What Budget? Do you keep one?

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mak1277
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Re: What Budget? Do you keep one?

Post by mak1277 » Thu Mar 22, 2018 1:06 pm

No budget here. I do track spending monthly, but the only category is "$ out". I adjust for one-time expenses (e.g., new car purchase) so that I can have a reasonable estimate of recurring expenses. For retirement planning, I'll take that number and layer back in estimates for future car purchases and other big ticket items.

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corn18
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Re: What Budget? Do you keep one?

Post by corn18 » Thu Mar 22, 2018 1:08 pm

I'm in the track spending camp. The only thing we budget is savings and that comes out first. Then we track spending after the fact. That has really helped to estimate expenses in retirement.

N10sive
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Re: What Budget? Do you keep one?

Post by N10sive » Thu Mar 22, 2018 1:13 pm

Since I am single I track only a few categories

Rent
Food
Gas
Misc

In an excel I track where every single dollar goes by comments but MISC encompasses everything from car insurance, to hobbies etc.

frugalmama
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Re: What Budget? Do you keep one?

Post by frugalmama » Thu Mar 22, 2018 1:20 pm

We use YNAB as well. I didn't start seriously budgeting until my DH decided to switch careers and our income was cut to be only a fraction of what it was. We do a lot on actually very little, but in order to do so much, we really do have to plan for every penny. When I didn't keep a budget, we spent a lot more...even with a high savings rate.

Independent George
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Re: What Budget? Do you keep one?

Post by Independent George » Thu Mar 22, 2018 1:38 pm

Given how many of my expenses tend to be balloon payments once per year (IRA contribution, home insurance, vet bills, holiday travel, etc.), I find budgeting invaluable; I like being able to prorate the expense monthly to know how much I can really afford to spend, even if I'm technically in the black each month.

Traveler
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Re: What Budget? Do you keep one?

Post by Traveler » Thu Mar 22, 2018 7:47 pm

I make an annual budget by month each year but it's really more of a guide than a strict budget. However, I do diligently track my spending and put each item into a budget category that I track monthly against the annual budget. What I don't do is fret if I'm over or under in a certain category. Annually, it surprisingly comes out pretty close even if some categories are over and some are under for the year. For things like travel (my biggest line item), I have an annual budget that I spread evenly across the months. But reality is that it's spent in chunks over the year (some months a lot, some months nothing). I use Excel and have been doing this for about 10 or more years.

dknightd
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Re: What Budget? Do you keep one?

Post by dknightd » Thu Mar 22, 2018 8:00 pm

I'm starting to think that keeping and maintaining a budget is a hobby for some people.
I like hobbies. But not that one. Spend less than you earn - problem solved. IMO YMMV
Last edited by dknightd on Thu Mar 22, 2018 8:08 pm, edited 1 time in total.

Monster99
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Re: What Budget? Do you keep one?

Post by Monster99 » Thu Mar 22, 2018 8:08 pm

I tracked saving and spending in MSMoney for about 10 years before retiring. Now I track spending with Excel and have a basic budget with monthly spending guidelines. Being debt-free (no mortgage or CC debt) really helps with the budget - We find that my pension and the dividends from the taxable account cover our current expenses. I will withdraw from the retirement accounts for big ticket items like new cars, appliances and such. The only issue I see in the future is the DW is dropping hints about relocation....( new House) :?

RetiredNewbie
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Re: What Budget? Do you keep one?

Post by RetiredNewbie » Thu Mar 22, 2018 11:02 pm

mike_in_ny wrote:
Thu Mar 22, 2018 5:40 am
We do not keep a budget, but what we do is track our spending.
#metoo. I track my spending with Mint, but budgeting seems like a waste of time to me. I give every potential purchase the want/need test. If it's something I need, I buy it. If it's something that I can possibly get out of buying, I don't. Two years ago at age 60, I woke up financially and accepted the fact that I had spent my entire lifetime wasting money (but I did have one heck of a good time!) I have completely turned my situation around since then by lurking here, reading your recommended books, and using the want/need test. I have been following it punishingly, but I'm at the point now where I may start rewarding myself occasionally. After making $30,000 of credit card debt disappear, I deserve it. And you Bogleheads deserve a tsunami of thanks. There is no way yall could ever know how much you help people all over the world.
Your attitude about risk changes significantly when the bear begins to maul you.

TheBogleWay
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Re: What Budget? Do you keep one?

Post by TheBogleWay » Thu Mar 22, 2018 11:30 pm

I don't keep a budget at all, but instead I just keep a general rule in my head to save as much money as I can on purchases, and only splurge after I've done plenty of research and I really think a purchase is going to improve my life or really entertain me somehow. I try to save money by cooking, not eating out, not buying excessive things when I do go out, etc. Things like fancy restaurants bore me when the ms and I can hang out at home, watch some entertaining show and have better tasting and healthier food for cheaper here.

Annual cost of living to my best guess is about $65,000/year give or take maybe $5-10k. That's with some splurging and living in an expensive part of the US, and provides plenty of fun money and living money (without kids so far).

JBTX
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Re: What Budget? Do you keep one?

