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Budgeting


pwny

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Even though I’m an accountant, my Achilles heel in my personal life is proper budgeting and making sure my money goes to good use, rather than a black hole of “stuff”. It’s so easy to blow $400-500 eating out without realizing it, or to let a bunch of small expenses just keep piling up. That $4 coffee every day (I don’t drink coffee) is $120 a month. Plus, I’m a consumer. If there’s something I want, I rarely wait for it. I buy it then and there, even if it puts a strain on my earnings.

Over the last month and a half, I’ve started to get a better handle on things. I’m currently trying out YNAB for doing all my budgeting, and things seem to be going a bit better. I still have habits to break, but they’re getting there.

 

So let’s discuss budgeting. How do you budget? Tips? Things that trip you up?

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50 minutes ago, iPwn said:

It’s so easy to blow $400-500 eating out without realizing it...

You and me both, brother... that's my main issue, going out to eat. 

I'll be following this intently. I definitely can use some 3rd party insight.

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1 hour ago, iPwn said:

I’m currently trying out YNAB for doing all my budgeting, and things seem to be going a bit better.

I never heard of this until now - students get it free for a year, so guess my wife is going to sign up! :D

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45 minutes ago, EliteTexan80 said:
1 hour ago, iPwn said:

I’m currently trying out YNAB for doing all my budgeting, and things seem to be going a bit better.

I never heard of this until now - students get it free for a year, so guess my wife is going to sign up! :D

A year on top of your first month free, IIRC. I ended up talking to a lady on their support about some stuff and she gave me an extra month free. I’m taking a couple classes this semester, so I think i’ll be getting a year on top of these two months once I put that in.

I’m getting the hang of it. Still working to flesh out my budgeting categories and the *right* amounts to put in certain areas.

Really the key to it is giving every dollar in your bank account a purpose, and trying to push the age of the money out as far as possible. So instead of a person living check to check thinking “I will make $x this month, so I can pay my rent with that and this and that” and so forth, you’re looking at what you have *currently* and seeing how far you can push it out. So rather than “hey, I have an extra $25, buying that burger isn’t a problem” as you’re pondering what to have for lunch, it’s “I have an extra $25, that can go towards my Netflix and Hulu bill for next month” when you sit down and map out what your check is going to do for you. Then next month, you have $40 extra you can budget forward, and then $60, then $80 and so forth. But if you do buy the burger, because we all need to live a little, you can see directly where it impacts your budget as you’ll have to rebudget that money from somewhere else. You’ll get a message that you overspent your “dining out category” if it goes over what you originally budgeted and it’ll ask you where you want to take the money from to cover it. You got an extra burger, but now you know that your fund for a new computer went down $25.

 

Mint works well too, but that’s largely to see where money has already gone. Less about straight forward budgeting, but it helps to see where your money goes and where the areas you should be budgeting for or need to work to be better on are.

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1 hour ago, iPwn said:

How do you budget? Tips? Things that trip you up?

I don't do it nearly as hardcore as I used to. When I first started, I was doing what you are doing now with YNAB - tracking every penny. Now, I have a good idea of what my expenses are and why/how much they might deviate from normal. So since I'm hitting all of my savings goals anyway, I don't need to sit down and enter my grocery store trips like I used to. 

I didn't use an app, I got receipts and had a spreadsheet that included absolutely everything. It was broken out in categories (rent, food, gas, insurance, car, electric/heating/water) and managed to get it down to a pretty tiny fraction of "other". That's a big thing. It's easy to say "oh I bought clothes I only do that a few times a year, other", but you should categorize out absolutely everything you can. "Other" should be stuff like your car registration that comes up once a year.

My 2 tips for a budget would be:

1. When you start, don't be in a rush to stop yourself from getting the burger. Get to know your own spending habits and come up with what your current budget it. Then you can decide if you want to change it. Otherwise, it's easy for people to associate tracking their expenses with having no fun, and just giving up once they start to feel the impact of their changes.

2. Let your life be automatic as much as possible. Max out your 401k, IRA, etc. automatically from every check to save more instead of letting it burn a hole in your wallet, and if you're already doing that and it's not enough, direct deposit to 2 bank accounts. It's like not buying the chips at the grocery store - you can't eat them if they aren't there.

 

At this point, all I track is my savings rate. At the end of each quarter, I take (Total saved)/(Total income-taxes), and include stuff like the 401k in the savings.

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20 minutes ago, ramssuperbowl99 said:

1. When you start, don't be in a rush to stop yourself from getting the burger. Get to know your own spending habits and come up with what your current budget it. Then you can decide if you want to change it. Otherwise, it's easy for people to associate tracking their expenses with having no fun, and just giving up once they start to feel the impact of their changes.

This one is definitely important. I used the burger as an example because in my situation, there’s times I have gone out for lunch every work day for a month, and then bought pizza on  couple weekends, maybe went out to eat with the girlfriend once or twice and if I look back, I’ve dropped $700 on dining out/ordering in for the month.

