Tag: budget
There are 15 entries that are tagged budget. Now displaying reults 1 - 15.
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What Financial Turmoil?
Posted on September 30, 2008 by Him
We're finally back from 2 weeks of a Mediterranean honeymoon, and apparently our country's, even the world's, financial foundation is in deep trouble. Admittedly, it was disconcerting to hear about the economic turmoil when we were abroad.
But here at home, things couldn't be better. We've received a generous gift of a student loan payment. We have received a boatload of cash gifts from the wedding. We're enjoying wines and other delicacies from our honeymoon.
When we returned, I looked at our account and noticed that my most recent salary deposit was higher than the previous ones. While we were gone I received my yearly salary adjustment - a nice increase of 9.5% For those of you who are counting, my salary has increased by 72.5% in just 4 years!
In the upcoming weeks we're going to work on a new budget and some new goals now that we're officially married. Exciting times are coming!
Two Styles, One System: Communication and Money
Posted on September 24, 2008 by Him
Laura is a twenty-something woman out of school and happily married. Eliminating credit card debt has energized her to knock out her car loan and student loans. She blogs at Green Panda Treehouse about reducing debt, building savings, and working with her husband on finances, as well as her successes and failures.
Many people worry about discussing finances when they have different views. Avoiding financial talks can lead to disaster in relationships. It can build resentment and escalate into fights that tear down and could lead to divorce. Money isn’t the root of the problem, it’s lack of communication.
If you share
openly and honestly your thoughts and feelings with your fiancé or spouse, you
are missing out on a great opportunity. Relationships are mutually defined and
both need to share to make it work.
Here are a few
examples of how my husband and I handle money in our
relationship. Is it
perfect? No. Does it work? Yes, because we’re
willingly to talk about our common thoughts and our differences.
Budget
We
keep a Google Spreadsheet to display and organize our monthly
bills.
This allows us to see what our joint bills are and gives a snapshot view of our
individual accounts. I can see how much he puts in his 401(k) and he can see my
Roth IRA deposits.
He’s
great at setting up the spreadsheets and I love playing around with them. I
Goals
Some
of my personal goals are to pay off my car loan and my student loans. We
also set aside money in our budget for saving. We’re working together: our
‘extra’ money goes to joint savings and to paying down the car loan.
Investing
My
husband puts aside money for retirement, but is only semi-interested in
following his accounts. When he changed jobs and was rolling over his old
401(k) to an IRA, he asked me to look at investments to put them into.
I
get a kick out of learning new things about index funds, stocks, ETFs, etc.
While I explained why and how I came up with my suggestions, he just agreed and
made the changes. He’s more conservative with his money and his investments are
a reflection of that. I tend to invest more in international funds than him,
but the volatility is within what I can handle.
Credit Cards
I
have two credit cards (I’m closing one) while my husband has no credit cards.
After learning the hard way about high credit card interest rates, I’ve paid my
debt. I generally pay it off each month.
I
use credit cards mainly for convenience and rewards. I normally keep it at home
with me. If we go on trips, I use my credit card. He is very adverse to debt
and has not found a credit card that ‘he likes yet’. He generally saves until
he can buy it, like his car.
Paperwork
I’m
the paperwork queen. It basically falls to me to organize bill payments and
documentation requests. Due to our basic system, it doesn’t take up to much
time (5-10 minutes). If there are any issues we’ll discuss in the evening.
I
show him where I keep the files, in case something happens and he needs quick
access.
Conclusion
It’s an
imperfect system to be sure, but we make it work. The best advice we received? Talk it out and figure out what’s right for
you two.
Talking
it out can help you to understand your partner so much better and help you to
build a stronger foundation on future communication, not just with money.
Remember also that you’ll discuss these issues as your circumstances change.
It’s not set in stone.
Keeping
each other in the loop is essential to a successful marriage. Two different viewpoints can lead to a
stronger system.
How We Budget, Part 3: The Analog $1,000 Countdown
Posted on February 15, 2008 by Him
Our last two posts have shown you how we manage our money in our various accounts and how we manage our cash flow. Today, we're going to explain how we deal with our non-fixed expenses.
