How do you manage your budget?

[Monique]

Some categories are categories because they can blow up and need emergency reserves - for example pet care; one of our cats just blew up 2 seasons' worth of ski trips with the testing and the chemo.

I'm sorry to hear that your cat is having such a difficult time. Boy, do I know how expensive they can be.

But - I don't understand how that category helps you. Do you have a separate pet care savings account? (I had that for quite a while, actually.) . But surely you don't have an account for every category?

if you need an app or a spreadsheet to realize you are spending too much on restaurants then there are more basic problems.....

Well, that's exactly my point.

 

[Monique]

The necessary groceries vs. treats thing I also understand because NG is theoretically chock full of price-optimised commodities -read: avoiding name brands, tricks like that - whereas treats is meant to be chock full of maximum enjoyment for maximum time.

Well, yeah, but I still don't know that it matters enough to categorize. I am not going to split every grocery bill into two categories. I don't even know what that would accomplish. I do review the receipt immediately after I get home to get a better idea of the big picture.

Maybe more of a budgeting tip: King Soopers (presumably all Kroger grocery stores) has an app where you can select digital coupons. Then they just automatically apply when you check out. For some reason, they also mail me personalized coupons - I'm not sure why it can't all be digital. Where I haven't been so good is in actually evaluating whether the coupon brand is still cheaper than some other brand.

 

[Monique]

On the topic of what *I* consider to be excessive categories, but obviously everyone's brain works differently (and I'm just trying to understand if I've missed something!) - just got this in an email.

 

[surfsnowgirl]

@cantunamunch sorry about your kitty. I went through this in April of this year and March of last year, 2 different cats and my bank accounts and credit cards don't like me much right now. I'm about up for air and will be in the black soon. However, I'm thinking positive thoughts for healthy kitties for the next year or two while I build things up again.

I am curious about tracking too. I know I don't eat out a lot as I love to cook and grill at home in the off season. During ski season is where the $$ flies. Summer/fall is our time of year to lay low, save money and replenish the accounts/cards that take a hit over the winter. I've thought about using something like Quicken but I wonder if that is over kill for lil ol me and if something simpler might work better. I do keep a spreadsheet with my budget made out so I know what $$ is going for bills, savings and how much play money I have. I'd like to go a tiny bit more detailed so I can see what I'm spending where.

 

[scott43]

I don't know how much value there is in itemizing all your fixed costs. You're paying insurance, internet, gas etc every month regardless and you're not fixing that. The itemizing is better when you start labelling Starbucks, eating out, booze..bike stuff..ski stuff..

 

[surfsnowgirl]

The itemizing is better when you start labelling Starbucks, eating out, booze..bike stuff..ski stuff..

Definitely. This is what I'm curious about. I eat at home about every night and my company buys us lunch every day so really my only daily expense is my $3.00 iced americano. However, I'm curious about my overall expenses in the the eating out, booze, ski stuff arena so I'd like to start tracking to some degree just so I can see where my money goes. In the summer I spend a lot at the farmers market on fresh fruits/veggies but I'd love to see the big picture breakdown of where my "fun money goes"

 

[Monique]

The itemizing is better when you start labelling Starbucks, eating out, booze..bike stuff..ski stuff..

I guess that's the part I don't get. Is it to look for low hanging fruit? Like, if you look at these, you might choose that one is less important to you than another. But ... even if you didn't have categories, you could still make that decision. Maybe it helps you prioritize, because you're actually comparing categories, rather than making an isolated decision each time you spend on something?

