# First time using a budget



## Harp (Jul 18, 2012)

So I am 35. Shade under 40k in debt. Most is due to bad habits, which I will not get into here. 

Having said that - I have cleaned up my act, and while embarrassed at the hole I have created I am also not going to run and hide but fix my current financial state.

Was never shown how to budget or anything - parents lived off credit but I refuse to do the same. Did alot of reading, esp Gail Vaz Oxlade, Wealthy Barber, etc. and came up with balanced budget that works for me, while at the same time paying down my debt AND putting away a bit each month. Yay me.

Here is my thing and I know it may sound stupid but here goes: I am scared. Living/dealing with the budget as my point of reference everyday scares me, to the point where I think that it won't work. Is this because its something new to me and never done it before? Why does something so simple scare the heck out of me...?


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## Cal (Jun 17, 2009)

It probably scares you b/c you see how you life can be if you do not adhere to your budget.

If you have a good thought out plan, and it seems to work, I am sure that after following it for a few months you will realize that you can change things for yourself, and will feel alot more confident with your budgeting plan and path in life.

Congrats on making a budget that works for you!


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## the-royal-mail (Dec 11, 2009)

Glad to hear you've seized the monster. Budgeting and sticking to the budget means you will have to say 'no' to a lot of stuff.

I think you're scared because it means you'll have to dial down the ewaste purchases or whatever is the source of financial bleed for you. Most people 40 and under these days seem to think they always need to have the latest mobile communications device. What they fail to realize is this is making a lot of people very rich on what's in your pocket. Same thing goes for gambling. Saying no to the source of your financial bleed takes you out of your comfort zone. 

Remember, the ultra modern smartphone of 2012 won't be worth spit in 20 years when you are tired of working and want to retire.


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## Harp (Jul 18, 2012)

My biggest (or one of my biggest) issues is I have no self-esteem. I have equated having crap as getting the self-esteem I need. Did I need a digital dslr camera? Front row seats to rock concerts? etc.. Not really but I thought I would fit in and look "cool". The list can go on and on.

I just can't help but think of how much of a loser I am and think: if only I can go back. Sad reality is, I can't.


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## the-royal-mail (Dec 11, 2009)

You are right, you cannot go back. But you can change the result if you recognize the problem and budget to address it. Sounds like you've done that. Just don't give up!

For the record, I've learned that nobody really cares what items you have. People care about what they have, not about what you have. Same thing goes for cars. Don't worry about others. Focus on yourself and get through this.

It's like the peer pressure to start smoking. Ask yourself if the one egging you on cares so much about you doing that, is he willing to subsidize your habit for the rest of your life? The answer to the question is a good answer for whether or not you should take up smoking.

Same thing here.


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## Plugging Along (Jan 3, 2011)

Harp - Welcome to the forum, and much more importantly recognizing that a change needed to be made. The even harder part you did, was looking at the root cause of your spending which was tied to self esteem.

If you can always remember that material items really do not make a person. For those that do judge based on material items, they also deal with issues themselves, and those are not people I choose to keep in my circle. 

In terms of a budget, I am like that myself, and having a budget stresses me out. For me, it comes down to a control factor, and my dislike for being limited. I hate the idea of having limits. I think you are trying so hard to be perfect and worry about breaking your limits. In the big scheme of things if overall you say under your income, even if the exact buckets are off, you are fine.


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## MoneyGal (Apr 24, 2009)

One of the most interesting money quotes I ever heard (and I have probably repeated here!) is that "we live in a world in which people think that money solves problems." 

If you can get how limiting that belief is, you will be fine. Money solves only a very small and finite set of problems. Most problems are actually solved by something else. Money just lets you fulfill on whatever you are up to in life.


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## brad (May 22, 2009)

Big changes are scary for most people, it's normal. You're leaving behind a territory that's comfortable and known, and heading into unfamiliarity. You should find that scary, that's healthy.

There are a lot of parallels between budgeting and weight loss, and people who are trying to lose weight often encounter similar fears to those who are budgeting. "What if I get hungry? I don't like being hungry?" or "I can't eat ice cream anymore, I love ice cream." 

