I’ve Paid For This Twice Already…

Archive for the ‘budget’ Category

The technicians are here as I type installing our new furnace.  They cleaned all my ducts this morning (that was a fun project for them, I’m sure) and now the furnace is being installed.  I just finished meeting with the president of the company, who is the person who came originally to the house to give me the estimate.  He sat down with me to go over everything, and he had a preprinted form-letter type checklist of things to touch base with me about, including the rebate our gas company is currently offering for this furnace, how to operate our new thermostat, and other issues like that.  Then I took out my checkbook to pay him, and as I wrote a check for $3700, he went to his preprinted generic checklist and the line item that said “Financing Paperwork Signed” he marked “N/A”.

This is a major moment in my life.

Honestly, it didn’t really sink in until that moment.  This is a major purchase we are making, that we hadn’t really quite planned to make so soon, and yet, we managed to swing it, without even touching our emergency fund.  We don’t need financing.  We just paid for it.  Of course, the timing of the furnace replacement was very fortuitous, with the economic stimulus rebate arriving, but even without that, we would have managed to pay for it (but the emergency fund would not have been untouched).

Times like this I realize even though we have a long way to go, we have really made a huge amount of progress in improving our financial present and future.  And we stimulated the local economy to boot. 

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Lynnae at Being Frugal tagged me in the 5 Budget Busters meme. As far as I understand, I need to list 5 budget busters for us, and then tag 3 other people to do the same. Since I’ve been budgeting for a little while now, I figure I can probably do this. My budget busters aren’t quite line items in my budget though, rather attitudes and behaviors that increase my spending.

My biggest budget buster is honestly a lack of organization. I am one of those people who thinks they are organized but really is not. I have tried about 15 times to start collecting coupons, and never got things organized to do so. I lose track of things. I completely lose things and have to replace them. basically, I’m a mess. But don’t tell anyone!

Much of my budget-busting is also from lack of experience with budgeting for us, so I don’t know the appropriate amounts to budget. There are two places this became apparent over this last year of budgeting - natural gas usage and medical expenses. Our natural gas usage this winter was just a lot more expensive than I had budgeted for. We made adjustments and made it through, but every month I was pulling money from here, there, and everywhere to make it work. As for medical expenses, they can be so variable that I really don’t yet have a good sense of the appropriate amount we’ll need each month.

Failure to plan all the details is a problem of mine as well. I don’t tend to think of all the aspects of an event or trip, and then I get some monetary surprise. For example, my son competed in a taekwondo tournament last weekend. When I budgeted for it, I didn’t take into account parking, or the fact that unlike me, he’d want his name engraved on his trophy (they have a little stand at the tournament to do it). Combined that was $7 I hadn’t remembered to plan for, even though I should have - I’ve been to plenty of tournaments, after all.

The power of impulse is one I almost have a handle on, but sneaks up on me once in a while. Lately, I have been unable to resist buying different protein bars for my spouse to try. He eats about 5 protein bars a week so that isn’t exactly impulse except… well… let us just say that those Zone Perfect bars are tasty! Fudge Graham Zone Perfect bars… yum.  And then I have to buy more because someone ate the ones he was supposed to eat. Impulsive eating, impulsive spending, it all adds up to money I didn’t need to spend.

And I have to list just one category - my car - as a budget buster. Since the engine self-destructed, I think it deserves mention as number 5. Cars in general are just more expensive than I’d really ever considered. Here’s to hoping that it does okay for a few more years and doesn’t bust open my budget again!

I am supposed to tag three people, so I will tag:

• My Daily Dollars
• Sick of Being Poor
• Debt Non Sequitur

Have fun and don’t bust your budgets!  What’s your biggest budget buster?

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I was reading The Simple Dollar’s Mailbag yesterday, and Trent talked about how he sees a budget as training wheels - it teaches you the skills to use to keep your spending, savings, and investing in balance. That’s a great analogy, except I wonder if it really works that way for everyone. Does there come a point in every person’s life where they no longer need a budget, and can move forward with the same financial purpose and goals without sliding backwards into old habits?

If there is, I know I’m not there yet. When a week goes by, and I haven’t really looked at my budget or entered my expenses as they come in, somehow I slip into spending just a little more here and there, and find that when I do check in, I’ve gone over in one category or another. Not by much, and I don’t completely blow my budget, but I find that I still don’t do moderation well. I go from feeling like enough money is coming in to take care of some miscellaneous needed expenses, to feeling like I am spending money left and right and begin to panic. There still doesn’t seem to be an internal barometer for me that steers me along the correct course.

