Caveat: This is not a personal finance blog and I live in a 2-person, 2-income household with no debts. Frugal types, click your Back button now!
My spending has been out-of-sorts for a few months. I have been recording all my spending, but not trying desperately to stay on budget. I have some flexibility, so I am not being too hard on myself. However, “outgoings” have crept up, and I am now $2708 overspent for the first half of the year. I can imagine what Gail Vaz-Oxlade would say: “At this rate, you will be $5400 in the hole at the end of the year, and if you keep spending at this rate, you will owe $27,000 in five years!”
The good news is, I have borrowed against savings and I will have paid myself back by October. But how could this happen in Exacting Land?
I divided all my spending into household bills and discretionary spending, to see how much of it was avoidable. The answer:
- $733 extra household spending
- $1975 extra discretionary spending
Here is what the household bills looked like:
|Household Bills: Jan to June 2015 Actuals|
|6 Month Actuals||6 Month Budget||Over/Under Budget||Notes|
|Long Term Savings||6500||6500||0|
|Grocery||2608||3000||-392||Savings from Rom grocery takeover|
|Child||2193||1452||741||Agreed to cover additional expense|
|Property Tax Savings||1800||1800||0||Savings for annual bill|
|House Projects Savings||1500||1500||0||New project coming soon|
|Electric/Heat||1395||1500||-105||20% savings over last winter|
|Insurance Savings||1260||1260||0||Savings for annual bill|
|House Maintenance||861||600||261||Yet more furnace repairs|
|Internet/Phone||730||725||5||Dropped cable TV|
|Car – Service||633||200||433||First major service (3 years)|
|Car – Gas||326||420||-94||Hard winter, stayed in|
|Health & Dental||83||70||13|
|Haircuts||62||132||-70||Every other month|
|Car – Tolls & Parking||59||100||-41|
This includes everything except Rom’s car and bus costs which he pays out-of-pocket. As you see, I agreed to pay for an expense for Link, and if it weren’t for that, the budget would have balanced. Since I can make it up later in the year, I am 100% OK with that.
You will see that six months in, Rom has aced the grocery swap! I “assigned” him the grocery shopping starting in January. He has been saving us $65 a month. On top of that, I feel guilty buying my premium coffee and skincare products out of the grocery budget (as I used to do) so I have paid them myself. I will post later about how our grocery buying and meals have changed.
As far as bills go, I wasn’t sure how much to budget for heat now that we have heat pumps instead of the gas boiler, which is used only as a backup. My estimate was pretty close. I am pleased that the new system saved us 20% over last year, despite the winter feeling twice as long and cold. I was not happy that we needed another expensive boiler repair, but the last thing I want is to replace the whole unit, since it is now only a backup. If we have no more repairs in the next few years, we should easily start to save real money. (I am keeping in mind that if we didn’t install the heat pumps, we would have paid for the repair anyway, plus 20% more for heat).
Our next big household project is to replace the front and back doors of the house, including the hardware and framing, and add storm doors. Good for both energy efficiency in the winter and airflow in the summer. We have additional savings for that carried over from last year.
Our home and car insurance are very expensive. When Rom moved here from the UK, only one insurance company would take Rom’s UK driving experience into account. The others would have charged him as a new driver (we are talking $4500 annually!) So he is getting the Canadian rates, but we pay a lot more for home insurance as part of the bundle. By the end of 2016, he will have met the New Driver expiry period, and we can then switch insurers.
We cancelled cable TV in January, which we hadn’t watched in forever, saving $55 a month. You will see I am listing Internet and landline as a household bill because they “feel” essential to me even though I know otherwise.
I have listed haircuts as a necessary expense because I have to be presentable at work. I have been going to a no-frills place every 2 months, and Rom does his own hair with clippers.