If the other two posts left your head spinning about our budget, I'd have to agree with you. With all of the accounts, our money has been abstracted in a way that makes understanding exactly how much money we have at any given moment very difficult. That complexity has allowed us to make a simple system for tracking our expenses. How do we do it? By using a whiteboard and a box for receipts. Sure we could have used a piece of paper, but I love whiteboards, and we have one setup in our home office anyway.
For our non-fixed category, we've allocated $1,000 per month. Our non-fixed expenses consists of dining out, entertainment, groceries, household, pet expenses, automobile gas, gifts, and any other expense that isn't quite fixed. At the first of the month, we start at $1,000; as we spend money on non-fixed expenses, we write on the whiteboard the amount of the expense, rounded up to the nearest dollar, and subtract. Here's what it looks like:
The receipts for those purchases go into a box; at the end of the month, those receipts are reviewed and the non-keepers are shredded.
This system works for us in a few ways:
1. We don't have to ask each other how much money is available for purchases. We know exactly where to look to see if we have enough money for something. This seemed to have been a self-policed system so far; we're astutely aware of how much money we have, what we have coming in the month, therefore we make better decisions about our money.
2. Our receipts only pile up for a month, cutting down on financial paperwork. At the end of the month, we review the receipts, and toss the non-keepers. The keepers get filed to their appropriate location.
3. We don't have to worry about every single penny. If we blow some cash on eating out, guess what, we now have less for everything else. Again, this forces us to make better decisions so that we're not eating ramen at the end of the month.
For us, it is this simple solution that allows us to successfully reach our financial goals and maximize our dollars. How does your budgeting solution stack up?
How We Budget, Part 2: Monthly Cash Flow
Posted on February 13, 2008 by Him
Yesterday we laid out the flow of our money per month when it comes to accounts. But how do we allocate those funds once we get them?
In order to showcase my expert Powerpoint skills, I've created another diagram to show how our money flows. As usual, clicking it will bring up a bigger version.
This cashflow scheme is based off of the 60% solution of budgeting and saving. Out of our paychecks every month taxes and funds for our retirement accounts (of which we get matching funds for) are deducted. After that, we both get a small amount of money per month for our own personal use. Our fixed monthly expenses are then accounted for; these are generally fixed or within a few dollars of a base amount. We then have a set amount that is deducted from our accounts that goes into savings. Lastly, the remaining funds go towards are non-fixed expenses. Any money that is not spent from our non-fixed expensed then gets funneled back into our savings account for the month.
In creating our budget, we've managed to include many of the mantras floating around the personal finance blogosphere. Our system allows us to to pay ourselves first and last. In order to make everything go smoothly, we put mostly everything on automatic; the fixed expenses and savings are both automatically deducted from our accounts so we never get to really see the money.
In order for this system to work smoothly, the money that moves into and out of our accounts follows a highly choreographed dance. I get paid twice a month; Her gets paid every other week. Therefore, we treat Her's pay as if she gets paid twice a month, with the three paycheck months treated like a "bonus." Taxes and retirement get deducted every pay period, obviously. Savings also gets deducted each pay period. As long as we stick to the amount we've allocated for our non-fixed expenses, we generally have enough cash in our checking account to pay for our credit cards bills as they come in every month.
On Friday, we'll show you how we keep track of our non-fixed expenses. It's the easiest part of our budget, allows us to be flexible, and most importantly it allows us to have some freedom when making purchases.
How We Budget, Part 1: Account Flow
Posted on February 12, 2008 by Him
This month the Money Blog Network is hosting a group writing project with the theme of budgets. We've had a few posts in waiting to go on this very topic for a while now, so we thought this was the perfect time to unleash them. We hope that our budgeting systems makes sense and others can learn a little from it.
We think we've finally straightened out our budgeting situation for 2008. We've posted before on how our budgeting wasn't adequate and how we've tried to change it. Well, those changes didn't work, so we've worked on another budgeting system, one that's been working for us for a little while now.
