Saturday, June 25, 2011

Guest Blog By Ted: Macro Budgeting

Hubby had a few suggestions for blogging, and since his perspective/way of looking at money (and the world) is so different from my own, we both thought it would be a great idea for him to lend his own unique voice. I've really learned from him over the past few years, and I think his steering has done our family well. While our natural thoughts on money are not SIMILAR, in our marriage I have found that they can be COMPLEMENTARY. There are lots of bumps in the road to united goals, but the feeling of truly being on the same page is worth the journey.

Here's Ted:

Part 1 – Making the budget.
In dividing the budgeting responsibilities, Ally and I defined our tasks as macro - the monthly and longer term budget and the micro - the everyday living expenses on the two weeks scale. She talks about the micro budget all the time - how to stretch it or how to prioritize it. But how did we make our macro budget? Here are the steps. You can do it this evening. And so you don’t get frustrated, round to the nearest $5. Round up for expenditures, round down for earnings.

1. Find out what you pay for. Put it in a spreadsheet. These are your fixed expenses.
a. Utilities usually include water and sewer, power and/or gas. A safe guess is about $100 per month per utility. Your water and sewer combined will be half that. So the total should be between $100 and $300.
b. Mortgage or rent. How much is it? Numbers I would call normal are on the scale of $500 to roughly $1000 per month.
c. Cars? How much do you pay for a lease or finance on your car(s). $200 to $500/month? More? Do you live in you car?
d. Insurance. How much is your car and home insurance? Insured alone on my own car, I was paying $100/month. With a wife, house and two cars, we pay $250.
e. Do you have a routine debt payment? Are you sure? No student loans? What’s your minimum credit card payment?
f. Phones, internet and cable I lump in together. In the last four years, for me these have varied from $50/month to over $250. With the all inclusive HD cable package and a data plan for your iPaidTooMuch 4gs, you could be at twice that. I’m judging you.
g. Any other fixed payments?

2. Here’s how to decide on your variable expenses and reduce the variance. This is our mirco-budget that Ally withdraws in cash every payday.
a. We give ourselves $100 each in allowance; I used to spend mine on cigarettes. Ally tithes. I quit, she didn’t.
b. Spend $100/week on food,
c. $50 week on gas (or transportation) – if you have a bus pas and it costs the same every month, you can call this a fixed expense and remove it from here.
d. $50/week on clothing and gifts.
e. Some people break this down differently and add an entertainment or “other” budget. Ours is our allowance.

3. How did we get these numbers? The truth is, we guessed and adjusted for the first few months. Our number is $600 bi-weekly. (*Ally note-it's actually twice a month on payday, not bi-weekly, which equals two less withdraws/year) I think it’s lavishly extravagant. For a single, non-drinking, non smoker, this micro budget could be on the scale of $200.

4. The hard work’s done. Now add all this up (don’t forget to count your micro twice) and subtract it from your monthly income. If you’re making less than you’re spending, go see a financial advisor. If you’re in the green, you’ve got options about improving your position.


Lindsey said...

I think you married a computer.

But seriously, I used to micro-manage our money down to the last penny. Like, spreadsheets, formulas - it was scientific. It's really frustrating, doing that when you're married to someone who sees money completely differently than you do, and who inevitably blows your tight budget on incidentals while working in a different province for months on end. I STOPPED budgeting so I could sleep at night, and to date it's done us no harm.

Melanie said...

Its Mel :)

I like how its all broken down..MAYBE we'll try this...maybe...well done Todor (and Ally) <3

Annie said...

Annie said...
how about $1000 for fixing a compressor of the car air conditioning (well, it includes change of oil). Ants in the house (exterminator spendings)? Friends/relatives coming to visit? Gas? It's constanly coming, new and new, never ending.
Still, try to save. Do you have emergency fund set aside? Don't spend it all.
I know, you are young. You would like new clothes, and accesories to it, and a toy for the kid or for yourself (new gadget for the computer), and a bit of show off infront of your friends/relatives. Vanity....
I have my regrets for not saving "when I was rich." I hope you will not.