Problem Definition Worksheet

A. Problem Statement: My wife recently left a high paying career to return to something she enjoys, nursing. She made this decision and the career change 6 months ago. This resulted in a significant reduction our family's monthly income. For the first time we have to consider the "B" word, budget. We lived blessed lives and to this point our food and entertainment budget was non-existent. We ate out and entertained without regard to a budget. We now know we have a problem because her credit cards are starting to accumulate balances and we have not adjusted our living expenses accordingly. Her checking account balances are also starting to be depleted as well. So what we have to do for the first time is determine how much we are actually spending. Then I want to employ different control measures to capture our expenses so that we may still enjoy dining out and entertaining but in a way that we don't go into debt doing it. We have determined that a reasonable monthly budget for a family of 3 is $600 a month.

B. Business Impact: We need to fix this problem because we have not captured our monthly cash burn on food and entertainment. We know that we are spending more than $600 a month now and we need to get to this goal based on a family budget. The benefit to solving this problem is that it will allow us to continue to save for retirement, plan family vacations and do so without incurring unforeseen debt. Success for this problem will be to establish a lifestyle that supports a goal of spending less than $600 a month, thereby making this our key output. If we are spending $300-400 dollars more than this budget it is negatively impacting us by $3600-$4800 per year.

C. Goals: Our objectives are to:

a. Determine how much we spend now with no change to our spending patterns.

b. Find out what the appropriate number of times we can eat out a week and stay within budget.

c. Determine our largest expense.

Our primary endpoint is $600 a month. Not knowing what we even spend now is a problem so therefore it is initially hard to determine how much better we want to be. We only know based on our budget where we need to be after this analysis.

D. Project Scope: Our boundaries in this analysis are to capture actual dollars spent during the course of a week. This will require some work on our parts. The scope of what we want to capture are, dollars spent on groceries, dining out throughout the day, and entertainment. Entertainment will be defined as activities that include the family, movies, bowling etc. This will also include items such as gifts for birthdays. The steps that we have identified are to use Sunday-Saturday as our measurement periods. We will look and capture what we spend week to week.