Mr. T and I were married in the midst of college. We were happiness-rich, but cash poor. We were both lucky to not be in debt because we were both given some assistance from our parents for college. After we were married, we combined our meager bank accounts and started an elimination budget.
We both worked hourly as custodians for our college football team cleaning the locker rooms and the coaches’ offices between 9:30PM and 1AM. Perks: football games were way more engaging because we knew the players intimately though we never met them (“the player that’s got that cute letter from a 6-year-old fan on his locker board has the ball!”). We also got random things out of the trash, like a barely-worn pair of shoes and a dozen tickets to the nearby waterpark. Also, we got to work together and we got a slight pay increase for working nights. Downsides: It was very late and we were tired. We got weekly wheatgrass shots at Jamba Juice to get us through.
The Simple Elimination Budget
The Elimination Budget just means you start with a number (how much you make) and then you subtract as you go. Do you remember the old check registers you used to balance your checkbook? (No? Does this make me an old lady?). When the money runs out on the piece of paper, you stop spending. Simple as that.
Each week, we worked about the same amount of hours (about 17.5 each) and we got paid the same amount (around $7.50 if I remember right). So, each month, we would make just over $1000. Our budget was literally a magnetized grocery list on the fridge. At the top, we wrote $1000. We paid 10% to tithing and saved 10% right off the top. So, we subtracted each of those from $1000 and were left with $800. Rent was $500. From there, we subtracted utilities (which were only about $25/month). Anything left after that was for food, gas, and other expenses. When the money ran out, we stopped spending. We invented meals from the pantry. We stopped paying for entertainment.
A Simple Budget for a Simple Time
Remembering these college days is bittersweet. I’m glad we no longer make only $1000/month. During the summers, we would work full time on campus to make enough money for tuition and books for the year. Those summers were stressful. It was also stressful going to school full time and working. But our budget was simple. We did have cell phones on our parents’ plans (because we only used them to call them), so we didn’t pay for those. We biked or walked to campus and only used the car for outings. We often even walked to the grocery store.
Applying a Simple Budget to a Complex Situation
I’ve been wanting to mix things up a bit with our money. My income varies significantly each month and some months (*cough* vacation), I earn nothing. Also, our budgetary needs are much more complicated. We have 2 cars that we use consistently, cell phones, a mortgage, medical expenses (instead of just being able to pay $15 to go to the university health center), 3 kids (and the random school fees, equipment, clothes, and medical expenses that come with them), Netflix, and vacations (that’s right. We live large).
For the past few months, we’ve been saving enough money to be a full month ahead in our bank accounts. Now, we can do the very same thing we used to do. At the end of the month, we’ll know how much to write at the top of next month’s elimination budget (our take-home pay). Mr. T’s already automated to max out his 401k this year, so that will be the savings we take away at the beginning. The top of the budget will just have our take-home pay. We’ll then subtract tithing and other donations, the mortgage, utilities, cell phones, etc. At the end of the month, whatever is left over will go straight to savings or extra on the mortgage!
It’s a simple, elegant solution to complicated money and I’m excited to return to simpler ways. No, I’m not giving up my fancy spreadsheet Mr. T perfected for my birthday last year. I still love keeping track of everything in a complicated way, but for figuring out how much money to save, the simple elimination budget is the way to go.
Lucky Girl
This is sort of what we do, only we don’t work a month ahead. We just record all our income at the top of the spreadsheet, including bonus and gifts when those happen. Then we input all of our expenses in various categories. And at the bottom we see how much we get to sweep into the investment accounts.
This works nicely for me because as we go through the month I know if I avoid temptation to buy that latte or new sweater, the number at the bottom will be bigger!
MaggieBanks
Yes! I’m so excited for that kind of motivation!
Mr. SSC
I remember a college job I had working for the chemistry department loading coal into a fluidized bed extractor. Think a big incinerator that runs so hot it fluidizes coal as it burns it. It was a DOE project to study how adding limestone affected the air quality output and ran 120 days non stop. I loaded coal and/or limestone into at night from 9pm-2am. It was pretty fun, but tiring. I also was supposed to review all of the Chinese grad students theses and “english-ize” their writing. Thatw as literally how the department head put it to me. It was more fun than loading up coal every hour and I learned a lot just by reading through them and asking questions.
Back to your post – I never used an elimination budget however, I should have in college. If I’d printed one up it would just start going negative because I never stopped spending just because I was out of money. (palm slap to forehead) It’s true though. That’s how I ended up with about $16-18k in credit card debt once I graduated college.
Man, that budget and any amount of spending discipline would have been handy, but then I’d be a diferent person than I am today.
