AlmiraGulch Posted July 29, 2012 Share Posted July 29, 2012 I need a budget. Really. We do fine, but "fine" is sloppy. I used to manage my finances much more carefully, but for the past....I don't know...8 - 10 months we've been pretty much just spending what we feel like spending without even paying attention. Given that we do have debt, that's just not acceptable and we need to reign it back in. A couple of questions.... First, is anyone willing to share what percentage of their income they budget for what categories? Meaning.....groceries, housing, transportation, entertainment, etc? I know our food expenditures are ridiculous (we eat out a lot) and the "miscellaneous" spending is also sort of out of control. Second, how do you handle variable income? My husband works on 100% commission, but he gets a minimum draw every week (though usually makes much more than the draw). My idea is to budget based on the minimum amount, and anything extra can go toward debt. He thinks we should budget based on what his pay is on average, as that would be a more accurate portrayal of the actual income. Thoughts? Quote Link to comment Share on other sites More sharing options...
Soror Posted July 30, 2012 Share Posted July 30, 2012 So, what happens if you budget for average and it isn't an average month? That is what I would ask my dh. I would budget based on the minimum as well and use all the extra for debt as well and hopefully squeeze some debt payments out of the regular budget as well. Dh is hourly and generally has always worked some OT I've always budgeted on regular pay though. I did a quick analysis for you, this % is based on regular 40 hr week. Dh also gets an extra check 4x a year since he is paid weekly and that goes to saving and 2 bonuses as well that I don't count. As I said in another thread we are cutting back tight this year to pay off the house, so I'll give you % for this year and projected for next year in the areas which will change. House, Taxes and Insurance- 24%- Taxes and Insurance 7.5% Groceries- 15-18%------20% Car Insurance- 2% 7.5% Gas 4% Electric 2.5% Phone/Internet 1.5% Misc----2.5% 1% Dh Blow Money-----3% .5% Entertainment----1.5% Quote Link to comment Share on other sites More sharing options...
AlmiraGulch Posted July 30, 2012 Author Share Posted July 30, 2012 So, what happens if you budget for average and it isn't an average month? That is what I would ask my dh. I would budget based on the minimum as well and use all the extra for debt as well and hopefully squeeze some debt payments out of the regular budget as well. Dh is hourly and generally has always worked some OT I've always budgeted on regular pay though. I did a quick analysis for you, this % is based on regular 40 hr week. Dh also gets an extra check 4x a year since he is paid weekly and that goes to saving and 2 bonuses as well that I don't count. As I said in another thread we are cutting back tight this year to pay off the house, so I'll give you % for this year and projected for next year in the areas which will change. House, Taxes and Insurance- 24%- Taxes and Insurance 7.5% Groceries- 15-18%------20% Car Insurance- 2% 7.5% Gas 4% Electric 2.5% Phone/Internet 1.5% Misc----2.5% 1% Dh Blow Money-----3% .5% Entertainment----1.5% Thanks for this! I don't mean to be dense, but I'm a little confused on why you have two figures for some of the categories, like Misc, Groceries, DH Blow Money and Entertainment. Would you mind elaborating? Quote Link to comment Share on other sites More sharing options...
Soror Posted July 30, 2012 Share Posted July 30, 2012 The first percents are our figures for this year and the second ones are the ones set to increase next year (or in case of house decrease). As I said we have things tighter than usual this year to pay off the house. So, next year we will just have taxes and insurance but we are increasing a few categories as well so it is not as tight. Quote Link to comment Share on other sites More sharing options...
sleeplessnights Posted July 30, 2012 Share Posted July 30, 2012 Here is the breakdown for us: Giving: 11% Saving: 16% Monthly Bills (Housing, elec, cable, etc): 33% Transportation: 11% Food: 12% Insurance: 4% Clothing: 2% Personal (x-mas, homeschool, haircuts, gifts, etc): 5% Leisure (vacation, entertainment, kids' activities): 6% When we get some un-budgeted pay, we put half into savings and put the other half towards our "wish list," which includes our anniversary vacation, new dishes, carpet, etc, and is ranked according to what we want first. Hope this helps! Quote Link to comment Share on other sites More sharing options...
