Monday, January 21, 2008

Budgeting For Dummies

First, I make a list of everything that we spend money on in the year. This includes Christmas and insurance premiums and other things that we don't have to pay monthly. I divide those items by 12 and come up with a monthly amount that I need to set aside to pay the expense when it occurs. I have all the money for those items not paid monthly automatically deposited into another account until payment is due on these items.

I have set up our checking account on Quicken and it has a feature that lists in order your recurring bills. We get paid every two weeks so I pay everything that is due between the pay period on the day we get paid. That way, I only have to pay bills two times a month. Most of our bills are on automatic payment schedules. I go to the bank and withdraw money to fund our envelope system and pay the kids allowance.

Make sure to keep a set amount in your checking account as a cushion so you never have overdraft fees.

One of the biggest helpers to organizing my bills is to buy a portfolio that I can carry from room to room. I set up catagories within it for auto, receipts, medical bills/forms, recipes I tear out of magazines, decorating, craft ideas, school papers, rosters with contact information for baseball/school, and my best help... To pay and To do. I put all our bills in the to pay. I put all papers that require me to call someone or has papers to fill out in the "to do" folder. I also put copies of rebates I am waiting on, pending insurance forms, etc. so that I can know to check on it if I need to. We just moved from Florida where we had hurricanes every year and I kept our social security cards, birth certificates and important papers in it and could just grab the portfolio if we needed to leave in a hurry. I also can take it from room to room and work from our laptop to pay bills.

We have money automatically set aside from our check into a flex medical account. This is pretax money. When I have a medical bill that I turn in I staple it to the form that I have to turn into the flex account manager for reimbursement. I file this in the "to do" folder until I receive reimbursement. When payment comes, I staple that to the forms and file in my medical folder. This year we have two going into braces and one getting an expander costing $900.00. Our total amount due the orthodontist will be $7900.00. We have the maximum that we can withdraw for our flex account which is $7500.00. Our monthly amount taken out for taxes is 11.75 percent, so we are saving about $73.00 a month in taxes. Be sure that you can use all the money you put into a flex account because if you do not use it you lose it at the end of the year. Last year we had $200.00 left so I got a pair of prescription sunglasses and stocked up on over the counter medicines.

Just simplify it as much as you can and keep it organized in one place so it is not a chore to locate everything- or forget something.

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