The Budget & The Challenge

It’s been a while since I dug through the transaction history on my bank account. And there’s been a reason I’ve been avoiding the task – it doesn’t exactly paint a pretty picture of financial success. I’ve been paying down my debts slower than ever, overspending, not saving, and all the while I’ve been stressing about money.

There are no surprises when it comes to what I’ve been overspending on: clothing, food, and transportation. Once the numbers were laid out in plain black and white, I knew it was time to make some changes if I ever want to have the sturdy financial foundation of my dreams. Enter: The Budget.

Financial experts agree that in order to create a budget, you have to know your own money and what you’re spending it on. Creating a budget out of thin air is like drawing a treasure map without actually knowing how to find the treasure. I decided to use my transactions from January-March as a starting point for The Budget. I keep my digital transactions limited to two accounts – my credit card and my debit card. I downloaded my year-to-date transaction history for each one, and labeled each transaction line as a category I planned to use in my Budget. After categorizing – which, by the way, only took about 20-30 minutes – I added up my total expenses by category and divided by three for an average amount per month. Here’s what mine looks like:

spreadsheets r sexy

Most of the numbers didn’t surprise me, but a few did. I only spend $44 per month on entertainment, which kinda bums me out. Decide for yourself whether you find me extra dull after this new information. I was also surprised to see that I spend over $50 monthly on subscriptions. What am I even subscribing to? It’s easy to forget about those auto-renewing services like Spotify, Netflix, etc. (I forgot that I’m still a zipcar member, event after buying my own car TWO YEARS AGO. brb making a call to cancel.)

The actual numbers are arbitrary for the purposes of a blog post, but the indications behind the numbers are important. Knowing myself and my spending habits, past budgets, goals, and the fact that I bring home about $3,000 per month, I could tell which categories were problem areas that needed to be disciplined. (Okay, it’s me. I need the discipline.)

Quite a few categories are unchangeable, like rent, utilities, insurance, and other super-dull necessities. The categories that can be adjusted are those over which I have control: clothes, shopping, transportation, debt payments, savings, etc. Along with cutting my spending down by at least $250, I need to make some decisions about what I want my money to be doing for me every month.

While I do have a ~*pAsSiOn 4 fAsHiOn*~ I can’t realistically spend hundreds of dollars each month on new clothes if I want my debt to go down and my savings to go up. I cut my “clothes” category down from over six hundred American dollars (!) to just $100 per month. Once again, the actual numbers are arbitrary for the purposes of a blog post, but the indications behind the numbers are important. $600 a month for clothing might be pocket change for some people, and $100 a month might be exorbitant for others. Consider the numbers a little differently: I’ve chosen to change my habitual spending on clothing by restricting my bandwidth for purchasing to less than 20% of what I have been spending in recent history. A change this drastic is not going to be easy to manage. Shopping habits run deep. Enter: The Challenge.

A budget of $100 a month is going to require some outside-the-box thinking and extra creativity on my part, and that’s what makes The Challenge exciting! (That’s how I’m trying to think about it, at least.) There are a (large) number of pieces and trends that I have been dying to get my hands on and add to my wardrobe, but I won’t be able to afford most any of them at full price. $100 doesn’t get you very far these days.

As with any self-imposed experiment, The Challenge requires a few rules:

  1. Calendar monthly budget of $100 is for all clothing items, including shoes, apparel, and accessories. This does not include gifts for others, or any required purchases (like a bridesmaid dress, for example).
  2. If the full amount of $100 is not spent in a month, the remaining balance will roll over into the following month.

Yep, just two rules. I opted not to include a “what if I overspend” rule, because that allows me an out. If I spend over $100, I have failed. That’s it. I will continue The Challenge until I have achieved my goal of paying off all of my credit card debt. I am genuinely looking forward to correcting my bad habits and shaking things up for myself creatively, and I can’t wait to share my success (the only option!) here too.

Do you stick to a budget? What ways do you keep from overindulging financially? Please share in the comments below!

 

*several budget categories have been redacted for privacy, such as medical expenses and rent amounts.

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