topic Creating a budget in General Credit Topics

Creating a budget

Anonymous — Mon, 10 Dec 2007 04:06:42 GMT

How do I create a budget? Things like daycare fluctuates. Gas usage definitely fluctuates. Why does it seems cell phone bill fluctuates? No overages ever!

I know about Quicken or MS Money, but it tracks expenses and doesn't really say "spend only this on gas/food/etc, right?

Thanks.

Re: Creating a budget

SmartCookie — Mon, 10 Dec 2007 04:15:16 GMT

I don't use an official budget but I do have one in my head and am always trying to cut corners and look ahead to needs and goals. I think it would be a work in progress and you'd have to play with it for a few months and make adjustments. For things that vary like daycare... use the highest amount. When you don't use the entire amount, that money stays in savings either short term or long term depending on your total goals for the year.

Here is a good place to start:

http://cgi.money.cnn.com/tools/instantbudget/instantbudget_101.jsp

To save extra money I have a bazillion tips if you've got kids. Feel free to PM me, I love to swap family tips.

Re: Creating a budget

SmartCookie — Mon, 10 Dec 2007 04:38:48 GMT

This is a little more straightforward. http://www.fool.com/calcs/calculators.htm?source=LN Start at the 'how much am I spending'.

Re: Creating a budget

Anonymous — Mon, 10 Dec 2007 05:01:44 GMT

You can get fancy and track every single transaction in MS Money-

I have items that fluctuate as well The "power bill" is that one that come to mind- it was 125 this month in Aug in was close to 700

It also pulls all transactions for all the CC, bank and investments. It has cool budgeting, cash flow and debt reducer,

I balance the checkbook and reconcile every account (down to about 20 in all) weekly- takes about 20-30 minutes.

We are WAAAAAAAAAAAYYYYYYYYYY over on the Xmas budget and groceries.

It has a free DEMO as well- the demo does not have the online services (the best part)
http://www.microsoft.com/money/freetrial_info.mspx

Re: Creating a budget

tbenz6876 — Mon, 10 Dec 2007 06:31:51 GMT

I use Quicken 2008. It has the same features as MS Money. I am real bad about not balancing the checkbook so it makes it very hard for me to keep a budget.

Re: Creating a budget

Anonymous — Mon, 10 Dec 2007 14:35:52 GMT

When creating a budget that includes items that flucuate, what you should do is take the last four months or so, and calculate the average cost of them

For example Day care ;

August - $200

Sept. - $150

Oct. - $220

Nov. $180

Average cost of day care would be $187.50

Message Edited by Boswd on 12-10-2007 06:35 AM

Re: Creating a budget

Anonymous — Mon, 10 Dec 2007 16:04:27 GMT

I agree with Bowsd, I take a similar approach except I go more by the median than the average. For an odd number of items, the median is the number in the middle, go figure. But for an even number of items such as in Bowsd's example it would be the average of the middle two numbers (200 and 180) which is $190. This is pretty close to the average $187.50. It depends on your situation, sometimes the median number is higher than the average and vice versa but the gap can become wide. For example your median can be 198 while your average is 150 if you take alot of months into account.

The median is easier to eyeball and at least in my case has been a better approximation to what I will typically spend on a bill. For minimum balances on CC or other accounts you might want to or need to pay little by little, I go with the MODE (taking it back to basic arithmetic). That's the number that occurs most often in a set which typically tends to be $21 for some of my cards. But I guess if you had this case, it wouldn't be much of a fluctuating bill.

Of course going with the highest you've ever paid is always the safest amount to budget for. I find the best approach if you aren't going with the highest amount is to be aware of your bills that can be compressed if necessary. These can be food, gas, and entertainment, etc. If your bill comes for energy and you were expecting about $200 and its $500. Quickly adjust your budget and come up with ways to compress these. To compress the food bill, make a light lunch at night to take with you to work the next day so you don't have to eat out. To compress the gas bill, put the car keys up for the night when you get home after work. Sit down and write up a list of everything you need to do before driving away from the house. Nothing inflates a gas bill more than going to Walmart then back home, then going to the mall next to Walmart, then back home, then going to the food place next to the mall and heading back home and turning around to get something you forgot to get at Walmart. Compressing the entertainment bill is easy. DON'T DO ANYTHING. Its fun after a while. You find ways of being creative and you can actually see the money your not spending on stuff you don't need.

Message Edited by berraco58 on 12-10-2007 08:04 AM

Re: Creating a budget

George2037 — Mon, 10 Dec 2007 16:10:03 GMT

I bought an Excel "How to" book and built a spreadsheet. I have every bill I pay Monthly and yearly built into it and, basicly if I spend money it goes in there. I even went as far as building "Estimated" pay checks (I'm hourly and get a ton of OT) so I know where I stand on each pay check. Each Page represents a month, and all the info from one month carries over to the next page (month). All my intrest rates, minum payments, target payments, everything is in there. If anything effects my money flow it's in there.

