How do you manage your budget?

[Monique]

Cross posted because it seems relevant.

 

[Varmintmist]

I dont think you are insane at all. Life happens and you better prepare for it. Sometimes it takes a wake up call, other times you get to thank the Flying Spaghetti Monster that you did the work ahead of time.

You lost your husband and had his retirement and it looks like he did well by you. You are now learning to handle yourself financially. So you got a wake up and get to be thankful that he planned for the both of you. That is another great way to remember him.

Knowing where your money is at, saving regularly, planning, and paying attention doesnt make you a greedy 1%er, it means that when TSHTF, you can develop a plan B right after you start to breathe again. No one who budgets or has a plan would consider what you said as bragging. It is the fact that you are comfortable with where you are at and where you are going enough to state it. Bragging would be putting dollar amounts on the items you mentioned without answering a specific relevant question.

Just for context. (I am not saying I had no part in this) My wife walked out Aug 2018 and took as much as she could get hold of. Grass looking greener and all of that. (hasnt been apparently) Together with our incomes and a decent plan we would have retired pretty early and been able to do about anything we wanted to. I had to so some scorched earth budgeting for a few months to not blow through savings, but I am at the point now where the regular income is making the accts go up even with added monthly expenses and the Efund is whole again. Now, with PLAN B coming into place, even though the smoke hasnt settled as of yet, my figures say I will still retire "early" and OK, though not as early or as comfortably as we would have been together. That wouldnt have been possible if I had let it go for 30 years without a plan. Even at just a touch over half of the retirement, and half the property value after sale, I wont have to buy the book "79 Exciting Ways To Prepare Alpo While Working From Your Deathbed" even though plan B is coming into play at 55 years old.

What planning has done for me is put me in a position to look at the situation with some dispassion. Would we be better off financially together? If some things change then yes. If we cant make this relationship function, then I will be OK financially. That knowledge means I can deal with the rest of it as it comes with a more relaxed, thoughtful and open mind.

So for those of you who are the spouse who doesnt want to know, or refuses to work with the other on a money plan, these are two good examples as to why it is good to learn. Life happens. You might not like it, you might be sad or angry. Likely both. But you need to know.

 

[Monique]

You lost your husband and had his retirement and it looks like he did well by you. You are now learning to handle yourself financially. So you got a wake up and get to be thankful that he planned for the both of you. That is another great way to remember him.

Yes. Even though I called his life insurance "blood money" for quite a while, and I still have mixed feelings about spending it, which may actually play into my success in sticking to my own income. To be clear, though - he provided the means (even before death), but we figured it out together, and we each had a role to play, both in the spending and in the saving. His income allowed us to save (and spend) in a way that would not have been possible with a different career trajectory, for sure, but we'd talked about life insurance, knew about each other's retirement accounts (roughly), we decided together what to do with bonuses, etc. Of course, when you're just into your 40s and don't have dependents, those conversations don't sink in the way they might in other situations.

Really, what I need to do right now is buckle down and put together a will, living will, etc etc. But that one's hard to face, and I'm at an in between point in figuring out beneficiaries. I assume it would all go to my parents right now. Need to find that out.

Just for context. (I am not saying I had no part in this) My wife walked out Aug 2018 and took as much as she could get hold of. Grass looking greener and all of that. (hasnt been apparently) Together with our incomes and a decent plan we would have retired pretty early and been able to do about anything we wanted to. I had to so some scorched earth budgeting for a few months to not blow through savings, but I am at the point now where the regular income is making the accts go up even with added monthly expenses and the Efund is whole again. Now, with PLAN B coming into place, even though the smoke hasnt settled as of yet, my figures say I will still retire "early" and OK, though not as early or as comfortably as we would have been together. That wouldnt have been possible if I had let it go for 30 years without a plan. Even at just a touch over half of the retirement, and half the property value after sale, I wont have to buy the book "79 Exciting Ways To Prepare Alpo While Working From Your Deathbed" even though plan B is coming into play at 55 years old.

What planning has done for me is put me in a position to look at the situation with some dispassion. Would we be better off financially together? If some things change then yes. If we cant make this relationship function, then I will be OK financially. That knowledge means I can deal with the rest of it as it comes with a more relaxed, thoughtful and open mind.

Oh, man. I'm sorry. I hear that even amicable divorces can get expensive. Our couples therapist (yeah, things weren't roses, adding to my complicated feelings about "his" money) made that point repeatedly, and Eric and I did talk about what it would look like. Who would keep the house? What about that condo in Breck? We joked (I think) that we would still get the condo and just make sure it had two bedrooms. Anyway, in divorce, inevitably, both parties end up less financially secure. And of course, two people = distributed risk. We both had thought about that, but not to the point of planning, starting separate accounts, or anything like that.

So for those of you who are the spouse who doesnt want to know, or refuses to work with the other on a money plan, these are two good examples as to why it is good to learn. Life happens. You might not like it, you might be sad or angry. Likely both. But you need to know.

THIS. My mom always said that it was important for me to work, or at least be able to get a good job, because you never know what life brings. Of all the scenarios I envisioned, this wasn't one of them. A couple of years prior, I had taken a skibattical after an epically bad job - seven months unpaid. Imagine if he'd died while I was unemployed. I struggle with technical interviews anyway - that would have been an expensive disaster, and the life insurance would be dwindling. As it is, my boss has been incredibly generous and understanding and given me a ton of leeway as I feel my way through the grief and my changing life.

 

[Doug Briggs]

On a shoestring.

Spoiler: small joke

Damn! No shoestrings.

 

[Uncle-A]

I am not sure if this was discussed already but just wanted to mention that timing your bills can be negotiated. Just an example two major utility bills are heating in the winter and cooling in the summer. The third bill that can set you back a lot is car insurance, so what can be set up is that you could arrange your car insurance to be paid twice a year. First payment in the spring when the heating season is low and before the cooling season starts. The second payment in the fall after the cooling season is over and the heating has not begun. Just talk to some of the organization that you do business with and see if timing of payment is flexible.

 

[Monique]

I am not sure if this was discussed already but just wanted to mention that timing your bills can be negotiated. Just an example two major utility bills are heating in the winter and cooling in the summer. The third bill that can set you back a lot is car insurance, so what can be set up is that you could arrange your car insurance to be paid twice a year. First payment in the spring when the heating season is low and before the cooling season starts. The second payment in the fall after the cooling season is over and the heating has not begun. Just talk to some of the organization that you do business with and see if timing of payment is flexible.

If you've been at a location for at least a month, Xcel (power) will calculate the average and bill you with exactly that amount every month. Then at the end of another year, they'll recalculate, and you either owe the excess or ... I'm not sure if they pay you back directly or plow the excess into the next bill. I've set that up, and it's great. Unfortunately, I don't have anything like that available for electricity or water, just gas.

 

[Monique]

If you've been at a location for at least a month, Xcel (power) will calculate the average and bill you with exactly that amount every month. Then at the end of another year, they'll recalculate, and you either owe the excess or ... I'm not sure if they pay you back directly or plow the excess into the next bill. I've set that up, and it's great. Unfortunately, I don't have anything like that available for electricity or water, just gas.

Correction: I meant at least 12 months, so that they can calculate the average.

 

[Monique]

Another update: wowza. I went from realizing I was miserable as a rank and file software engineer, to planning to move to Product Management, to realizing I was just plain miserable all over and taking a leave of absence (aka unpaid leave) to sort things out.

My boyfriend bought a restaurant this year in addition to working a full time software job. I swore up and down I wouldn't get involved, because I didn't want to do that thing where you get sucked into someone else's business. But things changed. His plan was always to own multiple restaurants and eventually other businesses. Working in a restaurant didn't sound like fun to me, but then I started thinking that running a business might be good. I started going to manager meetings for the restaurant. It turns out that I have a lot of good insights, I keep track of things, and I follow through - and I love having different things to do every day. None of them involve working in the kitchen or even the front of the house - I'm updating the menus and website, getting the key employees to give me a brain dump so that I can document processes, designing "free drink" cards and distributing them to local dealerships (where people often have time to kill and a shuttle available), working with a designer on ads ... and instead of dreading work, I find myself constantly motivated. I also have that life insurance. Instead of buying a mountain condo for personal use, I'm now looking at buying businesses and running them. Not in the "stand at the front and do the obvious work" way, but more in a "10,000 foot" way. I would never have considered this on my own, but my boyfriend and I work super well together (no, really - we used to work together at a previous high-pressure job, so we actually know this), and I missed working with him. The things that interest me don't interest him, and vice versa (doing taxes, writing contracts, figuring out how to save a few hundred a year here and there, blech). He has a finance degree and an interest in all things financial, and he's a cynic compared to my rose-tinted glasses - I trust and believe everyone; he points out my blind spots.

The funny thing is, everybody I know is freaked out about this - except my financial advisor, who thinks it's a great idea. He understands that I'm not talking about buying a business so that I can work like a dog for less money than I make now. The capital I have means I can buy businesses, rather than going through the really risky startup phase. The restaurant business is risky and uneven, but that's baked into the plan.