The first step of creating our budget was to figure out where all of our dollars go. In the last few years, our money situation has started to get a little complicated. In order to maximize our dollars, we've setup an elaborate cash/account flow scheme. We do this in order to maximize rewards, keep our individual credit scores relatively high, and to account for every dollar that comes into our hands. Check out our cash flow in the diagram below. You can click it to see a larger version.
Whoa, looks complicated, no? Well, it is. It took us a while to figure out how to do this, but after a few years we think we've finally gotten it down. This is admittedly a little more simplified in that I didn't put our fun money savings accounts on the graphic.
I've thought about summarizing the graphic, but it seems pretty self-explanatory to me. If you have any questions about the way we do thing, please ask away in the comments.
Tomorrow's post will more simply detail how we budget our money each month.
Chocolate Chip Cookies Are Hazardous To Your Budget
Posted on January 16, 2008 by Him
It's again cold as hell here in Chicago, so we've decided that baking would be a good way to warm up both our bellies and the house. We better check out our bank account balance if we bake chocolate chip cookies, though.
According to a recent study, the aroma of chocolate chip cookies can prompt women on a tight budget to splurge on a new item of clothing.
From the study:
...an appetitive stimulus not only affects behavior in a specific behavior domain, but also induces a shared state that propels a consumer to choose smaller--sooner options in unrelated domains...(emphasis mine)
Thus, the researchers also surmise that male investors have something to watch for as well: the presence of an attractive woman in the trading room might propel an investor to choose the investment option providing smaller but sooner rewards. I guess with Her around so much I can't help but make stupid, short-term, impulsive purchases.
I guess this is another reason why you shouldn't go grocery shopping on an empty stomach; having an appetite will influence your decisions to put everything in your cart in anticipation of feeding your hunger in the quickest way possible.
If retail stores start pumping chocolate chip cookie smells into their departments and plastering pictures of attractive women all around, our budgets will be doomed!
That's One Less Thing We're Paying For
Posted on January 15, 2008 by Him
Wedding planning + volunteering + extra work duties + social life = Busy
We're having a hard time finding a good 2 hour window where we can watch movies.
Sorry Netflix, but we had to cancel you. Maybe we'll cross paths again.
Ten Financial Considerations For Newlyweds
Posted on January 08, 2008 by Him
Somehow sometime during this long engagement of ours I was signed up to receive the "Groom's News" in my email inbox a few times a week. Along with cheerfully telling my how many days until the upcoming wedding and trying to sell me often unneeded high end trinkets and vacations, it points to articles that may be useful to newlyweds. In today's issue was this gem: Ten Financial Considerations For Newlyweds. Let's discuss, shall we?
1. From the beginning, save 15 - 20% of your income. By combining households, you should reduce your expenses a lot which should allow you to save. You should save to build your cash reserves, in your 401k plans and in a mutual fund.
This is a great tip to start off with. We're currently saving about 10% of our gross income, and after the wedding we're likely to increase that. It will be a balancing act with paying off student loans, though.
2. Rather than simply keeping two checkbooks like before you were married, pool your money into one checkbook and one savings account or money market.
We've spoken about how the joint checking account is working for us. We also have an allowance system to give us a little more freedom in making "guilt-free" purchases.
3. Change all of the beneficiaries on life insurance plans, retirement and other plans at work, and IRAs to your new spouse.
A nice reminder. We don't have life insurance, but we do have retirement accounts and bank accounts we'll have to check.
4. Decide how debts accumulated by each individual prior to the marriage (i.e. student loans) will be handled.
Since we've been living together and have had our finances combined for a while now, we've been living the "everything is ours" way of things - even debt - for a while now.
5. Work together on budgeting and tracking expenditures.
We've made efforts to budget in the past - this year we've implemented a new system that closely resembles the 60% solution. We'll detail that in a later post.
6. Discuss your approaches to handling money -- is one person a spender and one a saver? Create some ground rules on handling any differences.
Haha, it's more like "He's a spender, she's a spender." I mean, uh, we love to save money.
