Budget Lesson, Part 4

Part 4 of the Budget Lesson series.  Please see Part 1, Part 2, and Part 3 to catch up.  The Google Doc of this example is here.

The final category in my budget is “Set-aside funds”.¬† These are the categories that don’t have specific payout amounts and happen at irregular intervals.¬† When my car is paid off, there will be a car fund added to the list, instead of a new car payment.

  • Parties –¬† We throw two parties each year; a Halloween party and a summer barbecue.¬† We also have three children who have varying expectations and needs for their birthday parties.
  • Gifts I don’t buy presents for my friends, and the number of relatives I buy gifts for has decreased dramatically over the years.¬† I do, however, buy birthday and Christmas presents for my wife and kids and I participate in some form of gift exchange with my brothers and their wives.¬† Combined, we set aside about $100 per month for parties and presents.
  • Pet Care – We have four cats and a dog.¬† This is to cover cat litter and food the bunch.¬† We have too many pets, but we can’t give them away.¬† They are family.¬† However, there is a moratorium on new animals for a few years.¬†¬† Two cats and a dog are our hard limit.
  • Car Repair – Cars break.¬† Tires wear out.¬† This isn’t a surprise, and it certainly isn’t an emergency.
  • Warranty Fund – We are building up our own “Warranty Fund“, to replace appliances when they break.¬† I’d rather have the interest accruing than see this as a line-item fee on any of my bills.
  • Medicine/Medical – Kids get sick and prescriptions need to be filled.¬† We figure our monthly prescriptions plus one office visit per month, but the money accrues in this fund.¬† On low months, we have more, so we can cover the visits during flu season.
  • In The Hole – This isn’t actually a fund we set aside.¬† If, for some reason, we go over budget one month, it gets entered here to immediately pay ourselves back for the over-spend.¬† This month, this number is $170, which is how high we went over for Christmas.¬† Since we have all of the “Set asides” and non-monthly bills stored in the same account, there was no actual debt, just this “paper” debt to ourselves.¬† This serves the combined purposes of a mild punishment for overspending and a method to get back on track.

That is my entire budget laid out.¬†¬† As the series continues, I’ll be examining how I have lowered the bills, how I could lower them more, and how I’ve screwed them up.

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Budget Lesson, Part 3

I keep calling these lessons, but they are examples and explanations, more than lessons.   Names aside, please see Part 1 and Part 2 to catch up.  The Google Doc of this example is here.

School Lunch

This time, I’m going to review my non-monthly bills.¬† These are the bills that have to be paid, but not on a monthly basis.¬† Some are annual, others are quarterly, or even weekly.¬† Every month, the amount–adjusted to the monthly equivalent–is set aside in Quicken.

  • School Lunch – We don’t qualify for any of the reduced lunch plan, and I don’t know that it is possible to send a brown-bag lunch that is both cheaper and healthier than the school’s menu.¬† This is automatically replenished whenever it gets below $15.¬†¬† This actually gets paid about every other month.
  • Property Taxes – Semi-annual and increasing every year.¬†¬† I know the valuations around me, so I don’t think an appeal would win.
  • Life insurance – We pay this quarterly.¬†¬† If I die, my family will be completely covered for several years, without adjusting a single expense.¬†¬† If the expenses are adjusted to account for the fact that I won’t be eating, driving, or using electricity, it will last much longer.¬† This is a separate policy from the one discussed in Part 2.¬† GET INSURANCE!¬† Take care of your family.
  • AAA – Since we got reliable cars, this hasn’t been a money-saver, but it’s priceless in terms of peace of mind.
  • Vehicle Registration – We have two cars and a motorcycle that need registration every year.¬† I’m planning to sell the bike in the spring, but I was planning that for last spring, too.¬† It’s easy to put that off, since I enjoy riding.
  • Daycare – Daycare is a weekly expense.¬† As a two-income family, this isn’t an expense we can do away with…yet.¬† As time goes on, the bill will be getting lower.¬†¬† In June, my youngest reaches a cheaper pricing table and my oldest is almost ready to be done with daycare completely.
  • City Bill – Our garbage and sewer are paid through the city on a quarterly basis.
  • Web host – I’ve got this blog, plus a few other side projects hosted here.¬† I have been simplifying and reducing the projects that aren’t fun or profitable, but I’m not sure this expense will ever go away.

There aren’t too many items here that can be legitimately and responsibly trimmed.

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Budget Lesson, Part 2

Today, I am continuing the detailed examination of my budget.   Please see part one to catch up.

This time, I’m going to look at my monthly bills.¬† These are predictable and recurring expenses, though not all of them are entirely out-going.

Let’s dig in:[Continue Reading…]

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Budget Lesson, Part 1

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Over the next few weeks, I will be going over my budget in detail.

The first section is income, but that’s straightforward.¬† A line for each income source, bi-weekly, monthly and annual totals.¬† Simple.

Before we start, a word on the organization.  There are five columns:

  • Category – This is the description of the line item.
  • Cost – How much do you pay for this item?
  • Time – What is the frequency of the payment?¬† Valid values are ‘m’, ‘q’, ‘y’, ‘w’ for ‘Monthly’, ‘Quarterly’, ‘Yearly’ and ‘Weekly’.
  • Monthly – Cost and Time are combined to calculate the monthly expense, to make it possibly to budget.¬† If this is $100, I need to set aside a C-Note each and every month to make the payment when it comes due.
  • Yearly – This column is mostly informative.¬† It’s helpful to see this in comparison to my annual pay.

The first section I am actually going to address is discretionary spending.

  • Groceries/Dining¬†¬† ¬†$475.00 – We don’t budget heavily for groceries, which would be a surprise if you saw me.¬† At the smallest I have ever been, fit, I was never small.¬† We shop smart, buy in bulk when it makes sense, and rarely eat out.¬† We also keep cooked rice and beans in containers in the refrigerator as a cheap and healthy way to stretch almost everything we eat.
  • Discretionary¬†¬† ¬†$250.00 – This gets used for household items, like toilet paper and soap.¬† It also get used for the odd book or movie, or to cover the gaps between the other categories and reality.
  • Baby stuff¬†¬† ¬†$60.00 – We have two children in diapers.¬† ‘Nuff said.¬† This category does get progressively smaller as the baby items are outgrown and the children get potty-trained.
  • Gas/oil¬†¬† ¬†$200.00 – Gas and auto-maintenance.¬† This is actually higher than monthly costs, allowing us to set some aside for larger maintenance issues.
  • Clothes¬†¬† ¬†$15.00 – All of our dressers are overflowing, so this is strictly replacement cost for the time being.¬† Our kids wear a lot of hand-me-downs.
  • Blow Money¬†¬† ¬†$50.00 – Occasionally, habitual shoppers need to shop.¬† If they don’t do it on-budget, they will do it off-budget and kill the whole idea.

Initially, we used a “virtual envelope” system.¬† We had a spreadsheet and every time something was spent in this category, we entered the amount and stopped when the category was spent.¬†¬† Didn’t work.¬† We are going on a pure, cash-only system as of the first of the year.¬† No money, no spendy.

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