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Discussion Starter #1
Hi all!

I'm new to Dave Ramsey. I'm reading TMMO and I've done quite a bit of research online about the babysteps etc. First I jumped straight into step 2 and realized ... duh... that's not going to work! But I got smart and am working on our $1000 EF now.

So questions about the budget. If I set a budget and have a little extra left in the grocery fund, does that go into the snowball (when I get there) or do I roll it over to help out with the next week's budget?

For now it's obviously going into the EF, but I was just wondering about the budget when I'm in BS 2. Also, what about things like a clothing budget that I won't spend every month, but when I need it, I need it?

I'll probably get these answers and more as I get further in the book. But I thought I would ask.

Thanks!
 

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Variable budget line items rarely equal actual expenditures. There are different ways to handle it. For now, put into your baby emergency fund. What if your actual had gone above budget? What would you have done? Once you have your baby emergency fund fully funded, if you are following Dave's plan, extra will go to your snowball. Just be careful if you decide $1,000 is all you're keeping in an emergency fund. You will have to be very accurate on your budgeted line items so you don't go over budget. Also, because budgets are only estimates, it will be necessary to continually monitor and modify your line items. That's why Dave suggests budget meetings with your spouse.
 

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Discussion Starter #3
Thanks Kim!

For the past few months as we were trying to get a handle on the "bleeding" I've paid all my set expenses first, then whatever was left was the "slush fund". That was groceries, gas, clothes, eating out, entertainment. In the old days, when I spent too much I grabbed a credit card. In the past few months, I've been watching more carefully and haven't had to grab the credit card. But with no savings I was living on the edge.

I think it would be nice to have an actual amount set for "clothes" and "entertainment" that was separate from the more necessary things like "groceries" and "gas". I'm pretty good at tightening the belt when needed. But I think this will actually feel better, as I won't feel like I'm stealing food from the table to buy a pair of shoes for my daughter.
 

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I use a sort of envelope form of budgeting. It is all electronic. My categories are groceries, utilities, gas, and misc. Misc is all the stuff like clothes, car parts, random crap needed for the house (toilet innards and the like), etc. I also budget in some in the spring and fall to replace what the guys grew out of.
 

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I been doing the DR every dollar has a name budget since 2009. Kinda before but not from the Dr course.
Because i always have a running CC balance (last debt from kids college) I prepay the amt designated right to the CC for both gas and groc. If it doesnt get used for groc/gas it covers interest.
I get cash back from using the CC.
I prefer the electronic envelopes as opposed to the cash where I can grab it.
What you do will be modified by who you are.
We were is debt to the tune of $300,000 when this started after a huge medical emergency and w/ 2 college kids. I am proud to say we are down to $8000. And have $3000. saved for the new furnace.
I tell you because it will show you it can be done.
 

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Starting with a zero amount every month has REALLY helped me with budgeting! I rolled over the amount to my emergency fund until that was fully funded, now it goes into the sinking fund. I challenge myself to squeak out a little more "leftover" each time. For example, if I already bought groceries for the month but there is $15 leftover, it doesn't mean go out to dinner with it, roll it over! Zero out and be proud of it! I used to think I had to pat myself on the back by treating us out to lunch or dinner with it and now I see how many other areas it can help us, instead.
 

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Thanks Kim!

For the past few months as we were trying to get a handle on the "bleeding" I've paid all my set expenses first, then whatever was left was the "slush fund". That was groceries, gas, clothes, eating out, entertainment. In the old days, when I spent too much I grabbed a credit card. In the past few months, I've been watching more carefully and haven't had to grab the credit card. But with no savings I was living on the edge.


I think it would be nice to have an actual amount set for "clothes" and "entertainment" that was separate from the more necessary things like "groceries" and "gas". I'm pretty good at tightening the belt when needed. But I think this will actually feel better, as I won't feel like I'm stealing food from the table to buy a pair of shoes for my daughter.
You'll find the system that works best for you. Most budgets expand categories, just like you mentioned, once there is some buying history to build on. By accounting for every penny spent, you will be less likely to impulse buy.....that has always been a big one for me but now I just think......that's $20 more I can put on my mortgage.
 

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It helps with some categories to hold onto it (more like a sinking fund) and others it's good to move the money on out. For instance, I don't buy clothes every budget cycle. I save up and buy more at once. Food - I have some items I buy in bulk that last more than a budget cycle. Et cetera.

You could always start putting it to EF and debts, and then when you feel that it's hurting you too much, you can hold those categories back in the future. Or you can set a cap - 'extra carries over until it becomes x size, then it stops'. For instance, we have a car repair fund that we give to every month - but if the fund gets bigger than reasonable for our vehicles, that extra money ought to be in our car replacement fund instead (or elsewhere altogether). We do monthly budgeting rather than weekly, so that makes things different too.
 
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There are a lot of schools of thoughts on this.

For some categories, like car maintenance, it's best to let it build, and in fact, that's actually part of the purpose of those envelopes. To save up a little bit out of each paycheck so that when you have the big expense, like buying tires, the money is already there. In those cases, I think it's best to set a limit on it, like $600, or whatever, and then once that leftover money reaches that limit, then anything over that rolls into whichever baby step you are in.

For other categories, like groceries, there's not generally a need to build up funds like that. For those, unless you know you have some big expense coming up (like maybe you buy a whole cow to cover all your beef for the year or something), it doesn't make a lot of sense to keep rolling that over. So for extras there, that goes to which ever baby step automatically.
 

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Discussion Starter #10
Thanks for the ideas everyone! I am still working on my EF. I think my extra will all go to that for now, just so it can build. Then if the extra expense comes up I can tap the EF if needed. But we aren't planning any big expenditures soon. We have a chunk of change coming this summer which is already earmarked for new tires, car maintenance, and specific debts, and finishing the EF if it's not complete yet. We are also planning a garage sale/plant sale for mid May. That will all be extra to put towards the EF.

I am happy to say we would have had the EF finished if we hadn't needed a washer. But we bought it with cash! DH was really against a used one (he doesn't trust people's stories about how old it is, condition etc.) but we got a clearance floor model and saved quite a bit on it. We are happy with it, and plan to get a good 10 years out of it as we did our last washer. So I will call that a victory!

Continuing on....with baby step 1!
 

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Discussion Starter #11
Update on this! We just opened a new savings and checking account! The savings account with be our EF and sinking funds, and the checking account our groceries/gas/entertainment. This is at the same bank that has my business account. It's two blocks from home. It will be nice to transfer funds directly from my business to our other accounts. Our regular household bank is near hubby's work. They have our mortgage and our direct deposit from the school, so that will remain our main bill paying account. I'm glad we have things a little more separate. It's easier to see where we have money, and where we DON'T have money!
 

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Looks like you're well on your way to a working budget. However you actually achieve it, the principle really should be to ensure your money is always working for you, or at least not against you. For example, there is little point is putting $10,000 into a low/zero-interest EF if you have $10,000 sitting on a credit card charging 19%.

For categories that have high or seasonal variability, like utility bills, I carry the remainder forward. Anything else I sweep into savings or paying extra on my mortgage.
 
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