5 posts tagged “budgeting”
yep, it's been ages since I posted. Addressing that may be a new year's resolution.. we'll see. I've been busy at work and at home, so the blog, she suffers.
But at this time of year there are lots of things worthy of updating: what tracking my spending reveals about my year, notes about my travels, plans for the coming year, all manner of good things. Today I'm working on a few posts and will dribble them out over the next couple of days. We can call that my Christmas gift to you, okay?
First off: charitable giving, 2008!
Last year I did the majority of my giving in the last few months of the year. I donated to my local public radio station, and to two food banks (one in Oregon, for old times' sake, one local). At the time, I resolved to donate more often, and to have my 2008 giving surpass that of 2007.
Well, I certainly didn't donate as I went along - I gave a pitiful $82 from January through November. That left me with some last-minute decisions to make! Here's who I donated to, and why.
Alameda County Community Food Bank - because I have never gone to bed hungry. I have never wondered where my next meal was coming from. Because I'm so grateful for the lovingly-prepared food my lunch group gives me every week!
Hope Line - because I read Post Secret every week, and because that page's founder won't accept donations.His preferred cause is Hope Line. I donated because Frank asked me to.
Chicago Public Radio/This American Life - I subscribe to the free This American Life podcasts, and love listening to them when I travel. They've asked for some support this year, as providing the podcast costs their parent organization money.
Doctors Without Borders - because I am a happy reader of the Yarn Harlot, and this is her favorite organization. Read about her Tricoteuses Sans Frontières/Knitters Without Borders idea here and, even better, here.
To forestall this rather uncomfortable feeling I'm having - I really didn't have that spare cash in my budget this month! - I'm planning ahead for next year. I'm going to set aside just under 1% of each month's income, and will either donate as I go along in the year OR will have a specific pool of money to use at this time next year! My giving ranged from $20 to $100 and I am confident that every little bit helps.
So, what's important to you? Can you share a little bit of love and money?
The NY Times has a fascinating article/graphic that breaks down the average American's spending.They've got eight main categories (food & beverage, misc, recreation, education/communication, transportation, health care, apparel, and of course housing).
I'm sure they are using before-tax figures, but I always find it more interesting to calculate these things based on my take-home (which means I'm not counting my taxes, retirement savings, and health care expenses), so I ran the numbers both ways. I'm geeky that way.
So how do I line up?
Category... Average American... My % of gross/% of net
Food & Beverage 15% 8% / 13%
Recreation 6% 4% / 6%
Education/comm 6% 1% / 2%
Transportation 18% 1% / 2%
Apparel 4% 3% / 5%
Housing 42% 20% / 33%
I didn't calculate: Misc or Health Care. Misc seems too vague. Health Care is not something I feel I can control, but I feel like I have a good deal in this regard courtesy of my employer.
Apparel is a very spotty category for me. I can spend nothing for several months, then a couple hundred dollars, and I haven't been tracking my spending long enough to have a good feel for this category. I did use my numbers for the first four months of this year, so that's probably a good rough number anyway.
I'm glad my housing expense is lower than the average. That seems really really high to me!
In the recreation category, I did include my hobby spending, which is bike maintenance, bike club & organized ride fees, and my knitting expenses. However that doesn't cover all my knitting expenses, as anything that I am buying to give away gets stuck under the Gift category (helping me in my knitting expense denial, I'm sure). I didn't include Gift spending in the above numbers because I'm not sure where that would fall.
One category I didn't see, though it's got to be in there somewhere, is travel. That's a big chunk of my income, 13% of my gross/ 21% of my net. And I still haven't bought my Christmas ticket! Note that this is 21% of my net income so far this year.. I expect my travel expenses will drop sharply as a percentage of my monthly spending, since I've paid for several trips that are happening later this year.
The above numbers account for 61% of my net income. Adding in travel accounts for 83%. Where is the remaining 17% going? Well, off the top of my head (and with the help of my spending notebook):
gifts (2% of net)
school loan repayment (4% of net)
household/upkeep (decorating, laundry, shampoo, etc.) (4% of net)
charity & miscellaneous spending round it out at another 4% of net
... and a little bit is getting tucked into savings. That's my biggest gap right now. All told that adds up to 97% of my net income accounted for (i.e. spent!) each month.
In an ideal world I'd like to save 20% of net every month. So far it's not even close to happening!
Allow me to insert that I JUST finished paying off my car (whoo! go me!) so my transportation costs don't count a car payment.I WAS paying 8% of my net income, and I'm looking forward to doing something with that money that is more satisfying than paying off a loan.