7. If both incomes are needed to pay expenses, be sure to have adequate life insurance.
We're definitely going to have to look at adequate life insurance after we get hitched.
8. Be sure to let each other know where important documents are kept.
More importantly, we need to get a safety deposit box to keep all that stuff. That's been on our to-do list for the past 2 years.
9. Consolidate your credit cards to avoid having double the number of credit cards needed.
Not sure if I agree with this one. We believe that we both should have individual credit. We've even opened some duplicate credit cards in order to take advantage of rewards.
10. Make a list of upcoming purchases together and prioritize them. You should decide jointly how to spend your money now.
Of course, communication is key. Her probably wouldn't like it if I just came home with a 52" plasma screen TV, and I don't quite know how I'd react if she brought home a couple pairs of Manolo Blahniks.
This list actually wasn't that bad. It will serve as a good reminder of things to-do after we're married.
Budgeting, Or How We Managed Not To Kill Each Other
Posted on April 02, 2007 by Him
So we did it. We sat down this weekend and with the help of Microsoft Money 2005 we created a budget.
And we're alive. Both of us. With all of our fingers and toes.
We've been tracking our expenses for the past three months and started out from there. From seeing what we were spending our money on in the prior months, we were able to have a starting point for what exactly we're budgeting for. We were also able to see right away the categories that money seems to leak into, such as dining out (you'd think that I just devour my pay stubs when I receive them - maybe LAMG's $20/day plan may work...)
Honestly, making the budget it was pretty easy because mostly everything was accounted for. Regularly occurring expenses such as rent, utilities, phone, internet, etc. have always been paid first. Then we listed our regularly withdrawn savings into our Roth IRAs and for the wedding. Groceries have also been pretty consistent from month to month. All of these numbers are pretty static for the time being, with the utilities categories differing by at most 10% during any given month.
Categories that weren't static regular expenses were now assigned a static number for the budget for each month. I'm looking at you, dining out. Entertainment expenses were also capped off. That sucks, but what sucks even more is eating the contents of my wallet. Her is an excellent cook, so we'll make do with the grocery budget that we've had.
The most difficult part of the budget was all of the other expenses that may not necessarily occur each month. We seldom drive, thus automobile maintenance expenses generally only occur every few months. Those expenses could also range in cost by hundreds of dollars. We ended up allocating a reasonable amount of money each month whether or not it is used or not. Other categories done this way are pet expenses and gifts.
We've also setup guidelines for good and bad consequences of budgeting snafus. The bad consequence of blowing the budget on any given category is the deduction of funds from one of our funner categories for that month. The good consequence of going under the budget is to transfer any leftover money into savings.
Today is the first day of our budget. I hope that I don't eat it.
Cheese Graters and the Force
Posted on March 29, 2007 by Him
Yesterday's post by Her garnered some good discussion, and there are a few details that I'd also like to address.
This whole issue is not about a cheese grater or a vase, or any ONE particular item. Admittedly, I'm not that much of a cheese fan (lactose intolerance does that), but the grater was a really cool purchase for its ability to shred parmesan with ease.
From her post:
Stuff like a vase, a kitchen grater, etc. (emphasis mine)
It is the et cetera that I was beginning to worry about. Magically, more and more household items were beginning to appear. Some napkin rings here. Some placemats there. Associated charges from Bloomingdale's and Williams Sonoma appearing on the joint account. Since they were relatively small purchases, it didn't really have a significant effect on our overall finances. Yes, they were small purchases that we'll both end up using, but ultimately I feel like they were Her purchases.
I'm guessing it wasn't so much WHAT was purchased, but that you were the one that got to choose the exact item, buy it, and spend the money.
That is in stark contrast to the purchases that I like to make on the joint account. I feel like I have to ask for every purchase, not because Her is in control of the account, but because I want to make sure that it is a purchase we're both going to be on the same page about. 99% of the time Her just tells me to go ahead and buy it.
The real issue here is that with the increase of our available cash flow, the Force method of budgeting is failing us (but we already knew that). Many have commented along the lines of "well, if it is in your household budget, then it shouldn't be a problem."