MomatHWTK Posted July 30, 2012 Share Posted July 30, 2012 Maybe you could compromise. Use the minimum draw plus $X (based on his average). Anything above that amount goes toward debt. That way, he feels like he gets to spend some of that commission $ he worked hard to earn, and you still get a steady dollar amount. You could also base the total budget on his lowest commission month rather than his average. That might make you feel more secure. Quote Link to comment Share on other sites More sharing options...
kalanamak Posted July 30, 2012 Share Posted July 30, 2012 Consider keeps a money journal for a month. Carry a pad with you and write down every penny. There are three columns: must-haves, rather helpful/may save money later, and frivolous. This is a good way to see where your money goes. Then you can look at the bigger ticket must-haves and think about what you can do to save on those items, etc. Quote Link to comment Share on other sites More sharing options...
kim.4dogs Posted July 30, 2012 Share Posted July 30, 2012 I've been using You Need a Budget for the last 4 or 5 months. One thing I really like about it (among many things) is that you work towards having a buffer, so that the money you earn in June is used for July expenses, and the money you earn in July is used towards August expenses. Then you budget bases on what you actually earned. Obviously, most of us can't do this right away, but once you reach that point it is nice, and solves the problem of which amount to use for your budget. Quote Link to comment Share on other sites More sharing options...
Trilliums Posted July 30, 2012 Share Posted July 30, 2012 I was thinking of this the other day when reading some of the budgeting threads and yesterday I wrote out July expenses. We Pay extra on mortgage and into 401k. Our mortgage is our only debt. In your case (OP) I would budget on his minimum guaranteed income and use all of the extra to pay off your debt. I strongly dislike having debt hanging over my head and interest is not worth paying! Try some new recipes/foods or make larger batches for leftovers; do whatever it takes to cut down on eating out. Eating out can be a major money draw. We hardly ever do anymore, but I used to more when the kids were smaller and I just felt too tired to cook. Rally the family together to come up with ways to save money. Taxes, 401k and ins premiums: 33% Mortgage, ins & prop taxes: 21% Utilities (water, elect, gas, cell phones, satellite, internet): 6% Groceries and household items: 15% Kid activities: 2.5% Gas 2-3% hOme improvement (DH put on gutter guards) 2% Clothing: 1% Annual car registration: 5% Work related: 1% Cash for DH: 2% Misc entertainment for me & kids: 2% The rest goes into savings. Quote Link to comment Share on other sites More sharing options...
AlmiraGulch Posted July 30, 2012 Author Share Posted July 30, 2012 Thanks, everyone! I appreciate your willingness to share, and the suggestions. I took a look at You Need a Budget and I'm considering giving it a try. I suppose I could start with the free trial and, if I like it, buy the software. Any additional feedback on the program? Quote Link to comment Share on other sites More sharing options...
speedmom4 Posted July 30, 2012 Share Posted July 30, 2012 Dave Ramsey explains how to budget with a variable income. I would start with either Financial Peace University or Total Money Makeover. I know there are many people who use DR as a philosophy and then implement it with YNAB. Controlling our finances with the budget as a tool was one of the best decisions I have ever made. I don't say that lightly. I started in Sept. '09. I felt like I was always reacting to life's ups and downs rather than controlling them. I have been budgeting religiously ever since. It has seriously changed our finances more than I could have ever imagined. We now have no debt, are giving and saving regularly, and have peace of mind. I really encourage you to study personal finance and get on a budget. I promise you that within a year you will be AMAZED how different your financial future looks!! God BLess, Elise in NC Quote Link to comment Share on other sites More sharing options...
carriede Posted July 30, 2012 Share Posted July 30, 2012 I've been using You Need a Budget for the last 4 or 5 months. One thing I really like about it (among many things) is that you work towards having a buffer, so that the money you earn in June is used for July expenses, and the money you earn in July is used towards August expenses. Then you budget bases on what you actually earned. Obviously, most of us can't do this right away, but once you reach that point it is nice, and solves the problem of which amount to use for your budget. I love YNAB! It's worth the one time purchase. We've had great success with it. It's definitely a way of living, not just a budget. I love rolling with the punches! Quote Link to comment Share on other sites More sharing options...
KatA Posted July 30, 2012 Share Posted July 30, 2012 Food - 11% Other variable expenses (clothing, gas, entertainment, gifts, eating out, personal care)- 6% -We have one car, paid off, and my husband bikes to work. Besides insurance, cost of transportation is entirely dependent on how bored we are at home and how often we drive around each week. I'd say about $100/mo. If we lived farther away, gas would probably go up and have its own category. Health insurance - 9% Mortgage - 30% Utilities - 10% (gas, power, water, phone, internet) Then there's 30% left... Well, we're trying to save some money, so we've cut our budget deep. We also have a little debt that we're trying to pay off. As of now, we don't get any new clothes, no regular hair cuts, etc. We actually usually blow through the variable expenses. I try to use envelopes, but I end up using my debit when we run out. I guess you're not supposed to do that. ;) So I see the variable expenses going up when we get out of debt and money saved. Oh, charity's negligible. About 2%. That will go up eventually. So though our budget is a work in progress, our mortgage, utilities, groceries, and health insurance should always be around that percentage. Quote Link to comment Share on other sites More sharing options...
