Like a Budget

Budgeting is like dieting, 10 minutes into it and we say screw it “I look just fine.” or “Where’s the nachos?”.  Some of us will double down and stick to the budget because we know it’s the only way to get ahead or reach our goal. And some of us will create a budget and then blow it out of the water within a few days. Don’t give up. That’s my advice. I blow up my budget and diet plan in the same month. It sucks, but I know I gotta stick with it or I’m gonna be stuck financially and fit-sically (Leave me alone). 

My main purpose for budgeting is to pay off debts faster, and make sure money is allotted to my bills first before I buy anything else. The first article I wrote “What Are You Worth?” explored our net worth. If you haven’t read it, please click the link and check it out now. One of the important parts to figuring out your net worth is determining your debt. So I have a list of all my debts and an order to which one I want to pay off first. After I get my debts paid off, hopefully sooner than later, then I will use that money for savings and investing. Your reasons for budgeting might be different than mine. You might only have a little debt, but you spending most of your income and don’t know where it goes. Budgeting can help you figure out where that money goes, and then you can set a limit on that spending if you want. Or you might not have any debt and save a ton, and only spend what you need on food and bills. Instead of dipping into that savings, you can set a budget and allot money to the purchase of a new car or truck, or a vacation. There are many reasons why someone would choose to budget, after finding your reason, we need to get it set up.

How to Set Up a Budget

Get a piece of paper or if you prefer your excel spreadsheet and get ready to write. Here is where you can determine if you want to budget a month at a time or two weeks at a time. I think most of us get paid every two week, but there maybe some that still get paid monthly either way we can budget it. I get paid every two weeks so I budget for two weeks at a time. So write down your expected income for two weeks. Paycheck City baby…click the link if you need help calculating your hourly pay check. I wholly recommend only calculating for 80 hours. That’s 40 hours a week, which doesn’t include overtime and I’ll explain why in a minute why not to include overtime. I used $30 an hour, 80 hours a week, which is $2400 gross and $1882.48 net. The $1882.48 is the amount we use for our 2 week budget.


Now that we have our income, let’s tally up our bills. This category is rent/mortgage, electricity, water/garbage, car payment, and cell phone…if you don’t pay and they come and take it away…then it goes in this category. For bills I included:

  • Internet/TV – $80
  • Cellphone – $75
  • Car Payment – $550
  • Utilities – $172
  • Auto Fuel – $120
  • Groceries – $262
  • Insurance – $100

That is a total of $1359. Most of these are monthly bills, and if you were to pay all these on your first paycheck of the month then you would have $523 until the next paycheck. Let’s continue on with our budget, and then we’ll decide how to use the left over money.


You could include a car payment in your debts, but I am using this spot for credit card debt. Most of us need a car to get to work and do other things, so I consider it a necessity. Credit card debt is the one that typically creeps up on us, and has an enormously high interest rate compared to even a 5% APR car loan. Your local credit union might be able to get you a 7.99% APR credit card, but a lot of us have an average credit card interest rate of 19%. I’m going to use that average American household credit card debt of $16061, and at 19% APR if you paid $260 a month it would take you 20 years to pay off. Over $45,000 in interest will be paid to the credit card company. Calculate for yourself here.  We have to debt and now we need to pay it off. Decide right now how quickly you want to pay it off. I’m going to go with 2 years or 24 months. A quick calculation shows that I will pay about 670 a month. Realistically, it will take 2.5 years due to interest. If we add $670 to the rest of our bills then our total will come to $2029. “But I haven’t even budgeted for dining out, entertainment, or savings!”

Real Life

Yup. We haven’t included the real life expenses. We all like a treat every now and then, whether that is just ice cream or a nice gourmet meal at celebrity chef’s new restaurant. Don’t worry, we’ll fit it in. Our total on our budget so far is $2029, but that is for our monthly bills, and we are on our first paycheck. So, let’s cut our $2029 in half–>$1014.5. This is how much you can allot to bills and debt with your first pay check. That leaves $867.98 for real life expenses until the next pay check. The reality check we has is that our monthly bills are spread throughout the month. So your Internet/TV bill might be on the 3rd of the month, while your utilities might not be due until the 23rd of the month. Your budget should allow you to be flexible with your bills. 

Semper Gumby

Semper-Gumby-Always-Flexible-Shirt-Back-Side-300x300Always flexible. It’s true. Gumby served in the military. So much so that the unofficial motto of every command is Semper Gumby. You don’t have to be green and glide around to be flexible, you just need to plan a head. Just a little. With your first paycheck allot money to the bills you need to pay before you get paid again. In this two week pay period, include the fuel and groceries you will need until your next pay check. 

We calculated that $1014.5 would cover half our bills for the month. In reality for this two week pay period it might be $900 or $1300, it just depends on how your bills fall within the month. Let’s say that for this two weeks our debt, bills, groceries, and fuel will be $1016. $1016 will cover our Internet/TV – $80, Cell phone – 75, Credit Card payment – $670, Fuel – $60, and Groceries – $131. That leaves us with $866.48 until our next paycheck. Now we can decide what to do with our extras.Pay It Forward

Pay It Forward

Not exactly the Haley Joel Osment movie, but you can use your extra money for that purpose if you want. One of the option of using your extra money from the first paycheck is to pay a bill ahead of time. You can either ear mark the money or go ahead and pay the bill if you want. The bills after the next paycheck will be the car payment – $550, Utilities – $172, Fuel – $60, Groceries – $131, and Insurance – $100. By paying or setting money aside for one of these now, you’ll have less money on the front end, but you’ll have a little more on the back end. It doesn’t seem like much, but it adds up the more you do it or the more money you pay forward. My goal, by doing this, is to get one month ahead on bills. That means that in February I could possible have money for my March bills set aside. This allows you to have piece of mind that you have enough money for your bills.

You forgot again…

What’d I forget? Oh, yeah. Savings and fun money. So if you haven’t paid any future bills yet, then we can take our $866.48 from this paycheck and put some in savings. Yes, put your money in savings, before you go blow it on the Xbox Series X. How much should you save? If you aren’t investing in anything including a work 401k plan, then IMHO you should save 20% of your net income. Feel free to choose gross income if you want to save more. 20% of our 2 week net income of $1882.48 is $376.5. As soon as you get paid, put $376.5 in your savings account. This leaves $489.98 to go out, wine and dine, or buy a few video games. 


We finally come to all that overtime you were forced to work, or maybe you volunteered for it. If you used Paycheck City, then you can put in your overtime rate and hours to see how much you made in over time. You’ll have to calculate your exact amount in over time, but that’s pretty easy. We made $1882.48 net for two weeks. If we work 20 hours of overtime in that two weeks plus our regular 40 hours our net income will be $2515.63. Subtract those values $2515.63 and $1882.48, and our net overtime is $633.15. The best use of this money is to probably put money on the credit card debt, but you can also save the money, or put it toward future bills.


Your goals should help shape your budget. If you can’t even fathom what goals you need or should have, then by default you should save your money. At a minimum save 20% of your paycheck. One day it’ll click and you’ll realize what you need money for, and if you have been saving your money, then it’ll be there waiting for you. If you just hit that realization and don’t have the money, then now you know what you need to be doing. My wife and I had a recently had an epiphany when we decided we wanted to start a business. You need to have money saved, or less debt. At least less debt than what we had. Don’t let money be the road block to your goals. Setup that budget, stick to it, and reach those financial goals.

Please feel free to comment, ask a question, or contact me. Let me know if I left something out or if you have a good suggestion for budgeting. Thank you.

-The Cash-Strapped Dad


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