By putting the budget in place - right now, my budgeting pace is $200 for dining out - it allows me to actually be cognizant of what I’m doing in a meaningful way. I can still eat out in a reasonable amount with this budget. I haven’t tightened my belt to where it would be uncomfortable, but I now am keeping better track of it. And I’m not punishing myself for going over. But if I hit $300, I can actively see that $50 had to come out of my new computer savings, and $25 came out of my monthly alcohol fund, and $25 came out of my savings.

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Excel spreadsheets are your friend.  A few years ago I started one tracking all things related to money in a spreadsheet. Income, expenses, investments, projects, vacations, etc.  I have budgets that I don’t follow super strictly, but over the course of a year it averages out to what I expect.  I have projections for future income and return on investments that include inflation, and random but reasonable fluctuations in the market.  

Why do I do this?  First of all I’m naturally an anxious person, and financial stability gives me ease of mind.  Secondly, I subscribe to the FIRE (financial independent retire early) mindset.  I have a goal of quitting the rat race at around age 40.  Then I will have the freedom to either do nothing at all, work part time, or make money from side hustles.  

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I try to “pay myself” first, directly from my paycheck, and go mostly paycheck to paycheck with the rest of it. If I don’t take it out before I see it, I won’t save it at the same rate.

I tend to save with just my HSA, 401k, IRA, and ESPP.  I keep another 10-12k in a savings account for whatever, liquid funds, and usually less than a few hundred in my checking.  The bulk of my savings is through the investment stuff, not my bank account.

I don’t mind working and plan to do so until I’m probably 70 at a minimum.  I think it good to wake up with stuff to do and I’ll want the income. I’m still trying to be ABLE to retire at a reasonable age, but I probably won’t do so.

I spend more than some would advise in cars and “wants” and vacations, but I only get one shot at life, I’m gonna live it and enjoy it.  I feel like as long as I continue to save, I subscribe to the “smoke em if ya got” theory with the rest of it. I have kids too, so I want to make sure I show them a little bit of the world and experience things.

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Eating out for us is usually 1-2 x per week.

Sunday through Friday we usually eat at home, maybe order a pizza once a month or the like (nothing major), and then most Saturdays we eat out 1-2 times, usually trying to find a new restaurant or one we really like.

I realize spending $100-200 per week eating out isn’t on a any financial guru’s plan, but what’s the point of making money if you can’t enjoy some of it?

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I took a year's worth of spending habits tracked by category, inserted savings goals, and cut down those spending habits across the board so each pay period I allocate funds into different accounts. Small leftover amount is "fun money". I basically use spreadsheets for everything. I don't want to input any personal data into third party programs (especially cloud based), although I'm sure it'd be a lot simpler.

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7 hours ago, iPwn said:

So let’s discuss budgeting. How do you budget? Tips? Things that trip you up?

Honestly, I'm nothing fancy with my money.  You start off with your net pay.  For all intents and purposes, it's your monopoly money that you can actually play with.  Most people who need a budget likely have 401k, insurance, etc. through the company you work for.  For those who are salaried based, it's easier to project but for those who have a bit more variables, it's probably better off to underestimate your income than to overestimate.  Once you have that, you deduct all of your "fixed" expenses like rent, utilities, gas, groceries, etc.  Once you exclude that, you've got your "spending" money.  Let's say you're making $4000 a month, and between all of your fixed expenses you've got $1500 left.  At that point, you'll take what you want to save and generally I'll use a % of what I have leftover, and put in the bank or whatever to save money.  I also have a "splurge" fund where I'll withdraw a certain amount of money each month, and set it aside for something new.  After that, you'll have your "free" money.

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I'm so terrible with budgeting, it's been a major issue for my girlfriend and I.  I recently got a new job that pays me pretty much double what I was making before and I'm still having issues month to month.  Part of it is that we're so bad at splitting utilities, dog expenses, etc that I've been pretty much paying all of those for the past many months.  We just opened a joint checking account that will only be used for those things so that should help.  It also doesn't help that I'm paying ~$900/mo in school loans.  

I've tried Mint in the past but it just doesn't seem to help me, maybe I'll give YNAB a look.  

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18 minutes ago, flyers0909 said:

I'm so terrible with budgeting, it's been a major issue for my girlfriend and I.  I recently got a new job that pays me pretty much double what I was making before and I'm still having issues month to month.  Part of it is that we're so bad at splitting utilities, dog expenses, etc that I've been pretty much paying all of those for the past many months.  We just opened a joint checking account that will only be used for those things so that should help.  It also doesn't help that I'm paying ~$900/mo in school loans.  

I've tried Mint in the past but it just doesn't seem to help me, maybe I'll give YNAB a look.  

You gonna marry this lady?

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