Post by JBTX » Thu Mar 22, 2018 11:49 pm

ad2007 wrote:
Thu Mar 22, 2018 5:12 am
Do you know your budget?

We save and invest in order to retire at some point, right? We might be there (late 40's), but can't really be sure. The problem is we don't really know what our annual spending really is. It fluctuates wildly.

For the past 5 years now, I've been trying to figure out our number and have about given up. We can go from spending roughly $75K to $200K per year. And the weird thing is we really don't feel the difference in quality of life, and are just shocked looking at that wide range. The average during those 5 years: maybe $140K, so we figure that might be a safe number for us. But I feel like I'm trying to do a calculus problem and have forgotten all the formulas. So frustrating when you'd figure this should be a cakewalk.

I'm baffled that people can say: "We're going to retire early on $XX per year." Are those people that consistent with their budget?

So the question is: how much does your budget/spending vary? Do you really know why and can account for the variations? Please tell me there are other people out there whose spending fluctuate greatly because that's just life. Things change, habits change.

I guess the other question is, did your spendings steady out later in life, maybe? Or are some of us just not all that consistent with money, ever.
I'm in early 50's. We would occasionally do line item budgets, but never really tracked against them. As long as we maxed out of retirement and saved some additional we didn't sweat it too much. But the last year I have finally started to budget - because like you we were fluctuating, but growing, and last year was very high spending. I figured we have to start managing to a base number (approx $100k- excluding taxes) if we ever want to retire. And that has required us making some choices., and I have been comparing to it almost weekly.

The big thing that has thrown off over the years are additional medical expenses for kids - but we had become lax in some other areas, then we did a major remodel and that depleted some excess cash. We were definitely experiencing lifestyle creep.

Ultimately we hope to manage to around $100-120k base, but that doesn't include major one time expenses like cars, and kid's college. I'd like to get it down to $100k (give or take) - including taxes, and mortgage paid off, by retirement.

ad2007
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Re: What Budget? Do you keep one?

Post by ad2007 » Fri Mar 23, 2018 7:35 am

JBTX,
Thanks for your post. We seem to have had similar experiences with cash flow. Even though it's not really an issue, sort of an eye opener. Showed we are impulsive with money, and have allowed a bit of lifestyle creep to set in.

Iliketoridemybike
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Re: What Budget? Do you keep one?

Post by Iliketoridemybike » Fri Mar 23, 2018 7:39 am

I track our expenses in a simple format that has only about 9 categories. Have done so for several years so we know our spending and thus have a good feel for expenses in our soon to be retirement. To handle fluctuations we have a “mad money” category. Credit card rewards, eBay sales, any extra money goes into it. It usually grows to several thousand dollars a year and then we use it for a vacation and any other “fun” things we just want, knowing that we are using found money and not stealing from our retirement. Works great for us. We never argue about money and we have saved millions for our retirement.

MnD
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Re: What Budget? Do you keep one?

Post by MnD » Fri Mar 23, 2018 8:00 am

We budget our savings and spend the rest like drunken sailors on shore leave. About 3 years ago I started documenting total monthly spending which is easy since we charge everything possible on rewards credit cards and have their statement date set to the same day so we have a monthly "closing". Since we have no debt something like 95% of spending is auto-paid on the same day of the month when credit cards are due.
Spending varies a lot but we usually make a small to significant additional transfer to savings from our spending funds so clearly, even after budgeted up-front savings we are living below our means which is all I'm concerned about. After 30+ years of systematic savings and investing, spending just isn't a big factor any more. If we want something we just buy it.

Marjimmy
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Re: What Budget? Do you keep one?

Post by Marjimmy » Fri Mar 23, 2018 8:40 am

I think the biggest thing about knowing your expenses is knowing your savings rate. I don't have a "budget" but I'm around 70% savings which I'm very happy with.
Very little is needed to make a happy life; it is all within yourself, in your way of thinking. -Marcus Aurelius

Gray
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Re: What Budget? Do you keep one?

Post by Gray » Fri Mar 23, 2018 9:55 am

401K and employer-related insurance are deducted from our paychecks. We identify and fund our major expenses through transfers to an Ally MMA to cover things like mortgage, property tax, college savings. The mortgage, college funds, and property taxes are debited from that account.

We have our net paychecks deposited in a checking account in USAA that has no other purpose than to route money automatically to other USAA checking and savings accounts.

We identify all our general, recurring shared expenses, including insurance policies, and allocate a recurring monthly transfer to a checking account. Those expenses are paid either directly from that checking account, or through a reward credit cards that debit that checking account.

We also have a contingency fund for unplanned expenses. Similarly, we have a fund for expected expenses. For example, buying more furniture, enhancements to our house, vacations, etc.

We analyze our spending (Mint, etc.) and allocate funds to individual checking accounts, funded via a weekly transfer.

Lastly, we have a Grocery checking account, also funded via a weekly transfer.

Using Excel, we go through and analyze the overall budget on a recurring basis, maybe 2-3 times a year, and make adjustments. On an ongoing basis, we monitor the account levels and transactions, but it's all pretty much automated. We've been doing this since about 1999.

