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Author: monica3674 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 5068  
Subject: Budgeting Date: 8/18/2003 11:01 AM
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I am curious to know whether anyone here really budgets. I read all of the time that households should have a budget or "spending plan." My DH and I don't, and I have been wondering if we should. I could tell you approximately where our money goes, but I wouldn't be able to account for all of it.

If you have a budget, why do you do it and does it work? Do you use any software?

If you don't have a budget, why not?

Thanks!

Monica
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Author: GusSmed Big gold star, 5000 posts Old School Fool CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 463 of 5068
Subject: Re: Budgeting Date: 8/18/2003 11:11 AM
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I certainly do. I use Quicken to keep track of my accounts and investments, and incidently track my expenses. Given that I have complete financial records of everything I've spent over the last 10 years or so, budgeting the non-discretionary expenses is easy. I don't really like the budgeting feature of Quicken, but it does make it simple since you just tell it to fill in the average monthly spending in each essential category.

Of course, discretionary expenses are what budgeting is really all about. Aside from some luxuries (like cable TV), I lump everything under "Recreation Gus" or "Recreation Debbie." Each of these categories has several sub items, like "Books", "Games", etc., but the total for each lump is fixed at no more than $500 a month for each of us.

For scale, I am currently sending $3K-$4K a month to our American Express brokerage account to invest against FIRE. This is approximately 50% of our take home pay.

- Gus

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Author: mazske Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 464 of 5068
Subject: Re: Budgeting Date: 8/18/2003 11:18 AM
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We don't have a budget, per se, but I pretty much know where the money goes.

Here's what we've been doing. My paycheck automatically has my 457 plan deduction taken out of it. My wife deposits most of her paycheck into savings and then IRA contributions are automatically taken out each month. My paycheck also has my military buyback amount taken out of it once a month.

I balance my checkbook once a week and that is where all bills are paid from. My wife keeps some cash, usually $30 or less each week when she cashes her check. She will buy gas, prescriptions and other goodies with that money. I usually keep no cash on me at all.

I am pretty good with figures and I know that if this month is the month we pay more for the swim team, then I know to cut back somewhere else.

What I've done is I decided how much I wanted and could afford to save out of each paycheck. Then, I live on the rest. I have learned that if I have money in my pocket, it will get spent. If their is extra money that is easily available to us, then the temptation is there to spend it as well.

Writing checks is a pain for most people, but it's a good way to easily keep track of your money. I have check cards that I use as well, but it's easy to use it, stick the receipt in the wallet and forget to write it in the checkbook. Of course, since I balance the checkbook every weekend, I catch all debit card uses then.

The wife's check is deposited and that's are e-fund. We tap into it from time to time to pay a credit card bill or home repair bill as well. I haven't carried a balance on a credit card in years either.

I use no software for my budget just as I use no software when doing my taxes. Actually, last year the state had a free on-line program that I plugged the numbers into. I figure why buy a tax software program when I can easily do my taxes by hand. I did study taxation when I got my business degree, but I don't remember all the tax laws by any means. Plus, they've changed so much in the past 10 years.

I will say that for many people, it is great to use a budget. I have a lot of self control when it comes to not spending money, but from my experience I can see that many others do not.

If you use checks to pay all of your expenses, you will have a running total of where your money goes.



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Author: WhiskeyRiver Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 465 of 5068
Subject: Re: Budgeting Date: 8/18/2003 11:19 AM
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Hey Monica!
Certainly do have a budget and both myself and LW have a hand in keeping it. We use Microsoft Money to keep us inline with our fiscal expectations. It lets us visually see how much we spend in certain categories (electric, groceries, insurance, fun etc.) and make adjustments accordingly.

I think a budget is a good thing to have. It's not a hinderence to your fun or billpaying, it's actually something that sets you free.

-Whiskey

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Author: 96hokies Three stars, 500 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 466 of 5068
Subject: Re: Budgeting Date: 8/18/2003 11:28 AM
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Sort of...
I use Quicken to track all our expenses (except cash but that's really limited now that almost everwhere takes check cards/cc.)

Each of my accounts Checking, Savings (2), Investment, Loans have accounts and I can run reports anytime to see where we stand. All of my banks have a way to import transactions so I don't have to enter every one... only the category - entertainment, gas, utilites, etc.

