As almost everyone who knows us already knows, Beth and I have been living on "the envelope system" for almost one year. We have cut up our credit cards, "given every dollar a name" at the end of each month, and have tried to work quickly to reduce our debt. As anyone who reads this blog knows, we have not completely deprived ourselves of travel and entertainment, but I assure you that our primary focus for the past five-plus years has been on eliminating our debt.
We use Google Documents to create and manage our budgets. It's a fantastic program and its web-based nature allows us to do our budgeting from anywhere we can find an internet connection (we did our March budget from Barcelona).
This pie chart is tied directly to the numbers in our Google Spreadsheet budget. They reflect actual dollars allocated toward various categories (some of the money is not yet spent, but it's all been "given a name" as Dave Ramsey says) (btw, we have a few more budget categories than this...some have been consolidated for the chart). As our budgets change over the next few months/years, this pie chart will automatically reflect the changes.
Beth and I will finally have our last student loan paid off by this time next year. You may notice that "Loans" is a big part of our budget. One of the challenges that we will face after paying that last loan is how we will use the excess money. We could put it into Housing...perhaps get a bigger place, or move to a better neighborhood. We could put it into Fun/Big Buys...get new furniture and electronics, take expensive vacations. We could create a new pie category called Savings...we still need to build up our emergency fund and eventually save some more money for retirement (full disclosure: we have a 401k that is not part of the budget). We could shrink the size of the pie...if my work becomes unhealthy for some reason, I could take a different job or work fewer hours, even if it meant a pay cut.
Some of those are good options, and we might choose to do all of those things to some degree. But our hope -- and the reason to create this blog post and provide some transparency into our financial life -- is that we will be able to greatly increase that Giving wedge. Please keep an eye on it -- we're counting on you.