All of this leads to some major budgeting changes. For one thing, we're in the process of combining our incomes. (Savings are separate, and we will have individual contracts for each business based on how much we each kick into the purchase and how much we each will be working there.) This means that we need to agree on budget categories - and on budgets for each category! Of course, there's always the option that we could keep finances completely separate, and I could deal with my lower income on my own - but neither of us see the point in that, especially as this furthers his own goals of growing the larger business. And most importantly, I'm going to have to either learn how to spend less, or draw from my savings. I really don't want to draw from my savings. Longer-term, there should be enough income from several businesses to do just fine - and if enough of them go well, I'll end up with way more for retirement than I ever would working for someone else. If enough of them go well.

It's all pretty exciting. It's risky, in that if you buy a business and it fails, you walk away with nothing. But it makes me miserable thinking of working for someone else, working all day at a desk, feeling guilty or having to get approval to spend the morning doing something else - and I haven't been doing a good job for a long time, anyway, which really sucks.

 

[Sibhusky]

Promise me you won't touch the emergency fund until it's for an emergency and that you'll keep saving to an IRA and I'll refrain from any more Mom advice.

 

[Monique]

Promise me you won't touch the emergency fund until it's for an emergency and that you'll keep saving to an IRA and I'll refrain from any more Mom advice.

Thanks, mom! At least that's more concrete than the vague dread my communicated via long pauses.

The retirement accounts are inviolate. Saving to an IRA is baked into the system. With my health stuff, I can't afford to take certain risks.

 

[nay]

This sounds really exciting.

 

[jmeb]

@Monique -- sounds like a really good change.

My now fiance and I decided we wanted to combine budgets but not accounts. We both believe in the maintenance of individual accounts after watching lots of nasties happen in our families and friends.

We have found YNAB (You Need a Budget) a really useful tool. We have a joint budget, we see each see all the spending, but our accounts are separate (save one joint CC). If one account is low, payments come out of the other. It has some weird quirks compared to have you might think of budgeting traditionally, but that comes down to what I think is a very smart budget philosophy. It's online tools and app are really good, intuitive and flexible.

 

[nay]

The only real solution to budgeting is to stay single. Money just hurts people’s feelings, even though math doesn’t.

 

[Monique]

The only real solution to budgeting is to stay single. Money just hurts people’s feelings, even though math doesn’t.

Finance is a tough subject in a relationship. Quantifying contributions to a relationship is probably impossible, and I think it would inevitably lead to a bean counting attitude that is antithetical to the type of relationship I require. I always picture that scene in Joy Luck Club where the woman is divorcing and they always had a "we split everything 50/50" financial type arrangement and her mother looks at a receipt on the refrigerator and asks the soon to be ex about the ice cream on the receipt. "SHE DOESN'T EVEN EAT ICE CREAM."

That being said, everyone has their own comfort zone. My boyfriend has a college age son, which means (at least in my eyes) that things are different than they would be if neither of us had children. Certainly in terms of inheritance, which is why wills for both of us are also critical as things progress. They should have been done already ... I should know this better than anyone. And while marriage is on the table, it's not happening in the near term, so that's not a fallback.

I don't think we're taking anything for granted as we move through this, but we're able to discuss it all openly and without too much emotional heat, which is really nice. @jmeb I've heard of YNAB before, but right now we're both using spreadsheets successfully, and there's enough in flux without trying to use a new tool when things are working pretty well ... YNAB seems to be heavily advertising to people who, well, haven't been able to successfully budget and save - we're not in that demographic, fortunately.

* ETA - In a thread about budgeting, though, mentioning YNAB is a good thing!

 

[fatbob]

Stoked that life is working out for you and you're moving into new things with eyes open.

Just a note of caution - lots of small businesses fail or need a ton of work to keep going successfully so don't push yourself too hard on being the next Warren Buffett. It only takes some poor employees who you spend more time watching over than what you should be doing or an economic downturn or a new competitor in town to start a downward spiral.

I guess that's why I've bumped along being moderately miserable/happy in a regular job though should have changed horses more often for pay bumps. Still thinking about closing out working life contracting - more chance for big pay on big projects for the retirement pot and potentially more flexibility for an ease into "seasonally retired" work against a bit more risk. But if I'm 70-80% there on retirement pot I do wonder how big the risk is.

What will make my decisions easier will be no kids, much though I would have loved to have had them.

 

[Monique]

Just a note of caution - lots of small businesses fail or need a ton of work to keep going successfully so don't push yourself too hard on being the next Warren Buffett. It only takes some poor employees who you spend more time watching over than what you should be doing or an economic downturn or a new competitor in town to start a downward spiral.