This approach has kept us on-track and kept the peace. Everyone knows what they're allowed to spend based on the money they have. If expenses arise that require contingency funds, we deal with that. This is account based budgeting.

Hiwatter
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Re: What Budget? Do you keep one?

Post by Hiwatter » Fri Mar 23, 2018 12:43 pm

My wife and I tried a full on budget, but it was difficult to track and there were too many "grey" areas. It just was a hassle and I didn't see it necessarily saving us money.

We actually found that a monthly allowance worked much better for us in the non-essential spending category.

We each get $400 per month to spend on whatever we want. It's that easy. When it's gone... no more fun spending! We each have our own checking account which makes it simple.

We also make sure to add to our savings account and investment account each month.

So to summarize, we basically have 4 buckets. Only the 'spending' bucket has a hard number assigned to it.

- Savings
- Investing
- Living (mortgage, bills, groceries, gas, kid, school expenses, etc)
- Spending ($400 per month each)

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lthenderson
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Re: What Budget? Do you keep one?

Post by lthenderson » Fri Mar 23, 2018 12:53 pm

I have found it much easier to track savings rather than spending or budgets. I've always felt that if I pay myself first (i.e. max out my retirement accounts) I will find a way to live on what's left. With tracking spending or budgets, there is always the tendency to use what is left on things that aren't necessary because you had the money already allocated and it won't be missed. When you don't have budgets, any excess money left over after fully funding the retirement accounts goes to fill up my emergency fund and then any excess beyond that goes into my retirement accounts.

mptfan
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Re: What Budget? Do you keep one?

Post by mptfan » Fri Mar 23, 2018 1:10 pm

ad2007 wrote:
Thu Mar 22, 2018 5:12 am
So the question is: how much does your budget/spending vary?
I keep a detailed spreadsheet of my actual spending tracked by various categories, but I do not budget, i.e. I do not create projections or estimates of future spending.

mptfan
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Re: What Budget? Do you keep one?

Post by mptfan » Fri Mar 23, 2018 1:18 pm

dknightd wrote:
Thu Mar 22, 2018 8:00 pm
I'm starting to think that keeping and maintaining a budget is a hobby for some people.
I like hobbies. But not that one. Spend less than you earn - problem solved. IMO YMMV
I don't keep a budget, but tracking my spending in various categories and keeping detailed spreadsheets of my finances in general is one of my hobbies.

ad2007
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Re: What Budget? Do you keep one?

Post by ad2007 » Fri Mar 23, 2018 1:19 pm

lthenderson wrote:
Fri Mar 23, 2018 12:53 pm
I have found it much easier to track savings rather than spending or budgets.
That's what I've done. I always save as much as I can. Obviously spend on needs and then splurge on whatever (this category changes all the time) - but always save something.

This exercise came about a few years ago when we thought maybe we can retire in our 40s. That's when we realize we didn't know our spending number, and then found wide range. It was a shocker.

Using the low number, we'd retire tomorrow. The average number for the past 5 years, we can safely retire at 3% SWR. The higher number? We've got a few years to go. Self inflicted conundrum.

I really marvel at the folks who spend a certain amount consistently.

invst65
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Re: What Budget? Do you keep one?

Post by invst65 » Fri Mar 23, 2018 1:32 pm

ad2007 wrote:
Fri Mar 23, 2018 1:19 pm
I really marvel at the folks who spend a certain amount consistently.
We don't stick to any kind of strict budget but like others have said I do track our spending. I started doing this about 5 years before I retired while we were trying to live on what we thought the budget would be when I did retire (wife's still working, btw).

I'm still tracking now that I'm retired but at this point I would have to say that it is pretty much on auto-pilot. We just go with the flow and live the lifestyle we've become accustomed to and it's pretty amazing how close the figures come out at the end of the year without even thinking much about it.

Paid cash for a new car this year so that threw things off but that was an off-budget item that was planned for. Also had to buy new washer and dryer but that was on-budget in the "Sh**t" happens category. Sh*t happens is $500/month in the budget. If no Sh*t happens for a few months we might spend a little more money on this and that or take a nicer vacation. If it does hit more than expected, well then we look at our portfolio and see how it's doing.
Last edited by invst65 on Fri Mar 23, 2018 3:18 pm, edited 6 times in total.

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pennstater2005
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Re: What Budget? Do you keep one?

Post by pennstater2005 » Fri Mar 23, 2018 1:36 pm

Mental budgeting. I could stand to do better.
“If you think nobody cares if you're alive, try missing a couple of car payments.” – Earl Wilson

Ron
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Re: What Budget? Do you keep one?

Post by Ron » Fri Mar 23, 2018 2:23 pm

"We can go from spending roughly $75K to $200K per year. And the weird thing is we really don't feel the difference in quality of life, and are just shocked looking at that wide range."

If the OP doesn't feel an impact in such a wide variation in spending, I would say h/she has more than enough financial resources to live the life h/she wants without worrying about a budget.

As a graybeard with little money in the early years, both as a child and as a young married, a budget was a prime requirement just to get by in life without starving.

Today, in my seventh decade, I still adhere to a budget out of habit, even though I/wife don't have to be as careful with our financial resources at this time of life.

