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Old 12-14-2009, 02:29 PM   #1
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Saving more?

I want to save more. I started tracking my expenses with Mint.com, but don't have a complete month of data available yet.

Not sure I like the idea of budgeting. I'm pretty conservative financially, but like to buy stuff from time to time (mostly electronics, PC parts, car stuff).

If I were to max out my 401K ($16.5K), does anyone know of any good calculators that I could run to see what my take home would be?

I thought of just ramping up my 401K until I felt the pain and may give that a try. Probably adding $50 or $100 a month into a Roth as well.

Maybe an automatic withdrawal into another savings account?

Anyone have any good ideas that doesn't involve total control over the budget?

I think I'm capable of that sort of control, but don't want to do it. Doesn't sound like fun. Too much work? Maybe I am chicken?
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Old 12-14-2009, 02:36 PM   #2
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PaycheckCity.com | Web-Based Paycheck Calculators might give you the info you need
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Old 12-14-2009, 02:38 PM   #3
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Well, I always maxed out my TSP (401K) and I didn't start tracking my expenses very carefully until the last couple of years. I just figured out what percent of my gross was taken out of my salary, then subtracted the 401K amount from my salary and took out the same percent for a very rough estimate.

Resisting "presents to myself" was easier if I regarded it as putting off the purchase for a few months rather than as never getting the item. Also I played a little game with myself as far as seeing how much I could save in taxable money compared with my usual past savings (after maxing out on 401K/TSP and Roth IRA). Every month I would move the savings from my checking into my savings account and from there to paying off my house (and then investments, once that was done).
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Old 12-14-2009, 02:49 PM   #4
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This is what works for us.

Let's say your goal is to spend $36K this year or $3K per month on average. And let's say that, after maxing out your 401K, your take home is $4K/month. Then you could set up a $1K/month automatic withdrawal into another investment account so that you are left with only $3K in your checking account.

Some month you'll spend less than $3K, in that case you can send what's left over at the end of the month into a savings account linked to your checking account. Some month you'll spend more than $3K, in that case you take the extra money you need from the savings account which holds the surplus of the previous months. With this system you don't have to tinker with 30+ budget categories, you just make sure that your overall budget stays on target. Unless you charge things to a credit card (and don't pay it off at the end of the month) or take money out of investments, you know you'll come in on or under budget.
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Old 12-14-2009, 02:53 PM   #5
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Bimmer, Budget does not = deprivation. Budget does = purposeful. I operated for many years with a very informal LBYM lifestyle unfortunately when we started making babies and took my wife out of the workforce we had some years we spent more than we made. When we got serious again and drew up a budget and focused on using cash instead of plastic it was astounding how our net worth increased for me a written budget was the biggest single thing to improving my finances. You should list "blow money" as an expense to use on whatever you want as impulsively as you want and yes you could set up a separate saving account for this line item.

You should look at your personal situation to decide on the investments.
A common recommendation is to utilize the 401k up to the company match then fill up the roth and if you still have money left after that go back and start putting in the 401k again.
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Old 12-14-2009, 05:32 PM   #6
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I don't do a budget, but I do track my expenses closely. It helps that I'm not prone to wild bouts of overspending. Maybe once a year I'll graph out my top 15 expenses per month over the last few years and see where things are trending. I find that sometimes just seeing how much I'm spending in some categories makes me want to spend less, i.e. "wow, I spent $2000 on eating out this year and I'd rather see that money in savings or spend it on <insert item here>."

I also like the idea of ramping up your 401k contribs until it starts to hurt. Then you can decide whether to leave it at the "hurts slightly" level or pull it back to not hurting.
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Old 12-14-2009, 05:46 PM   #7
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I don't do a budget, but I do track my expenses closely.
After reading this I realized that I have always tracked my overall expenses closely - - I just haven't tracked how much went to what category very closely until the past two years. I log into my checking account every day, though, to see how I am doing in keeping expenses down to normal levels. My post above was misleading.
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Old 12-14-2009, 06:21 PM   #8
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I think I'm afraid of the zero based budget, a la Dave Ramsey. I like fluff and plenty of leeway.

I may try to determine a basic budget total, and sweep everything over that into a savings account each month.
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Old 12-14-2009, 06:38 PM   #9
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If I were to max out my 401K ($16.5K), does anyone know of any good calculators that I could run to see what my take home would be?
I have my taxes professionally done by a CPA. Not that my financial life is so complicated, but I despise doing my actual taxes and I know what gets sent into the IRS is correct. It's worth it to me to pay the fee. (No doubt others here have a different view.)

