Archive for budget

Super Easy Pseudo-Budget

I can’t do regular budgets to save my life.  I’m horrible at tracking my spending and end up with mounds and mounds of unreadable receipts that I just throw away after a few months without looking at.  I can’t track cash at ALL partly because they’re usually for tiny amounts and partly because of my insanely horrible memory.  But, I really needed to know what I spent on and I really needed a way to save money for various short-term, middle-term, and long-term goals.

After years of trial-and-error, I have developed a system that works very well for me.

I made a list of all my financial accounts and a list of all my major goals with the shortest-term goal being about a year away.  I opened ING Direct subaccounts for all my savings goals and I reclassified some of my old accounts for an emergency fund and certain major long-term savings goals like a “Home-building fund”.

Next, I set-up an excel spreadsheet with a list of my financial accounts and major bills and charitable donations in the first column.  Then I split up the next columns into each paycheck as well as a column for any extra funds.  Then, at the beginning of each month, I divvy up my expected income for the month as well as any other extra income that I expect.  I also make sure to round down to the nearest whole number so I’ll have a few cents cushion each month.  I split up my money by the major bills and all my savings goals, playing around with the numbers until it satisfies me.  All the money that hasn’t been split up into the various goals and accounts, goes straight into “Fun for my credit card”.

Throughout the month, I have a general notion of how much money I can spend for daily and fun things and every so often, I’ll go check my credit card account online to make sure I’m not going over the limit I set for myself.  I don’t limit myself in any number of categories.  I just spend as I want and as things come up just as long as it’s within the boundaries.

At the end of the month, I take an hour and move all my money from my main bank account to all the other various accounts according to the spreadsheet.  Then, I pay off my credit card in full with the money that I had already set aside for it.  Lastly, I go on Bank of America’s “My portfolio” link and download a list of all the transactions/interest/dividends that occurred over the last month in my various accounts. I take that list and just spend an evening inputting everything into BudgetPulse while watching some TV.

So, now, this is why it works for me:

-I have finally been able to track my income and expenses easily

-I have a great credit score since my credit card is always paid off in full

-I am on track with my saving goals and am rapidly accumulating net worth each month

-I can spend happily without worrying too much about what it is that I’m spending my money on

-I never have to worry about over-draft charges or credit cards being declined or any extra bank or credit card fees because I always know how much money I can spend.

-There is a little bit of start-up time and work needed.  But, after that, it is really quick and easy for me to integrate this routine in my normal super-busy life.

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My FBP Account, and how I learned to have splurging as a goal

One of the biggest problems I had with saving was that I wanted lots of things.  I tried telling myself that “things” don’t matter when I have bigger future goals.  But, the problem with that was that to an early-20-something-year-old closet tech geek and wannabe artist is that the future just doesn’t seem quite real when compared to a new wacom tablet or gadgets for my Holga camera or a really cool usb microscope.

However, my relatively low income, my lofty savings goals, and an aversion to carrying a balance on my credit card instead left me with no way to feasibly buy anything just for fun and left me with the uneasy feeling like I was somehow missing out on my youth to focus on a very hazy future.  “What if I die tomorrow? or in 5 years and I really don’t need any of my retirement money!” is a popular refrain in my mind.

And whenever I did break down and splurge on something, the next month I would have to cut back even more savagely on my normal day-to-day spending just to make sure I paid off my credit card balance at the end of the month leaving me feeling even more deprived and upset.

I tried to focus on only free activities and told myself I didn’t really NEED that <insert really cool gadget> and it would just be cluttering up my limited space at home.  I tried not to watch TV or read magazines so I wouldn’t see advertisements.  But I would catch myself looking longingly at my friend’s spiffy mp3 player that they could strap onto their arm as we went to exercise together while I fiddled with my ancient CD player that skipped every time someone breathed too hard on it.  And then I contemplated how many functioning security video cameras they actually had at Circuit City and whether I could get away with filching something.

Obviously, this system was definitely not working.  I needed to be able to save for my goals but also I needed to have some fun once in a while and get to buy myself something just for the sake of its coolness.

So, I opened an ING sub-account three months ago and named it “my FBP account”.  FBP stands for Fun Big Purchase.  Every month I stick a little money in it.  Whenever I save up $300 or so, I plan to withdraw the money and splurge on something Fun and Big (meaning expensive).  While I’m waiting for the balance to reach that number, I like to plan out exactly what I want to purchase and this makes me excited since I know that eventually I will get it and I’ll actually have the money to buy it without cutting back on anything.

