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I dont really consider Budgeting (too-far) off topic, at least not to open a new post and see where it goes...

Looking at the Fool Boards related to personal Finance sections there are two other boards that I could see possibly posting this msg:
1. Fools and their Money
2. Family Fool

I have not really browsed either of these boards, might now, but havnt as of yet. Since there is not a "Digging your way out of Debt - Step 2 to Fooldom" Message Board. Hey there is an intersting Idea for a new Fool Board (Hint, Hint...)

Beleive it or not, I find bugeting the most difficult aspect of being in debt. The concepts are easy, but in practice it is next to impossible. What I have done is, with the help of Quicken, set up a budget for myself/family. I have only been using it as a guideline though, not an absolute.

Up until the end of last year I had no budget. I used the frist two months of the year as a benchmark for my budget and only tracked where I was spending money. That Quicken help immensly. I took those two months as datapoints and went from there using those as baselines.

I then extrapolated out the rest of the year months and adjusted some of the costs appropriately. For example, energy costs low in march/april/may/june and high in july/aug then picking back up in Nov/Dec as one point. Also puting in extra money for gifts around b-days/christmas as best as could be guesed. I didnt put any unplanned expenses, like the one of our car's Power steering problem that cost us 2k to fix in Jan.. GRRrrrrr...

As I said I used this as a guide to validate how much I think we could realistically afford to pay towards debt reduction. For the most part once I valaidated that aspect, the amount I could realistically assume for debt reduction, I pretty much stopped with the budget effort. Meaning I don't got out to a mall/store with the notion that I have 100.00 to spend or for that matter 100.00 I have to spend to stay in the budget.

I still track all expenses and make sure they stay in line with the baseline averages from those first two months. I check it porbably weekly or so. Quicken is Good for tracking Where the money gets spent on a month-by-month Baisis.

I do not really know if this is the right/wrong thing to use a budget in this fasion, but it seems to be working for us.

One note, I did try to use Quickens Buget tools, Found them hard to use and never tried it again, I use Quicken 6.0 (not '98 version). I just us an excel spread sheet for the buget and the catagories from quicken.

Hope this helps.

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I agree. I have never had success with a budget. I think it is better to decide how much to save and then live on the rest. There was an old saying that went, "Pay yourself first" meaning decide how much to save and have it taken out of your paycheck first. Then live on what is left, because we all have the tendancy to spend every dime we make.

So if you have a company matching 401K then have that directly deducted. If you want to pay down a credit card then make that the first check you write that month, whatever works for you.

Then you pay your normal ESSENTIAL monthly bills for housing, etc. There will be some discretionary left over and use that to buy clothes, go out to dinner, or set aside for a trip, buying lunch at work, cable TV, furniture, etc. (If there is no discretionary left over than you might want to reduce your savings or get a second job.)

The key here is that the "money-wasting" items above bare-bones necessities are taken from what is left over. Hey, if you can't afford cable then buy some rabbit ears. Maybe you can get cable but you have to brown bag it to work all month. The focus is on juggling what is left over for the items that you do not really need - or could wait. (That clothing sale will come around again.)

If the power steering goes and costs $2,000 and your discretionary is $500 per month then you are going to live like a frog for 4 months. Meanwhile, your Net Worth goes up every month because you paid yourself first every month. (A reduction in credit card debt is still an increase in Net Worth.)

Usually what we all do is buy the other stuff first and save what is left over. We go out to dinner, buy that new spring outfit, buy that item because we had a tough week. And surprise, surprise we have nothing left over for savings.

If you pay yourself first then you really don't miss it, especially if it is payroll deducted. You just see your Net Worth going up each year!

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I don't think budgeting is off topic at all. I had a very strict budget when I was in college, my wife and I were living off jobs that paid barely above minimum wage in the DC area (not an easy thing to do). We had our budget down to pennies!

As time went on, we fell out of it, however, I decided to try budgeting again after reading "The Millionaire Next Door". Budgeting takes time, and I believe that is what happened to us, we lost the time for setting it up. In that line, I discovered that too much of my time was in use if I could not free up a few hours per month to set up a budget.

Our initial figures came from Quicken, which I put in a spreadsheet. From there, each pay period we project the expenses. If I don't have time (which I didn't the past few weeks because of a graduate course I was taking), I set aside an extra amount of money aside and hide it in savings or whatever.

The system works. Also, as the budget begins, you discover ways to cut costs quickly. After the first round, it gets a little difficult though. My biggest savings was from bringing lunch to work and not eating breakfast at Mc Donald's on the way to work. Also, we switched long distance service.
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