FWIW,

- Ron

Watts
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Re: What Budget? Do you keep one?

Post by Watts » Fri Mar 23, 2018 4:44 pm

I've been using YNAB (You Need a Budget) for about 4 years. Great app that allows me to give every $1 a job. It has allowed me to track areas with historically-high spending and adjust accordingly.

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Re: What Budget? Do you keep one?

Post by smitty1515 » Fri Mar 23, 2018 4:48 pm

We budget every month.

I’m a Ramsey disciple who follows his budget and anti debt advice but deviates to BHs for investment advice. I consider this hybrid to be pretty stellar.
Be fearful when others are greedy and greedy when others are fearful. -Warren Buffett

harrychan
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Re: What Budget? Do you keep one?

Post by harrychan » Fri Mar 23, 2018 5:01 pm

DW and I started doing a budget and it's helped us quite significantly for the past year. We were in the camp where we always made more than we spend so we didn't think much about having a budget. We have so much more control over our budget that we can make informed decisions about large purchases and even her being sahm starting next week.
This is not legal or certified financial advice but you know that already.

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cfs
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Re: What Budget? Do you keep one?

Post by cfs » Fri Mar 23, 2018 8:01 pm

smitty1515 wrote:
Fri Mar 23, 2018 4:48 pm
. . . I consider this hybrid to be pretty stellar . . .
It is. And it is also your money, so, do whatever you need to do. My signature applies. Good luck with your investments, y gracias por leer ~cfs~
~ Member of the Active Retired Force since 2014 ~

wrongfunds
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Re: What Budget? Do you keep one?

Post by wrongfunds » Sat Mar 24, 2018 8:30 am

Since OP has said that his income is lot more than his expenses be they at 70K or at 200K, what does it matter? I am guessing that OP must be making well over at least half a million income and then indeed the variance in spending would be insignificant.

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Re: What Budget? Do you keep one?

Post by dumbbunny » Sat Mar 24, 2018 8:38 am

mike_in_ny wrote:
Thu Mar 22, 2018 5:40 am
We do not keep a budget, but what we do is track our spending. To me this is the most
valuable thing that you can do to understand your finances. I don't go crazy--only 10
categories. It takes about 15 minutes each month and I use an old fashioned self-made
spreadsheet
I post all expenses in an LibreOffice file then run a subtotal report on occasion to see where the money is going. The file also serves as an event calendar i.e., how did I celebrate our anniversary, etc.
“It’s the curse of old men to realize that in the end we control nothing." "Homeland" episode, "Gerontion"

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Meaty
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Re: What Budget? Do you keep one?

Post by Meaty » Sat Mar 24, 2018 10:19 am

Watts wrote:
Fri Mar 23, 2018 4:44 pm
I've been using YNAB (You Need a Budget) for about 4 years. Great app that allows me to give every $1 a job. It has allowed me to track areas with historically-high spending and adjust accordingly.
How much does it cost?
"Discipline equals Freedom" - Jocko Willink

Hillview
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Re: What Budget? Do you keep one?

Post by Hillview » Sat Mar 24, 2018 11:16 am

Meaty wrote:
Sat Mar 24, 2018 10:19 am
Watts wrote:
Fri Mar 23, 2018 4:44 pm
I've been using YNAB (You Need a Budget) for about 4 years. Great app that allows me to give every $1 a job. It has allowed me to track areas with historically-high spending and adjust accordingly.
How much does it cost?
$83.99 a year

longinvest
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Re: What Budget? Do you keep one?

Post by longinvest » Sat Mar 24, 2018 12:50 pm

I don't like to pay for commercial financial software which can lock-in my data. I've been tracking my expenses using GnuCash for many years.

I also have a flexible budget. Here's how it works.

I maintain a "known expenses" budget using a short 1-page LibreOffice Calc spreadsheet. This is useful for planning bank account balances (e.g. have enough money to cover the rent payment on the 1st of the month).

I also have a "minimum savings" goal. I never save less than this. This aims at making sure I'll meet my financial objectives.

This leaves an amount of money which can be partly spent, partly saved, the ratio varying depending on life flow.
  • flexible amount = net income - (known expenses + minimum savings)
Usually, most of this flexible amount ends up being saved. But, if I need (or sometimes want) to spend on something, I won't hesitate as long as it fits within the flexible amount.
Bogleheads investment philosophy | Lifelong Portfolio: 25% each of (domestic/international)stocks/(nominal/inflation-indexed)bonds | VCN/VXC/VLB/ZRR

Mike Scott
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Re: What Budget? Do you keep one?

Post by Mike Scott » Sat Mar 24, 2018 1:05 pm

We have a budget of sorts based on 30 years of habits and records of previous spending but income and expenses are lumpy from month to month and year to year. Every penny that comes in has a targeted place on paper but generally there is some adjustment every month to account for reality.

vested1
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Re: What Budget? Do you keep one?

Post by vested1 » Sat Mar 24, 2018 1:54 pm

I've always had a handle on our fixed expenses while working but never kept a budget because income was always comfortably higher. Then again I'm lucky because my wife is even more frugal than I am. I used to keep herd on our monthly spending in an old fashioned checking account, and up until about 15 years prior to retirement we always carried a balance on various credit cards.