Although I do have an average use default budget in Quicken, I often don't follow it monthly. There are always highs/lows in different categories so as long as the total outflow seems about right I don't go digging into the details. This month for instance, groceries will be high but dining out will be much lower.

I do look at the budget and make changes to what goes to efund and "play" when big expenses arise (like major dental work, ouch to both my mouth and pocket!)

Others use MSMoney and both Money and Quicken have boards here on the fool. Some use the report features in these to show actuals then budget in Excel.

96hokies

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Author: FriedaChopsticks Two stars, 250 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 467 of 5068
Subject: Re: Budgeting Date: 8/18/2003 11:35 AM
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Monica,

I never used to have a budget, but I had a rough idea where my money was going. I didn't say "oh, I'm $50 over budget in groceries this month", or anything. But I knew to cut back on X if I spent Y.

One month I realized that I had a little more outgoing than incoming.
I had used Quicken as my electronic checkbook register, but didn't really do anything with it. So I started running reports on where I was spending my money because I had no idea where the leaks were in my financial canoe. Taking an honest look at my expenses showed that I was taking out too much cash each week and that I wasn't prepared for major medical costs not covered by my insurance. Oops.

Sitting down and creating a budget helped me realize what I *really* spend my money on vs. what I *thought* I spent my money on. It was a big difference, and I thought I was pretty good with my money.

HOWEVER, I know quite a few people who don't have a budget and they are fine. They sort of keep it in their head. So, YMMV, of course.

Frieda

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Author: SloanT Three stars, 500 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 468 of 5068
Subject: Re: Budgeting Date: 8/18/2003 11:35 AM
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Monica:If you don't have a budget, why not?

We don't have a budget per se, but we did figure out a rough estimate of our monthly expenses and then we direct deposit that much and only that much in to our joint checking account. In fact, since our paychecks are coinciding this month instead of getting paid every week (she is every two weeks, I am bi-monthly) we are currently down to about $50 in our checking. That's really our budget enforcement system.

I believe that everyone is going to approach budgeting and spending slightly differently. Personally I hate the structure of a budget. If I want to spend nothing on books for two months and then blow $150 then I don't want to have to deal with the hassle of making it work in the budget. This also means that DW and I have to coordinate quite a bit on our spending and we have a good idea where it's all going. She does have her own checking apart from our joint checking (do all working wives have that???) but she uses that to pay down her school loans and that is where she parks her minimum wage from her part-time 'job.'

To each his/her own, I say. Some people will go crazy without a budget, others will go crazy with one. There is no sense in making yourself miserable doing something that won't work for you. The important thing, as Eldrehad said so elegantly in a prior post, is to know where your money is going and what you are really buying.

st


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Author: SRenaeP Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 469 of 5068
Subject: Re: Budgeting Date: 8/18/2003 11:54 AM
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I am curious to know whether anyone here really budgets. I read all of the time that households should have a budget or "spending plan." My DH and I don't, and I have been wondering if we should. I could tell you approximately where our money goes, but I wouldn't be able to account for all of it.

If you have a budget, why do you do it and does it work? Do you use any software?

If you don't have a budget, why not?

Thanks!

Monica


I have a budget and it works well for me. It keeps me from overspending (I suffer from if it's in my account, I spend it) and keeps me on track for my goals. Artificial scarcity works best for me. I use MS Money and I have an Excel spreadsheet. Every payday (weekly), I pay the appropriate bills, set aside my weekly money (for gas, lunch, incidentals, etc.) and then transfer the rest to savings so I don't spend it.

-Steph

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Author: Eldrehad Big gold star, 5000 posts CAPS All Star Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 470 of 5068
Subject: Re: Budgeting Date: 8/18/2003 12:23 PM
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If you have a budget, why do you do it and does it work? Do you use any software?

We have a budget in our household. I happen to have Microsoft Money, others use Quicken... and there are some really powerful budgeting tools embedded in each of these packages of software. They'll also tell you how much you have been historically spending in each of these categories, will help you devise a budget based on these patterns, and warn you when you are close to going over budget, or have gone over.

That said, I don't use these tools.

Our budget was created in Excel... it perhaps took about half an hour to develop. Sure, I used Money to tell me how much we've been historically spending on some items (like groceries and gasoline) when I developed the budget - but I didn't use it to create the budget, and don't use it to track against it.

Why not?

I don't like getting bogged-down in the details.

I don't care if I'm $100 over budget for groceries in a month... or $50 over for entertainment expenses.