MaggieBanks
College jobs are the best, amiright? Ha ha ha. The things you’ll do for money as a college student. 🙂 I know people like to regret debt, but I wonder if because we never had any debt, we never really lit ourselves on fire saving. Even now, we’ve pumped them up, but we’re not going crazy. I didn’t get a full time job or anything to save more money. We’re just doing our thing. Maybe having a debt we leaped out of would make us more dramatic savers. The grass is always greener syndrome…
Mr. SSC
Yeah exactly! When we first started working, because I had the high credit card debt and another $64k in student loan debt, we threw a lot of money towards both the first couple of years. When it got paid off, we were already used to living without those funds bing free to spend, so they just went towards investing.
Then when we started reigning in our other random, excess spending we freed up a lot more money to invest as well. Having debt did help us towards being better savers even though Mrs. SSC may have a different opinion on that statement. 🙂
MaggieBanks
Ha ha ha. We’ve just always saved, but not aggressively, so it’s hard to have the same savings rate like being used to paying down debt… that’s basically the number one reason I can’t wait to pay off my mortgage – I know I won’t be using that $1500+ on the mortgage anymore so I can roll it right into savings!
East Coast Dame
I’m slowly working towards having a month of expenses so I can do this! It’s how I’ve always tried to build my budget, but unfortunately, life keeps surprising me.
MaggieBanks
Oh man, I hear you! It took me longer to get here than I thought it would and I’m still scared my system won’t actually work because of “life” 🙂
Jacq
I do a ‘normal’ budget, with estimated expense from past months/experience, and then the extra goes to savings. Last year, instead of moving the money to savings, I figured out an estimate of basic expenses and have that much go to checking and the remainder of my paycheck to savings (it earns more interest that way, rather than waiting until the end of the month to move unspent $ over).
The month-a-head budget sounds good, but because I’m at this current structure and like the look of what’s in my savings account, I can’t seem to get motivated to do that. I have enough in my savings account, I could just transition to that. I’ve also had some ‘big’ expenses so far this spring. I owed taxes (savings bonds and yoga teaching put me over the top), and I finally did the ‘adult’ thing and got a will.
I am saving all of my yoga teaching money in a separate savings account this year to hopefully open a solo 401k. I don’t yet max out my work 401k (wiggle room for the solo 401k), but back filled 2016 Roth (max) and have an auto withdrawal for 2017 Roth and will do a lump sum transfer to max it out. I’m doing ok on the savings front. My normal spending is pretty steady too, it’s these one off things like a will that I won’t need to do again for a long time. 🙂
MaggieBanks
This sounds like a great system! Our spending is not all that consistent either. There are always big expenses but they vary in subject and size (medical expenses, car repairs, plane tickets, etc), but it seems like most months we have an unexpected big expense.
Penny (@picksuppennies)
I think this is like a zero-sum budget. Maybe?! Regardless of what it’s called, I think this is a great way to plan ahead and give every dollar a purpose 🙂
MaggieBanks
Yeah – it’s a version of a zero-sum budget. And I LOVE the idea of knowing where every dollar is going and how much is left after the previous month’s money. Then big spending expenses (new car engine, plane tickets, etc.) don’t seem like such a big deal because I can make up for them quickly and get back on my savings plan!
Kim from Philadelphia
Maggie, I enjoyed hearing about your married college days. Not surprised you both were such disciplined, hard workers!!
We essentially do this every month; now I know what it’s called!
As always, enjoy your perspective and your posts!
MaggieBanks
I sort of made this name up. It’s a specific variation on a zero-sum budget.
Kim from Philadelphia
Well, ours has a twist. Both my husband and I have separate checking accounts (savings and investments are all joint)
We both have regular, nonvarying pachecks deposited into our respective accounts every 2 weeks.
Our mortgage is no more (this will be you both- soon! Our investments are in good shape, so my main priorities are to
1) not touch/ withdraw our savings and investments and
2) continue to add to them, albeit at a slower rate than before.
Now that we have more money room we have more cash to donate, help out a friend who is struggling, etc
My husband pays the mostly fixed bills.
I pay for groceries. I’ll save up cash in checking to pay for taxes (8,000 a year- ouch), our son’s summer camp, travel.
Once I reach a “critical amount” (not a set number) I transfer money to checking.
My husband does the same at varying intervals.
This wouldn’t have worked when we were in debt payoff mode (too fluid and not specific enough), but it works for now!
MaggieBanks
It sounds complicated, yet efficient! My husband wants as little to do with the money as possible. He’s always on board with whatever savings goal I have going, but he really doesn’t want to deal with it. 🙂