Soror Posted July 30, 2012 Share Posted July 30, 2012 Thanks, everyone! I appreciate your willingness to share, and the suggestions. I took a look at You Need a Budget and I'm considering giving it a try. I suppose I could start with the free trial and, if I like it, buy the software. Any additional feedback on the program? Mint is a free program that many use and like. Quote Link to comment Share on other sites More sharing options...
AlmiraGulch Posted July 30, 2012 Author Share Posted July 30, 2012 Thanks again! This gives me a starting point, for sure. Or, I should say, a restarting point. This is much easier to do when you're the only person putting in and taking out! It's considerably more challenging when there are two of you, I've discovered. I want to get it under control now and use our money intentionally. Quote Link to comment Share on other sites More sharing options...
Annie G Posted July 30, 2012 Share Posted July 30, 2012 For those who are listing 401K and things like taxes and insurance, are you listing your percentages from your gross or net? Because I don't ever see dh's check- it's directly deposited into the accounts and the taxes,insurance and 401K are taken out already. Or are you referring to property taxes and car/house insurance? I'm trying to figure out these percentages you guys are posting to see where we fall. We have ample income but I'm trying to determine whether we're needlessly overspending in some category. Quote Link to comment Share on other sites More sharing options...
vonfirmath Posted July 30, 2012 Share Posted July 30, 2012 I bought You Need a Budget 11 months ago and need to pull it back out and start budgetting based on a new house and new expenses. I too need to pull in the jean strings until we get some of this debt paid off and our emergency savings built back up (it was spent down over the process of buying the house and fixing it up) As for variable income, I've heard a suggestion to make a list of bills that must be paid in the order they must be paid. And then you take incoming money and pay it in that order. So it might look like Rent $X Food $20 Gas $30 Electricity $Y water $Z Food $10 Gas $30 Debt $A Garbage $B Debt $C Savings $D ... Quote Link to comment Share on other sites More sharing options...
AlmiraGulch Posted July 30, 2012 Author Share Posted July 30, 2012 I bought You Need a Budget 11 months ago and need to pull it back out and start budgetting based on a new house and new expenses. I too need to pull in the jean strings until we get some of this debt paid off and our emergency savings built back up (it was spent down over the process of buying the house and fixing it up) As for variable income, I've heard a suggestion to make a list of bills that must be paid in the order they must be paid. And then you take incoming money and pay it in that order. So it might look like Rent $X Food $20 Gas $30 Electricity $Y water $Z Food $10 Gas $30 Debt $A Garbage $B Debt $C Savings $D ... This is sort of what I'm doing now. I have a spreadsheet that has all of my bills listed. Savings, 401(k), health insurance are all auto-deducted from my check and deposited where they are supposed to be, so I don't include those on the spreadsheet. I've listed the due dates for everything, approximate or exact amounts for each (depending on if the expenses are variable or not) and then I have a column for actual amount and date paid. Finally, I have everything divided into Paycheck 1 or Paycheck 2, depending on which check for that month I'll pay it out of. In theory, it should work fine. In practice, I actually sometimes get three checks instead of two, and DH gets paid weekly (so, sometimes 4 checks, sometimes 5). Plus, I haven't fully accounted for all of our miscellaneous spending, and I think we're hemorrhaging money in that category. I did use the debt snowball technique to get rid of some lingering medical bills (almost) but I NEED to do the same for the rest of the nagging debt, including the never-ending school loans, which I really think at this point I'll die before I actually pay back. I've tried Mint but couldn't get into it. I'm thinking about maybe the free month YNAB trial to see if we really use it. Quote Link to comment Share on other sites More sharing options...
Soror Posted July 30, 2012 Share Posted July 30, 2012 (edited) For those who are listing 401K and things like taxes and insurance, are you listing your percentages from your gross or net? Because I don't ever see dh's check- it's directly deposited into the accounts and the taxes,insurance and 401K are taken out already. Or are you referring to property taxes and car/house insurance? I'm trying to figure out these percentages you guys are posting to see where we fall. We have ample income but I'm trying to determine whether we're needlessly overspending in some category. I posted after tax percentages as I thought that is what the OP wanted. My house/taxes and insurances- is mortgage, property taxes and house insurance. Fwiw our mortgage is officially 20yr but I posted our % as the 15 yr amount as that is what we've always paid, so that might not seem accurate either. Edited July 30, 2012 by soror Quote Link to comment Share on other sites More sharing options...