The only reason I developed a budget at all was to make sure I can afford to fund the 'big' things.

Things like our emergency fund, our retirement fund, saving for vacations (my wife is from Europe and we try to get back there every year or two to see friends and family, and European vacations are expensive, but very important to us), saving for new cars (we usually buy 2-3 year old used cars, but new to us) so I don't have to take out an auto loan when the time comes.

As long as all of the above 'big' things are adequately funded, I don't really care if we overspend on entertainment one month. I don't care if we spend more on clothes, but less at Home Depot for new flowers for the garden - or vice versa.

Our budget consisted of me sitting down, going through what we spend, and what we want to spend... and putting the 'big' things at the top of the list. They go at the top not only because they tend to be major expenditures, but also because they are the most important. I then continued down the list, entering our monthly rent and other bills, and then further down the list to things like furniture, groceries, entertainment, eating out, any medical expenses (prescriptions, eyeglasses for my wife), 'slush' or 'mad money', etc..

I continued down the list, using some of the information from Money, until I was finished. Then I take a look and see if there's enough money to cover everything. If there isn't, it's time to rob Peter to pay Paul... always focusing on what is more important.

Then, once I was finished, I took special note of how much I had alotted to each of the 'big' things.

The only things I actually track are those very few 'big' things. I make sure, every month, that we're meeting our goals for saving for vacations, cars, and retirement. Our e-fund is now the right size, but if ever it weren't, that would be another one I would track.

Why don't I track anything else? Simple. For us, at least, all those things take care of themselves. A month comes along, and we spend more on eating out than we usually do... do I care? No... as long as the 'big' things are taken care of, and those I'm tracking so I know that they are. What happens when we spend a lot more on eating out in a month? Well, we spend less on other things. How does this happen?

It just happens.

Once a week I get caught up on entering all the transactions into the software, balancing my checkbook, paying bills. Knowing how much must be held in 'reserve' to fund the 'big' things, I tell my wife, "Honey, we have $X hundred dollar in the checking account that we can spend between now and next week." She says, "Okay."

And that's that.

If she goes out and spends $100 on clothing, she tells me, and I subtract it from my mental total we have to spend for the week, and vice versa. So... she spends $100 on clothing and we know there's that much less to spend on everything else... so that week we might not go out to a restaurant, or might not do something else.

I could care less if we are over or under budget on entertainment, groceries, gasoline, eating out, or even the phone or gas bill.

What I do care about...

Is our e-fund big enough? Are we meeting my retirement goal? Our vacation goal? Our new car goal? As long as those things are covered, it really doesn't matter to me how we spend the rest of our money.

I'm not suggesting this approach will work for everyone. There are habitual overspenders out there who I understand really need the structure and disclipline that a more exact, detailed budget and tracking can provide.

But this is the approach that works for us.

Regards,

Eldrehad



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Author: tab8221 One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 471 of 5068
Subject: Re: Budgeting Date: 8/18/2003 12:58 PM
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I used to use Quicken to track everything, but it got to be too much work. Now I use Freedom Funds to plan for irregular expenses using excel to keep straight how much I've saved for each purpose and how much to save each month, pay the fixed bills (like the mortgage), pay a certain amount to my savings\investments and put the remainder in a "spendable account" for the month. The spendable account includes utilities, groceries, gas, clothing, entertainment, and miscellaneous stuff, and I put in just enough that I can live comfortably but not extravagently. I always know that spending more on one thing means cutting back on others, and if I underspend one month I have more "fun money" for the next.

tab

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Author: ImCalvin Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 472 of 5068
Subject: Re: Budgeting Date: 8/18/2003 1:43 PM
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I don't like getting bogged-down in the details.

I totally agree. While money is a very important part of my life, I don't want it to dictate that I can only spend $2.49 on a box of Cheerios. Having a budget in my experience has not only been too constraining, but just a plain waste of time.

A solution that has worked much better for me and my wife is to have what I call a macro budget. A very simple spreadsheet done in Excel showing income and generally all major re-occuring expenses for each paycheck. Those macro expenses include rent, utilities, various savings vehicles (car, house, wedding, etc), IRA and credit card expenses and one category for "left over" (a visual cue to see how close we are to spending/saving what we earn). If we spend more on my credit card I can directly see how it affects my other savings and spending plans.