When I finally woke up I realized we were wasting far too much money by not closely tracking our spending. This caused me to transition all our bills to be automatically paid by either the checking account or the credit card, which is the only one we use for all other spending. The card is paid off every month, so we pay no interest while earning substantial awards points. We have other cards available that have no fees and no balance, in case the main card has a temporary problem. We both carry a couple hundred dollars which usually lasts for about a month.

We no longer write any checks, and having one checking account and one credit card statement makes tracking simple. If we exceed a certain dollar amount on the credit card, or our cushion of money in checking begins to dwindle it is immediately apparent. Our non-discretionary spending is currently about 30% of income, but will continue to drop every year in retirement, which we are currently enjoying.

The OP may find that creating a spreadsheet of recurring monthly expenses and comparing that to monthly spending will be an eye-opener that will lead to more manageable spending. If nothing is done to change the unconscious carefree spending he/she may realize that dreams of retirement will have to be delayed.

smitcat
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Re: What Budget? Do you keep one?

Post by smitcat » Sat Mar 24, 2018 2:27 pm

ad2007 wrote:
Fri Mar 23, 2018 1:19 pm
lthenderson wrote:
Fri Mar 23, 2018 12:53 pm
I have found it much easier to track savings rather than spending or budgets.
That's what I've done. I always save as much as I can. Obviously spend on needs and then splurge on whatever (this category changes all the time) - but always save something.

This exercise came about a few years ago when we thought maybe we can retire in our 40s. That's when we realize we didn't know our spending number, and then found wide range. It was a shocker.

Using the low number, we'd retire tomorrow. The average number for the past 5 years, we can safely retire at 3% SWR. The higher number? We've got a few years to go. Self inflicted conundrum.

I really marvel at the folks who spend a certain amount consistently.
We have always had a budget but that does not mean that we spend anywhere near consistently. Actually we vary by quite a % most years but that is what our budget is for - and we don't always hit the budget in the head so then we adjust.
Once you see where you are spending you may decide that it makes more sense to spend it elsewhere.

Mr.BB
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Re: What Budget? Do you keep one?

Post by Mr.BB » Sat Mar 24, 2018 2:41 pm

ad2007 wrote:
Thu Mar 22, 2018 5:12 am
Do you know your budget?

We save and invest in order to retire at some point, right? We might be there (late 40's), but can't really be sure. The problem is we don't really know what our annual spending really is. It fluctuates wildly.

For the past 5 years now, I've been trying to figure out our number and have about given up. We can go from spending roughly $75K to $200K per year. And the weird thing is we really don't feel the difference in quality of life, and are just shocked looking at that wide range. The average during those 5 years: maybe $140K, so we figure that might be a safe number for us. But I feel like I'm trying to do a calculus problem and have forgotten all the formulas. So frustrating when you'd figure this should be a cakewalk.

I'm baffled that people can say: "We're going to retire early on $XX per year." Are those people that consistent with their budget?

So the question is: how much does your budget/spending vary? Do you really know why and can account for the variations? Please tell me there are other people out there whose spending fluctuate greatly because that's just life. Things change, habits change.

I guess the other question is, did your spendings steady out later in life, maybe? Or are some of us just not all that consistent with money, ever.
If you can go from spending 75k to 200k a year, then you need to put some structure into your spending habits. I tracked our expenses (including cash) for 5 out of 6 years, and I learned a lot. Everyone has years where you have a large expense (maybe a new computer or new windows for you house), but your range of spending shows a tremendous lack of discipline and can get you into financial trouble down the road.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

Mr.BB
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Re: What Budget? Do you keep one?

Post by Mr.BB » Sat Mar 24, 2018 2:41 pm

Mr.BB wrote:
Sat Mar 24, 2018 2:41 pm
ad2007 wrote:
Thu Mar 22, 2018 5:12 am
Do you know your budget?

We save and invest in order to retire at some point, right? We might be there (late 40's), but can't really be sure. The problem is we don't really know what our annual spending really is. It fluctuates wildly.

For the past 5 years now, I've been trying to figure out our number and have about given up. We can go from spending roughly $75K to $200K per year. And the weird thing is we really don't feel the difference in quality of life, and are just shocked looking at that wide range. The average during those 5 years: maybe $140K, so we figure that might be a safe number for us. But I feel like I'm trying to do a calculus problem and have forgotten all the formulas. So frustrating when you'd figure this should be a cakewalk.

I'm baffled that people can say: "We're going to retire early on $XX per year." Are those people that consistent with their budget?

So the question is: how much does your budget/spending vary? Do you really know why and can account for the variations? Please tell me there are other people out there whose spending fluctuate greatly because that's just life. Things change, habits change.

I guess the other question is, did your spendings steady out later in life, maybe? Or are some of us just not all that consistent with money, ever.
If you can go from spending 75k to 200k a year, then you need to put some structure into your spending habits. I tracked our expenses (including cash) for 5 out of 6 years, and I learned a lot. Everyone has years where you have a large expense (maybe a new computer or new windows for your house), but your range of spending shows a tremendous lack of discipline and can get you into financial trouble down the road.
"We are what we repeatedly do. Excellence, then, is not an act, but a habit."

