Making first budget help

My wife and I have gotten ourselves in right much debt with credit cards and stuff like that. We are able to pay our bills all on time and we make sure we pay those first. Both of us get paid every two weeks, but it works out that we get a check every week. All of our money comes into one checking account and then we pay our bills that fall due in that coming week. Then the rest of the money we have left which isn't much we let it stay there and then we use our debit card for purchases. I check stuff off as they clear or write things down as we spend every day. Never fails we are like "OH SH&* we done gone through our $100 or whatever may be left for that week. I'm ready to turn things around and I need some help on making a simple budget that is easy for me to understand with my simple mind. Would it be easier or better for us to withdrawl the remaining money left after bills each week and put some aside and give some $$ to each other for spending each week? We have some money in savings not much to some of yall I'm sure but its what we got and I hate touching that every couple of weeks b/c we need more money.

 

When you say you have some money in savings, do you mean a savings account that pays you basically no interest?

If that is the case, there is no reason you should feel bad about "touching" that money. Honestly responsible use of credit cards instead of a debit card will also allow you more flexibility to pay your bills (especially if your bills are volatile). You need to pay attention, plan ahead, and make sure you can pay your entire credit card bill off each month. When you use a credit card you have 30-60 days to pay for it without incurring interest (depending on when you make the purchase during the billing cycle). If you sign up for a Fidelity Investments account (checking or investment) which has no fees or min. balance requirements then you can sign up for the Fidelity American Express rewards card (no annual fee!, 2% cash back in rewards with no limits, so you basically get a 2% off sale on everything you purchase!). I can't stress enough how important it is to pay off the entire balance every month! The interest is unreasonable and will destroy any value you get from the 2% cash back.

Until you feel comfortable using a credit card you can always set up a fidelity account and transfer the money on your phone from your existing bank to a fidelity checking account after each purchase (at at the end of every day, whatever) essentially you'd be putting aside the money to pay your CC bill after each purchase instead of having it immediately deducted from your account with a debit card.

Also with Fidelity they offer commission free ETFs ($8 if you sell within 30 or 60 days otherwise its free to buy and sell) which allow you to invest in stocks/bonds/funds in small increments, and if you need money to pay a large bill then you can sell some of your ETF (it takes 4 business days including the day you sell before you get the money from selling so that you can withdraw it). Personally i put my excess cash into PFF, a preferred stock ETF that pays me about 6.5% in dividends per year (paid out monthly) and the price of the ETF typically doesn't move that much since preferred stock acts more like a bond than it does a stock. I'll take 6.5% over .05% any day! Before internet investing you needed to be willing to not touch your money for a long time if you wanted to invest in stocks or bonds, but that is not the case anymore. It literally pains me to see people sitting with large amounts of cash in checking/savings accounts earning basically nothing!

 

Back in the middle ages, before PCs, the wife and I made up a list of what we owned, what the replacement cost was and the expected life. From that we calculated what we needed to save to replace each item when it came time. To that we added a reasonable savings for emergencies. We determined that if we could not put away that amount of money we were living beyond our means. We ate a lot of beans and pasta the first few years, but the payoff was well worth it. We have been debt free for nearly forty years and now have a reasonably comfortable retirement. Once we established our lifestyle we were able to pursue our hobbies at a better level without going into debt.

If I were in your shoes I would set up a spreadsheet doing what I described above and base my budget on that.

 

Ok I will work on a spreadsheet or may have to do paper b/c our 9 year old computer crashed a couple days ago. Nothing is going in our favor doesn't seem like lately. Once I pay the bills for the week after we get paid do ya'll put the little bit extra left over in envelopes in categories or how should we do the extra money left to buy gas, groceries, necessities that we actually need?

 

I would include the necessities in the list. Also include a reasonable amount for entertainment. If the total exceeds the income it is time for a serious re-evaluation of the lifestyle.

My employer for many years offered direct deposit of my paycheck. I never saw a paycheck, so it was fairly easy to set aside a small amount. Little cash in the pocket tends to minimize impulse spending. Having the money in the bank is probably better than having it lying around in envelopes.