Soror Posted July 30, 2012 Share Posted July 30, 2012 This is sort of what I'm doing now. I have a spreadsheet that has all of my bills listed. Savings, 401(k), health insurance are all auto-deducted from my check and deposited where they are supposed to be, so I don't include those on the spreadsheet. I've listed the due dates for everything, approximate or exact amounts for each (depending on if the expenses are variable or not) and then I have a column for actual amount and date paid. Finally, I have everything divided into Paycheck 1 or Paycheck 2, depending on which check for that month I'll pay it out of. In theory, it should work fine. In practice, I actually sometimes get three checks instead of two, and DH gets paid weekly (so, sometimes 4 checks, sometimes 5). Plus, I haven't fully accounted for all of our miscellaneous spending, and I think we're hemorrhaging money in that category. I did use the debt snowball technique to get rid of some lingering medical bills (almost) but I NEED to do the same for the rest of the nagging debt, including the never-ending school loans, which I really think at this point I'll die before I actually pay back. I've tried Mint but couldn't get into it. I'm thinking about maybe the free month YNAB trial to see if we really use it. Do you then watch each category to make sure your spending what you have budgeted? I started a physical list this year of all our spending divided into several categories(along w/ Excel spreadsheets and Mint) so I can more clearly look and determine what are accurate budget amounts and what we are spending our money on. I update my book and online at least once a week because if you just look at it once a month it does no good. What happens if you go over in a category? Are your expectations realistic? Without tracking closely you have no idea. Quote Link to comment Share on other sites More sharing options...
AlmiraGulch Posted July 30, 2012 Author Share Posted July 30, 2012 Do you then watch each category to make sure your spending what you have budgeted? I started a physical list this year of all our spending divided into several categories(along w/ Excel spreadsheets and Mint) so I can more clearly look and determine what are accurate budget amounts and what we are spending our money on. I update my book and online at least once a week because if you just look at it once a month it does no good. What happens if you go over in a category? Are your expectations realistic? Without tracking closely you have no idea. Not really. That's the problem. Well....for the actual BILLS I do (whether it be money toward debt, or mortgage, or car, or whatever). It's all the extra money that I have no idea where it's going. And THAT'S why I need a better system. That's why I asked what everyone spends as a percentage, per category. I can always find info online about certain categories, like housing, but I never know what is "normal" for the other stuff. Bottom line I have to figure out what works for us, but it's very helpful to have data (or at least anecdotal evidence) when making my final determinations, and in discussing with my husband. Quote Link to comment Share on other sites More sharing options...
Annie G Posted July 30, 2012 Share Posted July 30, 2012 I posted after tax percentages as I thought that is what the OP wanted. My house/taxes and insurances- is mortgage, property taxes and house insurance. Fwiw our mortgage is officially 20yr but I posted our % as the 15 yr amount as that is what we've always paid, so that might not seem accurate either. Thanks- that helped clear it up for me. So it appears you save nearly 40% of your income...that's impressive! Yeah, we're not doing that- I need to pinch some pennies and get serious about living way below our means- our monthly bills aren't bad- it's discretionary spending that I need to learn to corral. How do you get into that mindset? Quote Link to comment Share on other sites More sharing options...
Soror Posted July 30, 2012 Share Posted July 30, 2012 We want to meet our goals more than any of the other little stuff. I really want financial security and there is only one way there, besides the fact that I'm naturally drawn towards minimalism and frugality. Just doing without is hard to maintain I think without specific goals and purpose. Quote Link to comment Share on other sites More sharing options...
Soror Posted July 30, 2012 Share Posted July 30, 2012 Not really. That's the problem. Well....for the actual BILLS I do (whether it be money toward debt, or mortgage, or car, or whatever). It's all the extra money that I have no idea where it's going. And THAT'S why I need a better system. That's why I asked what everyone spends as a percentage, per category. I can always find info online about certain categories, like housing, but I never know what is "normal" for the other stuff. Bottom line I have to figure out what works for us, but it's very helpful to have data (or at least anecdotal evidence) when making my final determinations, and in discussing with my husband. Sorry I meant those rhetorically as thinking points not as interrogation. I try to ask myself the same when we start to veer off course. Quote Link to comment Share on other sites More sharing options...
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