 

[Sibhusky]

We use Quicken. There's a place to assign categories, it's only used for things we have at one time or another wondered about. Like how much do we shell out for insurance in general? (This is retrospectively.) So, we've looked at how much we spent for utilities at the old house vs the new house. They are totally different set ups, so comparing electric bills makes no sense. Comparing trash, snow removal, lawn maintenance, none are comparable as a bill unto itself because we moved from a condo in New Jersey to a house on five acres in the woods in Montana. But in the aggregate, "utilities" or whatever you want to call it, it is. My husband is the Quicken guy. I'm the person who every once in a while says, How the hell are we blowing through all this money? He almost never uses the categories and I go through all the entries assigning things belatedly. Fortunately they largely hold for the next time that bill is due. The point is, though, that if you don't care, you don't have to use them. We manage our sub account system that way, using I think it's the Class feature (?). Those he does use, because it gives the hers/his/ours portions in that checking account. But there's just one account to use in Quicken for reconciling your checkbook. And we can also reconcile the sub account checkbooks, which as I said earlier are three to an account. We are NOT seeding 45 categories with saved money every month. That was covered in the aggregate when we came up with the % that is due the household ("ours ") account every pay period. We allow negatives to some degree in the individual sub accounts as long as the three subaccounts in total are positive. That gets looked at on and off if the "ours" account seems to be having an issue (like now) staying in the black.

But to me, tracking where the money is going is important. But maybe that's because my MBA was in accounting. It helps with filing taxes, it helps with understanding how much you are really spending for discretionary items, it helps in understanding why, despite having a lid on them, you're broker this year than last year. Maybe propane went up. Maybe you spent more on snow removal. With bills that fluctuate a lot like those two or our vet bill, I like understanding that there's been a major change. Because now maybe we need to look at whether that 60% is sufficient. Why wait until we're deep in the weeds? So, I don't look month to month, but I'll compare the last twelve to the previous twelve.

And yeah, I'll decide that I don't want to spend $500 a year on cutting my hair.

 

[cantunamunch]

I'm sorry to hear that your cat is having such a difficult time. Boy, do I know how expensive they can be.

But - I don't understand how that category helps you. Do you have a separate pet care savings account? (I had that for quite a while, actually.) . But surely you don't have an account for every category?

The ones with absolutely necessary emergency reserves - like the pet one - are very much their own line item and may as well be separate account because that money doesn't get touched.

Every category doesn't get that level of attention, of course not. If I was single I probably wouldn't have a necessary vs. treat distinction either but ...and this enters into the spend/save/quality of life issue discussed above wrt. retirement...it's a serious help in avoiding strife when people have even slightly different outlooks/balance points.

And thanks for the sympathy, everyone. She's a dear and we want to give her the best possible while she's still with us.

 

[Monique]

The ancient PS3 in my bedroom seems to be experiencing organ failure - specifically, the WiFi has degraded terribly. This meant that I can't watch Netflix or Hulu in my bedroom.

And I've been annoyed for a while because my A/V system doesn't speak Bluetooth - if I wanted to play something from a device, I had to plug that device into the A/V system directly, and it would hum unless I got it *just* right.

So I ordered the smallest Roku and a Bluetooth receiver.

These purchases illustrate the point that I have trouble distinguishing "need" from "want." Now that I have both items, I can recognize that I've been living with these minor annoyances for a while, and that neither item was strictly necessary.

But at the time, it just felt like ... I don't know. Like I was solving a problem, I guess, and improving my life a little, and honestly, it's not that much money ...

But "it's not that much money" is relative to my old financial situation, not the new one. So that's something I need to work on.

 

[mdf]

But "it's not that much money"

....
That's the point of recording spending, so that you can tell whether or not "it's not that much" in the big picture rather than as an isolated decision. If you use that excuse relatively infrequently I think that's fine (unless you are truly broke). If you do it a lot, not so much.

The other reason to record is to trick yourself into feeling self-imposed psychological pressure not to spend. When I was a poor student, I wrote down every cent I spent in a small notebook I carried with me. It did restrain my spending for awhile. (I still remember 40 years later sitting in the lobby of the student union deciding not to buy a candy bar.) Unfortunately the effect wore off over time, and I gave it up after about 2 years.

 

[Monique]

....
That's the point of recording spending, so that you can tell whether or not "it's not that much" in the big picture rather than as an isolated decision. If you use that excuse relatively infrequently I think that's fine (unless you are truly broke). If you do it a lot, not so much.

