That’s not to say that I don’t have payments and bills and unexpected expenses. It’s because I have focused hard on getting out of debt for the last 2 years — and these days, I am almost debt-free and worry little about finances. It’s a beautiful thing.
I was having a chat with my friend the other day about budgeting and how incredibly important it is to do each month. Here is how I deal with my finances these days (you can check out previous posts on budgeting and debt below):
How I Deal with Finances
My finances are on automatic these days. Each month I tweak here and there, but I don’t think about them too much. Once I am completely out of debt, I really won’t think about them that much.
Here’s what I do:
1. Income is streamed into my checking account automatically. My income is all electronic, so I barely ever deal with checks. When I give private trombone lessons I ask to be paid in cash, which goes directly into my envelope system.
2. Savings & investments are automatically taken from my checking account and paychecks. If it’s not automatic, I am less likely to invest. I have my investments deducted right when I get paid — I will check every few months and see how my savings and investments have grown.
3. I often make major payments all at once in the beginning of the year. I pay utilities, insurance, and other smaller monthly expenses up front for the year. This way I don’t worry about the payments each month, and I don’t spend money I might need for these payments.
4. Other bill payments are made automatically. I set up automatic monthly payments on all my other bills. I never worry about paying bills. I just make sure there is enough in my checking account at all times to cover them, and I have them deducted one day after I get paid.
5. I leave a cushion in the checking for unexpected expenses. Once the bills, savings and investments are taken care of, what’s left is basically groceries and other living expenses. My wife keeps track of these expenses very closely, and we leave a cushion just in case we go over budget (we never do anymore).
That’s it! We set a budget every month that is pretty stable and automate everything. We are staying pretty frugal and tracking expenses carefully, and that’s fine with us. We do not have financial stress right now, and it is a wonderful feeling.
Some other posts on budgeting and debt you may enjoy: