Tuesday, November 19, 2013

Budgeting Update: Finally Following the Rules

I don't buy a lot of books, but I have never regretted the $6 I spent on The Debt-Free Spending Plan. Every time I start to feel stressed out about my plans, I read it again. And realize that even though I think I'm not guilty of the "shut down" that Nagler often refers to in the book, I did shut down on some parts. So almost every time I read it, there is still more for me to learn and implement. And here's the Full Disclosure about that link being associated with my Amazon affiliate account, which may generate a small income for me...that may be enough to buy another $6 book in two or three years!

While she stresses the importance of ensuring that Savings, Fun and Entertainment are part of the budget, I realized that I only had two of the three. I now remember that I combined Fun and Entertainment into one.

As I continue to pay down the balance on my remaining credit card, I've been going back and forth (in my typical can't make a decision fashion) on how or if to re-jigger the budget as my minimum balance decreases. At the same time, my daughters are getting older and Sylvia is old enough to get a driver's license, but I'm in no way financially prepared for that!

I do feel pretty strongly that since driving is a privilege, not a right, she should be contributing towards these costs, so she's been pounding the pavement looking for a job. At the same time, I don't expect her to cover all the costs.

So, after weeks and about a half dozen ideas on what to do, I re-read the book and that helped me make some decisions.

Because I've been stressing so much about the car situation, I've created a Car Repair line item in addition to the Car line item, which is mainly budgeted to cover gas and parking, but I had also been using it for maintenance. Nagler does state in her book that if your car is not under warranty, then she suggests $80 monthly for Car Repair. Originally, I had thought about adding that when my credit card minimum reaches a certain threshold, but using some Suze Orman advice to address what fears me most, I decided that I would feel better if I did it now. It might not help me next week, when I suspect my car will next be due for maintenance, but getting into the habit now is better than waiting even one more week.

I had also toyed with the idea of adding more categories, because I think I generalize too much and then justify some expenditures, and then regret them, or at least question myself about them. But again, instead of waiting until the minimums go down, I was able to split some categories in half so that these "sub-categories" (so to speak) would get some attention sooner rather than later.

For instance, I was really excited about starting a Theatre Tickets fund (i.e., our kind of Entertainment). I had originally thought that I could use the Fun category for that, but we kept finding other fun activities to do. At the rate I'm going ($5 a week), I still won't have enough in there to cover the cost of Newsies tickets when it comes to town, but I will be that much closer, and we can still have some non-theatre Fun in the meantime.

Vacation isn't as important to us. I am perfectly happy to take some staycations for R&R, and the girls travel more often than I do with my parents. But I do think fondly of places I'd like to go again; San Francisco, New Orleans, New York, to name a few, and places I still haven't been to that I would like to visit one day (Hawaii, Australia). But since it's not as important to me as the car and theatre, then I will wait until my credit card minimum meets a certain threshold before I start putting $5/week into that line item.

I have not had a Clothing line item. I figured I could take from other places for that, but again, that's not really planning. Clothes aren't really important to any of us, but are necessary, so that line item is only getting $4 a week and we'll continue to buy on an as-needed basis as we do now. That $4 is coming from the Presents line item, which can now be decreased a bit since I've completed 80% of my Xmas shopping.

I've previously bought miscellaneous household items using funds from either Groceries or Miscellaneous (things in the non-food grocery aisles). I decided there are enough of these type of needs that Household deserves its own line item, and will grow it at $5 a week (which I got from the Miscellaneous category).

My duties as a non-profit Board member sometimes include expenditures that I can't budget so when my credit card minimum balance goes down, I will start a Donations category at $5/week.

As my credit card balance decreases, I will also add New Car and Short Term Savings line items to my budget. I am hoping that the Short Term Savings will keep me from dipping into my long-term savings account as often. As Nagler says, it's important to have these multiple accounts to pull from when the unexpected happens, and so that's what I'm trying to build now that I kinda sorta have my daily budget under control.

*Note: Nagler states that we should open separate Savings accounts for many of these line items (Car Repair, Short Term Savings, etc.), but I find that it's just as easy to track in the Magic Little Notebook - and saves me from worrying about transferring if/when I want to access them. Of course, they might be too easy to access, but I am hoping that having that many more line items means that I will be more interested in building those than depleting them. Then again, I may change my mind again after I read the book another 2 or 3 times!

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