In addition to that, on the first Friday of each month we have a "financial summit" where we go out to a restaurant and take a look at our net worth (includes short and long term savings, retirement, emergency savings, short and long term debt). We go over our financial situation, mental health and anything else that might be weighing on our minds. It's worked incredibly well, and any time we ask if we can splurge on a nice dinner we can look and see how far the savings for our home purchase has come and better evaluate the costs.

Doing both helps us focus on the big picture to see where we are headed and make sure we don't overspend on a monthly basis. To each their own.

-Ben

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Author: chooey98 Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 473 of 5068
Subject: Re: Budgeting Date: 8/18/2003 1:43 PM
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I tried tracking all expenses and budgeting in Money, but it got to be too tedious, and anyway, there were no surprises in where my money was going.

I have a set amount taken out of my paycheck for my 457 and 401K, and enough after that I keep enough to cover my share of the regular expenses (mortgage, phone, gas, etc.,) plus set aside enough for the irregular expenses (car insurance, car repair, college tuition). If something changes, I just re-figure what I need to set aside, and make adjustments.

I found that keeping a checking account and writing checks was the best way to track expenses, as well as using my charge card (paying it off each month), I had a record of expenses.

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Author: monica3674 One star, 50 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 474 of 5068
Subject: Re: Budgeting Date: 8/18/2003 2:33 PM
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Ben writes: In addition to that, on the first Friday of each month we have a "financial summit" where we go out to a restaurant and take a look at our net worth (includes short and long term savings, retirement, emergency savings, short and long term debt). We go over our financial situation, mental health and anything else that might be weighing on our minds.

I really like this idea! We've usually calculated our net worth on a yearly basis, but the monthly "summit" would be helpful to us. It will be neat to see how our savings grow on a more regular basis.

Thanks!

Monica

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Author: ImCalvin Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 476 of 5068
Subject: Re: Budgeting Date: 8/18/2003 3:25 PM
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but the monthly "summit" would be helpful to us

We started about 10 months ago, and I found the only way I could get my wife to look at the finance stuff was to take her out to dinner. We eat well and have good conversation -- it just feels good. It only takes about 15 minutes to update and although it's just a point in time snapshot it sure helps to know where we've been. We've finally paid off our car and student loans and managed to pay for our entire wedding with cash, meanwhile going from $77k to $128k in net worth. It's been a good couple of months. :)

It really works out well for us. Not just financially, but for our relationship as well.

-Ben
Trying to keep an eye on the FIRE prize.

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Author: Mark0Young Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 477 of 5068
Subject: Re: Budgeting Date: 8/18/2003 3:52 PM
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I am curious to know whether anyone here really budgets.

My check register is my budget. 8)

Seriously, though, I make heavy use of "artificial scarcity" and I usually do a good job of living off of what is in my checking account, as recorded in my check register. (Usually my check register has less than what the credit union shows because I'll record the bills the day they arrive, which is usually a couple of weeks before the money is direct-debited.)

When I am anticipating an out-of-the-ordinary purchase, I'll look at my check register, compare it to a month ago, and take a quick look at the back where I list my non-monthly significant expenses, so I can see if I can spend the money, still maintain the buffer, and have enough for an anticipated upcoming major expense (with two exceptions). (I prefer keeping enough in my checking account so that by the day before payday I have at least $500 and preferably $1,000 in the account.)

So, if I go shopping for clothing, computer printer, or other discretionary or delayable purchase, I use the running checking account balance and the list of upcoming expenses to determine whether I can buy now or if I should delay to build up more cash.

So, no, I don't budget, but I do use my checking account balance as a way of pacing out discretionary and delayable purchases.

I also have taken a disciplined approach of recording any debit card purchases in the check register as soon as practical: the receipt goes from the cash register to my wallet, and then at home it either gets recorded right away, or the receipt is tucked into my check register so it won't be forgotten. Real VISA charges to into an envelope set aside for that purpose, though my VISA purchases tend to be few (most months it is just long distance and Netflix).

On payday I'll record the payroll direct deposit (or rather the part that makes it into my checking account--see next paragraph), and I also have three transactions that I list on the last page of my check register that I record at the same time: the mortgage payment, the automatic direct debit by my taxable investments, and the condo association fees (which requires that I also write a check).

