I need a budget...

[LRAO]

Hello all.

For my working life I have been good at saving money, investing it, etc. In addition, my spending habits are very much under control. My biggest expense that I should/could control is eating out too much. But I am 28 and single and I don't like cooking for myself.

Anyways, I think trying to go to a budget and stick to it cold turkey is a pretty hard thing to do. I am self-employed (in case you guys forgot) and basically my finances go like this:

A. work
B. collect payments
C. stock-pile cash
D. end of the month - pay off bills, debts, tax payments, etc.
E. repeat

Any suggestions would be appreciated.

 

[retire@40]

...my spending habits are very much under control.  My biggest expense that I should/could control is eating out too much.  But I am 28 and single and I don't like cooking for myself.
...Any suggestions would be appreciated.

Regarding your food problem, one option is to get married.

However, you will have to give up half your food to get your half cooked.

 

[Cut-Throat]

A budget need not restrict. It just helps you know where you are spending your money.

Your first step should be to account for every buck spent in a month. Do this for 6 months and the results will probably surprise you. I use QUicken and categorize everything. When you see what you spending out for food you then can decide if it's worth it or you want to make some changes. If not, that's your budget! 8)

 

[Mr._johngalt]

Hello all.

For my working life I have been good at saving money, investing it, etc.  In addition, my spending habits are very much under control.  My biggest expense that I should/could control is eating out too much.  But I am 28 and single and I don't like cooking for myself.

Anyways, I think trying to go to a budget and stick to it cold turkey is a pretty hard thing to do.  I am self-employed (in case you guys forgot) and basically my finances go like this:

A.  work
B.  collect payments
C.  stock-pile cash
D.  end of the month - pay off bills, debts, tax payments, etc.
E.  repeat

Any suggestions would be appreciated.

Learn to cook. I did it. You can too!

JG

 

[Mr._johngalt]

I would suggest you learn how to fix things yourself.  It helps you pay 'cost' for things, helps to minimize the impact of inflation and you'll learn all kinds of new things.  I'm still working, but in order to maximize savings, I've learned to do things myself instead of 'buying my way out of problems.'  Some things I have learned in the past year:
-  Changing house siding
-  Repairing roof shingles
-  Repairing private well system
-  re-piping A/C condensation line
-  painting (painted entire house)
-  fixing car A/C (surprisingly easy with stuff at Advance Auto Parts)
-  back feeding generator to house (I live in hurricane prone Florida)
-  chainsawing large trees (see hurricane comment above )
-  building a fence

Having this stuff done probably saved me $10k this past year.  For the upcoming year, I'm planning on re-siding my chimney, re-roofing two sheds and growing vegetables (I've allocated about 1/4 acre for this, which should be enough to support my family's vegetables consumption for the year ).  I'm sure the list will get longer.

Anyway, I think learning to enjoy cooking would be a great first step.  Boil some water, throw in some pasta and microwave some Prego spaghetti sauce, then mix the strained pasta with the sauce and you're on your way.  From there, you can learn other things.  Try http://www.allreceipes.com.  I've learned to make my own pasta from scratch, my own croutons, garlic bread and lots of other yummy foods.  I used to have trouble boiling water... but like everything else, I've learned along the way.

If you want to be truly financially independent, you need to learn how to solve your own problems and not pay someone else for the service.

I think this is good advice, but I don't follow it. Instead, I hire
more and more out all the time. Very fussy, very unhandy,
and I resent all intrusions on my freedom to come and go.
Even if I could do it, I usually don't. I would rather pay someone
and be done with it.

JG

 

[Nords]

Anyways, I think trying to go to a budget and stick to it cold turkey is a pretty hard thing to do.

Your first step should be to account for every buck spent in a month. Do this for 6 months and the results will probably surprise you. I use QUicken and categorize everything. When you see what you spending out for food you then can decide if it's worth it or you want to make some changes. If not, that's your budget! 8)

That's the conventional wisdom and it's worked for our family since 1987.  But it's not for everyone.

I recently read about another approach in the book "All Your Worth" by the Warrens.  They say that a lot of people resent budgeting & tracking their spending and so the process is fatally sabotaged.  The Warrens recommend splitting everything into large categories of "Needs" and "Wants".  Keep the "Needs" (mortgage, food, transportation) under 50%, make sure that savings is another 20%, and blow the rest.  There's another 304 pages of details & interesting stories-- the book is a good read-- but that's about all there is to this plan.

