not set in stone
My I-Guess-You-Can-Call-This-A-Budget
I am paid biweekly, and as much as I wish I could handle a month’s expenses on one paycheck, I’m not there yet. I also am not able to use the 60% solution. My first check of the month goes to everything but rent and the car note, which are covered by the second check. My job deducts pre-tax dollars for my health insurance and a program called TransitChek, with which I buy the bus tokens I use to get to work using pre-tax dollars. I have to figure out how to account for this when I file next year - according to my pay stub, this decreases my taxable wages. Of course, my taxes come out next - fed, state, and local. Philly has a wage tax of 4.5% - I hate it. Then about 6% of my gross pay is deposited directly into my bank’s savings account, where it sits until automatic transfers take it off to my ING account. (If you’ve seen my debt, you’d know why it’s 6% and not 10%.) By the time I log on to my bank’s website and pay the minimum on all these bills, I’m left with a few hundred dollars, at best.
I take the remainder and this is where my actual budgeting occurs. When I was little, I used to watch my mom sit at the table with a pile of bills and scribble these long columns of numbers down the back of one of the envelopes. I didn’t understand that childhood memory until college, when I found myself doing the exact same thing. I sit with my checkbook register, a calendar, a calculator, and my bills. I never was able to make that transition to Money, or Quicken, or whatever else there is out there. I’ve been meaning to, but so far, my mom’s back-of-the-envelope system works just fine for me.
Day-to-Day
I anticipate how much money I’ll need for the next two weeks for groceries, prescriptions, gas, a parking meter card, laundry and particular incidentals I know about in advance. For example, a while back, I took a trip, and I included spending money as an "incidental" that I knew I’d need in my pocket while out of town. This amount is deducted from the money I had leftover after taxes and bills. At this point all of my mandatory expenses are accounted for.
The Buffer
There is always money left after these day-to-day expenses are taken out, usually something between $100-$200. This is where my discretion gets tested every month. I try to leave some money in the checking account as a buffer for who-knows-what-may-happen expenses. Stuff like a sudden craving for pizza, or remembering someone’s birthday at the last minute, or EZ pass taking out $30 whenever I use that much in tolls. However, I don’t want to blow through all this money - I’m trying to get out of tens of thousands of debt. So I’ll try to at least cover the amount of interest that I know will be added to the balance of my old credit card debt in between my payments, in addition to my minimum payment. Everyone who struggles with debt knows that a minimum payment gets whittled down to darn near nothing after they slap that interest on you. If I can’t pay all of the interest, I pay as much as I can without destroying that buffer.
My buffer is precious. First, it keeps me from going under my account’s mandatory minimum of $100, which costs $15 in fees. (I know, I should do something about this.) Secondly, it keeps me from dipping into my emergency savings over dumb stuff. Third, sometimes I know I’ll need my buffer to supplement my balance after my NEXT paycheck, because I know a big expense is coming up (this is how I save for upcoming expenses without touching my emergency fund). This part of my budgeting is different every month, and it depends on what’s going on in my life. It’s flexible.
Accountability to Myself
One thing it seems others do that I don’t is evaluate whether or not I went X dollars and Y cents over budget in Z area. First, I usually don’t calculate amounts over budget. However, I do hold myself accountable - I know when something ain’t right. It usually happens when I’m struggling with a really small buffer until payday, or when I’m only paying the minimum on my debt repayment. Then I go through my checkbook register, which I keep vigilantly, and balance against my online statements faithfully, and examine where exactly my money went. Then I adjust my behavior accordingly, which I’ll discuss in my next post.
