Zero-Based Budget

I attended class alone this past Wednesday. Jon went to a concert with a  buddy (pre-planned!). Dave Ramsey spoke about the cash flow worksheet and about a zero based budget. Having a zero based budget means that all of your money has to be categorized to go somewhere. Even if that somewhere is savings or blow money- it needs to be accounted for. This was easy for me for a couple of reasons #1 I already do the zero based budget #2 we never have anything left over- so no need to worry about that!

The cash flow worksheet is divided into categories such as Giving, Saving, Housing, Utilities, Food, Car (includes gas), Debt, etc.  The goal is to put all of your money into the category and have ZERO left over... Easier said than done. I don't have too much left over- I am in the negative at the end! I guess I have been playing the "creative accounting" game. I know certain accounts have grace periods (i.e. mortgage, car payments) so if I do not have the money this pay check- I know that I will be okay to pay it with the next paycheck. This has got to stop! This has gotten my family to literally living paycheck to paycheck and that scares me.

On the brightside of going to class alone, I sat with two other ladies (both single). They reminded me so much of myself and the ways I handle money. At least I know that #1 I am not alone, #2 we are all in this class together, and #3 it will all b e okay in the end!

Along with the cash flow worksheet, Dave introduced his famous envelope system. He explained why the envelope system works and why we need to do it. It all makes sense really. If you have the hard cold cash in your purse or wallet- and you go to buy a small carmel frappe from Mc Donald's everyday- you are going to feel the pain of handing that cash over. You will also eventually feel the pain of running out of cash. However, sliding your card (even if it is your debit card) does not have that same painful feeling. Sure you may wonder if you have any money left in your account- but when you see that "approved" pop up on the credit card swiper- you know that you are free to drink that frappe. You will tell yourself to double check you bank account late- but you probably won't because you will have a brain freeze from drinking the frappe!

So we have a cash flow worksheet, the envelope system, AND then he wants us to STOP checking our bank account every day and starting BALANCING our checkbooks.  I almost spit my drink out on this one. Yeah I know how to do it- but why do it when I can see it online? Well, he wants me to do it so that I am aware of what I am purchasing and of how much is in my bank account.

I really ENJOYED this lesson, but this is going to be the hardest lesson for me to stick to. I will do it though- because I want to be DEBT FREEEEEEEEEEEEEE!

A reminder to myself of why I want to be Debt Free!!