Monday, August 11, 2014

July 2014 Budget

Updated Budget
It has been a few to many days since my last post.  I have been spending several evenings working out a better budget because my previous one had some flaws in it.  Listening to readers I think I have come up with a better one (fixed vs. variable).  This fixed budget assumes I will get at least 2 paychecks a month.  These two paychecks should be able to cover all of my expenses.  Anything else is a bonus which would go to savings for investing, vacation or to cover unexpected expenses like I incurred this month.

For each month there are certain things that are fixed so those remain.  One of the fixed items that sprang into life this month are braces for my son.  He is getting older and the longer you wait the harder it is for the orthodontist to move bone.  It was a hefty $1,000 down payment and then $145 for the next two years.  That is what I owe after insurance.  So for July you will see the down payment and then going forward it is a fixed expense.  When I have enough money saved up in my Health Savings Account (HSA) I may request a reimbursement.  For now it is coming out of my pocket.

Saving is still set at an amount that will cover my car insurance, water and sewer bills each quarter.  There is a little baked into this as well for other expenses that reoccur yearly like school fees for my kids.

Where Did It Go?
After I added all of my fixed expenses (the needs) there was not much left for guilt free spending money or investing going forward.  I will do my best to squeeze what I can from the miscellaneous category (toilet paper, toothpaste, etc.) as that is about the only area I can reduce.  Utilities are pretty consistent and we only run our air conditioning on the hottest of days.  I would be fine getting rid of TV (but not internet) as I don't watch much.  However my family has blocked me on this one.  The best I could do this year was renegotiate my package to a lower rate.  I got HBO free for a year, a land-line phone and the price went down $15/month.  I must admit I am watching more TV than I used to because of HBO.

Needs
Food was $56 over budget.  I was expecting this to be at least a hundred lower as we ate out for a week during vacation and that was all placed under GFSM category.  The price of food is just getting ridiculous.  No wonder those with less have a hard time just surviving.  My gas budget was under as I did not place the vacation gas under needs.  Utilities was under as well because there was no water or sewer bill this month.  I wonder if I should not count those 2 under utilities as they are just quarterly and I pay those from my savings.  That may paint a better picture.  What do you think?  Needs gets the big red X mostly because of the down payment on my son's braces.  I had not foreseen this so had not saved for it.  I was just expecting insurance to pay and then a monthly payment.  The remaining categories I classify as needs were close to the budget so nothing worth mentioning there.

Guilt Free Spending Money
Had to give it a big red one as well.  Under my new budget I basically have nothing left over to play with.  I have hinted at this to the family but haven't shown them the numbers yet.  Luckily I had saved for vacation so this category is covered.  I also wonder if I should include things like vacation that I planned for and saved.  I am not really spending money I earned this month for things like that.  What do you think?

Investing
So what if there is something leftover?  Anything that is will go to investing.  I still have my paycheck being split so $200 went into my cash account.  This may be stopped since I can't even afford that anymore.  This means I may have to look into alternatives that offer no fees for investing.  Investing something is better than nothing right?

Overall Budget
With $2,893 dollars coming out of savings to pay bills I get the red X award for the month.  Granted this was before my new budget but wanted to use it on July to test it out.   


Am I OK with this new budget?
I sure am.  This is probably the first time in my life I have a budget that means something.  I have always had problems in Quicken with their budgeting tool so never really had one.  Even my previous budget had to many flaws in it to be useable. 


No longer will I spend more than I make each month.  As always things change and so will this budget.  But for now I have a plan and that puts my mind at ease.  Is the family happy with the fact that we won't be able to eat out anymore or go places (that aren't free?)  They are but hopefully they will understand and apply this learning.  I cannot, I cannot, I cannot go back into credit card debt.  Hopefully the family will understand that and as a result be happy knowing they have what they need without owing anyone.

4 comments:

  1. Hi DFG,

    I'm glad you're still positive at the end of the day - you're doing the right thing! Tracking your income and planning your budget as you're doing is a major achievement alone!

    One approach I've found for smaller investments is via index funds at Charles Schwab - they have a minimum purchase of $100 (not $3000 like most) and you can add to the funds commission-free in subsequent purchases of $1 or more. See e.g. their S&P 500 fund, SWPPX. The Expense Ratio is 0.09%. This could be a way to keep investing in stocks when you don't have much spare cash.

    I have quarterly water bills and I treat them as monthly utilities, mine aren't very high about $50 a quarter. I put $15-20 a month into the checking account I use for budgeting so that when the quarter rolls around I have the money ready.

    I include Vacation in my monthly budget as a discretionary category (guilt-free). Since I plan to visit my parents in the UK each year, I budget the cost of the flight and include 1/12 of that each month in my monthly budget.

    I do keep Savings entirely separate from my living expense budget, since in my world Savings are for mid/long-term goals (2-10 years) only. All bill payments come out of the checking account I use for budgeting and I try to keep a couple of months salary in that account as a kind of rainy-day reserve in case of large bills to avoid touching my emergency fund.

    Anyway, that's my $0.2! I hope August is a better month for you; keep up the great work!

    Best wishes,
    -DL

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    1. Thanks DL. I may estimate and spread out as well per month.
      -DFG.

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  2. That's good that you're avoiding credit card debt. It's easy to swipe now and pay later. But the chains of habit are light until they are too heavy to break.

    Hopefully your family will be understanding and supportive. You're all in this together!

    Keep at it, cheers!

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  3. Good line Henry I will have to tell that to them. We are a family and in it together.
    Thanks!
    -DFG

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