Journal jawtheshark's Journal: Howto: Make a budget 20
This person is my dad, and you might not respect him... I do...
How do you get out of financial trouble? It's very simple: make a budget once a year. For this you need two things: a current account A and a current account B. The current account A is called "current account", but the current account B is called "expenses account". Your income comes in on current account A, as you probably have been used to. However, each month, you have a standing order to current account B. Why the fuck would you want to do that?
Let me explain:
At the beginning of the year you make up a budget. Start a spreadsheet, and make a matrix "expenses/months". So for example, you have 1x a year in July, your auto insurance for 600€. Well, you fill into that row 0€ for each month, and 600€ for July. Same thing for rent: every month 500€. Same thing for you cellphone: every month 10€. Same thing for your electricty bill: every two months 80€ Always round up... It's better to buget too much than not enough.
You get the picture... Budget every fixed cost you know.... every single one. Sum these over the year, and divide by 12. This is the amount that goes on account B *every month*. From account B, you pay all your costs. You never touch it, except for that! What is left on account A, is what you can use. You will notice very quickly if you spent too much, because account A will go down fast. Stop spending. Account B, will stay pretty constant.
Now, I know what you think: I can do this with one account. Sure, you can, but you know: separating it makes the thing more visible. We always make too optimistic estimates. So, you'll think: that 1000€, I can spend, because you forgot that your 1500€ life insurance is due next month.
You do as you wish, but this system has proven very effective to me. You can even budget future expenses. Last year, I budgetted in a 2000€ computer purchase. This didn't happen of course, it was only a 799€ one. The rest went in my savings account.
It also gives you an idea how much you really spent. When I showed this to my wife she was baffled how much a car really costs per year. This can help you cutting costs!
Finally, you do this once a year. It's not much work, and you can base most estimates on the bills of last year. Do not re-evaluate your budget because you got a raise: you managed to live fine without the raise. Everything you get now extra goes on a savings account. The exception is when you lose your job, then redo the budget and scrap what you can miss.
I hope I helped at least some of you, and if you want I'll send you my spreadsheet as a template for doing this. It's not hard to setup yourself, but I've been doing spreadsheets for over 15 years
Wait... what? (Score:2)
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No.
But you knew that...
My dad does ever better: he puts money on his credit card. They give better interest than some banks. Think about it...
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Your cell phone bill is so nice. Costs 5x that much in America.
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Technically his credit card is an account (all credit cards are). He knows that and looked for a bank that would take money on it. The ING does, so his credit card is there. I still find it odd, but it seems to work.
As for my credit card bill. All amounts in the journal are -of course- fictional. I do buget 10€ per month for my cellphone tough. The reality is very different: it's way less. The reason for this is very simple: I call next to never. I call my wife to say I'm later, or such tri
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The best offers here are prepaid plans and minutes on those cost at least 20 cents each, and expire after 90 days.
An el-cheapo cell phone is at least $30. Maybe a few companies have $20, but I doubt it!
My family pays around $100 a month, for 4 lines that is $25 per line, but we get 1000 minutes, so it isn't too bad.
Then again, cell phones are our primary phones, so all together, split across 3 house holds, we are getting phone service for $100 a
You do have a point (Score:1)
As an Ada 95 programmer for the past 8 years, I can concur, that having the spec and body of a package as seperate files is the bomb.
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Isn't it ironic I learnt this from a bean-counter. The arch-nemesis of the IT person.... Apart from marketing, that is ;-)
I might add into this, that I used this as an example on how to use spreadsheets while I was a teacher. Strangely enough my pupils did pay attention on that course.
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I know your wife might say "It's useless"... mine does too, but she has no math background and you're providing for her next
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Why? I get paid once a month. My bills come dispersed over the month. No problem there.
Besides, it still works. You just get your income every two weeks. Just transfer the budgetted amount (on 24 half-months then) every two weeks. The whole point of this system is that it levels out the expenses over time.
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Well, yes, of course it seems forever if you use this system. It shows exactly what money you can spend extra, and once you do it this way, you'll see that it isn't all that much per week (or month, or whatever period you chose)
Besides, my bills are due within two weeks too. I don't wait till the end of the month to pay them. I pay them immediately, just from an account designed to have "the money I need for my expenses". Pehaps that wasn't clear.
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Funny, I also didn't know this was different in the US. People in Europe need to mind their budgets a lot more, because if the spend it all at once, it takes a VERY long time before you can stick out your face into the street again
I sort of do this (Score:2)
Paycheck goes into savings; bills and groceries come out of checking; entertainment, eating out, travel, and toys (along with the cell phone bill) go on the credit card.
I chuck the expected next two weeks expenses into checking. The credit card either gets paid in full every month or at least a very high percentage of the outstanding balance (typically 1/4 to 1/2).
I can see the merit of calculating everything o
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That's good. If you get along with your system, it's all fine. I just proposed this system because it works well and is pretty much foolproof. ;-)
One thing that is odd is your salary on your savings account. Don't you get an interest penalty when you remove money from your savings account? I do, or well, I just don't get the "fidelity interest" when I remove from my savings account. It doesn't matter all that much, since there really isn't much interest on a savings account anyway ;-)
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That's good. If you get along with your system, it's all fine. I just proposed this system because it works well and is pretty much foolproof
Well I keep the bills paid, the credit card balance down, and I've built up a fairly good reserve. However there is always room for improvement, for example other than the monthly bills I really can't say how much of my monthly spending is essentials vs. other stuff.
The other thing is I can see the merit of keeping my reserve fund (which is what my savings is intended to be), current account, and expense accounts separate.
Not sure where the credit card fits in there but it has come in dang handy when I wan
gnucash (Score:2)
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True, I could use Gnucash now. I've just always done it with a spreadsheet, so well, yeah.... You probably used the better tool for the job. I don't know that much about accounting, but I can always ask my dad. Which helps ;-)
I do not need to do this either: both of our incomes cover our expenses quite well. Our expenses are stable too (with unstable expenses, budgetting gets an order of a magnitude harder) I think we could live on only one income, provided we live a bit more carefully. Thing is: I