Budget

I recently received a reader request from Allison (shout out to Allison --- Thanks for reading!). She suggested that I share my budget as she felt readers might be interested. So here it goes…in addition to sharing my budget numbers I thought I’d take it a step further and share my philosophy on budgets which is that is has to be stretchy like a rubber band or it will never work.

My monthly budget is $1800, excluding savings and automatic withdraws from my paycheck*. This increases several months a year when I have irregular expenses like car maintenance, vacation, taxes etc. To account for these irregular expenses I save monthly so in reality I still stay with in my budget. My budget line items are pretty simple – I like to keep it easy as can be. Big Expenses include Rent ($620), Charity ($500), Dinning/Entertainment ($230), Utilities ($150), Gas ($100), Groceries/Sundries ($100), Misc-clothing, memberships, gifts etc ($100). Any left over from the month I roll over to my irregular expenses savings in addition to my normal savings.

* My health insurance, flexible spending account, renters insurance, retirement contributions etc is automatically deducted from my paycheck

While my monthly budget is $1800, I don’t hold strictly to my line item budgets. Each month is slightly different for me – one month I might eat out more often but buy less Groceries, another months I might splurge a little big more on gifts (especially around June when I have three birthdays in a row) but I’m so busy at Birthday parties that I don’t drive as much. I don’t beat myself up over this if I go over my targeted line item budget, I simply adjust for it from another category. If you don’t adjust for it then its like you’re on a really strict diet and I don’t know about you but I can never seem to follow those because eventually you just can’t take it anymore and have to splurge so I allow myself that splurging. It also allows you to do last minutes items that aren’t planned for – if my friends are going out and I don’t have to say no just because I’ve reached the $230 limit, I can just “borrow” a little for another category or if I absolutely need some toilet paper but I’ve used up my $100 groceries/sundries budget I can still get the items I need and “borrow” it from gas etc. The only two that I don’t borrow from are Rent because I prefer not to get evicted and I don’t borrow from Charity because I make that a priority. But all the rest are adjustable.

To help ensure that I’m staying on track with my budget, at least once a week I check on my total expenses for the month (excluding the irregular expenses) and calculate how much remaining money I have – this helps me to adjust my spending and help me remember my goal with my budget. I also check on each of my line items to make sure I’m in the ballpark and if I notice a trend over several months I adjust accordingly as well.

That’s my take on budgets --- how do you manage your budget and what does your budget look like?

Carnival of Personal Finance #158

The Carnival of Personal Finance #158 Hosted by Mrs. Micahis up and running.

There's a tone of great posts by fellow bloggers, but sure to check them out and while you're there check out my article which is post under Assorted Instruments.

Monday's Money Funny - Tipping

One of the regular features on my blog is "Monday's Money Funny" which are humorous (at least to me) articles/jokes/just about anything that I've discovered over the weekend when I catch up on all my on line reading that spark a need for knowledge. For example the previous Monday Money Funny was about how People that are too Happy to be Rich.

This week's Money Funny is To Tip or Not to Tip from Do the Right Thing advice column on CNN Money.

Below are the highlights. You can check out the full column by clicking here.

Question: I was at standing on a pier recently when my hat blew into the lake. A nice kid, maybe 9 or 10 years old, swam out and got it for me. I thanked him appreciatively and also thanked his mother, who was nearby. A friend says a “thank you” wasn’t enough - that I should have given the boy ten bucks, or maybe treated him and his friends to ice cream cones. What do you think?

When should you tip? I know when I'm out with my mom she is always asking me should I give him a tip, how much? Well I've scored all of Emily Post's Guidelines, Encyclopedias, and just about every resource I know and have found the best all inclusive guidelines for you at Findalink. It covers everything from tipping at restaurant to tipping at a funeral and all things in between so all of your bases are covered.