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Sheepdog
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Re: What Budget? Do you keep one?

Post by Sheepdog » Sat Mar 24, 2018 3:07 pm

Mr. BB is correct.

A short history of my in-retirement "budgeting:

Since all of my needs and luxuries come from investments and SS only, I have to watch my savings balance.

During my 20 years in retirement, I have not budgeted specific amounts for items , but I do have an average dollar amount taken from investments which I try not to exceed. In my case it is an average of about 4.5% a year. If I have spent less than that in any year or years, then I take note of that excess which is "bank rolled" for future larger spending. For example, I do not buy a car every year, but I want to have money available when I do so.

My distributions from savings have been from 1.93% (2016) to 7.52% (2011) and the average has been 4.56%. and my investment balance increased. That may not be a classic budget plan, but it is a retirement inventory control plan.

For the op (ad2007) My highest year spending (2011) was 76% higher than my lowest year (2002). That is not a classic budget, is it? but the investment balance control is.
People should not say everything they think. They should think about everything they say.

delamer
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Re: What Budget? Do you keep one?

Post by delamer » Sat Mar 24, 2018 3:57 pm

vested1 wrote:
Sat Mar 24, 2018 1:54 pm
I've always had a handle on our fixed expenses while working but never kept a budget because income was always comfortably higher. Then again I'm lucky because my wife is even more frugal than I am. I used to keep herd on our monthly spending in an old fashioned checking account, and up until about 15 years prior to retirement we always carried a balance on various credit cards.

When I finally woke up I realized we were wasting far too much money by not closely tracking our spending. This caused me to transition all our bills to be automatically paid by either the checking account or the credit card, which is the only one we use for all other spending. The card is paid off every month, so we pay no interest while earning substantial awards points. We have other cards available that have no fees and no balance, in case the main card has a temporary problem. We both carry a couple hundred dollars which usually lasts for about a month.

We no longer write any checks, and having one checking account and one credit card statement makes tracking simple. If we exceed a certain dollar amount on the credit card, or our cushion of money in checking begins to dwindle it is immediately apparent. Our non-discretionary spending is currently about 30% of income, but will continue to drop every year in retirement, which we are currently enjoying.

The OP may find that creating a spreadsheet of recurring monthly expenses and comparing that to monthly spending will be an eye-opener that will lead to more manageable spending. If nothing is done to change the unconscious carefree spending he/she may realize that dreams of retirement will have to be delayed.
This raises an important point. Any time the question of budgeting comes up, some posters say that they never budget because they save enough and so feel comfortable spending what is left post-savings.

And that may be a method that works fine for them. But that does not mean it is an optimal method for managing their money, allowing them to align their spending priorities with their income.

Lots of people pay unnecessary ERs and management fees on their investments, but feel their returns are just fine and so are not motivated to lower their costs. Most Bogleheads would disagree — why settle for high costs when you can have low costs with a bit of effort?

Budgeting is the same — why not put the effort into setting up a budget and make sure you are spending in the way that best meets your goals?

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Jimbo9911
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Re: What Budget? Do you keep one?

Post by Jimbo9911 » Sat Mar 24, 2018 8:25 pm

No hard line budget here.
We do tract spending though and have for for the last 5 years. We both retired within the last 18 months.
It has worked out that with social security as out only guaranteed income, plus the 2% that we withdrew from our Vanguard IRA investments for this year, we are accumulating dollars into our "discretionary" account quite rapidly as of last month. Hope it keeps going that way. It did though take a few months to get caught up with early Year expenses like home insurance, taxes etc. Also in case anyone is wondering. As far as our investment strategy it is 60% stocks / 40% bonds and so far from the recent high of the stock market several months ago to the most recent low we are down 6.5%. I can live with that. (Stay the course). Have 3 years worth of "excess" expenses in safe accounts so that makes it much easier to stay the course, but i tell that my daughter to do that all the time. Got to teach the youngsters!

mike77308
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Re: What Budget? Do you keep one?

Post by mike77308 » Sat Mar 24, 2018 9:17 pm

No budget here but as many others do, I track expenses. I started doing that 1 year before retiring and found that I spent a lot on stupid impulse purchases, not expensive per purchase but an accumulating amount of such things as soft drinks when getting gas or a quick snack that I don't need. Becoming more aware and thinking before spending reduced expenses in time before switching from "I will get another paycheck next week anyway" to the life of a retiree. 5 years into retirement I consistently spend 1/2 or less of what I did while working.

In contrast to almost everyone, I live a cash only lifestyle which really makes you aware of your spending habits. The only time that I use a CC is for online purchases and I can go for months not using them. Yes, I would like to punch the guy in line in front of me that has to swipe his card 3 times to buy a $0.50 pack of gum just because he doesn't want to cash any cash.

DC3509
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Re: What Budget? Do you keep one?