Here is what my discretionary spending looked like:
|Discretionary spending: January to June 2015 Actuals|
|6 Month Actuals||6 Month Budget||Over/Under Budget||Notes|
|Vacation Savings||3300||3300||0||Not all spent, some for Fall travel|
|Entertain, Concerts, Dining Out||1166||960||206||Had extra from 2014 to cover|
|Xmas Gifts||1062||780||282||Will balance by year end|
|Gifts||975||1150||-175||I like buying gifts|
|Clothes||737||450||287||Separate post coming|
|Yard/Garden||188||100||88||Started feeding birds, bought wheelbarrow|
|Computer||149||0||149||Printer ink, blog expenses|
|Books & Mags||148||0||148||From vacation fund|
|CD & DVD||138||0||138||From vacation fund|
|Jewellery||133||0||133||Bought watch and amber earrings 🙂|
|Exercise machine repair||130||0||130||One time expense|
|Cell Phone||104||104||0||15/month plus tax|
|Postage & Stationery||92||0||92||Includes a courier fee|
|Fitness (Skating)||73||150||-77||Only skated half as much as intended|
|Unaccounted for||59||30||29||Included fees for currency exchange|
|Bank Charges||51||0||51||Need to switch account type|
|Misc – Mixer||40||0||40||Old mixer went kaput|
|Misc – Wine||28||0||28|
|Misc – Pillow cases||18||0||18|
|Totals||10304||8329||1975||< < overspent|
I am not concerned about vacation spending. I am continuing to set aside money for it until October when our planned travel is done for the year. I spent extra on books and DVDs for entertainment while we were in the UK, so I am charging them to the vacation budget! This fund will definitely not be overspent on an annual basis.
Rom and I set aside $160 a month for entertainment, including dining out and coffee shop snacks. We carried some forward from last December, so that is balanced.
I save money every month for gifts including Xmas, birthdays and “everything else” that crops up. In addition to what I saved, I spent money on Xmas gifts when I was travelling. I will skip some monthly payments to my gift fund until I catch up.
I am always joking that my cats are not members of the family, but just a hobby. I jest, but really, pets are a lifestyle choice. Obviously their well-being is not optional once you have them, but I don’t count their expenses as a household bill, the way I do utility payments. So cat food and litter are not in the grocery budget.
I shocked myself by having $59 unaccounted for in six months. My tolerance is about $5 a month 🙂 But most of that is £22 ($41) I lost track of at the end of our vacation. I am betting it went on food or subway passes.
The rest of the discretionary expenses will have to be paid back to myself by either spending less in those categories (such as charity and clothes) for the rest of the year, or cutting back elsewhere. One thing I have never done is to give myself a monthly personal spending allowance. I either spend as little as possible, or use creative accounting, like I just did with books and DVDs from the vacation budget. I can no longer play within the grocery budget like I used to, since Rom has it in cash! I do have annual expenses I could budget for, such as my $70 in optional WordPress fees, but that is a small amount I don’t need to “set aside” or worry about.
$1975 is a lot of money, and if I didn’t save throughout the year for all of my big annual bills, I would probably find myself unable to pay them by late Fall. There are loads of categories where I could cut back if I faced difficulty, but I’m glad I don’t have to.
Do you ever let your budget get away from you and play catch-up later?
New Reader? Some background on my financial situation is here.
You are my hero. Well done.
I do not feel heroic, just happy I have this much “play” in my budget.
I really understand where you are coming from, and I have a partial post written in a similar vein. When I switched jobs during the school year the increased responsibility seemed to cause me to be less aware of how our finances were doing on a weekly basis. Granted, we were still budgeting and saving, but I don’t like that feeling of being unaware of our spending, and coming to the end of the week and having no clue where we stand. Thinking about this right now…
Yeah, it has been strange recording my spending, but not really doing anything about the results!
Brilliant – I’m about to post in the same vein in the next few days. I’ve just looked forward at my spending for the next six months. Gulp! It’s way better now I’ve quanitified it though
I look forward to your post. I have to do a projection once in a while to open my eyes and make sure I reign in spending!
I’m sure it feels a bit weird to do personal finance posts (I know I feel a bit uncomfortable doing them) but it’s so useful for others to see how people organise things and keep track.
I’m still very much learning and we’re terrible at tracking. We look at ‘what’s left over’ and we do thoroughly track our savings, but not our spending overall. Obviously this needs to change, so it’s great to see this model.
I like how you have split the ‘essentials’ and ‘discretionary’ spending. I’m aiming for the second half of the year to track every cent – so far have managed 2 weeks, so I just have to stay focussed.
For myself, I don’t have a lot of daily or “small bits” spending, so money doesn’t trickle away like that. What I find useful about tracking is getting an accurate number for the big things – how much is really spent on groceries? How much of that is snacks? Is the child’s school always asking for money for extras or do I just “feel” that way? How many times a month do I actually fill up the gas tank? etc.
My biggest change in the last 2 years has been to have no leftover money – on purpose. I allocate all income to either expenses or to savings.