There's a shorter version of this in Richard Jenkins' article where he suggests keeping the mandatory spending (mortgage, food, transportation) under 60%.  Save 10% in tax-sheltered accounts, save another 10% in taxable investments, save a third 10% for emergencies & large purchases (unexpected car repair, a new roof, a replacement vehicle, a new appliance) and go woo-hoo crazy with the final 10%.  After the first 60% you stop tracking your spending and just track your savings.  Whatever's left over is yours to splurge.

 

[Mr._johngalt]

What I would like to know is how many of you do what we do.
We have no formal budget at all and just "wing it"
on the basis that (A) you will know when you are getting
in trouble, or (B) you can easily "fix" it if you go overboard??

Don't get me wrong............I think a budget is great.
Too lazy to bother with it.

JG

 

[Nords]

What I would like to know is how many of you do what we do.

JG, I don't think it's hyperbole to state that whatever it is that you do in your ER is truly unique.

At least I hope that it is.

 

[Mr._johngalt]

JG, I don't think it's hyperbole to state that whatever it is that you do in your ER is truly unique. 

At least I hope that it is.

I think that you are most likely correct.

JG

 

[Gone4Good]

What I would like to know is how many of you do what we do.
We have no formal budget at all and just "wing it"
on the basis that (A) you will know when you are getting
in trouble, or (B) you can easily "fix" it if you go overboard??

Don't get me wrong............I think a budget is great.
Too lazy to bother with it.

JG

I'm not retired but JG's approach has always worked for me. You kind of know month to month, or even week to week, whether you're spending more than you've got coming in and you make adjustments along the way. This worked for me when I was a college student and broke just as well as now when I'm not.

I think I'll want to plan it out a bit better before I retire, though.

 

[Cut-Throat]

Don't get me wrong............I think a budget is great.
Too lazy to bother with it.

JG

Actually once you get things 'set up' in Quicken it's pretty much on autopilot. - Transactions are downloaded and categorized automatically.

It's nice knowing where the $$$ money goes.

 

[AltaRed]

Simply suggesting "winging it" to someone looking for help on a budget is a bit irresponsible to say the least.

Keeping track of current spending in Quicken (or a spreadsheet for that matter) for 6 months is a good way to see your current spending pattern without artifically constraining yourself to canned budget plans. Then you can examine and decide where, if anywhere, you want to exert some discipline to cut back. Another suggestion for success is to probably cut back a bit at a time, rather than going 'cold turkey' if you wish to make significant cutbacks.

You may find, after a year of having to monitor yourself, that you will get in the habit of behaving in new ways that won't require constant monitoring (which is a PITA).

 

[retire@40]

Another approach is to figure out how much you need to save monthly to get to your FI goal and pay yourself first, then spend up to whatever is left over.

It doesn't hurt to pad those savings a little for those "unexpected" expenses that come out of the blue (like a root canal) as well as those repeating infrequent "expected" expenses (like car and home repairs).

 

[TargaDave]

Another approach is to figure out how much you need to save monthly to get to your FI goal and pay yourself first, then spend up to whatever is left over.

That's been more our approach. We know what we're saving and what goes to taxes. The rest is expenses. Our taxes are higher than our expenses (Lovin that AMT ). Once we're not working so much we'll track spending more closely. BTW, my one "latte" expense is buying lunch all the time. I live with 3 girls who eat like birds, so that makes up for it.

 

[BUM]

Instead, I hire more and more out all the time. Very fussy, very unhandy,
and I resent all intrusions on my freedom to come and go.
Even if I could do it, I usually don't. I would rather pay someone
and be done with it.

JG

Hey, wait a minute? Are you my brother?!?!?!?!?!

 

[WhodaThunkit]

We sorta wing it too. Keeping an eye on the checkbook balance gives an early warning if too much spending is going on. If too much accumulates in the checking account, it goes into longer-term investments (along with planned contributions). I know that not everybody likes to keep the checkbook balance up to date, but it helps us.

 

[Mr._johngalt]

Simply suggesting "winging it" to someone looking for help on a budget is a bit irresponsible to say the least. 

Keeping track of current spending in Quicken (or a spreadsheet for that matter) for 6 months is a good way to see your current spending pattern without artifically constraining yourself to canned budget plans.  Then you can examine and decide where, if anywhere, you want to exert some discipline to cut back.  Another suggestion for success is to probably cut back a bit at a time, rather than going 'cold turkey' if you wish to make significant cutbacks.   