Post by DC3509 » Sat Mar 24, 2018 9:43 pm

delamer wrote:
Sat Mar 24, 2018 3:57 pm
vested1 wrote:
Sat Mar 24, 2018 1:54 pm
I've always had a handle on our fixed expenses while working but never kept a budget because income was always comfortably higher. Then again I'm lucky because my wife is even more frugal than I am. I used to keep herd on our monthly spending in an old fashioned checking account, and up until about 15 years prior to retirement we always carried a balance on various credit cards.

When I finally woke up I realized we were wasting far too much money by not closely tracking our spending. This caused me to transition all our bills to be automatically paid by either the checking account or the credit card, which is the only one we use for all other spending. The card is paid off every month, so we pay no interest while earning substantial awards points. We have other cards available that have no fees and no balance, in case the main card has a temporary problem. We both carry a couple hundred dollars which usually lasts for about a month.

We no longer write any checks, and having one checking account and one credit card statement makes tracking simple. If we exceed a certain dollar amount on the credit card, or our cushion of money in checking begins to dwindle it is immediately apparent. Our non-discretionary spending is currently about 30% of income, but will continue to drop every year in retirement, which we are currently enjoying.

The OP may find that creating a spreadsheet of recurring monthly expenses and comparing that to monthly spending will be an eye-opener that will lead to more manageable spending. If nothing is done to change the unconscious carefree spending he/she may realize that dreams of retirement will have to be delayed.
This raises an important point. Any time the question of budgeting comes up, some posters say that they never budget because they save enough and so feel comfortable spending what is left post-savings.

And that may be a method that works fine for them. But that does not mean it is an optimal method for managing their money, allowing them to align their spending priorities with their income.

Lots of people pay unnecessary ERs and management fees on their investments, but feel their returns are just fine and so are not motivated to lower their costs. Most Bogleheads would disagree — why settle for high costs when you can have low costs with a bit of effort?

Budgeting is the same — why not put the effort into setting up a budget and make sure you are spending in the way that best meets your goals?
Because there are only so many hours in a day/week/month and spending that amount of time on it may not be worth it when you want to do other things. Most people who fall into the "never budget because they save enough" category are high earning individuals. High earning individuals are almost always in extremely demanding jobs with precious little "free time." When you are in that circumstance, you do wonder if its worth it making all of these charts, graphs, etc. on budgets when everything is kinda fungible at the end of the day -- and even more so if you are meeting savings goals. I think budgets can be more helpful if you aren't meeting savings goals or the margins are thinner.

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Veiled
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Re: What Budget? Do you keep one?

Post by Veiled » Sun Mar 25, 2018 12:44 am

I have a detailed budget in Google Sheets, but I'm starting to realize that it's not as important since I've learned to live below my means, etc. I expect I'll keep budgeting, since I expect my income and expenses will be volatile in the next one or two decades. But I can understand how, eventually, people can just live with expense tracking.
Pardon me as I read these one hundred and fifty-seven SP vs LLC vs Scorp threads...

AntsOnTheMarch
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Re: What Budget? Do you keep one?

Post by AntsOnTheMarch » Sun Mar 25, 2018 4:06 am

Regarding how much time it takes to track expenses. It literally takes me minutes per day to track both personal and business (self-employed). I track as I go on my phone when I have a few free seconds—using a spreadsheet that is cloud based. I usually don’t have to type a single character—just copy and paste the description and amount from CC email alert and tap a button or two and select from a pull down menu. All the rest of the wizardry is done by the software.

I can’t possibly imagine “not enough time” being the reason not to track expenses. There is never a free second or two where you’re otherwise not doing anything worthwhile (waiting in a supermarket checkout line, for example)?
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nolesrule
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Re: What Budget? Do you keep one?

Post by nolesrule » Sun Mar 25, 2018 9:01 am

I use YNAB4, and have been for about 4 years now. We spend about 10-20 minutes once a month together reviewing the ending month and setting the beginning month, and then I spend another few minutes a day entering transactions while drinking my morning coffee.

Generally our budget is on auto-pilot unless something unexpected comes up, because we've developed a pretty good history of our spending patterns over the last four years. When something comes up where we need to discuss intra-month, we quickly decide how we're going to handle it, make a budget adjustment and move on.

The only other instances we spend a little more time on discussion is when raises kick, in (which we make adjustments to our nominal budget) or we receive bonuses and decide how to split it up among our wants and savings.

mrsbetsy
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Re: What Budget? Do you keep one?

Post by mrsbetsy » Sun Mar 25, 2018 12:11 pm

Yes, we keep a budget on an excel spreadsheet. SO and I meet most Fridays to look it over and see how we are doing. We've been doing this for years.

We are small business owners and we each own a separate business which nets about the same.

While all monies are together he is responsible for funding:
#1

Mortgage
Gas/Electric
Water
Trash
Internet / Cable
Gas
Auto Repair/Maintenance
HOA
DMV
Paper
Medical
Health / Fitness
Emergency Fund
Lawn Service
Pest Control

I am responsible for funding:

#2
Groceries
Entertainment
Hair Cut/Nails/Hair Products
Clothing (& Dry Cleaning)
Pet
Birthdays
Allowance
Home Maintaince
Holidays
Kid1
Retirement
Vacation
Annual Insurances

We have sinking funds for expenses like birthdays, holidays, vacations, annual insurances, and any big project we are saving up to do.

