Last March I was putting the finishing touches on my application for Georgia Tech’s MBA program. In the words of Stevie Wonder it was “signed, sealed, delivered” and then a thought hit me, how are we going to pay for this?

I had spent so much time and effort ensuring that I would get my application out the door before the birth of my daughter, Ansleigh, that  some of the minutiae was swept under the rug for a later date, namely, financing for this costly investment.

I do not want to get too off topic because this is not a post about applying for a student loan, which is surprisingly easy (almost scary how easy it is). No, this is a post about personal or household budgets. My point above is that while Sarah and I have been prudent regarding our expenditures and savings in the past, it was time to take a magnifying glass approach to our finances. And I (we, mainly I, but we) did just that.

The first thing I did was take red ink to all of our monthly expenditures. I switched to Geico, not even lying they saved us a crazy amount of money each month(30%). Then I looked at how much we were spending on groceries, utilities, cable, gas, mortgage/rent, fast food, booze, etc… and sought obvious places for savings. Persistence is key, especially with the cable companies; you have to realize that their industry is fiercely competitive and that often times the consumer has the high ground. I used it as a means to sharpen my negotiating skills.

The next step was to look at the past year of trends for key monthly expenses. That sounds gruesome and daunting but it is actually quite empowering(and shocking) to know exactly how much money went out the door on things like groceries or gas.This information is pretty easily obtained via bank and credit card statements, unless you pay in cash for everything in which case you could always start collecting receipts to find your baseline. Finally, Sarah and I discussed benchmarks for our expenses and agreed on certain targets for different categories.

Then the fun started. I was curious how much money we could save over 9 months if we stuck to the budget. So I built a spreadsheet model that did just that. But I was not satisfied with 9 months so I extended it to 12, then 18 and finally just took it all the way to 32 months (projected graduation date). Also, I found that we were making a considerable number of purchases that could not be categorized in the budget but that could sometimes be planned for. For instance, we wanted to purchase a buffet for the dining room but we did not categorize “furniture” as a monthly expense. So I added a line for “miscellaneous payable” and also another line for “miscellaneous receivable” to prepare for bonuses and tax returns and cash gifts and the ilk.

Obviously I know that there are a ton of different budgeting tools out there that are  infinitely more sophisticated than my little spreadsheet, however, I have found that actively updating my own data encourages me to be more more self-aware than if I just synced my bank and credit card information up to mint.com. In fact, I do use mint as a supplementary tool to check my spreadsheet.

The Budget – Template is linked and has directions in bold orange print. The gray and beige cells are the inputs. It should be relatively easy to use. Feel free to reach out if you have questions about any assumptions or any constructive feedback. Thanks for reading I hope you find this helpful.