You may find, after a year of having to monitor yourself, that you will get in the habit of behaving in new ways that won't require constant monitoring (which is a PITA).

In case the "irresponsible" tag was aimed at me, I am just reporting what we do. Budgets are great, but a real PITA at times. I don't want
to spend the time. So far it's workin'. Others can draw their own conclusions. "Wingin' it" may not work for us after DW retires (date unknown).

JG

 

[wildcat]

Budgets are pretty personal. Some people like to plan and don't mind budgeting each month. A budget, to me, puts everything in perspective in terms of how much I need to save or how close I am to certain goals.

I would encourage the OP to at least run a budget on Excel for 1 year to track expenditures. Could be a real eye opener. If you decide you like it then either keep it up or invest in some personal finance software.

 

[Cb]

I think your best bet is to become obsessed about your lipid profile, read a few books by guys like Dean Ornish, then find yourself some message boards dealing with nutrition.

If you're like me, you'll quickly come to distrust anything prepared in any restaurant (I think they use real butter sometimes, or even, God forbid, margarine).

Then you'll subsist soley on real-deal Quaker Oats, Eggbeaters, low-sodium V-8 juice, fat free milk and cottage cheese, frozen 3-berry mix, your better grades of sliced turkey breast, 100% whole wheat bread, and bananas.

Bon appetit!

Cb
PS: you can still use regular peanut butter though, I checked it out.

 

[BigMoneyJim]

I can't stand tracking everything for more than a week or so. What I did instead is look at my credit card and ATM card usage for several months to get an idea of what I spend in an average month. The regular bills are easy enough to put in the budget. The results are laid out in a spreadsheet. I know I can control the ATM/CC spending by eating cheaper and otherwise limiting discretionary spending. So I'm sorta winging the wallet part of the budget, but saving and recurring expenses are budgeted, and savings usually gets boosted with raises.

This fails to include things like vacations, car replacement and clothes shopping--I shop so seldom that this didn't make it into my monthly average--but between bonuses, adjusting wallet outflow and figuring some expenses into savings I cover these items.

That said, I'm probably going to bust my budget next paycheck. I spent a lot on airfare for the holidays, spent a couple hundred on computer chairs and need to get my car worked on. I saw this coming but chose not to adjust discretionary spending for various reasons. I'll be back on budget in mid December or in January.

(BTW, the CC is paid off monthly. I haven't paid interest of any sort since about July 2004.)

 

[REWahoo]

...Then you'll subsist soley on real-deal Quaker Oats, Eggbeaters, low-sodium V-8 juice, fat free milk and cottage cheese, frozen 3-berry mix, your better grades of sliced turkey breast, 100% whole wheat bread, and bananas.

Jarhead, looks like you've got another convert!

 

[cj]

I think I am like a lot of people in here - we live so far below our means, that we don't really need a budget per se.  We have been tracking expenses very carefully for about 3 years, more or less to see what we spend and how much we need to live on when we retire.  It also lets us see where we can cut out if we need to.  We also save off the top - 401K money goes out and we never see it, plus we have money going to other investments every time we get paid.  But when the time comes, we'll know how to spend or not spend, I think.  But then, we're pretty frugal anyway.  It's probably different if you are not.

I don't think you can do a budget until you do what CT said - account for every buck you spend.  I'm not even sure 6 months is enough.  I would do it for a year, so you can see what happens in different seasons (heating costs, gift giving, etc.)

CJ

 

[greg]

Jarhead, looks like you've got another convert!

REW: I'm thinking about converting from mush (oatmeal) to Cream of Wheat. Naa! I just changed my mind.

 

[KB]

I track my spending, mostly so I can see what categories I'm doing most of my spending . After tracking for about 3 years, I still surprise myself by spending more in some areas than I think or budget for. But I'm still spending less per year than I bring in.

I transfer/deposit into my checking every month a fixed amount that pays all my monthly bills with some slush money.
If I need to pull more from my MM account, I will check a little more closely to see why I've gone over.

It's a pretty easy way to keep a check on things without spending a lot of time or effort. When I start tapping my pensions, my income will be larger so I'll either loosen the budget or save more. I still have 2 teenage boys on my auto and health insurance, so those expenses will disappear......eventually.

 

[MJ]

REW: I'm thinking about converting from mush (oatmeal) to Cream of Wheat. Naa! I just changed my mind.

I love them both and eat them quite often. I wait for great sales and stock up.