When I was ready to increase my 403b contribution I did a dummy projected tax return (based on last year's actual return) in a spreadsheet. It only includes the actual lines that apply to my taxes. Using the most accurate estimates I have available for this year, I plug in various numbers to play "what if" and then look up the taxes that would be "due" online. I do a state return too. It took awhile to set up, but allowed me to see that, with the house now paid off, I could double my 403b contribution and end up with the same take home that I'd have had if I was still making a monthly mortgage payment (I'd been paying extra on the principle toward the end.) The tax shelter of the 403b plus the freed up cash from the old mortgage really will allow me to pack away the dollars now. I'm now putting away at a rate that equals $18K per year and have figured out what my take home would be if I bumped it to the max ($22K). As an experiment, I'm limiting myself to live on the take home I'd have if I went to $22K for a few months to see how it goes. So far so good.

Quote:
Maybe an automatic withdrawal into another savings account?

Anyone have any good ideas that doesn't involve total control over the budget?
My take home (after 403b contribution) gets direct deposited into a local checking account. Next day, I have various amounts automatically transferred to various ING savings accounts. One of these accounts serves as an "emergency fund" for things like vet bills, occasional (vs. monthly) bills like insurance, car repair, Christmas. The others are for car replacement, furniture and appliances, home repair, taxes, etc.

What's left in the local checking account after the ING transfers is for local spending: gas, groceries, pet food, eating out, clothing...day to day expenses. I don't have a "budget" per se (I never limit myself to specific amounts in each category), but I do track these expenses pretty closely in Quicken just to make sure the overall totals don't go out of control.

My bottom line "budget": do not exceed that month's "remainder" balance in the local checking account and do not exceed my total takehome for the month overall. Most months I have money left over on both counts. That gets put into savings or just sits in the checking account as cushion, but gets transferred if it builds up. Unlike a lot of people on this board, I make well under six figures so I don't have enough to do additional investing.
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Old 12-14-2009, 06:54 PM   #10
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Until recently, the task of tracking every cent and keeping a check on every category of expenditure is not something I have ever felt motivated to do. What I have done historically, is run a monthly spread sheet which simply totals the "cash", "credit card", "eps" payments taken from my bank account each month (with no attempt to categorise), mortgage, school fees and "other". I then compare it with the previous year. So long as the total is more or less in line with expectations, I don't do any more. If it goes up, I ask myself why. It takes about five minutes each month and has proven to be good enough for my needs.

That said, with retirement only four years and 16 days away, I have started the painful process of keeping more precise records of my spending - daily entries in each of several categories.
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Old 12-14-2009, 07:31 PM   #11
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If you don't think of budgets as fun

My suggestion would be to track your outgo closely for several months.

See where your money is really going, instead of where you think it might be going.

Then do whatever pre-tax / direct deposit arrangements make sense.

Then the rest is "money to spend" - essentials, entertainment, who cares? As long as the bills get paid, and you are within your limit, you decide what to do.

I do think the 'track outgoing' part is essential - a budget is about mindful spending, not deprivation.

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Old 12-14-2009, 07:54 PM   #12
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I think I'm afraid of the zero based budget, a la Dave Ramsey. I like fluff and plenty of leeway.
Build in fluff/leeway into your budget, if it makes you feel better. DW and I loosely follow the Ramsey model, but we also like plenty of cushion in each of our spending categories (just in case). His methods are, of course, aimed at people that can't figure out how to live within their means, which is generally not a problem for folks on this board. As LBYMers, my wife and I got tired of watching extra money pile up in our savings account each month that could be (potentially) earning more in an investment...the written budget let us know exactly how much we could safely send off in automatic investments each month without worrying about coming up short.
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Old 12-15-2009, 08:22 AM   #13
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I'm losely following Dave Ramsey too. Paid off just about everything except DWs small student loan and the mortgage.

I like the idea of tracking my outgo, and am doing so with mint.com. They have a basic budget tab that I set up some guestimates based on 1 month of spending.

Will be a rough week this week. I lost my retainers and need both replaced ($420) and need new tires for the Pilot ($600). I know some of this is prime fodder for a sinking fund. Will work on identifying sinking fund stuff (pre-buy heating oil, car registrations, etc).

Got the 401K at 12% now. I think I'll start adding to my Roth, which I am not funding currently.

Thanks for the ideas!
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Old 12-15-2009, 08:43 AM   #14
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The easiest thing for me is to do is DCA 100% of your next raise into retirement accounts.

The yearly raises add up if you have a good employer.

-CC
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Old 12-15-2009, 08:48 AM   #15
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It seems that many people view a budget as being a self-imposed restriction on freedom, as with a diet. Someone else, or yourself, saying "You mustn't do that!"

That's not how DW and I look at it. It's saying to ourselves "These are the numbers we have to work with, these are the expenses and decisions we have made, these are the future expenses we can reasonably foresee, what do we want to do with what's left over?" And of course to make sure there will be something left over!

Or, saying to yourself "Where do I want to be financially five, ten, twenty years from now?"

To us a budget is a tool to implement conscious, rational decisions about how we want to live. It's about negotiating priorities. And, unless you're single, it's about sharing.