The most dangerous times, and the times when you're likely to slip, is when you're stressed out or angry at something/someone and you turn to your old familiar habits for comfort and stability. It's like "I'm stressed out enough as it is, I don't want to be further stressed out by my diet or my budget." So you blow it. It'll happen. But don't let it happen very often, and try harder and harder to keep it from happening. Because what you're trying to do is build new habits, and you can't build new habits if you keep slipping into the old ones. That's really the secret -- you're trying to establish a new normal, which becomes your new habit, so your old habits and your old normal start feeling strange and scary to you. That takes time and discipline, but if you want it badly enough you can do it.


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## Square Root (Jan 30, 2010)

good luck. You are young and with your current attitude, I have no doubt you will turn your finances around. I certainly would be an outlier, but we totally run our lives based on our budgets. I could not imagine not having total financial control of our lives. I think it is an acquired taste though. Did my first budget around your age I think.


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## stardancer (Apr 26, 2009)

I have been living by the budget since my children were born; they are now in their mid 30s. After a while, you get better at it and it doesn't seem so restrictive. Each year you get a little better and more realistic at estimating the expenses; you learn to put some $$ away for times when the insurance premiums take a big jump. Finally, when your savings percentage gets to be bigger than your debt percentage, you feel terrific. When the debt percentage goes to zero and stays there, what a celebration. Keep at it. Looking back, it pays off big time.


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## mind_business (Sep 24, 2011)

Once you start to see your savings grow, you won't be scared. You'll be looking for ways to save even more


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## 44545 (Feb 14, 2012)

Harp said:


> So I am 35. Shade under 40k in debt. Most is due to bad habits, which I will not get into here.
> 
> Having said that - I have cleaned up my act, and while embarrassed at the hole I have created I am also not going to run and hide but fix my current financial state.
> 
> ...


Why is a budget a scary thing? I have a theory: numbers on paper or even money in jars or envelopes aren't _real_. They're an abstract concept.

Not being able to pay rent and being evicted is _real_. Not having enough money to buy groceries is _real_.

You've made the numbers work. (congrats!)


Have faith that your budget works and adjust as needed. (Plan the work and work the plan)
Be disciplined about spending. Live below your means to build an emergency fund.
Accept that some risks (job loss, accidents) are relatively low and can't be planned for in advance but that your emergency fund will get you past those.


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## kcowan (Jul 1, 2010)

When your budget enables you to build a reserve to purchase a major item like a new car, you will become enthusiastic about it. Up until that time, it will seem to be overhead. And you will need discipline to stick to it. But it is the only way forward without winning the lottery.


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## Lephturn (Aug 31, 2009)

Harp said:


> My biggest (or one of my biggest) issues is I have no self-esteem. I have equated having crap as getting the self-esteem I need. Did I need a digital dslr camera? Front row seats to rock concerts? etc.. Not really but I thought I would fit in and look "cool". The list can go on and on.
> 
> I just can't help but think of how much of a loser I am and think: if only I can go back. Sad reality is, I can't.


Some day soon you will realize that the people spending on credit for all of that "stuff" are the losers. You will be the one who feels free - they will be living paycheck to paycheck where one misssed check will mean their financial ruin. You will be flexible, free, and confident that no matter what happens you are prepared and will be fine.

The fear you feel right now is, I think, you realizing how close to ruin you have been operating. Once you learn to use a budget and live within your means you will get to a place that feels very good - where you feel "rich" no matter how much you make because you know you always have some extra - you are always operating at a surplus - and it feels great.


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## Causalien (Apr 4, 2009)

I do think that there's a mentality of "Having crap = win life" in our society. But it is not what you think.
For example, I walk around with my Canon EOS 5D and I get more random comment from strangers than I do normally. I wasn't even taking pictures. 

Crap = conversation starter = leads to more random social encounter which leads to wins in my opinion. It all depends on how you capitalize on the interactions. A loser will always lose by not understanding how to take advantage of opportunities which leads to more. Having a road bike that I fixed up myself, I can now join cyclists on their weekly route if I happen by them in a social setting to further strengthen the bond. Without the bike, I couldn't.