I ended up signing up for the natural gas company's "equal pay" plan, where they estimate my annual expense and charge me 1/11th of that each month and use the 12th month to take care of deviation from the estimates. So, yes, in the fall I end up making a free loan to NW Natural, but in the spring they have given me a free loan, but it saves me from having to pay significantly more money in the cold months and next to nothing in the summer months. Yes, I could have handled this myself, but this was a convenient way to go and there are no fees associated with it.

For intermediate goals, including the annual property tax bill (October) and Roth IRA contribution (January), I have the credit union automatically divert part of my payroll direct deposit to feed a money market account. That account is targeted to be $10,000, which is enough for both the Property Tax bill and next year's Roth IRA contribution, but also for half of my emergency fund. (I keep the other half of my emergency fund in Savings Bonds.) The excess is either used for anticipated major expenses or (usually) gets swept into long-term investments.

For long-term goal, i.e., retirement, in addition to the Roth IRA, I have payroll deduction feeding my 403(b) at TIAA-CREF. Also, since I am contributing my legal maximum to both the Roth IRA and 403(b), I also make use of "Asset Builder" (automatic direct debit of my checking account to build up my taxable investments).

About annually I'll review how my cash flow has been, whether I have been too tight or too much cash left over each month, and see how I am doing towards retirement investments, and make adjustments. The most painless way to increase retirement investments is to make use of each pay increase to see how much more money I need and, what I don't need, I increase the amount going into savings or investments by that amount of money.

I have also taken care to form the mindset to avoid touching savings or investments for ordinary expenses. I knew in 1981 when I realized I wasn't saving a cent and first signed up for payroll deduction to feed a savings account that it was vital that I don't develop a habit of dipping into savings because I didn't want savings to be just an extension of the checking account. So, when I do want to spend that money, I have cultivated a reluctance that requires deliberate thought to break. Some months I'll be tight and, before I tap my savings, I'll browse through my check register and, if need be, my VISA statement, to see if the problem is normal unexpected expenses ganging up in a particular month or a series of such unexpected expenses (replace major appliance, glasses, replace dish washer, and then owe income taxes), or if the problem was caused by living too high on the hog. In the majority of years, though, I can go without touching my money market account except for property taxes, Roth IRA contribution, and sweeping the excess over to taxable investments or CDs or savings bonds.

So, no, I don't really budget, but I make use of "artifical scarcity" and (usually) live within what's in my checking account. It's a system that has served me well since 1981, and I found out a few years ago that it also serves my parents well, going back even further.

I have gone through the exercise of filling out a budget sheet about four times in my life, but that was to help categorize where my money goes, and the total has been in the same neighborhood of what I come up with by taking the amount that is deposited in my checking account and subtracting off what is direct debited for savings, and adding back in the annual property tax bill, so I usually just ignore such details. Instead, I will normally look at overall cash flow and use that as being close enough for planning purposes. Even when it comes to major changes, such as when I purchased my residence or more recently refinanced, I look at how my overall cash flow is affected, not what I am paying for specific categories.

I'll still occassionally mention that something is not "within my budget" or I have "gone over my budget" because that is quicker to communicate than to say that I have dipped into my checking account coushin.

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Author: mazske Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 478 of 5068
Subject: Re: Budgeting Date: 8/18/2003 5:07 PM
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It really works out well for us. Not just financially, but for our relationship as well.

Ben,

This is great that you and your wife do this. Keep it up and I hope your idea spreads to others. However, for folks in my financial situation, maybe instead of once a month we could go out once a quarter. During the other months, maybe I could arrange to cook a great meal with the conversation to follow.




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Author: Hyperborea Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 480 of 5068
Subject: Re: Budgeting Date: 8/18/2003 8:28 PM
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If you have a budget, why do you do it and does it work? Do you use any software?

If you don't have a budget, why not?


We have a 10,000 foot budget. We don't bother with the little details. We have some broad categories and some major expenses marked out and then leave it at that. So what we did was take the mostly unalterable costs like utilities, mortgage, insurance, groceries, etc. and mark them out on a simple budget. Then we looked at what was left and how much we need for savings and how much for now or the near term. We then had to make some choices and a bit of juggling just like a typical budget.

After this though we set the savings on automatic, the major expenses that aren't immediate (e.g. insurance, vacation, car repairs, computer expenses) were setup with their own accounts at ING where automatic monthly amounts go, and personal money was sent to my wife's and my separate accounts at the credit union. When an expense comes up for one of the accounts (eg. oil change for the car) then the money is transferred back from ING to pay for it at the end of the month. Any extra that builds up in the chequing account is swept into the savings. After a while if the savings get too large then some gets swept into the money market that holds the e-fund.

