The Simple Dollar Podcast #12: The Anti-Budget

The twelfth episode focuses on budgeting. I found that traditional budgets didn’t work for me, so I explore the methods that did. Total length: 7:20

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Episode Notes
Here are some additional notes that go alongside the comments in the podcast. Approximate times for the corresponding links and notes are listed.

0:00 – The theme song is a snippet of a Camper van Beethoven concert on October 25, 1986, shared via their very open taping policy. Listen to the concert in its entirety.
0:31 – Some thoughts on why a “one-budget-fits-all” approach doesn’t really work.
0:42 – Here’s
the early budgeting technique that worked well for me. It helped to get me on the right path.
1:21 – Here’s the full story on that coffee shop experience.
2:01 – I like the analogy of training wheels on a bike. At first, they teach you how to ride, but later, they’re a hindrance.
4:51 – Here are some thoughts on transitioning from budgeting to the net worth mentality.
5:50 – Some thoughts on budgeting with online bill pay.
6:59 – Here’s a preview of next week’s podcast, about personal finance media.

One thing I’d like to do in a future episode is have an audio reader’s mailbag. If you have a microphone on your computer and can record an MP3 of a simple, short question you might have on personal finance, careers, pop culture, or anything else you’d like me to answer, record it as an MP3 and send it to me. Keep the total recording under 15 seconds, please. Also, if you use Skype, feel free to ask your question that way – my username is trenttsd.

Comments and suggestions welcome.

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  1. FrugalCubicle says:

    Budgeting My Way:

    Ask yourself three questions:

    1. Where am I spending too much money(excluding house)?

    2. Where is the next place I’m spending too much?

    3. Am I stong enough to reduce spending in the categories for the answers provided in Questions 1 & 2?

  2. Moneymonk says:

    I agree I’m not a budget person but it’s good to revisit every now and then

  3. I’m not really a budget person… but I do have a system. Everytime I get paid I take 25% of my check and invest/save it. Then I live off the rest. As long as I don’t spend more than that I’m good. This system works well for me b/c I’m single right now but when I get married next year we’ll probably have a budget.

    -Gen Y Investor

  4. Bill says:

    We use the zero based budget Dave Ramsey style with the full fledge cash envelope system. Every two weeks because thats how I get paid. It works for us. We do have an entertainment envelope managed by my wife, but that is only for family entertainment. Books, dvd’s and fast food is covered under individual blow money. Our budget is different every two weeks and has never been the same. I enjoy our budget meeting and I credit the budget from taking us from 20k in consumer debt to debt free and a 6 month emergency fund, We invest 15% into retirement and our kids college is being funded and we are saving over 1k/month to pay off the mortgage. We always made good money, but we were sloppy. The budget gives us focus and keeps us on the same page as to our goals.

  5. Liko says:

    I think people are missing the point behind what a budget is. It’s nothing more than a tool to accomplish a goal. Sort of like a hammer, to build a house. But without an end goal it’s kind of pointless. The goal should dictate where you want to go. The budget simply paves the path to it. The reasons budgets fail is because people take their eyes off the goal.

    Whenever you deviate away from the budget ask yourself this “Is this item more important to me than my current goal?” This method has helped me out when I paid off $43K in debt. I used the zero based budget that Dave Ramsey recommends. It’s a powerful tool! But without the end goal it will fail.

    Also, a budget is NOT just a tool to track past spending. A budget is supposed to tell the future dollars where to go. You don’t create a budget for last month; you create a budget for the next month. A zero based budget means that all your spendable income is allocated for, and there’s not a single dollar left that’s not put in a category. So if you forget to put something on there it doesn’t happen! Otherwise it will jeopardize your goal and/or you spend more than you make.

    Remember, budgets aren’t just indented to save money. It’s indented to spend your money purposefully.

    “For which of you, intending to build a tower, does not sit down first and count the cost, whether he has enough to finish it”— Luke 14:28

  6. As a young and enterprising individual (self-proclaimed, of course) I do not necesarily like the whole budgeting idea. I have read quite a bit of books by Robert Kiyosaki (rich dad, poor dad) and he says the same thing. That is because spending less is only one option; the other being making more. I would prefer to find ways to generate more income so I can buy what I want, instead of restraining myself through budgeting.

    -DC

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