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Old 11-22-2007, 04:44 PM   #41
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Do you have a personal or family financial budget? If so, how strict is it?

Personally, I naturally live below my means, and I have never felt like I wanted or needed a budget. In some ways, I think I'd spend more if I had a budget. If I decide to buy something, I buy it, but only after I'm sure it is something I really want and will use.
Our financial budget is about as strict as Dr Spock was with children - anything goes (if we truly want it). The key thing is our "needs" and "wants" have remained fairly modest. Have never had a budget. See no need to start now that we are both FIREd.
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Old 11-22-2007, 05:04 PM   #42
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Anyway, I'm fortunate enough to be in a position where they above lifestyle qualifies as living significantly below my means (LSBYM?). My annual net savings amount is more than my annual taxes which is more than my annual expenses - a good LBYM definition I would say.
Maurice, you are definitely on target. It does not matter how much we earn or spend in hard core dollars. It is the ratio of net savings/investing to earnings.
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Old 11-22-2007, 05:34 PM   #43
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I put a budget in place for DW and I on Jan 1st of this year. The only problem is I'm the only one on it.
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Old 11-22-2007, 05:42 PM   #44
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I put a budget in place for DW and I on Jan 1st of this year. The only problem is I'm the only one on it.
Commonly referred to as the "unibudget"...
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Old 11-22-2007, 05:43 PM   #45
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I have another name for it.
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Old 11-22-2007, 06:55 PM   #46
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The artificial scarcity method works best for me. I pay my retirement and savings investments the moment I'm paid.

I'm usually 2 weeks or so ahead on bills, so by electronically scheduling a payment and recording it in the checkbook register immediately, but not having the actual transaction scheduled to occur until the due date, it allows us to go negative in our checkbook without actually overdrawing. Naturally, when we see a negative balance, we don't spend money until it goes positive which usually occurs when we get paid.

So, with savings, investment, and bills basically being basically paid immediately, I see no harm in just spending as we please for the remaining balance.

That's my budget in a nutshell.
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Old 11-23-2007, 10:34 AM   #47
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Like myself, most folks replying don't have a strict budget they adhere to. However it got me thinking about when I switch to withdrawal in ER.

I need to start with a nest egg large enough for 4% SWR plus an emergency fund of 3- 6 months expenses (EF) to act as cushion. The 'egg' needs to be kept fire-walled off from the EF and also the funds used to do short term saving for things like new vehicles, vacations etc. (spending varies year to year and a budget by nature is an average of what you expect to spend).

If disaster strikes over a year or 2 such as major repairs to vehicle, house and self (ie Health cost) and I exhaust the EF then to fill the gap I should "borrow" from myself just like you can from a 401(k) before retiring. This loan should have interest charges and be treated in the AA of the 'egg' as bonds as there is a possibily of defaulting.
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Old 11-23-2007, 07:52 PM   #48
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We have bugeted and reviewed our spending for over 20 years. As a result, we can comfortably make retirement decisions based on a huge base of knowledge of actual spending patterns and needs. It is probably our best reason for doing it.

We spend 1/3, pay taxes of 1/3 and save 1/3 and have done for as many years.
Looks like I have a near-twin.

I've recorded, but not budgeted expenses, for many years. Like you, the primary reason is so we can make big decisions. Early Retirement was one of them.

Also, for quite a few years we were in the 1/3 - 1/3 - 1/3 mode. My first third was "taxes and charitable contributions", and my "savings" included the principle payments on the house.

However, when our oldest started college, the savings mostly shifted to tuition.
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Old 11-25-2007, 07:47 AM   #49
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I've tried to keep a budget, just to 'confirm' where the money goes, but never see it through. Instead I estimate yearly inputs and expenses for various categories based on the previous year and accounting for inflation and major changes. I too have a large miscellaneous allotment which is the part I'd like to get a better handle on now that I'm moving into FIRE.
Above is me - using records as a "see where money went".

Think a lot of people on this board have a natural "sensible spending restraint".
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Old 11-25-2007, 08:29 PM   #50
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My budget is simple. I take out $200 twice a month from the ATM. The first thing I do is deposit $20 into an envelope. The rest of the money is used to make all my purchases at regular stores (e.g., grocery, department, drug, clothing, etc), gas stations, restaurants, and other public or entertainment venues (e.g., movie tickets, videos, park entrance fees, etc). This includes purchases such as medicine at the drug store, but it does not include medical, dental, or veterinary bills. It includes gas, but not major auto repair or insurance.

Using cash in this way causes me to make constant cost-benefit decisions regarding potential purchases. If I want a magazine, I may not be able to get a video. I see how much I have left in my wallet and I know the number of days before my next ATM payday. It's a good strategy, at least for me.

I put left over funds (in $20 increments) into the envelope at the end of the half month period. If I want to purchase something more significant, I need to use the saved funds in the envelope. Hence, I have both a budget and a reason to save. At the end of the year, I deposit most of the saved funds into the bank.

Unfortunately, sometimes I cheat and use my credit card when I shouldn't.
I like this method of controlling expenses. Thanks for posting!

My current "budget" method is pretty loose. I have a detailed budget plan that I created in Xcel, including short and long term savings items, so that I have some goals. But what happens during the months does not often correspond to my goals. But, I am still meeting my long term saving goals, so I'm doing ok. But I'd like to do better.
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Old 11-26-2007, 03:01 PM   #51
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I forgot to add that not only do we have a budget, but we have what is called a LIFE BOOK. In it are our plans, our retirement income projections and the calculations, our current estate plans, our purchases, etc. Basically anything hubby could think of. It was one way to save money when we visited a financial planner. Why pay them to do anything but review actual information?

We enjoy going back and reviewing our projections and how we met or did not meet them. We are now dividing our future into approx. decades and making general projections on what we might do when. For example, sell the house with stairs and go to a one floor house, change our travel patterns, etc.
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