The personal accounts hold whatever my wife or I save from our pocket money (personal spending money) or clothing/grooming budget. We get the same pocket money but my wife gets a larger clothing/grooming budget to cover the higher costs a woman has for these things.

We revisit the budget whenever there is a major change in the financial situation - one of the big expenses changes, one of the ING accounts runs dry (why? is it long term or was it just fluctuation?), pay raises, etc. This means that we don't have to mess with it too often, there is flexibility (I've seen budgets where each spouse has expenses earmarked for each hobby or interest but that doesn't allow one to change too easily - i.e. they have money but it's marked for books and they want to buy a guitar strap), no need for software, and it works. It won't let you track how much you spent between FY (fiscal year) 89 and FY93 on staples in relation to the lunar cycles but then that's overkill.

Hyperborea

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Author: SirSouthBent Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 481 of 5068
Subject: Re: Budgeting Date: 8/18/2003 9:04 PM
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If you have a budget, why do you do it

It keeps us honest about our financial situation, and lets us see the probable future any time we want to. My paycheck is direct-deposited every two weeks, and DWs check is ATM deposited each Friday. There are times where we appear to have a bunch of money midmonth, but the budget allows us to see all the monies that will have to go out a couple weeks later. I'd have been feeling like there was more money available right now if it weren't for our budget telling me that there is a LOT of money going out next month, including nonmonthly expenses like the quarterly car insurance payment coming up.

does it work? Do you use any software?

It works for us. I'm using MSMoney(2003?). I think quicken might be better. Money tends to do unpredictable things occasionally that forces us to restore from backup. I like the feature that shows our checking account balance forecasted out to the future... so long as we have every expense accounted for in the budget, an upward trend tells us we're on the right track.

-bent


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Author: Crazyinlovefool Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 482 of 5068
Subject: Re: Budgeting Date: 8/19/2003 3:28 AM
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No budget for us. We used Quicken for a bit but stopped because it was too tedious. We have a set amount for monthly household expenses direct-deposited into our joint checking account. We do the same in accounts for retirement, vacations, Christmas & birthday gifts. Everything else we spend. We're each paid weekly so whatever is left is our individual spending money.

Crazyinlovefool

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Author: ChocoKitty Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 484 of 5068
Subject: Re: Budgeting Date: 8/19/2003 8:30 AM
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I don't have a strict budget. I do everything by paper because I keep things simple (it's easier because I'm single).

I split my biweekly paychecks (which cover about 40% of my annual income) between my checking account (for my bills and living expenses) and a savings account (for my mortgage/HELOC and FIRE fund). I automatically withdraw a bit of cash for "fun money" that I can spend without accounting for it (it often goes into my piggy bank so I can save up for a nice splurge, such as clothes). I set aside a little extra as a cushion, and the rest goes right to the mortgage and FIRE fund. I often have money left over in my checking account by the time the next paycheck comes around, so I simply carry that over (house repairs usually eat it up anyway).

I also get a large check every other month for my partnership draw. 10% of this is cashed out as fun money. 60% goes to the FIRE fund, 15% goes to my car fund, 15% goes to a house repair fund. I also receive rent from my DBF; all of this goes to the HELOC, e-fund and/or the house repair fund.

For money I get from freelance writing, I let myself spend or save for any purpose.

The fun money piggy bank was a recent development because I had tightwad tendencies that were getting a bit TOO tight. The cash lets me relax a bit and buy a few things that make me happy without feeling guilty. So far, the system's working well!

CK

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Author: MainiacJoe Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 488 of 5068
Subject: Re: Budgeting Date: 8/19/2003 9:25 AM
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The fun money piggy bank was a recent development because I had tightwad tendencies that were getting a bit TOO tight. The cash lets me relax a bit and buy a few things that make me happy without feeling guilty. So far, the system's working well!

I had recently been too tight when it came to eating out. That is something we enjoy doing a lot so we set aside money for it each month. The problem was, I'd be too concerned about how much we were spending to really enjoy it, and I was spoiling it for DW also.