The other reason to record is to trick yourself into feeling self-imposed psychological pressure not to spend. When I was a poor student, I wrote down every cent I spent in a small notebook I carried with me. It did restrain my spending for awhile. (I still remember 40 years later sitting in the lobby of the student union deciding not to buy a candy bar.) Unfortunately the effect wore off over time, and I gave it up after about 2 years.

I'm recording everything right now. It isn't that hard and, as you say, forces me to pay attention.

 

[jack97]

• "Recurring expenses" - other stuff that is on a recurring schedule, like Netflix, Hulu, charities, etc.

I cut the cable a while ago..... nothing much was interesting so after watching reruns of Finding Bigfoot, I decided it go out and do it myself. Now I have to figure what I need for gear and traveling expenses.

 

[Monique]

I cut the cable a while ago..... nothing much was interesting so after watching reruns of Finding Bigfoot, I decided it go out and do it myself. Now I have to figure what I need for gear and traveling expenses.

Right. I haven't had cable for quite a while. After I had to start winnowing down expenses, HBO and Showtime went, too. (HBO will come back when GoT does.) I do watch Hulu and Netflix quite a bit, but I'm not sure how long I'll keep Netflix around. They have fewer and fewer movies. It's getting ridiculous. I can pay for those movies on Amazon Prime, but I don't think there's a reasonable subscription-based movie streaming solution. Very annoying.

I suspect I can pay for many years of Hulu and Netflix without approaching the costs of an open ended Bigfoot quest ...

 

[scott43]

So here's an example of my budgeting...needs vs wants..my 13 month old cellphone (Sony XA1..don't buy one..) no longer accepts input around the edges. Out of warranty. So I can't use P or Q or some menu items. So I'm looking for a new phone..cheapest decent phone is $330. I'm not getting a new phone. I want to replace the downtube on my road bike, long story, it's a poorly chosen diameter. $800. I'm not fixing the bike. Some things I just can't justify. Do we have money? Yeah..but that's not the point. Reminds me when I told a real estate agent the house he was selling was priced too high..he said he had a mortgage broker who could get us any amount we needed..I said we don't need a mortgage.. He just sat there slack jawed..

 

[Sibhusky]

We've got Amazon Prime, Netflix via my daughter, and Hulu Live. And there's more than we can watch. So sorry we hung into satellite for so long.

 

[Monique]

So here's an example of my budgeting...needs vs wants..my 13 month old cellphone (Sony XA1..don't buy one..) no longer accepts input around the edges. Out of warranty. So I can't use P or Q or some menu items. So I'm looking for a new phone..cheapest decent phone is $330. I'm not getting a new phone. I want to replace the downtube on my road bike, long story, it's a poorly chosen diameter. $800. I'm not fixing the bike. Some things I just can't justify. Do we have money? Yeah..but that's not the point. Reminds me when I told a real estate agent the house he was selling was priced too high..he said he had a mortgage broker who could get us any amount we needed..I said we don't need a mortgage.. He just sat there slack jawed..

That last one seems to me to fall into a different category.

The idea of having a not-really-working phone makes me itch ...

We've got Amazon Prime, Netflix via my daughter, and Hulu Live. And there's more than we can watch. So sorry we hung into satellite for so long.

To be harsh - unless your daughter lives with you right now, I'm pretty sure you're pirating/stealing Netflix. I take a hard line on that. I know I'm the only one in the universe who draws that line, but I do.

 

[scott43]

That last one seems to me to fall into a different category.

Not really..I mean..everyone's priorities are different I suppose, and what's a need vs a want..house wasn't in the budget at that price..

On another tack, talking to a real estate buddy..my parent's generation the idea was to pay off your mortgage and build some savings..apparently, according to his observations on the market, most people are resigned to dying with a mortgage. Dunno what that means, just changing economic scenery I guess..

 

[pete]

The ancient PS3 in my bedroom seems to be experiencing organ failure - specifically, the WiFi has degraded terribly. This meant that I can't watch Netflix or Hulu in my bedroom.