I’m not ready to let go of my training wheels. I have hope that I will internally learn to balance, and be comfortable with spending when I need to and saving what I want to, but I know that I have a long way to go to get there. Any spending makes me feel panicky, and no amount of saving puts my mind at ease. I don’t know what it will take to turn that corner, but I look forward to finding out.

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Yesterday I spent about $110 total between the two grocery stores I shop at. Since my grocery budget per week is $85, this was significantly over the budget I had set for myself, and had been more or less successfully following for the past few months. Occasionally, I would have a week where I spent much more than the budget, but that would usually be balanced out by another week where I spent significantly under. But yesterday, I didn’t expect to spend quite so much - my list was just a little more than average and I expected to be at maybe $90 total or maybe $95.

I started looking at detail at my receipts when I got home, and comparing the prices of items to the past few months. I am behind on entering prices on my spreadsheet, but I have the receipts still to compare. And over the past few weeks, a number of items have steadily increased. Milk is about $1.00 a gallon more than it was in January. Peanut butter is $0.50 more. Apples are about $0.20/lb more. Cat litter is almost $1 more. Even animal crackers and rice cakes have gone up $0.10 each. In fact, a number of things that just 2 months ago were $0.99 on my list are now $1.09 or even $1.19. Even though that is a seemingly small price increase, when the majority of your list goes up by 10% or 20%, your spending also goes up.

What’s your strategy for dealing with ever-increasing prices? Do you adjust your budget upwards? Where does the money come from? Although, hopefully, my spouse will receive a raise in the next month or so, we’ve also adjusted his 401K contribution upwards, and he brings home about $50 less every two weeks than he used to. The raise may compensate for that but I doubt he’ll get a much higher raise than that. So we’re starting to look at the rest of our budget and see what can be squeezed or trimmed. There is some trimming I can do in the food budget as well, but in the end, eating healthy food is important and there is only so much trimming that can happen.

Where are you at with your food budget, and what are you doing to compensate if you need to?

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At different points in our “coupled” lives, my spouse and I have had semi-irregular income. When we were first married, I worked at a job with unpredictable bouts of overtime, and my spouse’s job had profit sharing as part of its salary structure, so our income was very variable from month to month. Now, my spouse’s salary is very regular, but my income is completely variable. Because my spouse’s salary at this point eclipses my earnings, I consider our income fairly regular, but budgeting, even zero-dollar budgeting, can be done even on the most irregular of incomes.

When looking at how to budget when your income from month to month is in flux, one of the big keys is to try and even out the hills and valleys as much as possible through a savings plan. To do this, you need to save a portion of what you earn in good months and use that to help smooth out the tougher months. It is a simple concept, but hard to do without serious discipline. It is easy to justify spending a little more in “good” months, but the key to making irregular income budgeting work is to treat good months and bad months the same from a budget perspective.

How do you know what to save, and what qualifies as a good month? If you have had an irregular income for three or more months, the easiest way to do this is to come up with your average earnings over an at least 3 month if not a year period. The longer the better. You can then base your budget off that number. Let’s say the number is $2500 per month. When you make $2700, you bank $200 of that. When you make $2300, you pull $200 out of that savings to make up the difference. This should be a totally separate account from your emergency savings account or any other savings goals. This is the budget savings account and will make your irregular income life simpler to manage.

If you have no idea what you will earn month to month, you’ll have to be more conservative and creative at first. Determine your very baseline expenses. This is the amount you absolutely need to make, and this will form the beginning of your budget. What you make over that, bank. After a few months go by, you can look at if you end up with a surplus each month, and make some upward adjustments in your budget to create yourself some wiggle room. Go slowly, and be careful. The more data you have, the more sure you can be that you have the room to wiggle.

What happens if you do better than history dictates for an extended period of time once you’ve “regularized” your income? You can use that savings surplus towards another financial goal, or make some upwards adjustments in your budget. I recommend some additional retirement savings, myself, as long as you are out of debt.

Basically, the key to budgeting with irregular income? Make it mimic regular income as much as possible. Predictability is the key to the zero-dollar budget. If you know how many dollars you have, you can assign every dollar a job, and make them work as hard for you as you worked to get them.

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