Personally I try and follow common courtesy but in general I tip when I feel its appropriate and I tend to "over tip". I'm an extremely generous tipping when I receive good service. It just makes sense to appreciate job well done. For example I tip my hair dresser around 30% despite the guide calling for 10-20%, I do this because this the the woman who controls whether I have a good hair day or bad hair day for the next 4 months, so when she does a great job I let her know. Plus when I come back she remembers (although I've been going to Leslie since I was in elementary school so I think she remembers me, but the large tips help her remember to take good care of me). The same is true of a waiter or waitress, I tip large when I've had really good service, not because I think I'm going to get the same server the next time but by tipping large I'm reinforcing the good service that they offered so they will continue this habit. That's just my two cents on tipping.

Stay tuned for next week's Monday's Money Funny. If you run across any Money Funnies please email them to me at future.millionaire.blog@gmail.com and if I use them I will give you credit and link to your blog.

Weekend Round Up -- The Neglected Edition

Ugh -- this past week has been exceptionally rough on the Project from Hell. This week we were trying to top out the building so it meant even more exceptionally long hours (Thursday I was at the job site for a solid 20 hours yuck!) -- I think I'm still sleep walking trying to catch up on sleep. I'm now trying to spend a lazy Sunday on the sofa sleeping and catching up on the PF Bloggers World -- while I was sleep walking my peers on PF Blogger were busy keeping up informed.

A few highlights from this past were include:

Ashley from Wide Open Wallet featured another guest post from Bruce the Tax Guy about how to hire a professional. Very good advice - especially since I've started thinking I might want to hire a professional financial adviser but that discussion is for another post.

Kevin from No Debt Plan discusses Target Date Retirement Funds. This is what the bulk of my retirement is housed in because its really easy to manage.

Master Your Card's Kristy shared how to Get Perfect Credit -- looks like no matter what I'm going to have to wait another 20 years before I can potentially have perfect credit, I guess I'm okay settling for near perfect credit ;)

Penelope from Our Four Pence Worth shared an interesting twist on Monopoly with accounts.

Living Almost Large raised some interesting questions about are Credit Cards really the cause of debt or is it simply the people using them. Personally I use a credit card for every purchase, I think for the last month I've had the same $12 in my wallet. I'd be in real trouble if I could only use cash. Until Mr. Be Mine I'd never met anyone who was a strickly cash person, to me it seems a lot more difficult and more expense - always having to drive to the bank plus you have to keep all of your receipts to keep track of your spending. Are you a cash or credit person?

Weekdend Round Up - Happy Dad's Day Ya'll

Hope everyone's having a wonderful Sunday with their Dad's.

This past week in the PF Bloggers World was most exciting a few highlights to check out are:

This week Ashley from Wide Open Wallet and I exchanged financial data and posted Millionaire in the Making Stories about each other.

Kristy from Master Your Card posted about how young is too young to have a credit card. I have to say I got my first card that I was responsible for when I was 18 however I listed as an authorized user on one of my mom's credit cards since I was 12. About a year ago I had to ask my mom to take me off of as being an authorized user because it was great when I was younger to have a long credit history but the balance my mom carried on that card was hurting my debt to credit limit since she was close to maxed out on the credit card.

No Debt Plan's Kevin shared about do-it-your-self projects. I think I'm like Kevin a lot in that my DIY project end up taking forever and a day longer than planned. About 4 months ago I bought an unfinished side table and you guessed it - it only have one coat on it right now. Maybe Kevin's success story will help motivate me to finish it up.

Living Almost Large posted about Medical Costs in Retirement. I know that's a big concern for a lot of retirees. I guess I'll have to make sure my mortgage is paid off so I can afford medical care in retirement.

Congrats go out to Ginger from Girls Just Wanna Have Funds for being featured on Good Morning America. -- You go girl!

Also out side of the PF Bloggers World Banker Girl posted 6 Secrets for Fast-Tracking your climb up the corporate ladder. Very useful to me since I'm aiming to make it to the next rung this year.