If I spend $10.00 today on Lunch I enter it in the Spread sheet and can look at January 2009 and see how it effects my bottom line. It's a bit extreme but I like to go overboard sometimes , plus it helps me Identify any "Butterfly Effects" that may happen.

One of my lastest benifits have been when I switch insurance companies and saved $1200 for the year, I can see the direct effect on my bank balance in 12 months avoiding the typical "Where did it go" question.

I've tried MS Money, and Quicken. Although both are great programs, I didn't like the options and the complexity of them. With my spreadsheet I update all my info when I make a payments each month, and my Bank Ledger is kept online through my bank (They even keep digital copies of my checks online) for 7 years, all I need is the numbers.

Re: Creating a budget

George2037 — Mon, 10 Dec 2007 16:20:15 GMT

"DON'T DO ANYTHING"

haha, funny you said that. I went out and spent $500 on an XBOX 360 and just sit home playing it and watching movies. I figure I've saved $100 a weekend by staying home, and not to mention the beer is cheaper and safer (DWI's are expensive) to drink at home

For Utilities specificly electric, see if your provider offers a Budget Billing plan. BGE does and I enrolled in it last year after getting $75 bills all summer and a $350 in November. Now I pay $223 every month and at the "Reset Month" once a year I get any extra I've paid back with intrest.

If at anytime you use up your balance and go over you will have to pay that extra amount that month, but currently going into Winter I've got a $600 positive balance and doubt I'll use it all up before winters over. I can watch it and if it gets close to being in the negative I can account for it 60 days ahead of time instead of the typical ' Suprise your bill went up $200 and we need you to pay it in 20 days bill '

Re: Creating a budget

Anonymous — Mon, 10 Dec 2007 17:02:23 GMT

Quicken and money have budget functions with alerts when spending exceeds your budgeted amount in a category (like Auto:fuel). I found for stuff that fluctuates using the 12 month average as a budget amount works (total for the year / 12). When an alert pops I know if I'm just going hog wild or it was a legit expense this month (is my gas usage up because I'm showing houses or is it because I'm having fun running around) - either way I know to try to curtail whatever it is I'm doing to not get in real deep.

Message Edited by Lady_Scarlet on 12-10-2007 12:02 PM

Re: Creating a budget

Anonymous — Mon, 10 Dec 2007 20:30:06 GMT

www.mint.com

offers a way to start budgeting- you enter your credit cards and bank accounts, and it downloads and categorizes the transactions (kind of like Quicken, et. al., but free, and I find it much easier). After a couple months of history, you'll see patterns and areas to trim (dear gosh, did we really spend $800 on fast food last month?! Okay, time to break out the mac-and-cheez...)

You can also make rough budgets, and it will track it through the month- if you have budgeted $350/mo. for gas, but have spent $200 in the first week of the month, the graph will change color to warn you.

Re: Creating a budget

Anonymous — Mon, 10 Dec 2007 21:40:38 GMT

George2037 wrote:
"DON'T DO ANYTHING"

haha, funny you said that. I went out and spent $500 on an XBOX 360 and just sit home playing it and watching movies. I figure I've saved $100 a weekend by staying home, and not to mention the beer is cheaper and safer (DWI's are expensive) to drink at home

Yeah that probably would be better but I stopped playing video games when I turned 14 (no offense ... just so happened). Now I just read that book that I bought that I never opened or watch that DVD that I rented through BlockBuster Total Access that I never had time to see. Worst case scenario, I drive to the movie theaters ~$5 gas round trip, its a crappy theater but has all the new movies so its a $3.25 ticket and I buy a $3.50 cup o' coke. GF lives in another state so I go solo. That's 11.75 a day. Even if I did that twice a week for a month($94), I couldn't save $100 a MONTH by skipping out. Darn close though. I typically go once a week if that.

Wow MsMs ... how did you find Mint, it looks amazing. I am just a little skeptical at the fact I can sign up and only give them my email address. How do they get access to my accounts then. I mean, I'm sure there is more to the sign up but would like the full story before attempting it. Is it all online (no programs)? I like my Excel sheet because I can update my bills at work. This might be something for me to consider. Does it have a way of tracking what you paid on a bill. I mean, if my credit card shows a payment of $50 and my bank account shows a debit in the amount of $50 to the same credit card company does it link these two to show they are related? Alot of questions. That's what makes me scared to try.

Message Edited by berraco58 on 12-10-2007 01:40 PM

Re: Creating a budget

Anonymous — Mon, 10 Dec 2007 21:46:00 GMT

I have a TC account, a myFICO account, a Prosper lender account, I have online accounts for all of my credit cards, student loans, my bank account, my auto loan account, my cable and probably one more I can't think about. That is a lot of places for my personal information hanging around. At first it was no big thing but then I started counting all of the places online where I had personal information and it scared me a little. I'm very hesitant to open up anymore online accounts that have my personal information unless I am actively engaged in business with the company.

