Get FINANCIALLY Fit: Cash Flow

The first part of managing your household budget is analyzing and establishing cash flow.  We have always been pretty responsible spenders, but this...well, this is crazy.

It all starts with income.  And income is tricky.  I have had a full-time job since January of 2007.  My husband has worked various jobs since then - salesman, banker, worship leader, and finally, this summer, engineer.  We always referred to our income prior to this summer as a 1.25 income.  Mine was the 1, and his job at the church was the .25.  Now, I suppose we are a 2.25 income.  It seems like that would mean that we could continue living on the 1.25 income and use the remaining 1 to pay off debt.  But as it turns out, getting a job is a lot like getting older - the more privileges, the more responsibility.

• Child in preschool = $$$
• 120 miles round trip to work in gas = $$$
• 120 miles round trip in toll = $$$

And, I begged for some more grocery money.  My $50/week budget including diapers was killing me.  We upped it.  End result? Extra monthly expenditures.  And when you are maintaining a cash flow plan, you are watching every. single. penny.  It starts with a form that looks something like this:

From Dave Ramsey's Financial Peace University

Only this is half of the first page.  Yep...it literally tracks every single dollar you spend.  October was our first month, and I think we redid this form at least three times.  Part of it was because Rick worked lots of overtime this month, and the other part was because unexpected expenses kept popping up.  We had to pay for pest control.  We had to pay more than we budgeted for a cab when we flew to Texas for Rick's cousin's wedding.  We got a bill from Charlie's doctor.  Etc, etc.  The way the formula works is this: you end with $0.  If you do all the math and end with $214, you need to go back and spend that $214 somewhere.  Ideally, you are applying it to debt, or if you're out of debt, to savings, or if you have significant savings, allocated savings.

One of the big keys to making this work is buying with cash.  We are cash people and always have been, so that part wasn't much of an adjustment.  The other big key is balancing your checkbook against the form and making sure all the numbers match up.  That is a HUGE adjustment.  I was once very diligent about my checkbook, but as it turns out, it was one of many things that went bye-bye when I had kids. :/

Anyway, we are excited!  We were able to put a respectable amount on debt this month, which is GREAT, because we have a list of goals:

1. Establish an emergency fund of $1000 CHECK
2. Pay off Loan #1.  CHECK
3. Pay off Loan #5. GOAL: Paid off by Christmas 2013.

It's happening!