How We Manage Our Money

Friday is our day off--our Sabbath, if you will. (Full time ministry necessitates a different day to rest.) Oddly enough, I spent a large part of my morning spontaneously updating our budget based on our expenses from the past year. (You can laugh if you want.) In the midst of my number crunching (who am I trying to kid with my financial record-keeping? The husband is the math wiz. How'd I end up with the figures?), I remembered a friend's request from a long while back. She asked if I'd be willing to write a few blog posts to describe, in detail, how we live frugal yet full lives? What does our budget look like? How do we actually spend our money?

Since frugality is kind of a passion addiction of mine, I decided to make good on my promise. So strap on your safety belts, friends! We're delving in the world of Kevin & Melanie's finances!*

*special note--we're actually on the verge of starting an "exploratory" study of Financial Peace University by Dave Ramsey, along with the other ministry leaders and their spouses. Should be interesting to see the affects it might have. 

The first and most important step to our budgeting lives is free accounting software called Gnu Cash*. This program is simply amazing for record keeping and has helped me organize and comprehend the ins and outs of finances at a much deeper level. The only hitch is I don't think I ever could have figured how to use the program on my own. My husband has this super-human ability to innately know or intrinsically discover how to use computer software. He's awesome. 

We've been using Gnu Cash for a few years now, and I've only recently felt 100% competent....but that's because we've expanded our usage of the program to well beyond the checkbook-ledger basic functions. (It's worth it, though, even if you only ever it use for tracking a checking account.) 

*no, I've not been paid to talk to about Gnu Cash. It's just what we use, I love it, so I'm telling you about it. 

Here's what we use Gnu Cash for: 

1. "Asset" accounts--one for each of the following--checking, savings, credit cards (EACH of our credit cards has its own sub account), cash on hand (for gifts or paychecks, etc). In each of these sub accounts, we record every dollar that goes in or out. 

2. Expense accounts--this is a category with as many sub accounts as necessary for every specific area of expense in our lives (groceries, eating out, entertainment, utilities--gas, water, electric, rent, cell phone, tithing, child sponsorships, gifts, clothing, medical, etc, etc, etc.) The more specific accounts we have, the easier it is to track EXACTLY how we are spending our money. 

3. Accounts Payable--we set up this function to keep track of the taxes we owe on our incomes. I'm self-employed and Kevin is technically a "contractor" for the church denomination, so we're responsible for writing our own checks to the IRS every quarter. Fun fun. For every dollar we earn, I multiply it by 13.5%. Then, come the quarterly tax day, I write a check for the amount in Accounts Payable, deduct it from the checking account the Accounts Payable account will be zeroed out. Makes tax day(s) so much less stressful. 

4. Transactions Reports--Here's the function I used this morning. You can set up a transaction report for any account in your Gnu Cash and find out exactly what's been earned/spent over XX period of time. For instance, I made a report for each of our expenses. I started with "Grocery," changed the time period to be August 2011 to August 2012 and clicked "ok." VOILA! I had a list of recorded expenses, with their description, amount per transaction, amount per month, and total amount. I divided that by 12 (months) and found out we spend, on average, $144 per month on food.  

5. Bonuses for electronic record keeping--a) You can search for any transaction by hitting "ctrl f." b) you can change a date or delete any transaction at any time without having to erase your whole ledger and recalculate. (This was a big plus for me because I remember being so frustrated with balancing my checkbook with the paper statement--the order of the transactions were always all over the place.) c) it keeps track of your total Assets (all of your accounts, minus all of your outstanding balances on credit cards, etc so you know EXACTLY how much money TOTAL you have at any given time.) 

There are a million more uses for Gnu Cash, but that's how we've been employing this tool for the past few years. And did I mention it's FREE? 

how do YOU keep track of your money? 

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