It's been a while since I posted about money. Good thing I'm tagging the posts appropriately - frankly, reading some of them, especially this one, is kind of surreal - I don't really remember the money crunching session and results very clearly at all! So it's a good thing I wrote it up so tidily and left it where I could find it. Actually I think that's pretty typical librarian behavior - I don't keep much in my head, but I know how to find the information when I need it. Or, I'm becoming senile already!
Debt
My credit card is still showing a zero balance (hurray!) but I HAVE been using it - I donated to my local public radio station, and I bought a plane ticket for a December Portland visit (2nd saturday, cookie party, stay tuned for more!), but I've already paid the balance off. I'm still doing double payments on my car loan so it'll be paid in full in May. I've pretty much resolved to pay the basic payment on my school loans forever - the rate is low and the monthly payment isn't a hardship, so though it's tempting to try to get aggressive and pay it off, it makes more sense to get money in the bank for non-retirement needs and goals (house down payment (ha!), travel, better-funded emergency fund, etc.).
Spending
I'm working on tracking all my spending, and have a spreadsheet from uncagedbird that I'll use to get a visual representation of my spending. Things already of note:
...food spending
I think I'm going to do a special version of the spreadsheet to cover grocery spending only, just out of curiosity. I pretty much shop at four places: Trader Joe's, the farmer's market, a full-fledged but small and somewhat upscale independent grocery store that is two blocks from me, and a small and somewhat-scrappy market that is on the same block.
I like Trader Joe's for reasons that probably don't need elaboration (fairly inexpensive, interesting options, close to work), but I don't like it because it's a chain, it's always CRAZY-busy, and all the food is quite packaged.
I like the full-fledged grocery store because I can walk there, it's been in that spot for over a hundred years, it's a locally-owned non-chain, and their food is all high quality. On the down side, it's always really (really really really) busy, and the prices on the food can add up. But... see high-quality. And SO convenient. And not ridiculously huge.
I like the somewhat-scrappy market because it's NEVER busy (at most I have to wait in a two-person line... an extreme rarity in the bay area), and because the owner and his wife work there, and because it almost always has what I need (except meat, but I don't buy that often). Plus, they're newish at the business and I feel like they really need and appreciate the support of my meager dollars.
Gas/transportation
I bought gas the other day, at $3.059, and I have no idea if that's good or bad because the last time I bought gas for my car was in early August! (I love my short commute and the fact that I can bike it, or walk a mile and take a free shuttle.) I'm also going to track my public transportation and other transit spending - although it's been six weeks since I bought my own car gas, I kicked in gas money for the road trip to Ashland and to the Ren Faire, so that should get noted as well.
Retirement savings
I decided to just aim for 10% in bonds for now, and changed my retirement contributions to go half into a bond fund, and half into an index fund. Since we use Fidelity, the funds I am in are fbndx and fusex, respectively. I had my choice of two bond funds, but frankly I couldn't really figure out the differences...the allocation, fees, and returns were near-identical. Eventually I just picked the one I'm in. So far the bond fund is about 1% of my total retirement plan, so there's a while to go before I need to revisit it.
I haven't done any other allocation or consolidation work. In this post I laid out some pretty bubble charts that showed how my accounts are set up. I thought I might consolidate my various retirement accounts that aren't linked to my current job. Haven't touched that one yet. In one case, I'd have to deal with the state of Oregon's retirement people and I am afraid. The rest of my most-recent-job's money is in a 457(b) account, and I recently read something that indicated funds in a 457(b) could be withdrawn without penalty. I have no intention or anticipation of ever needing to do that, but it was news to me and bears investigation before I close out that account. And, turns out the other account I have with a former employer has me in a fund that at least one online personal finance writer loves, and it's an international fund, so I'm leaving it alone for now. So I guess I did make some decisions! (except the part about fearing the state of Oregon people...)
Non-retirement savings
No progress on this front. I have a sense of what I think is a reasonable monthly goal, but I don't think I'm going to make it this month. I blame the credit card charges listed above (radio donation and plane ticket), but in truth I know that "something" could come up every month. What I really need to do is figure out if that amount I have in mind is reasonable, and if so, get it out of my account as soon as it hits, not set it into my local savings account to send away IF it makes it to the next payday.
I have the good-but-bad habit of allocating all my money elsewhere. The structure until recently was: retirement savings, bills account, great thwack of money to credit card, little bit to easily-accessible savings account, spend the leftovers. It's great in theory but the problem was I was leaving myself a couple hundred bucks per pay period to cover all food, gas, entertainment, and clothing expenses. Guess how well that worked? Well, it obviously worked for a while, since I did pay off the credit card, but now I want to strike a better balance between saving well, and having a reasonable spending expectation.
I have goals I want to meet, but I don't want my life in the interim to be one of beans and rice and no going out with people who I really enjoy seeing.
Dang that was long. Oh how I long for a way to just post SOME of my natterings, then hide the rest under a cut. Anyway, makes you glad I don't update about money more often, I'm sure!