Millionaire in the Making

I’m a huge fan of the Millionaire in the Making stories that CNN Money publishes. Ashley from Wide Open Wallet and I decided to swap financial data and write each other’s Millionaire in the Makings stories. You can view my story written by Ashley at her blog Wide Open Wallet, below is her story.

Millionaires in the Making:

Ashley and her Dear Husband (DH)

Ages: Ashley 31, DH 42
Occupations: SAHM and Telecommunications Installer
Salary: Approximately $91,000 combined
Home and Land Value: $110,000 estimated equity
Retirement: $17,200
Cash on Hand: Approx $20,000
Monthly Expenses: $4,000 - $5,000
Debt: $34,732 outside of mortgage

Ashley started her blog, Wide Open Wallet, because she wanted an outlet to share her financial views since according to Ashley her friends grew tired of listening to her talk about personal finance. So you know this couple has to have their head on straight when it comes to money.

The couple has two young children, a girl and a boy. Ashley’s DH works in telecommunication as a telephone system installer and she stays home with the children. Ashley plans to eventually return to work after their youngest goes back to school but that won’t be for a few more years. However, she had tried a few part time jobs such as elder care but it’s not really worked out for the time and energy involved.

Currently the household earns around $91,000 a year. This is great considering the household expenses are between $4,000 and $5,000 each month. They have minimum debt out side of their mortgage. Their total non-mortgage debt is $34,732, which is comprised mainly of car loans.

The couple bought their current home in 2004 for $184,000. The home is in a great location in Arizona and has appreciated in value since purchasing. Currently the house is appraised at over $250,000 despite the current housing crisis.

Unfortunately, the couple got a late start saving for retirement. Currently DH has $2,700 in an IRA and is contributing $100 a month. Ashley has a retirement plan that’s currently valued at $14,500 and is saving $50 a month towards her retirement.

The couple’s financial goals include providing for their children and one day retiring.

Future Millionaire’s Take

With their current savings and home value Mom and her DH are well on their way to becoming millionaires – it’s just a matter of when. Calculating a modest return of 7% they will become millionaires in 43 years.

But the even bigger question for this couple will be “Is a Million Dollars Enough for Retirement?” This is a big question for Mom and her DH that needs to be investigated. I recommend they review their current spending and determine which expenses they will still have in retirement and any future expenses, including medical, they might have. Then develop an approximate monthly budget for retirement and add at least a 10% safety net. This will give Ashley and her DH a goal amount and can adjust their savings accordingly. Then determine what monthly contribution is needed to reach this goal. One can determine this by using Bankrate’s calculator for saving goal.

While they are starting to work towards their retirement goal Ashley and her DH should tackle some other financial objectives. Priority number one should be building up their emergency fund to have between 8 – 12 months of living expenses. Even at their bare minimum expenses of $4,000 they only have 5 months and that includes liquidating all sources of cash on hand, not just their emergency fund. The other piece of securing their emergency fund is to make sure it’s earning some money, put it in a high yield Money Market or On-line savings account where they still have easy access but are gaining some interest at the same time.

Ashley and her DH should also look into starting to plan for their kid’s college. As young as their children are who knows if Daughter or Son will go to college but by starting to save for them now will save their children from the burden of working full time while in college or having to take out student loans. (I fully support kids being responsible for a portion of their education, it will make them value it more but if possible it’s nice if parents are able to help them out). The best way to start saving for their children’s college expenses is via a state 529 plan. This allows for tax exempt dollars to be saved and grow to be used towards college expenses much like a 401k except you’re not taxed on the money at the time of withdraw if its used for college expenses. If they are not sure if Daughter or Son will attend college they can still save because they can change the beneficiary to another qualifying family member at any time in order to keep the account going and avoid taking non-qualified withdrawals when the original beneficiary doesn't need those funds. And even if all else fails 529 Federal law only imposed a 10% penalty on the earnings from this plan.

Once their Emergency Fund contains between 8-12 months of living expenses and college savings has been started for their children Mom and her DH should look into accelerating their debt pay off and then establish a future car savings account so that any future car purchases can be paid in full and avoid paying interest. After that Ashley and her DH should just focus on enjoying a good financial future.