The problem is that we don't have a budget for household items. Just the Force.
If we have, say $500 left over at the end of the month, what's to stop Her from buying $500 of household items? Or me from buying a Mac Mini and say that's what the Dark Side of the Force wanted me to do? (okay okay, I'll stop with the incredibly dorky Star Wars references)
When we discussed this, we agreed that an arbitrary amount of leftover money could lead to a slippery slope of buying a lot of et cetera for both of us. By actually having a budget for household items, Her can have more freedom to buy whatever household items she wants as long as it fits in the budget.
I'll just have to make sure there's an electronics budget, too.
Oh Nos! Not The B-Word!
Posted on March 21, 2007 by Him
Over a year ago, figuring out where our money went was an easy task. Since we weren't making as much and we had considerably more debt, we budgeted using the Force.
The Force? Wha?
Budgeting using The Force is more organic in that saving is taken out up front (usually automatically), most bill payments are made automatically, there’s a decent cushion in the checking account, and the rest is spent or not based on what comes down the pike
Budgeting using The Force was all fine and dandy when most of our money was allocated towards debt repayment. There are a few events that have recently happened that made us rethink about the way that we budget.
In the past year, we have boosted our incomes by 33%. We have lowered our debt by about $14,000 (!!), lowering the number of credit cards we pay per month to just one. These events combined led to a an increase in cash flow, something that happened a lot sooner than we thought it would.
With the increase in cash flow, we also managed to get a two small and one large unexpected windfall in the last two months. The smaller windfalls were the result of tax refunds (it seems as that my withholding changes didn't properly account for my year end bonus). The largest of the windfalls was a result of a generous bonus that Her received. This is also one of the two months of the year that Her receives three paychecks instead of two.
Since we know we have a lot of this cash in the bank, we've tended towards laziness and a false sense of security. We both sat down and agreed that our spending was getting a little out of control, and came to the conclusion that The Force wasn't working for us.
So this past weekend I sat down with Microsoft Money 2005 (obtained for free two years ago when I bought TaxCut), used maybe a half a dozen times since we obtained it. I'm still learning it, and hope that it can be the budgeting tool that works for us.
Wedding Vendor to Us: "Cool Kids Don't Stick to Budgets!"
Posted on March 05, 2007 by Her
This week a wedding vendor told us to be like the cool kids and forget about a wedding budget. Here's how it went down (approximately).
Her: Dear Vendor, how much do you charge?
Vendor: MILLIONS of dollars, plus your KIDNEYS!!!
Her: Oh dear! We can't afford that. One of your competitors has offered to charge us just one tonsil for the same services. Can you match their price, which fits in our budget?
Vendor: NO! And you should forget about your budget if you care about your guests. You are a BAD BRIDE if you don't spend MILLIONS of dollars, plus your KIDNEYS! Anyway, I've never met a bride that came in on budget, so let me just tear that budget up for you and get started on your kidney removal...
Her: AGGGHHHH!!!!
I am tempted to send the vendor a link to this educational film, Your Thrift Habits. Enjoy!
Budget Vacation Tips
Posted on June 25, 2006 by Her
Would you like to take your family of 4 to Paris on $991? How about a honeymoon in Paris for $600? I discovered this very practical vacation bargain article tonight while looking for ways to trim costs on our honeymoon. It's a Christian website, but there's no proselytizing in this article. One of their suggestions includes doing a Home Swap (where you and another family swap homes for your vacation), which I've always been interested in doing. I stayed in a furnished apartment when I studied abroad in France, and I've always thought that home feeling would be nice to have on all trips abroad. This article has lots of creative ways to save money on your next vacation.
Wedding Budget Panic: We've lost $10,000
Posted on April 27, 2006 by Her
EDIT:
We know you'd love to just jump right in and leave a scathing comment, but please read our responses to this post as well. Thanks.
Read His response.
Read Her clarification and response.