And I've been annoyed for a while because my A/V system doesn't speak Bluetooth - if I wanted to play something from a device, I had to plug that device into the A/V system directly, and it would hum unless I got it *just* right.

So I ordered the smallest Roku and a Bluetooth receiver.

These purchases illustrate the point that I have trouble distinguishing "need" from "want." Now that I have both items, I can recognize that I've been living with these minor annoyances for a while, and that neither item was strictly necessary.

But at the time, it just felt like ... I don't know. Like I was solving a problem, I guess, and improving my life a little, and honestly, it's not that much money ...

But "it's not that much money" is relative to my old financial situation, not the new one. So that's something I need to work on.

Agree about debt, but disagree about using credit cards. You just have to pay them off. I haven't carried a balance on a credit card in ... 15 years? More? I got into a lot of credit card debt right out of college, and the process of digging myself out was painful.

Credit cards can be useful for tracking expenses, though, and getting the benefits (cash back, miles, whatever). You can also dispute charges. If I'm spending cash, I tend to lose track quickly. (Yes, I could start from a baseline amount and then just see what's left - but I don't tend to do that.)

But - it all hinges on controlling spending enough that you can avoid carrying a balance. If that's a challenge, then absolutely, avoid plastic.

Generally I agree with the the throwback to "pay oneself first" and pick that percentage .. 10% is default but aim 15%.

Then, as others noted, higher deductible, lower cost places to buy same food, less dining out and to compensate for less dining out ...make cooking at home an event.

Direct out of payroll is nice, as most say if you don't see it .... you don't miss it.

I like the idea of not spending on a CC but then I do, however you might try a few months spending cash on hand or when spending on a CC to pull that money aside to get a real time feel of spending.

One thing I toyed with is pretending I was in college. I spent far more frugally in college and with far less waste than today .. yet I was fine then. In many respects far less concerned as there were no real anchors I was tied to. point being ... today you may have costs that didn't exist in college ..aka: mortgage, however you can deduct actual needed costs out of your bigger budget and then live from there. Once you identify "optional" costs verses "fixed" costs, you can better strip off those items that you choose to spend on.

I don't subscribe to Dave Ramsey but in listening it really comes down to what you have to pay ... verses what's optional.

As noted by others, there's lots of "upgrades" one chooses and really .. many may be justified as why else would one bust butt on hard work, raises, etc .. if not to enjoy life .. but as we age I think we sell ourselves into a marketing sale of "we deserve it" ... I find humor in "deserve has nothing to do with it" (Easwood in "Unforgiven") as I think as we age .. we take for granted the things we worked for .. but should we?

Rambling aside .. strip out everything other than the fixed costs. Then figure out if you can reduce these. Save 10% or more ... for rainy day, then decide if all those other expenses are worth it .. good old Uncle Milton economics ... keeping in mind what you could live with when young/college .. and go from there.

As added note, try not using credit cards for a few months - or pay them on the go as you charge, this to get a feeling of what you are actually spending. I charge most things including food (grocery) for the reward points ..etc but have skipped this to get a feel if it is "worth it".

last thing .. while I haven't yet .. fret not the children's future expenses and plan for yourself and spouse. Yeah, I would love to pay the college, wedding and grandchildren expensives but till I'm stable .. it serve little good. I'd presume if I can't care for myself .. my kids may be stuck with it. personally they can toss me out to the wolves .. as that's my problem, but don't care to be a burden. What ever I have left is theirs anyhow. ...


Home dinner?

this was ok by me tonight .. cheaper than eating out!

 

[Sibhusky]

To be harsh - unless your daughter lives with you right now, I'm pretty sure you're pirating/stealing Netflix

Definitely harsh. She's paying for two screens. There's only one of her. We pay for the discs anyway. But sometimes they don't work, sometimes a series is only available on one or the other. Sometimes a series on disc isn't completely available and a season is only online. So, sue me.