So I made a sheet for each of the next four months, each month having a number of stars representing chunks in our eating out budget. Getting snacks at a convenience store is 1 star, fast food 3, a simple sit-down 6, a nice restaurant 10. I sort of stacked the deck making it less stars/money for nice restaurants to encourage us to go there. I figure that the exact dollar amounts will average out over time, so sometimes a star will be more "expensive" than others. It seems to work well in this way: recently I ordered the breadsticks we wanted with no hesitation, because I'd already accounted on my star sheet that we were eating at a sit-down. It was a great feeling.

This could be applied to many budgeting categories. Eaiting out was the one that for me caused excessive penny-pinching in need of a flexible yet still budgeted system.

- Joe

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Author: vickifool Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 495 of 5068
Subject: Re: Budgeting Date: 8/20/2003 1:30 PM
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Monica asked about budgets.

I think budgets are a great idea because they help you align your spending with your values. But I don't use them on a regular basis. My natural method of budgeting is just to be a tightwad and not spend money so whatever is left over is savings. This is balanced by VickiSpouse who saves first through payroll deductions.

I did enter all our spending for several years into Quicken to forcast our retirement budget. It took me about a week. I added the children's education and ritual celebration expenses. And tried to estimate taxes (our biggest expense) which is harder than it ought to be. That meant that Intercst's spreadsheet didn't quite work for us.
http://rehphome.tripod.com/software.html
(It's about half-way down the page, but I wanted you to have the context, too.)


Sometimes not budgeting gets me in trouble because I have different standards for different categories. When I graduated from college and got my first job, I moved from a low-cost-of-living area to a high-cost-of-living area. I tried to keep mostly the same standard of living. Grocery shopping was traumatic for me because food was SO EXPENSIVE. So I would come home from the store with cheap foods I didn't really like. So I ate out a lot because that was a different mental category. Until I realized that ANYTHING in the grocery store was cheaper than eating out. I saved up the down payment on a house in about a year that way.

When I entered all our spending into Quicken I was able to track our spending by category. That was revealing. I didn't realize how much I was spending on books. Books are good, but I was spending way too much on them. I started going to the library more often. There were several categories like that which actually tracking our spending revealed.

Some people like the freedom of a budget. Some people need the limits.
Good luck getting a handle on this.

Vickifool

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Author: nmckay Big gold star, 5000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 505 of 5068
Subject: Re: Budgeting Date: 8/21/2003 12:27 PM
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I don't budget to the penny but I cover all the major catagories before I spend on the miscilaneous stuff. DW and I each get two checks a month. One is for bills and the other is for savings and after that we each have about $400 a month to spend.

Food comes from this $800 too so we balance eating out with cooking a home. I love to cook so that's my preference, but I'm also a big fan of cooking so I like to go to good restaurants with good chef's to learn how they do things. I hate "wasting a meal" and paying for mediocre food. So I avoid chain restaurants of any stripe though I have invested in a few.

By the end of each pay period we're pretty tapped out, but it's an artificial scarcity since everything else is already covered and we have a sizable e-fund.

DW and I both travel and work long hours during the week so on Saturday mornings we have breakfast and our "Team Meeting" (similar to the financial summit) but we go over everything else, too. What's on the calendar, what do we need to plan for, vacations, guests, etc. That's better for us than logging every penny into Quicken.

nmckay

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Author: InLivingColor Big red star, 1000 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 568 of 5068
Subject: Re: Budgeting Date: 8/24/2003 3:46 AM
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I sorta budget and sorta don't. Got started with Andrew Tobias' "Managing Your Money" checkbook program, and used its report function to gauge how the cash was flowing, which led to some tweaking how I was spending money.
Every few years, I get OCD about collecting receipts and make sure I haven't let any bad spending habits "creep" into my lifestyle. (Different stages of life, it's happened.) But mostly I don't bother with the details. There's so much cash I'm allowed each week, and when it's gone it's gone.
Am a big proponent of MarkOYoung's "artificial scarcity" tactic. I set up various savings vehicles which are easy to put money into but difficult to withdraw from. Paycheck comes minus deductions for 401(k), employee stock purchase plan, and savings bonds. Then it gets deposited into savings and only a set amount gets transferred into my checking account each week to cover bills and my weekly cash stipend.
I'm InLivingColor

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Author: FoolStreet Big red star, 1000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 601 of 5068
Subject: Re: Budgeting Date: 8/30/2003 1:03 PM
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For scale, I am currently sending $3K-$4K a month to our American Express brokerage account to invest against FIRE. This is approximately 50% of our take home pay.


wow!

and what do you invest in???

love to hear your story...

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