Over a year ago, figuring out where our money went was an easy task. Since we weren’t making as much and we had considerably more debt, we budgeted using the Force.
The Force? Wha?
Budgeting using The Force is more organic in that saving is taken out up front (usually automatically), most bill payments are made automatically, there’s a decent cushion in the checking account, and the rest is spent or not based on what comes down the pike
Budgeting using The Force was all fine and dandy when most of our money was allocated towards debt repayment. There are a few events that have recently happened that made us rethink about the way that we budget.
In the past year, we have boosted our incomes by 33%. We have lowered our debt by about $14,000 (!!), lowering the number of credit cards we pay per month to just one. These events combined led to a an increase in cash flow, something that happened a lot sooner than we thought it would.
With the increase in cash flow, we also managed to get a two small and one large unexpected windfall in the last two months. The smaller windfalls were the result of tax refunds (it seems as that my withholding changes didn’t properly account for my year end bonus). The largest of the windfalls was a result of a generous bonus that Her received. This is also one of the two months of the year that Her receives three paychecks instead of two.
Since we know we have a lot of this cash in the bank, we’ve tended towards laziness and a false sense of security. We both sat down and agreed that our spending was getting a little out of control, and came to the conclusion that The Force wasn’t working for us.
So this past weekend I sat down with Microsoft Money 2005 (obtained for free two years ago when I bought TaxCut), used maybe a half a dozen times since we obtained it. I’m still learning it, and hope that it can be the budgeting tool that works for us.