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!