We are heading in the right direction (I think)

by Rocket Finance

So, I was looking through my Excel budgeting workbook the other night. . . (I know, I know, there are better ways of keeping track of one’s finances, but I like tinkering in Excel, plus it makes it easy to set the budget for the next year, just copy, paste and edit any changes. For reviews of other cutting edge and more user-friendly budgeting software, I recommend this category from Being Frugal.)

But I digress.

I started looking at our yearly deficits and I noticed a trend that I hope will continue.

2005 was the year that I began to really understand that we had some financial problems. We did not keep a budget that year, but from what I have been able to piece together, our family spent approximately $25,000 more dollars than we earned between the middle of 2003 and the beginning of 2005. However, by the end of 2005, I was keeping track of our spending.

2006 is the first year in which we kept a budget that we faithfully updated. I still have the spreadsheet and it isn’t pretty – our deficit spending for that year was a little over $15,000. Our total deficit at the end of 2006 was not $40,000 because much of our debt overlaps with the previous deficit – we were making payments on our prior loans. Even though our financial picture from 2006 looks like a disaster, we were actually encouraged because we finally had a complete picture of our annual income and expenses.

2007 came with some financial challenges. Our ARM adjusted from 4.85% to 6.75%. We added a third child to our family, as a result, my wife quit working at a daycare and started working full-time in our home. Finally, we added a sizable car loan for good measure. We also started a retirement fund that further limited our cash flow. Yet, our deficit for 2007 was less than $5,000!

January 2008 was the first time since before we had our second child where our net worth inched past 0. In fact, our projected budget for this year shows a surplus of $84.95. (Although Mrs. Rocket is at the store as I type this. . .) Our previous two budgets did not even show a surplus before the year started.

Here is a little encouragement and advice for those of you who are either not using a budget, just starting a budget or struggling with your budget:

  • Get something on paper! (or on the computer) You will not know what you are dealing with until you see it in black and white.

  • Life happens. No budget unfolds exactly as planned, but having a budget on paper allows you to take control and start to exercise creativity in meeting your obligations.

  • Not meeting your budget does not have to be a defeating experience. But it will help you make daily financial decisions in your life. A budget can show the need for a second job, a better job, a reduction in spending or a surplus to be invested or saved.

  • Keep at it! It took my young family almost three years to even see the tunnel, much less, the proverbial “light” at the end.

  • Don’t forget to make God a part of your planning. Commit your budget to Him in prayer. He is the one who can open or close job opportunities and can allow or prevent major expenses.

  • A budget is a guide and money is a tool. Sometimes there are more important needs in life than sticking to a budget. Just make sure that the exceptions to your budget are not the rule.

We have done well in following our budget for the month of January – only eleven more months to go!

  1. 14 Responses to “We are heading in the right direction (I think)”

  2. By Lynnae @ Being Frugal.net on Jan 29, 2008 | Reply

    Great job on following your budget for January! I’m still tweaking mine, but hopefully I’ll have a good report in February.

    And thanks for the reminder to keep God as part of the budget planning process. Very important! :)

    Thanks for the link, too!

  3. By Aaron Stroud on Jan 29, 2008 | Reply

    Great advice, but what are these financial management tools that are better than excel? My copy of Quicken is warning me that online functionality it set to self destruct again. I am seriously considering tossing the whole thing aside for excel/apple’s numbers.

    Does anyone know if Microsoft Money shutdowns your ability to download bank/investing data after 2-3 years like Quicken does?

  4. By rocketc on Jan 29, 2008 | Reply

    I think some people are intimidated by Excel. Some of the other budgeting software is made for people who don’t have or want much technical knowledge. I like Excel because I can make it do whatever I need.

    I don’t require that my budget has online access to my bank accounts. I am more interested in cash flow – not balances.

  5. By Jack Payne on Jan 29, 2008 | Reply

    Great Blog title. It’s a catcher, a stopper. Makes you think.

  6. By rocketc on Jan 29, 2008 | Reply

    Jack, thanks for stopping by. I could ad “I hope” to the title – might be more accurate. . .

  7. By fathersez on Feb 2, 2008 | Reply

    A good encouraging post.

    My wife and I have also just started our journey to climb out of a budgetless life.

    We have done our first budget ever (I am a true Excel fan) and are now working to improve our savings rate.

  8. By SingleGuyMoney on Feb 3, 2008 | Reply

    Great job Rocket. I too use Excel for my budget because I can make changes as needed. It works great for what I want it to do.

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