This reminds me a bit of the concept of mind mapping which I learned about in grad school, and it really DOES help me sort out what needs to be changed. Thanks to bubbl I'm able to draw a pretty organizational picture of my finances! Here's how things flow now:
Here's how I'd like that chart to look:
I don't have any changes to make to the rest of my money handling: I manually transfer funds from my paycheck into my bill-paying account, and by mid-month have enough to cover that month's expenses (including the next month's rent). I manually transfer funds from my paycheck into a short-term savings account; the balance is left for groceries, misc. spending, coffee, and gas. I've listed the expenses in order of value - most expensive to least. Yes, I spend more on coffee than on gas, but that's because I typically buy gas about every third or fourth week. Both expenses work out to about 50 bucks per month. (eventually I expect I'll spend at least a month tracking all transportation costs, including toll and transit passes. it'll be interesting to see what I really spend! but I'm not ready to add that to the tracking listl as yet.)
After organization, my areas that Need Improvement are a) tracking misc. spending, and b) really staying in my desired boundaries for my monthly spending. That's another reason to get more savings pullled out pre-check: if it's not locally available I'm far less likely to spend it.
To address item a) and potentially b), I will continue to track grocery spending, and will also track all other food/alcohol spending for the month of July. I bought a nifty little notebook (from the clearance rack! with cash!) for just this purpose.
Here concludes my Beautiful Sunday Spent On The Computer Thinking About Money.
ps. happy july!
In this post, I stated some money resolutions for the month of June, and ongoing. How are they going?
Resolution the first: double up on car payments
Result? no sweat. didn't feel it.
Resolution the second: set aside $50 to cover work coffee runs for the month
Result? I love it. I don't agonize about going, or spending the money, or what to get (the $2.50 chai vs the 1.65 coffee) - I just decide which I want, and go for it. Unexpected bonus is I'm not quite using it all, so I'll use some of the leftover cash to buy coffee grounds to have at home.
Resolution the third: track my grocery spending
Result? so far so good, I've held onto every receipt. I'm only now adding them up, and... so far this month I've spent the visually tidy sum of $101.01 - really! I'll still have one more grocery run this week, for my work-lunch day which is Wednesday. That'll be under 20 bucks, I think. Of course this month wasn't typical, in that the grocery spending includes groceries to feed my visiting parents & brother, but on the flip side, they bought me a number of meals. But when I think about it, no month is ever "typical" so all I can do is see what I spend and see if some ballpark number emerges as a good target to shoot for.
Next month I will definitely continue the grocery spending tracking, and I may also track food-out spending. I haven't committed to that yet.
The reason I'm doing all this is because I'm trying to figure out how much is a reasonable amount of money to spend in a month, vs using toward debt, bills, and savings.
Right now I have two checking accounts and one main saving account. 16% of my paycheck goes into my retirement savings account, before I ever see it. What's left of my paycheck after taxes & retirement savings goes into the day-to-day checking account, and I immediately transfer 58% into my bill-paying account. All of my bills go from there, and I make sure that by the mid-month paycheck I have enough to cover everything including the next month's rent (so I can mail it early without worrying if it'll clear). The only check I write is for rent; all the rest are automated online bill payments. I love it.
As a side note, the 58% figure isn't a number I chose; it's dictated by the expenses I have. I figured out a slightly-high monthly total for all my recurring expenses (rent, phone, cell, internet access, electricity, double car payment, school loans, and car/renter's insurance) and make sure I put half the amount into the bill paying account every time I get paid.
Now, of the 42% left of my paycheck, 26% is earmarked for savings. Right now it's just going into my main savings account, which is linked to my two checking accounts. For those of you playing along at home:
However I'm also just finishing paying off my credit card (most of that 26% that is now for savings WAS being used for credit card paydown). Last pay period (June 1-15) I wound up using my card because I had used up all my cash allowance. Then when I got this paycheck, instead of putting the full 26% into savings, I first repaid what I'd charged on the card, and saved the remainder. Even though I've wound up pulling out the money I'd put in savings, I have NOT added to my credit card, so when I next get paid, I'll be starting from a clean slate: I won't have to pay back my card for spending I did that I hadn't budgeted for. So July will be a fairly good gauge of what a typical (ha!) month will look like.
Bottom line: clearly I'm not being realistic about how much I spend. But, on the flip side, I spent 130+ bucks on gas last weekend for a road trip - not typical!
So, from a day-to-day spending perspective, tracking grocery money is a great starting point as it's the majority of my spending. If I add other food/drink spending, that'll be the vast majority of what I spend. From there I'll be able to look at the numbers and see if it seems reasonable, or excessive.
As ever, it's a process that I don't have fully refined. But it's a good start.