It’s good to read this, Dar. We do have a lot of ‘small bits’ spending so the tracking time can be really substantial. This is another good tip – we need to streamline things! I don’t do zero-based budgeting either (is that what it’s called?) and that might be a good aim as well.
It’s always interesting to see other people’s figures, particularly as I don’t do category based budgeting. AS you may recall, I do ‘savings’ budgets – so I automate savings for bills and other ‘wants’, and then set myself an amount for incidentals (meals out, snacks, clothing, ‘just because’ gifts etc). It works well for me, by saving first, I know I’m covered for bills, and rent/food, so the rest is for me to do whatever I like.
It helps me be a little more ‘chilled’ with things like gifts. This weekend, I got the BF some tracky pants and a cable for his phone. It’s the sort of thing that’s not a huge expense, but I’d likely not have a line item in the budget, which may mean I resent over spending if I was to budget like you do. I used to resent ‘charity’ cause it made my savings pool smaller. As soon as I set a weekly ‘charity’ savings amount, and put it away, I stopped resenting requests from friends for donations – I knew it came out of that pool if the weekly incidental money is running short. Interestingly, sometimes the ‘walking around money’ can cover those things, and when it doesn’t worry me, I just give, and not reconcile between the ‘charity’ account, and the normal account. Funny how the brain works, it’s all the same money!
I like your system. Ultimately mine is similar, because I will “save” $75 for clothes (for example) and then spend against it, making sure I balance by year end. I don’t have many unexpected expenses – I suppose an extra car repair or vet bill would be the most extreme.
I love getting a peek at other people’s finances! The fact that you realized and noted that you had “overspent” during the first half of the year makes me think it’ll work out fine for the rest of the year . . I think people who don’t track or pay attention are the ones who are more likely to get themselves into money trouble. I’m really happy to hear your new heating system saved you money! And like you, I lost track of some money on our vacation. I think we may have accidentally tipped with a $20 rather than a $10 bill 🙂
I am confident that my budget will work out by year end. I have lots of seasonal expenses, for example, I save for property tax for 8 months, then it is paid off and I start over in January. So, there are 4 months I am not paying that expense. Same is true for several others. (Well, I could average them out over 12 months). That was a lucky server 🙂
I love reading your budgeting posts! I don’t really pay attention to the figures (because I don’t think my expenses are comparable at all) but I think it’s really interesting to see how you plan your budget and what categories you use. I don’t think I could ever operate on a ‘none left over’ type of budget though!
Ever since I moved away from home I’ve been tracking all of my spending, especially since coming over to the UK. However, my incoming and outgoing cash flow has been so varied since I moved over here (living in different places, working vs relying on savings, etc) all of my meticulous keeping track seems a bit pointless sometimes; I have all these numbers that are useless for analysing and predicting! Oh well, it’s good practice for when I have a stable income and predictable expenses, right?! 😛
Yes, absolutely! You will not regret it. The original point of “none left over” is that any money not needed for expenses is saved. Could be saved for a bill the next month, or a movie the next week, but it’s still earmarked for something later, rather than saying “it’s left over so it’s OK to spend it all now.” Mind you it took me several decades to get to this point 🙂
Have you set a date for how long you will stay in the UK or is it based on your visa expiry?
Yeah that makes sense, I would just worry about underestimating expenses and having to ‘borrow’ from savings!
My rough plan is to stay until my visa expires in September 2016, but chances are my plans will change! I’m trying to work on being okay with not having everything planned out to a T 😛
Wow you are so exacting! I WISH I had the discipline to keep such good records. While our finances are fine Im sure being able to document everything so exactly would yield some surprises. I especially like your idea of turning over the groceries to the hubby!
I am always surprised by what I uncover. Whether I actually follow it up with an action plan is another story! One thing I know about my spending is that cash doesn’t trickle away on coffee, magazines, nail polish, etc. I am much more likely to scrimp and have a lot of no-spend days, then go out and spend $100 on clothes!
Same here. No coffee, no magazines, no, well not many nail polishes. But easy several hundred at the shops on shoes and dresses.
Part of my journey to an organised life is doing a budget or at least tracking where we spend. But I know it’s not going to happen. In part because I find it sooo tedious. Reading through all your categories and amounts reminded me of this. And in part because I would have to acknowledge how much money I waste on things otherwise known as entertainment, clothes and stuff. But well done you, Miss Very Exacting.
Ha, thanks, as you must know, I sincerely do not find it tedious 🙂