See, uh ... this is what I mean. Sometimes I think everyone must think I'm an idiot to somehow not know that lots of small businesses fail. In the meantime, the one person who has full access to my financial status and the financial education to understand the situation - my FA - is perfectly happy with this direction. MUCH happier than with a condo, which would be a choice almost everyone on the forum would endorse, or at least those who didn't wouldn't post about it.

I guess that's why I've bumped along being moderately miserable/happy in a regular job though should have changed horses more often for pay bumps. Still thinking about closing out working life contracting - more chance for big pay on big projects for the retirement pot and potentially more flexibility for an ease into "seasonally retired" work against a bit more risk. But if I'm 70-80% there on retirement pot I do wonder how big the risk is.

Yeah, I thought about consulting often, for the same reasons, but I just can't do that kind of work anymore, whether for myself or someone else. The flip side - it's always possible to go back to an office job. A friend of mine has been doing contract work for a few years, but his primary contract finally fell through, and he's now going to be interviewing again.

Of course ... for tech ... getting older doesn't necessarily do you any favors in hiring decisions.

What will make my decisions easier will be no kids, much though I would have loved to have had them.

I'm sorry to read that.

 

[fatbob]

Sorry. Wasn't by any means intended to be a sob story.

And I wasn't saying that buying your own business(es) is a terrible idea. It's a great idea if you can pick out businesses with the right profile and know exactly why the owner is selling and not overpay for goodwill you are going to have to generate yourself.

Just that it's different. A job turns crap and you just quit and get another. Your business has a downturn and you end up sinking more time into it to fix it so I was cautioning against burning yourself out on too much too soon. But you're probably all over that and have had the advantage of learning for free on your BF's venture for a bit.

 

[Monique]

Sorry. Wasn't by any means intended to be a sob story.

And I wasn't saying that buying your own business(es) is a terrible idea. Just that it's different. A job turns crap and you just quit and get another. Your business has a downturn and you end up sinking more time into it to fix it so I was cautioning against burning yourself out on too much too soon. But you're probably all over that and have had the advantage of learning for free on your BF's venture for a bit.

Didn't think you were giving a sob story! Sometimes things don't work out the way we wish they had. I imagine that's true of everyone's life to some degree; some much more so than others.

You have a point ... although as you well know, you don't "just quit and get another." From what I've seen, most people will put up with a lot before they go looking. Crafting a resume, applying, and playing phone tag take time, and then you have to take vacation and creep around to go to the interviews, and then you may or may not get that job (or want it, after the interview and the offer), and then it takes 3-6 months to find out if the new job is actually any better than the old one ... and a lot of times it's not. In theory, you have a lot of options. I'm not sure that's true in practice. Also, if you switch jobs too often, hiring managers will rightly hesitate.

I hear a lot of concern from people. Or maybe I only hear the notes of caution and not the words of encouragement. I figure it's all a crap shoot. For years, I enjoyed my job, or at least I got satisfaction from it. Right now, the idea of going back makes my stomach hurt. I don't see that as an option, even if I'd been doing a good job of it, which I hadn't been recently. I can't afford to just stop working and live a life of leisure, or at least, I can't afford it for long ... and I do hope to live quite a bit longer. So I gotta do something else. Right now, this seems like a solid option, and I'm excited, not miserable. I am very productive when I'm interested. It could end in tears in a few years - of course, I was already doing that at my old job. You're right that losing money is very different from "just" losing a job, and you have to be careful not to keep throwing good money after bad. I spoke to someone who had a few examples of closing up businesses that were doing "okay" but not "enough." It's a good lesson - there are times when something is making money, but not enough to actually be worth keeping it going.

 

[fatbob]

To be honest there is a lot in the being interested and happy that can mean a business doesn't have to be a blockbuster* to be a personal success.

I think my own missed opportunity was not being on the case when Subway was franchising in the UK. I'd spent plenty of time in the US, knew the product and could see the robustness of the business. Relatively low footprint/rent needed, all day custom including lots of kids afterschool/evening. Relatively healthy product for fast food. Shoulda taken my then relatively fresh MBA and bagged a few in small towns/suburbs where the experience would have been relatively exotic.



* Clearly not the video store

 

[scott43]

and then you have to take vacation and creep around to go to the interviews,

True story..my current employer asked to contact my then manager for a reference. I looked askance, nervously giggled and said "If you do that, I'll be unemployed tomorrow.." And my current employer looked at me like I had horns and said "Oh that's not how it works.." Ha!