Not that we account for every nickel (although we did do that for two months once to see where any unnoticed expenses were) but I wonder that anyone could live that tightly regimented a life for long.
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Old 12-15-2009, 10:54 AM   #16
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If your spending is out of control, then budgeting is about deprivation. For those who consider mindless shopping as their main entertainment and all the credit cards are maxed out, they have a problem.

For people who are not overspending, budgeting is simply a means to see where the money goes so you can make informed decisions about whether that expenditure is worthwhile or not.

I think it is very valuable to closely track all expenses and income for at least 2 months. Sometimes you see that one category or another is much worse than you thought and could be reined in without significant deprivation. Other times it simply shows you where things are going. For example,

I discovered I was spending insane amounts on coffee and lunches out. For me, making my own coffee and lunches meant better coffee and food at much less expense. Others might decide differently.

I'm one of those who tracks the large categories. One means I've used is my paycheck goes into a savings account. Then I automatically sweep $2k/month into checking. If I go over expenses one month, I manually move enough to cover into checking. If I'm under, then there is excess money in savings plus the automatic amount that stays in saving every paycheck. When the savings account gets too large, I move the excess into a money market. If checking is too large, I move that into the MM too. On-line banking makes this very easy.

I track all but cash expenditures by getting and saving all my receipts and enter them into a program (MoneyDance, in my case). Once I started making this a habit, having this data at hand makes the little effort to keep up with it worthwhile. Others might choose to let their credit card statement do this for them. For cash, every now and then, I count up what is in my wallet and make a blanket entry for cash expenditures to balance the cash account in my program.

When I got within 3 years of retirement, I found my desire to spend money naturally reduced. No new clothes because what I had would last. I stopped buying trinkets for the house because I want to sell it in a few years. etc.
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Old 12-15-2009, 01:08 PM   #17
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I think I'm afraid of the zero based budget, a la Dave Ramsey. I like fluff and plenty of leeway.
I personally use a zero based budget using YNAB software - YouNeedABudget.

It is zero based but I have plenty of fluff and leeway.

The idea though is that you should only spend what you have so at the beginning of the month let's say I budget $200 to dining out and 3 weeks into the month it is used up and I want to eat out again.

I am perfectly free with YNAB to do this. I just modify the budget for dining out to, say, $250 and then play whack a mole to some other category to cause it all to balance. That extra $50 has to come from somewhere.

As a practical matter I also have a category called irregular expenses that I run and try to keep at $3000 or above. This handles, well irregular expenses, and most of the leeway. That category rolls over from month to month.

The point is that the budget is not something inflexible. It is something that I probably modify 10 times during the month but it helps me make sure that I'm not spending more than I want to spent that month and to realize that if I add $100 to one category, well, it has to come from somewhere.

The other alternative for those who don't like budgets at all is to do a percentage based solution. This is usually done by taking savings, investment money, fixed expenses off the top. Basically you never "see" those. Then decide that you want to spend, say, 10% per year on discretionary entertainment, fun stuff. It really doesn't matter if that 10% is spent on books or if it is spent on travel or whatever. What is important is that you don't spend 20% if you planned to spend 10%.

Here is a good article about how to do this:

A simpler way to save: the 60% solution - MSN Money

Personally I love this idea...but it doesn't work well for me. I do better with a zero based budget where I have to allocate every dollar and have to adjust in real time if I want to spend more in one area than I had estimated at the beginning of the month.
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Old 12-15-2009, 04:56 PM   #18
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I want to save more. I started tracking my expenses with Mint.com.....
Do you know if Mint.com allows one to input banking data manually as well? I know it can pull my data automatically from US financial accounts, but I also have foreign accounts it wouldn't be able to pull data from. I couldn't find anything on the website about it.
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Old 12-16-2009, 11:37 AM   #19
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Trek, I have the same problem with Mint. My mortgage is thru a small Credit Union, and I can't figure out how to add it to the rest of my accounts.

On the plus side, my net worth looks good since it doesn't include my $160K mortgage!

I think I kind of mentally budget. Maybe not "budget", but control spending pretty well.

I do think tracking expenses for a few months will work out. Then I'll be able to see what kind of fluff I have, and set up a more formalized savings strategy.
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Old 12-16-2009, 11:56 AM   #20
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Trek, I have the same problem with Mint. My mortgage is thru a small Credit Union, and I can't figure out how to add it to the rest of my accounts.

On the plus side, my net worth looks good since it doesn't include my $160K mortgage!

I think I kind of mentally budget. Maybe not "budget", but control spending pretty well.

I do think tracking expenses for a few months will work out. Then I'll be able to see what kind of fluff I have, and set up a more formalized savings strategy.
The first year DW and I did budgeting, we were shocked to see how easy it is to "just spend money". Our first real test after getting engaged was to figure out how to pay for a wedding and down payment on a house within 2 years. Somehow we ended up paying off both our student loans ($8,000), paying for a wedding ($12,000), and putting $10,000 down on a house, all within 18 months...........it shows what you can do when you are motivated........DW says she still can't believe we did it..........
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