Money.
Household budgets don't run themselves. When yours starts to break down, don't run away -- breathe deep, roll up your sleeves and get down to the hard work of getting it back into condition.
As the designated columnist for the Women in Red, its not like I get to sit home doing my nails. Just as Brice, Beth, Carole, Yalitza and Anna struggle with their money issues, I struggle with mine.
And believe me, Id rather write about theirs. But the other day my cigar-chomping editor growled, So whats going on with YOUR budget?
And I had one of those panicky, peering-over-the-cliff moments. Because I really wasnt sure how my household budget was doing. And I REALLY didnt want to look. But for those of us who are trying to stretch our paychecks around our bills -- and these days thats a lot of us -- keeping your household budget in synch with reality requires constant vigilance.
The big budget myth
It doesnt matter whether you have a budget, a so-called spending plan or some other strategy for managing what goes out and what comes in. Whatever money-management method you use, theres a tendency to imagine that it will run itself.
Thats the Easy-Bake Oven philosophy of budgets, and it doesnt work for money (or relationships, cars, governments or anything else you need to rely on).
Still, because the plan I use, the 60% Solution, is so simple, I succumbed to the fantasy that since it was already in place, it wouldnt need much maintenance. But even with my fingers crossed and my eyes closed, I could see some red flags that my budget had veered away from financial reality. Or rather, my finances had parted ways with the household budget.
Household budget red flags
Maybe you dont use a household budget or a spending plan, and you just eyeball your finances. Either way, its easy for money and reality to get out of synch. Here are some telltale signs:- My husband and I had stopped monitoring our basic expenses, for which wed been using Money Plus, available free to MSN subscribers. (Yes, its free for me because I write for them, but thats not why I use it. Its just easier than Quicken or Excel.)
Which meant that . . .
- We stopped paying attention to where our cash was going. How to tell youve lost control of your cash? When the ATM receipts pad your wallet and you cant remember why you withdrew that money.
On top of which . . .
- We were so proud of our extreme debt-reduction strategy, we ignored other problems. (And having paid down just over $4,000 of the original $24K, who can blame us for being cocky?)
That said . . .
We swept some unusual expenses under the rug: three super-high phone bills ($310, $308, $438), several acupuncture appointments for me ($250), a random decision to paint the kitchen ($140) and my husbands psych class ($470) added up to way more than we had planned in those categories.
Related resources on MSN Money
Getting back on the road to recovery
There is only one way to get your budget up and running again: Face the numbers, which is what my husband and I had to force ourselves to do. Because, lets face it, denial is a pretty comfy chair.- Write down or use software to track all your expenses.
- Pull out your bills and your checkbook (or online statement) and double-check your payments and balances.
- Breathe deeply. Take breaks. Dont whine.
- Include any changes to your financial situation (a raise, a lost job, an added obligation like school or medical expenses).
- Anticipate upcoming outlays -- like the holidays or home repairs.
- Calculate whether youre still making progress toward your goals (saving, retirement, debt reduction, etc.).
In case you were wondering, our budget tune-up took us three false starts (dont try this in the car!), and then four hours sitting at the dining room table with our laptops, statements and checkbooks.
Hint: If youve let things slide, be prepared to play detective. I had to call the bank a couple of times to clarify some transactions. And I spent at least an hour organizing and re-categorizing our expenses online, while my mate recalculated what our actual committed expenses are right now -- and delivered the news that we were over our ideal of 60% for essentials.
Start repairs immediately
More bad news: Because one of my freelance gigs was coming to an end, we were facing a definite deficit for the winter. Plus, we needed to replenish our depleted savings cushion while continuing our aggressive debt-be-gone strategy -- and set aside something for the holidays.
My husband decided to take on an extra shift where he works. I said yes to an assignment I wanted to decline (because beggars cant be divas). We decided to rent out our house upstate.
And we were both so irritated by the end of this we were barely speaking to each other. I found myself staring at the dirty dishes in the sink (usually his job) and trying not to start a fight about them, too. Finally I just decided to pick on his attitude.
Why are you mad at me? I demanded.
Im not mad at you, just at the whole situation! he said, rather loudly.
Well, youre getting mad in my direction! I said, not too quietly either.
Im just frustrated!
You blame me because Im the one who bought the house!
You always think Im blaming you! Etc., etc., etc.
Put on that happy face
I wont bore you with the rest of the fight, but eventually (after I took a long walk and he took a nap) we piped down because . . . really, it doesnt matter who has a grudge against whom or why. I mean, theres always the potential to drag things out to a full-scale conflict, but why go there?
We successfully resurrected our budget and now we have to stay committed to making it work. Kind of like our marriage.
And the good news is, even though facing the numbers is a painful process, its ultimately a relief. Actually, its not. Its damned stressful. But as your columnist Im trying to slap on a smile here. I suppose the best I can say is that now we know how bad -- I mean challenging -- everything is, and that moment of clarity has motivated us. And within that, yes, there is a glimmer of control. Which gives me hope.
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