There are no questions like: Where does it all go? How do we spend so much money? Or anything of that nature. With the exception of the $100 each we allow ourselves in "allowance", we know where everything goes. We get to say NOTHING about how the other spends it.

30 years of marriage and it eliminates any/all money fights or money problems.

thx1138
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Re: What Budget? Do you keep one?

Post by thx1138 » Sun Mar 25, 2018 1:21 pm

Fall more into the "saving more than enough so don't need to track to closely" than anything though I do know for sure what I spend too much money on - eating out too often. That said even the "eating out too often" expense is not really significant.

As we start considering retirement plans a bit more than a decade away I'd like to better track our expenses so we know which ones will persist (housing, vehicle, food, vacations) and which will disappear (education, kids clothes, etc.). I've poked at Mint a few times but I find it a bit frustrating. Many expenses are "noisy" in the sense they are large expenses that are infrequent (e.g. new roof on house, new car) which are difficult to track well in something like Mint. Also Mint is occasionally fussy about importing certain cards and sometimes it is hard to tell when it has properly offset a credit card payment from our checking with a card.

I think what I really want is to be able to take a particular infrequent expense (like a new roof) and amortize it over an expected lifetime/frequency. That would give us better expense estimates without having to collect years of data on every little thing to establish an average. So probably a spreadsheet based kind of thing.

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GerryL
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Re: What Budget? Do you keep one?

Post by GerryL » Sun Mar 25, 2018 2:28 pm

If you start with the 50-20-30 budget (no more than 50% of income for basic expenses, 20% to savings, 30% discretionary) and can get to the point that it is consistently coming out as 40-35-25, you don't really need to maintain a more detailed budget. It's a personal choice. (Note that "discretionary" can also include saving for future large purchases or splurges.)

delamer
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Re: What Budget? Do you keep one?

Post by delamer » Sun Mar 25, 2018 3:13 pm

DC3509 wrote:
Sat Mar 24, 2018 9:43 pm
delamer wrote:
Sat Mar 24, 2018 3:57 pm
vested1 wrote:
Sat Mar 24, 2018 1:54 pm
I've always had a handle on our fixed expenses while working but never kept a budget because income was always comfortably higher. Then again I'm lucky because my wife is even more frugal than I am. I used to keep herd on our monthly spending in an old fashioned checking account, and up until about 15 years prior to retirement we always carried a balance on various credit cards.

When I finally woke up I realized we were wasting far too much money by not closely tracking our spending. This caused me to transition all our bills to be automatically paid by either the checking account or the credit card, which is the only one we use for all other spending. The card is paid off every month, so we pay no interest while earning substantial awards points. We have other cards available that have no fees and no balance, in case the main card has a temporary problem. We both carry a couple hundred dollars which usually lasts for about a month.

We no longer write any checks, and having one checking account and one credit card statement makes tracking simple. If we exceed a certain dollar amount on the credit card, or our cushion of money in checking begins to dwindle it is immediately apparent. Our non-discretionary spending is currently about 30% of income, but will continue to drop every year in retirement, which we are currently enjoying.

The OP may find that creating a spreadsheet of recurring monthly expenses and comparing that to monthly spending will be an eye-opener that will lead to more manageable spending. If nothing is done to change the unconscious carefree spending he/she may realize that dreams of retirement will have to be delayed.
This raises an important point. Any time the question of budgeting comes up, some posters say that they never budget because they save enough and so feel comfortable spending what is left post-savings.

And that may be a method that works fine for them. But that does not mean it is an optimal method for managing their money, allowing them to align their spending priorities with their income.

Lots of people pay unnecessary ERs and management fees on their investments, but feel their returns are just fine and so are not motivated to lower their costs. Most Bogleheads would disagree — why settle for high costs when you can have low costs with a bit of effort?

Budgeting is the same — why not put the effort into setting up a budget and make sure you are spending in the way that best meets your goals?
Because there are only so many hours in a day/week/month and spending that amount of time on it may not be worth it when you want to do other things. Most people who fall into the "never budget because they save enough" category are high earning individuals. High earning individuals are almost always in extremely demanding jobs with precious little "free time." When you are in that circumstance, you do wonder if its worth it making all of these charts, graphs, etc. on budgets when everything is kinda fungible at the end of the day -- and even more so if you are meeting savings goals. I think budgets can be more helpful if you aren't meeting savings goals or the margins are thinner.
I can track our expenses against our budget in 15 minutes a week in Quicken, so I just don’t see how free time as a factor. It probably would take someone a few hours to get familiar enough with Quicken to enter determine categories and enter a budget, but that is a one time investment.

I also am not convinced that most of the non-budgeters are high earners. Even if that is true for Bogleheads, I don’t see evidence of it amongst the non-Bogleheads that I know. But it would be impossible to prove either way.

Each person/family makes the “should I have a budget” decision based on their own preferences. My feeling is that people don’t create one either because they don’t want to take the time or because ignorance is bliss (or a combination).

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