So using credit card to purchase something can be seen as borrowing to build a business. Bringing forward your future earnings in order to capitalize on chance encounters now. If you fail to capitalize on it, you lose. Without credit, it is slower, but I am starting to see the difference between me and my credit burdened bretherns. I am seeing more and more jaw drops on my purchases when in fact, they are really conservative purchases in my mind. The difference I think, is that I can do sustained purchases of crappy items over time (if I use only 1% of my net worth for socially oriented purchase), while my capital increases and raises the overall quality of "crappy items" I can buy. Mind you, I went through several years of using crappy items while others managed to buy the best on year 1. From a business stand point, the latter should be better, if you are good at capitalizing on opportunities. Me? I am not that good, so I go with the long haul.

So, you are not really in the shitter. Think of what the 40k debt has bought you and use it wisely.


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## Eclectic12 (Oct 20, 2010)

Harp said:


> ...Here is my thing and I know it may sound stupid but here goes: I am scared. Living/dealing with the budget as my point of reference everyday scares me, to the point where I think that it won't work. Is this because its something new to me and never done it before? Why does something so simple scare the heck out of me...?


*shrug* - only you can know for sure. New things can scare people ... for others, seeing in black & white how their bad spending habits are being indulged despite "I won't do it again" bothers them.


If you wrote out a twenty step plan to build a deck or desk - would that scare you?


A budget is nothing more than a road map to your financial goal. It's to keep your eyes on the goal. 


Cheers


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## Harp (Jul 18, 2012)

Honestly, reading some of your comments literally brought tears to my eyes! - not something a dude should say but just being honest here! lol! 

Seriously though, what really gets me is what I used to have: I lived up north, had an actual house on an acre, etc. Unfortunately, no work so had to move to the city. Re-located with new house, new job and my first wife decided she wanted to have "fun" with someone she worked with. Long story short: divorced, sold the house in city, split proceeds and kicked the adulterer out of my life, .... fast fwd: re-married and all we can afford is a condo here in Oakville.

I look back what I had before and it seems my life has/is wasted. I had the house, the dog - what everyone around me seems to be enjoying. Yet instead of being where a 35 y/o should be, my life has taken the form of what a 19 y/o has - pretty much nothing. 

Anyways, enough of my ranting - I am sure you all don't wanna hear my sob story.


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## the-royal-mail (Dec 11, 2009)

Actually Harp, what you describe is not that unusual. There are a lot of us who have had similar experiences and have sob stories of our own we could share. I do not think there's much value in dwelling on sh-t that happened that was beyond your control. You can only do your best every day as a person and no, that won't always be rewarded in your favour. I do think there's value in picking yourself up, accepting what happened and moving on and rebuilding. That happens to a lot more than you think. Why do you think I'm promoting the concept of saving up for emergencies? You just never know!

Try to learn something from the experience and make the best of it. Unfortunately you don't have a rewind button.

Sorry man.


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## Oldroe (Sep 18, 2009)

Having a budget is just a huge stress relief. Started ours 25 years ago.

The first of very month I know the money is there for every bill. It all works auto. Never think about it. 

I redo it every few years.


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## marina628 (Dec 14, 2010)

Harp haven't you heard that 35 is the new 19?You have a long life ahead of you and sounds like you have many many changes in your life in a short period of time.I watch Gail all the time and some people owe $100,000+ and have nothing at all.
Condo in Oakville is nothing to put yourself down for ,you balanced a budget that is good news and you realised you needed to deal with it before getting out of control.


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## Causalien (Apr 4, 2009)

Harp, we all have a sob story. I think most of us have told the story years ago or at one point in our life. With time, the need to tell it goes away. This is your time. Concerning being scared, it just means that it is your weak point. I can probably budget at the back of my head while riding my bike around town without feeling a thing at all like going to the grocery store buying milk. But most of the forum observed my scare-ready approach to installing a door when I came begging about what to do a few months ago. I am pretty sure you have skills that you are confident about. 

This forum will criticize your methods, berate your sins and bicker amongst each other on the best way to get rich. One thing is for sure, if you stay and stomach the comments, you will get richer.

Now let's get you rich. Repeat after me. Ehbergerd! Budgeting is easy.


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## 44545 (Feb 14, 2012)

Harp said:


> ...all we can afford is a condo here in Oakville...


