You might have heard of the FIRE movement (Financial Independence Retire Early). In case you have not, these are people that, for the most part, through saving and investing, can retire from their jobs before what society considers to be “retirement age.” Many in the FIRE movement are focused on retiring in their 30’s and 40’s. Since we are in our 40’s, I am dropping the “Early” part. We want to be able to retire and be financially independent. To accomplish this, we need to focus on getting control of our expenses, saving, and investing prudently to ensure that we reach our financial goals.

We are both in our 40’s, and both have full-time jobs with three kids in school. Like most, if we do not focus on getting ready for our retirement in the next 20 or so years, we might not be able to retire comfortably.

We do not want to burden our kids financially as we get older because we failed to plan and prepare for our retirement. Now don’t get us wrong, if our financial situation changed and we could retire early, we are not going to be the type to say, “No, we would rather work!.” but instead of doing nothing and “hoping” we are going to do what we can now to ensure we reach our goal.

The first step in this process is getting a detailed picture of our financial situation. We need to know how much money is coming in and where it is getting spent. We mostly wanted to know why was it that a lot of months we would have more month than money? How can a family with two incomes end up with more month than money? The simple answer is we spent more than what we made, but if you asked us where we spent this “extra” money, we would have been hard-pressed to reply with a specific purchase or item.

When we finished listing all of our monthly expenses, we saw that we were getting in trouble was not the big-ticket purchases but the smaller $10 to $20 type purchases. These usually added up to several hundred dollars by the end of the month. These lead to the “more month than money problems,” which lead to arguments and an overall tense situation at home.

This exercise allowed us to see in detail where we were spending our money. We discovered that we averaged $600 per month on Amazon alone! We immediately removed the app from our phones, and our monthly spend on Amazon has dropped to less than $100 per month! We took this difference and added an “expense” to our budget, redirecting the $500 per month to an IRA Account where we invest the money for our retirement.

Putting together a budget takes time. I will not lie. While it might be tempting to “wing it,” we decided that we would take the time and do it right; the benefits have been worth it. We sat down over a weekend and listed every single type of credit card and bill we had paid in the past three months on a spreadsheet.

We all are creatures of habit. We shop in the same stores week after week for the same stuff. We looked at the past three months to get an average of what we spend on food, gas, clothing, etc. Aside from our utilities, most of our expenses get charged to a few credit cards. This made it simple for us to document our recurring monthly expenses. We went from using several credit cards to only one, making it easier to track all of our household spending.

Today we pay all of our bills off this spreadsheet. When a statement arrives in the mail, we input the charge on the spreadsheet, which gives us a running total for the month in a visual way. We can see what we have already paid and what still needs to be paid. (We do not do paperless statements, we have tried it and found that it does not work for us.)

We refuse to go to electronic statements because they make it too easy to not “see” where you are spending your money. Unless you can pay the full balance every month, it is hard to make an argument for electronic statements. Electronic Statements only make it easier to overspend, underpay, and remain in debt. Part of the reason we accumulated some debt was when we initially went to electronic statements. Once we got off the electronic statements, we have been able to stick to our budget and pay down our debt. Here is an article about Paperless Statements and Identity Theft you might find interesting.

We have all of our credit cards listed on our spreadsheet; balances left to be paid, interest paid the prior month, and year to date. We prioritized paying down all credit card balances and being debt-free within the next 18 months. By playing what I call the “Balance Transfer Game,” we make sure that as much as possible of our payments go towards the balance instead of interest payments. In doing this, we cut our interest expense down by over 2/3!

Except for our utilities, all of our bills are due after the 15th of the month. We were able to accomplish this by calling and requesting that the due date be changed. This change made it easier for us not to “miss” a one-off retailer credit card that we might use because they were running a particular promotion for their cardholders.

If you would like to download a copy of our Household Budget Spreadsheet, you can request it below