Re: Creating a budget

fishbjc — Mon, 10 Dec 2007 22:13:48 GMT

The extent of our outings consist of $4 movies which include popcorn & I take my own diet pepsi. Beef O'Brady's has 1/2 price burgers on Wednesdays...our local club sells wine for 2.25 glass and beer 1.75 or 2.25. Other than that....this Friday is my first all-out outing in 4 months!

Tivo is usually my 'date' these days.

Re: Creating a budget

SmartCookie — Mon, 10 Dec 2007 22:48:02 GMT

fishbjc wrote:
The extent of our outings consist of $4 movies which include popcorn & I take my own diet pepsi. Beef O'Brady's has 1/2 price burgers on Wednesdays...our local club sells wine for 2.25 glass and beer 1.75 or 2.25. Other than that....this Friday is my first all-out outing in 4 months!

Tivo is usually my 'date' these days.

I love my TiVO. DH is very jealous...

Re: Creating a budget

Anonymous — Wed, 12 Dec 2007 02:11:18 GMT

Oh my.... I don't remember how I found this site, but I am so glad I did. Thank you for all your information on this topic! I'll be looking into this and find which best suits me!

Re: Creating a budget

Gigi77 — Wed, 12 Dec 2007 05:45:40 GMT

Mint.com seems somewhat scary, but from all the positive online reviews and mentions from reputable sources: NYT, WSJ, BW, etc, I think I may try it... but will do a bit more digging first. I'm particularly cautious right now. My friend just discovered her BOA debit card was duplicated and pin somehow swiped and used at several ATMs in MALAYSIA! I couldn't believe it when she said told me, but I heard the convo with the BOA reps.. very scary stuff.

Thanks for the link though, there are a few the links I discovered from the "reviews" page that are really useful as well...

gigi

Re: Creating a budget -- automatic tools

Anonymous — Thu, 20 Dec 2007 14:58:17 GMT

There are a number of great online tools now that help you budget. Mint.com is one of them, and the good thing is they let you compare your spending to other people's in certain categories (for example, am I spending more on food or entertainment than other people?). However, they don't yet allow you to manually enter cash purchases so that leaves out a good chunk of many people's budgets. I would guess that enhancement is coming soon. Here's an article I wrote on the topic with a link to other online tools: http://www.credit.com/credit_information/money_management/Three-Ways-to-Put-Your-Budget-on-Auto-Pilot.jsp Yodlee is probably still the most robust and is well-tested in the marketplace. The other thing you'll want to check is whether your bank or credit union offers a similar tool. Many work with Yodlee or other service providers, for example, and that may be offered for free by your financial institution. They may even help you set it up! (Mint uses Yodlee for their account aggregation piece so they are good security-wise too.) Another great program is Mvelopes, although it's not free it is very robust. You figure out how much you have to spend in your budget categories and it keeps a running balance so you can see how much is "left" each month. If you haven't planned well, you can borrow from other categories, or readjust. Any of these programs take some time to set up but once you get them set up they can be a real time and money-saver. And if none of these work, the cash/envelope method Dave Ramsey advocates can also work! And a word of caution: it may take you a while to get one of these methods set up and working for you. Don't beat yourself up if the first time doesn't "take." If you really can't get it going after a few tries, think about a financial coach (financialrecovery.com is a great resource). Just like weight loss and other hard-to-change habits, sometimes there are other issues behind our spending habits that need to be addressed. Hope this doesn't sound like preaching...it's always a challenge for me like anyone else!!

Re: Creating a budget

Anonymous — Thu, 20 Dec 2007 15:08:57 GMT

Like George, I work off Excel spreadsheets. I run them about 12 months foreward and make sure I don't see any negative numbers in the ballance column. One sheet (and thus, one checking account) has fixed expenses. This year, my credits will be > debits by $62. That's okay.

Another sheet is for savings, and although that's a new concept for me, I haven't dipped in since it started-- last March. It helps to have a goal on that one. Mine's a house down payment of $33,000 and I'm on track.

The third account/sheet is for everything else. What works for me is gassing up the truck, and hitting the atm every Sunday. I tried the debit card concept, but it's less book keeping if you can handle cash.

Budgeting is actually fun, in a way. There have actually been some periods where I had extra cash come Sunday, which I stashed in a drawer. It's satisfying knowing it's there.

Re: Creating a budget

Anonymous — Thu, 20 Dec 2007 16:15:23 GMT

This looks like a good site but it scares me to have all my info in one spot! Right now I do online banking. Chances are if someone hacks in, they will only get 1 account. If someone hacks into mint.com they would get everything!

IO use quickbooks for my business. I do not have time to enter all this information for my personal too. It takes hours per week to use.