Beers down and fingers at the ready. For this post I am going to try and get you some exercise. Relax everyone, your fingers and brain will be doing most of the work from typing, mouse clicking and wait for it…maybe some thinking. If brain activity is not your cup of stout then maybe you should go get yourself some Red Bull and energize those brain cells today because apparently Red Bull can give you wings or some crap like that. We do not necessarily want to give you wings today but we want those fingers flying AF!
Sometimes it is the smallest things in life that can have the biggest impact. A tiny rock on a ring of gold can change your life forever. Two small single celled things come together and miraculously bring forth new life. I am watching my own little miracle (aka Little Dude) on my video monitor right now sleeping soundly. For Budgets and Beer; it was a friend who gave me the link to a little Microsoft Excel program by Vertex42 that helped me learn about the Avalanche and Snowball methods we have mentioned in the previous posts. The program helped me track and pay down my student loans faster than I would have going it alone. The program very simply organized all my loans from multiple lenders by size and/or interest rate and I could see month by month my interest payments and principal getting smaller and smaller. It really is fun to watch and inspires you to keep going on the path to freedom from debt.
The debt reduction tool uses a magical computer program called Microsoft Excel. Most of us have used Excel in school and/or college and may have a small idea of how it functions. It is a very powerful program that can do many wonderful things and if you use it for your job you may not need this small tutorial, but for most of us a refresher might go a long way. Newer versions of Microsoft Excel come with monthly budget, family budget and money manager workbooks that are pre-made. These ready-to-use budgeting tools are great ways to get started and I encourage you to use them if you would like. Unless I have had too much to drink or I am stupid I can never seem to get them to work all on the same workbook for more than a month at a time. Because of that I like to use my own very, very simple budgeting tool which allows you to budget for the entire year. This allows me to see my net income and net savings for the entire year. Also, I like to see month to month budgeting. For example, how my spending in January effects my bottom line in February.
Starting with a blank Excel workbook at the very top of your spreadsheet lets start with the month of January and lets pretend you get paid every week. Just under your January header lets put the money you bring in every week from your paycheck and call that income:
That looks great! You are even bringing in a little extra cash on the side. No, I do not want to know how you are making some extra money; this is a no judgement zone today. Now lets do the ugly part. Lets list your consistent monthly expenses. Everyone’s expenses are going to be unique. Whatever your typical monthly expenses may be, list them here underneath your income:
Now it is really coming together. Your monthly expenses look good. You are trying to keep them reasonably low so that we can focus on paying off your Asshat Loans and/or credit cards and still stashing a little money on the side. Sadly, credit cards are necessary asshats. In future posts we will go into both the dilemmas of saving vs. paying off your loans and using credit cards responsibly; but for this example we will budget in some savings for emergencies. Next, we budget for items that are not consistent from month to month. These are our miscellaneous expenses like ATM withdrawals, debit card payments, and those fundraiser sandwiches you bought from your co-worker for her daughter’s underwater basket weaving team or some other crazy event like that. Damn, I’m a sucker for those delicious subs and sandwiches and you are probably supporting a good cause. Buy 5 and support local.
Lastly, lets put a cell at the very bottom of your January budget that will give you how much money you should have leftover at the end of the month. This is a critical step so put down your beer and pay attention. You want to have a positive balance here at the end of every month or you need to increase your income or decrease your expenses. Typically it is easier to do the latter. We are going to take the total (or “Sum” in Excel language) of your income and subtract your monthly and miscellaneous expenses to give us how much we have left at the end of January. We will call that the “Monthly Ending Balance”. See the formula in the screenshot below.
Well that wraps up a very simple monthly budget. In later entries we will flesh this out further for month to month budgeting to create a budget for an entire year. It is how I budget and what I recommend. You caught me! I know I budgeted in beer money! Remember this is a no judgement zone post today. Now it is time for a beer.
My Beer of the Blog is Sidecar Orange Pale Ale by Sierra Nevada Brewing Company. A light refreshing ale that almost has a pixie stick sweet orange candy presence when it first hits your palate and leaves crisp and clean. Very little hop presence that will make you want to drink more. Very sessionable. Seems perfect for a warm spring afternoon. Cheers!