In fact, I have 5 different sets of things I want to purchase with that money and I really have a great time trying to prioritize them or trying to find the best prices for them.  And a great benefit of this plan is that since it takes me quite a few months to save up that amount in that account, it lets me really think about exactly what I want as opposed to short-term gadget lust so whatever I’ll end up getting is something that I’ll really treasure and want.

And…just maybe I’ll get that fancy new mp3 player eventually.  But for now, I just listen to the radio.

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Restarting my budget (once more!)

Ok.  I’m going to try to restart tracking my income and expenses once again.

I’ve tried.  I’ve failed.  I’ve tried again.  And I’ve failed miserably again.

I’ve tried paper solution.  I’ve tried desktop solutions.  I’ve tried mini-notebooks and bags and bags of receipts.

So, now I’m going to try an online solution.  It doesn’t directly connect to my bank accounts which is good for safety but will be more difficult for me to keep track of all my daily expenses.  However, I’ve already decided to cut back on expenses so perhaps that will be more helpful.

I think my biggest problem is that I have a type A personality.  So everything needs to be accounted for.  But daily life comes and takes over and suddenly I find I’ve gone 3 weeks without tracking anything and I have no idea where anything is and I just can’t keep my budget going with 3 missing weeks of data in the middle because all the numbers will come out wrong.

I’m crossing my fingers that I will actually make it this time.  I think the trick is to make it part of my daily routine.  So, it is now officially my homepage until I make a habit of it.  Wish me luck!

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Tax Rebate Confusion

Apparently most of my coworkers were confused about the tax rebate.  They fully expected to receive the complete amount of the rebate and didn’t know it was based on income.  What followed was an hour long group rant about how the government confused everyone and how they were expecting a certain amount which they’re not going to receive.

What a lot of them were saying was that they had already spent the money on new splurges before even receiving the money in the first place.  Since they spent money they didn’t have, that effectively puts them in debt.  Kind of ironic since the money was meant to help the American consumer and instead put them into more debt. Also, this was Bush trying to end his 2nd term on a good note and in the end, it kind of just pissed people off more towards him.

I already knew that it was based on income but I had assumed that since my income is quite low, I would receive the whole rebate.  However, I had no idea that if I received a refund (meaning no net income tax liability), I would only be receiving half the amount.  So, when I saw the amount of money in my bank account on my computer screen, I immediately pulled out my budget and dialed everything down.  Thank goodness I hadn’t splurged as much as I had intended to do.

But hey!  Better to receive less money than expected than to pay money to the IRS.

The take home lesson:  Don’t spend what you don’t have and always leave some flexibility in your budget

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Not being Dependent anymore

It was such a great day graduating from college until I was hit by reality.  Now, I don’t count as a dependent so not only do my parents not get to have me as a tax deduction, I myself am not exempt from tax withholding anymore.  I have to purchase health insurance, auto insurance, and AAA membership since I’m not covered under my parents anymore. I have to save up for graduate school since I promised my parents I’d pay for that myself.
In a few years, I’ll be looking to buy a car and then take on a mortgage, cable costs, estate taxes, and the cost of maintaining my own home.  I’ll get married so I’ll have to juggle wedding costs, joint accounts and the taxes that come with that.  I’ll have kids which will entail life insurance, 529 college savings plans, family vacations, and the various costs that come with child-rearing.  I want pets so pet food, veterinarian visits, and flea collars.

On top of this, I have to save for retirement and possibly have to care for my parents as they get older.

It’s definitely not like what I imagined when I was little dreaming about a successful career with a lot of money.  Sure I’ll finally be earning a decent salary once I find a great job, but it’ll be eaten away just as quickly.  I finally understand why sometimes it’s just hard to get on top of the finances but I figure if I instill good habits with myself now, it’ll be much easier down the line.

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A Miscalculation

I thought I calculated all my budget very well and left the bare minimum in my checking account, trying to put as much money in interest-bearing accounts.

However, I must have miscalculated wrongly because I now how much less money in my checking account than I expected and I hadn’t spent any large amount of monies, just a few fast food meals.  Now, I’m a little worried since I haven’t found a job yet.  With no income coming in, and bills looming in the background, I’m going to have to put on my dancing shoes and do some fancy dancing withdrawing some money out of some of my accounts and put some of my obligations on hold to make sure I have enough.

Must make sure to figure out what went wrong and never let that happen again!

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