--
This week our wedding budget suffered a huge blow. My parents reduced the amount they are offering to pay for our wedding from $10,000 to....zero. To be fair, my parents never actually promised us the $10,000. When we got engaged, I told my mom that I would like her to tell us how much they would be willing to contribute by April 15. Between then and now she has repeatedly said she would like to give us $10,000 but that she and my father were having trouble agreeing on an amount. April 15 came and went with no mention of the money. So a few days later I called my mom and reminded her that we will need to know exactly how much they can give us and when, so we can accurately plan our wedding budget. She seemed to have forgotten all about the April 15 deadline and sounded a little put off by the request. Still, she promised to give me an answer soon.
On Sunday night, she called. She sounded more chipper than usual and made some small talk before announcing that she and my father had decided on their wedding contribution. Then things started to take a turn downhill. She began by stating some facts:
They are 70 and 72 years old. They are still working, and cannot stop working because they do not have much money saved for retirement (I do not know how much but it isn't more than $50,000). Their health is failing and they are afraid they will be forced from their jobs. They have borrowed the full amount available from their home equity loan (not for any sort of emergency, but for Christmas gifts and the like) and they will have to make monthly payments of $1500 for two years in order to pay off that debt. They have no money set aside for our wedding. And they cannot give us any money for the wedding.
Part of me feels abandoned. They have made bad financial decisions their entire lives, and did not plan for their retirement or our wedding. I feel like if they cared about me, they would have saved some money for our wedding. My mom even had the nerve to suggest we should elope. How could she so easily say she doesn't care if she's at our wedding?
Part of me feels angry. How can they be surprised that I would expect them to help pay for our wedding? We've only been out of college for two years and are already burdened with $1000 a month payments for the student loans my parents forced me to take out (because they saved nothing for college, either). I'm angry that my mom kept hinting at a large gift, than cheerily told me we'd be getting nothing.
Part of me feels relieved. I am aware of their financial situation and know that they really cannot afford to help us. This is probably the first financially responsible decision they have ever made. I foresee that I will be expected to care for them when they run out of money, so this thrift will help delay their dependence on me.
Most of all, I feel panicked. The typical wedding costs around $25,000 and I don't see how we can do it for much less, especially in Chicago. Of course there are ways to cut costs, but it takes a lot of cutting to halve the budget. We have $4,000 saved up for down payments and a quarter of that will go to reserve the church. That doesn't leave much for reserving the reception hall and everything else. We both agree we do not want to take on any more debt to pay for the wedding, and estimate we can save up around $15,000 ourselves if we try very very hard.
On the phone with my mom, I couldn't help but cry. I didn't want to say anything I would regret so I told her I had to go. Then she heard me crying and sounded shocked. "You expected us to pay for your wedding?" she exclaimed. I told her again that I needed to go and I hung up. I have not called her back yet. I don't know what to say to her. I'm just so hurt.
Any suggestions from our readers would be appreciated.
Budget Inspiration: Guilt-Free Jaunt Around Europe
Posted on April 24, 2006 by Her
This week one of my co-workers made a big announcement: She's quitting her job so she and her boyfriend can move to Europe, where he has been offered a position. Before he begins work, though, they're going to take a month to jaunt around Europe. They make around the same income as we do, and they are paying off roughly the same amount of student loan debt. So how can they afford this extravagance?
It took me a few days to piece together the answer, but I'm pretty sure I know how now: They saved their money for a very long time.
Clue #1: When He and I first moved in together, we were planning to start using a budget. I mentioned it to this co-worker and she said that she and her boyfriend stick to a very strict budget, live well below their means, and never use credit cards for anything. She also mentioned a special fund they were saving for something big.
Clue #2: As part of their move, they are getting rid of almost everything they own. She invited me to come "shopping" at her house this weekend, and I picked out a large toaster oven and a bedroom set. I tried to offer her money for them, but she wouldn't take it (even though these items were really nice). She said they don't need any money.
To me, that is amazing! They are about to take a month-long vacation followed by a period where they will live on one income, and they are so well prepared that they're not worried at all. I am impressed and inspired. To be able to do something guilt-free that you have dreamed of for years, now that's a reason to budget!
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