EveryDollar Budgeting Tool

Hi y'all!  This particular post is a little off from my normal blog "voice".  I debated for a while whether or not I should talk about something like this because the topic of "money" can be such a sensitive subject.  I'm referring to the "adult" stuff in life: budgets, money, and all the emotional stuff that comes with it. 

After hemming and hawing (per my usual) I decided that while this post is not the most glamorous, it might help someone out there.  It's really personal to talk about finances but I think we make the subject too taboo sometimes.  As you're reading this, please keep in mind, Jordan and I are NOT perfect and we still have MUCH to learn in the world of finances (well, not so much Jordan since he has an Masters in Personal Financial Planning).  Also, just to be clear, this NOT a paid advertisement; these are organic opinions. 

For more than a year now, (since Nov 2015) Jordan and I have been using the Dave Ramsey budget app called EveryDollar.  Jordan and I first heard about Dave in college, and since Jordan was majoring in Personal Financial Planning, he especially found Dave to be interesting.  You can visit Dave's webpage HERE to learn all about him, the tools he offers, and the radio show that he hosts.  We are actually big enough fans that we traveled to Nashville in 2014 (on our way to Orlando) to visit Financial Peace Plaza and we got to meet him and shake his hand!  That was a cool experience.  You can see pictures from our visit HERE.

I could drone on and on about Dave's show, charity work, books, financial tips, faith based mission, and more, but I wanted to focus this blog on his budgeting concepts and the app that we've been using.  

Dave's moto is that you must tell your money where to go or it will go where it wants.  He has always told his listeners to use what he calls an "envelope system" to budget their money.  Essentially, the idea is to put actual dollars from your monthly paycheck(s) into separate envelopes, each with it's own purpose.  The envelope system is designed to be a visual to show you how much you have left in a certain budget cateogry (ex: The envelope for "groceries" is getting low so we have to decide how to cut back (tuna sandwiches) or decide which other category to pull dollahz from.  While I'm a big proponent of the envelope system, it was never practical for us to carry around cash or to shuffle envelopes around.  Especially as a married couple both spending from those categories.

That's where the app comes in.  The app allows us to enter our monthly income and designate a purpose for every single dollar (thus the name, "EveryDollar").  This is also sometimes called a "zero dollar budget" because every dollar of income is assigned an outgoing category (even if that category is "savings").  The app is all virtual so there are no envelopes to keep up with and it's much more friendly towards virtual debit card purchases!  The app allows us both to view the budget anywhere, anytime, and decide what category to put our money in.  All in real time.

You can sign up to use EveryDollar for FREE on their website.  After you sign up, you have the option to connect the app directly to your accounts (for a small fee). There is a free 30 day trial to use the "plus" version where every transaction will automatically link to your bank and show up in the app.  We tried this but found that the 3-4 day lag time really hindered more than helped.  Instead, we opt to load each transaction manually as it happens.  It takes a little more time to do this but it "hits" our budget immediately and we have the ability to make a note so that we remember what the transaction was for (ex: not all Target transactions are "grocery" so a note helps me remember).

You can also read about the app from an independent source HERE (Nex-tech Wireless). 

When we first started using this app for our budgeting, we definitely had a learning curve.  We had to communicate more than usual on where to put our money when things got tight (Dave calls these "budget meetings").  Some budget meetings are more like "budget arguments/debates" but, don't worry, it gets easier over time.  Today, with the same income, budgeting is still a challenge sometimes, but it's a LOT easier because we are better at planning in advance (ex: planning for semi-annual HOA dues, or paying for auto insurance in 1 lump sum).  

Using the budget app has also helped to give ourselves permission to spend money on certain things.  If we both know exactly where our money is going, and the important stuff is already handled, then it's no big deal if one of us wants to spend a little money on something fun.  If you're naturally a spender, this is perfect because you can have your cake (the trill of spending) and eat it too (knowing you've covered all the other adult categories like bills, food, housing, etc)!  It also sets expectations between partners so neither person is shocked by an expenditure.

Jordan and I like to have what we call "blow funds," meaning, it's money specifically designated to blow on a "want" rather than a "need".   You can spend to your hearts desire on whatever you want as long as you do not exceed your mutually agreed blow fund.  When the month is really tight, the blow funds are usually the first to take the "hit".  

We also use what we call an "escrow" fund within the app.  This is money that we thought we would need to spend in a certain month but, for one reason or another, we didn't use it.  We "escrow" that money and roll it into the following month.  A good example of this is the hail claim on our house.  When we received an insurance check, the money of course was deposited into our bank, but I earmarked it in our budget as money specifically set aside to repair the hail damage.  Since it takes a long time (months and months) to work with contractors to make design decisions and schedule repairs, the app helped me easily see how much money in the hail category we had to work with.  It helped me separate our earned income from the insurance claim.

This is probably WAY more information than you bargained for but I sincerely hope you found it helpful.  My generation and most millennials have a difficult time juggling money.  We were not taught how to balance a checkbook, pay our taxes, or save for retirement in school.  With so many expensive temptations out there, this app really has helped to ground us.

If budgeting drives you crazy, or scares you, I highly recommend using EveryDollar.com to help.

Have a great week!