All in all Ashley and her DH are right on track to be Millionaires in the Making.

Monday Money's Funny -- Too Happy to be Rich

One of the regular features on my blog is "Monday's Money Funny" which are humorous (at least to me) articles/jokes/just about anything that I've discovered over the weekend when I catch up on all my on line reading that spark a need for knowledge. For example the previous Monday Money Funny was a not so Funny Money Funny about being unable to Afford the Mortgage.

This week's Monday Money Funny is from CNN Money. Its an article called What to be Rich? Don't get to Happy.

Below are highlights from the article, click here to read the article in full:

"Diener and his colleagues used data from the World Values Survey, which measures the happiness of respondents on a scale of 1 to 10 (with 10 the happiest). They found that income did indeed increase along with happiness but not at the very top. The 10s earned significantly less than the 8s and the 9s. The latter were also more likely to have gone to college, have engaged in the political process and have saved money."

For those of you too happy to get rich here's a few resources to help you still get rich. (PS Teach me to be that happy!)

Business Week's Advice for How to Get a Raise at Work Ieke's Top Ten Saving Money Tips


Stay tuned for next week's Monday's Money Funny. If you run across any Money Funnies please email them to me at future.millionaire.blog@gmail.com and if I use them I will give you credit and link to your blog.

Weekend Round Up

I had a lovely weekend. We celebrated my mom's Birthday and I baked a storm. I spend all of Saturday in the kitchen but it was well worth it to see my mom so appreciative. So times in life the best presents are the ones that are of your time and energy.

Now for some highlights from this week in the PF Blogger World:

Our Four Pence Worth's Penelope Pince posted Simple Solutions to Staying out of Debt.
Kristy from Master Your Card posted about the Modern "Necessities" that Drain your Cash. (Althought I have to say I love my cable TV)
Girls Just Wanna have Fund's Ginger provide a great link for the Ultimate Graduation Resource List. Good luck to all of your recent Graduates!
Mom @ Wide Open Wallet posted about the Opportunity Cost of Having a Baby. Its very interesting read for any one especially a career woman.
No Debt Plan's Kevin post about Portion Control and your Finances. I'm always worried about portion control for food and finances as a Marathon Runner and as a Future Millionaire.
Living Almost Large posted Food Inflation. No wonder my grocery bill keeps going up.
And Seb from Pinching Copper with is humorously truthful posted posted the death of the SUV with rising gas prices.

Carnival of Personal Finance #155

The Carnival of Personal Finance #155 Hosted by Pinyo @ Moolanomy is up and running.

Check out my article which is post #4 under Money Management.

There's a ton of great articles (a total of 98), I know what I'll be doing this weekend in addition to celebrating my mom's B-day.

While you're reading all of the great articles - the ones I scanned so far seem to be very useful (especially the career ones in my case) don't forget to check out fellow PF Bloggers posts by Our Four Pence and Living Almost Large that were included in the Carnival.

My Annual Review is coming up

My annual performance review is coming up and one of my financial goals for this year is to obtain a promotion.

I'm a little worried that my goal of a promotion might not happen this year, not because of a lack of performance on my part but because my role in the company has changed. The new role which is on a difference career ladder I've only been performing for about 6 weeks now, definitly not enough to prove myself in to obtain a promotion but I definitly deserved in my old role.

I feel like a promotion was coming if I had been able to stay in my old role or go back to preconstruction, especially since on Monday my old boss, who's doing my review, called to make sure I was going to fill out a skills assessment that he was going to email me. I said I'd never heard of it before and he said it was a tool that he liked to use to prove to the brass that someone was ready for a promotion.

I've filled that form out and have all of my other ducks in a row to prove I'm ready for a promotion so we'll see how it all goes - unfortunately I won't find out anything until late August.

So we'll see how it all turns out - wish me luck.