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“We must consult our means rather than our wishes.” 
― George Washington 

Living within your means can be a challenge but is most definitely worth it!  Although I am not in a perfect place with my budgeting or financial situation, implementing budgeting and living within my means is making my situation much better.

Before I discuss how I budget with you, I want to give you a little bit of history about where I have been in my life.  When my daughter was almost one, her Dad lost his job.  This was a really hard time for us, as I made a decent amount of money but not enough to take care of a family of three.  We had quite a bit of debt and were only able to make minimum payments on all of our loans.  The credit cards were maxed out and I found myself making a minimum payment so I could use the card for diapers and formula.  Not a good place to be.  A few months after my ex-husband lost his job, he left.  Because most of our debt was in both of our names, I had to make sure that at least the minimum payments were made to keep my accounts and credit in good standing.  I knew that something needed to be done to get me in control of my finances.

I was lucky enough to get a promotion at work soon after my ex left.  This meant a raise and I was able to provide insurance for my daughter.  This was finally a step in the right direction for me.  As part of our divorce, I was able to get rid of one of the car loans that was in both of our names.  One debt down, plenty more to go.  When I refinanced the auto loan that I had to keep,  I took some of the equity in my car to pay off a very high interest credit card.  Another step in the right direction.  I tried to SLOWLY start paying off my credit cards and used balance transfers to help me do this.  I was able to get qualified for credit cards with 0% interest and low or no balance transfer fees.  This helped me a ton! I strived to make more than the minimum payment and not use the credit card unless I had an emergency.

About a year and a half after my divorce was final, I got a new job.  I only received a small increase in pay at the time, but I was able to move from a 401K retirement plan to a defined benefit plan.  I decided to take the small amount of money I had in my 401K from my previous job and pay off my student loans.  The amount of penalties and taxes I had to pay on the early withdrawal was much less than what I would have paid if I had continued making minimum payments on my student loan.

Ok, enough about my history, let’s get to how I currently budget.  I was finding that as I was paying off debt, I started spending more money on random things, like shopping.  I was able to pay off all of my credit cards, and I only had a car payment and a mortgage.  I had also recently moved in with my Fiancé (my husband now) and I was renting out my house.  This left me paying only $130 a month for my mortgage, the rest was covered by my tenant.  I knew that I needed to figure out a good way to manage my spending, so of course I started doing research.

As I was browsing Pinterest one day, I ran across a budget idea that I felt might work for me.  I found the website funcheaporfree.com.  Her budgeting method involves opening multiple accounts, creating different budgets for different things, and using an envelope to track expenses.  I have taken her ideas and created a system that works for me and my family.

The first thing I did was open a second checking account.  I now have two checking accounts, one labeled Family, and the other Ashley.

Family Checking

This checking account is used for expected, or “needed” items.  For us, this includes:

  • Mortgage
  • Utilities
  • Car Loan
  • Gas
  • Car Insurance
  • Dance Fees (for my daughter)
  • Daycare
  • Medical (prescriptions)

These expenses generally remain the same each month and are relatively easy to budget for.  The only expense that usually changes is gas.  I try to estimate this cost based on how much I use in an average month.

Ashley Checking

This checking account is used for my grocery and other budget. Grocery items include:

  • Food
  • Toiletries
  • Basic kitchen supplies (garbage bags, etc.)


My other budget includes:

  • Clothing
  • Gifts
  • Other wants

This budget is normally used for items that we “want”.  I feel like by allowing myself to purchase “want” items, I don’t feel so strapped down by my budget.

The amounts that you allow yourself for each of these categories is different for everyone.  If you are needing to pay off debt or are needing to build savings, these budgets should be less to accommodate for this.  When I first started budgeting like this, my other budget was much less.  As I started paying off debt and putting money into savings, I allowed myself to increase my other budget.

I use an envelope to track expenses for my grocery and other items.  I break up my envelope by weeks and use a new envelope for every month.

Here is an example of February’s completed budget envelope:

 After I purchase something, I take the receipt and write the amount in the appropriate category (grocery or other).  I then put the receipt in the envelope in case I need to return something later.  I do this with every expense that I have in my grocery and other budget, and once the week is over, I write down what I have left for the week.  This amount will get placed in my Slush fund at the end of the month.  Occasionally I have more grocery expenses than other expenses, so I adjust my other expenses accordingly and visa versa.  You should not let yourself carry over your budget from week to week.  As you can see sometimes this happens.  I really do strive to only spend what I have allotted for the week, and try to build up my Slush fund for larger purchases that I want.

Happy Planner Budget Extension

I also use the Happy Planner Budget Extension to assist me with budgeting.  This budget extension is very helpful in making sure that my expenses are staying on track, and that my bills are being paid on time.  I can also set goals for myself and review how I did for the month.

I hope that this post has been helpful and happy budgeting!


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