See below.



marina628 said:


> Harp haven't you heard that 35 is the new 19?You have a long life ahead of you and sounds like you have many many changes in your life in a short period of time.I watch Gail all the time and some people owe $100,000+ and have nothing at all.
> *Condo in Oakville is nothing to put yourself down for *,you balanced a budget that is good news and you realised you needed to deal with it before getting out of control.


I *wish* I had a condo in Oakville!  You're doing well - don't sweat it.

Seriously though, an antidote to fear is realizing "everything is difficult until it's easy."

Keep meticulous track of your spending and you'll see how the budget is working.
If things start diverging, (more spent on groceries than planned), you can rearrange in advance (cut from dining out & entertainment) _before_ it puts a strain on your total finances (not enough in bank to pay for a scheduled bill).

Do that for a few months, staying diligent and you'll have confidence that the system you designed works. The fear will melt away.


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## Square Root (Jan 30, 2010)

My daughter who is 28 and earns in the range of $45k per year came up to the cottage this past weekend. To my surprise she asked me if I would help her set up a budgetting system. I was very happy to do this and we set up a simple spreadsheet with maybe 10-15 expense categories and 3-5 income sources. Turns out she is saving almost half her income, no debt, will have the max TSFA by year end, and is DRIP'ing her small ($50k) portfolio of stock. i was proud of her.


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## Harp (Jul 18, 2012)

Square Root said:


> My daughter who is 28 and earns in the range of $45k per year came up to the cottage this past weekend. To my surprise she asked me if I would help her set up a budgetting system. I was very happy to do this and we set up a simple spreadsheet with maybe 10-15 expense categories and 3-5 income sources. Turns out she is saving almost half her income, no debt, will have the max TSFA by year end, and is DRIP'ing her small ($50k) portfolio of stock. i was proud of her.


I honestly think that our schools should really teach this exact thing when kids are young and continue it through high school. They could very simply use The Wealthy Barber book as a course guide. If anyone has not read this, do yourself a favor and give it a read. Its awesome! I haven't had a chance to read the second book but can't wait to get my hands on it.

Like I said, I am 35 and there was nothing ever taught in school about budgeting, planning, etc. I assumed that living off credit like my parents did was the way to get what U wanted - I knew nothing else.


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## the-royal-mail (Dec 11, 2009)

^ Agreed. I think one of the hindrances is that budgeting and organizing money and planning are not sexy. Even if you look at the CMF threads, count the number of thread starters that want to learn about these things and you will find they are far outnumbered by threads about investing, specuvesting, renting out condos and other such shell games and get rich quick schemes. My point is that I just don't see a lot of interest out there for these basics even though I 100% agree with you that they need to be taught at an early age and practiced and refined throughout one's life.

I regularly review my excel tracking sheet, establish simple checkpoints and try and meet or exceed the targets. This has provided me with a lot of power over my financial house and keeps me well prepared for life's events. Save first, then spend responsibly.


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## Causalien (Apr 4, 2009)

the-royal-mail said:


> ^ Agreed. I think one of the hindrances is that budgeting and organizing money and planning are not sexy. Even if you look at the CMF threads, count the number of thread starters that want to learn about these things and you will find they are far outnumbered by threads about investing, specuvesting, renting out condos and other such shell games and get rich quick schemes. My point is that I just don't see a lot of interest out there for these basics even though I 100% agree with you that they need to be taught at an early age and practiced and refined throughout one's life.
> 
> I regularly review my excel tracking sheet, establish simple checkpoints and try and meet or exceed the targets. This has provided me with a lot of power over my financial house and keeps me well prepared for life's events. Save first, then spend responsibly.


That's funny, I always assumed that people who comes here already know and done budgeting to death and that's the reason why we are here. To discuss about investing and money management, because we are bored of the first step.


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## brad (May 22, 2009)

Harp, this may already have been mentioned, but have you looked into the You Need a Budget model? Check it out at http://www.youneedabudget.com. They sell software that helps you implement the approach, but you can also do it yourself without the software: they provide (for free) a very readable online book that describes the method in 47 pages.

I like their approach, which involves living on last month's income and "giving every dollar a job." Even though I'm not big on budgeting myself I'm going to give their approach a try just as an experiment.


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