by Matt Fildes
I want to share with everybody how I’ve been doing my budgeting now for several years. 
Here’s a sample month of mine for August of 2014. I know what my weekly (net) income is and put that under Job Income (obviously, lol). I base the month on 4 weeks. Below I have listed all my recurring monthly expenses, which will give everybody a good idea of what my minimum payments are. I explained to Ashley back in September that I “pay myself” $70 per week for misc. groceries (my GF typically buys these) and gas, so what I do is allocate $40 per week gas and $30 to groceries.
I have a really good idea of which payments I need to make with which paycheck of the month. I use this to determine how much of a payment I can make on my loans the day I get paid. When I take cash out for gas/groceries, pay the recurring bills and use the remaining money t0 pay my student loans, I’m often left with $0 in my checking account the day after I get paid.
Now I’m sure you’ll quickly notice is I don’t budget for non-recurring/surprise bills, ex. ER visits, ER pet visits, car repairs, travel and, honestly, I don’t even try. Most of time I have a pretty good idea the day I get paid, or the day after, expenses I’m going to incur that I don’t have specific line items for. When this happens I just lump it in the rest of my bills and use the rest to pay my student loans, like normal. When a surprise expense happens that I had no way of knowing, I pull out of my emergency fund (which currently holds just over $3,000). When the fund drops below my personal threshold of $1,000, I refill it using a month’s or so of extra income.
Compared to what I’ve seen on this site and other sits for budgeting, I’m very loose with it in the sense I don’t have lines for car repairs and travel and going to the movies and stuff I do to keep me busy. I don’t know if that’s a good or bad thing so I’m looking for feedback here! Don’t pull any punches, lol!
Overall your method seems pretty uncomplicated, and I’d say if it works for you, go for it, but I do see a couple problems with it.
One problem I see is that since you don’t seem to have separate savings categories other than emergency fund, you would be taking from this for non-emergency opportunities as well, such as a last minute trip if it came up after you had already emptied your checking account. This could then leave you vulnerable to a true emergency that would come up, especially if you let the account get down to $1000 before you replenish it. If you had a separate savings account for travel, you would be able to pull from that, and know not to use the emergency fund for a fun trip (but still be able to pull from the travel fund for an emergency). It just seems to dilute the purpose of an emergency fund to use it this way.
Also without a separate budget for items such as clothing or gifts, it seems easier to let the amounts spent on these creep up without realizing it. Just pulling money out of your debt payments anytime a ‘need’ for these comes up sounds like a recipe for overspending or thoughtless spending. It might make more sense to take a certain amount out each month to cover all these extra expenses (or just leave it in the account), and then if any is leftover at the end of the month, add it to next months debt payments. This way you only have a set amount of extra left per month, and will have to plan your spending around this. To keep it simple, you wouldn’t even need to separate this into categories, just keep it for discretionary spending.
Hey Jenny! You’re 100% right. I have to agree with everything you’re saying, but (there’s always a but, lol) there’s more reasons I don’t break down my budget farther than I’ve been doing. Overall, the biggest reason is because I don’t really need to right now, and I should have touched on this in my post. Ever since I got really hyper focused on the debt pay off, I haven’t bought clothes, I haven’t gone out to eat, I’ve kept my travel to the absolute minimum and all that good stuff. Essentially, I’ve really only used my emergency fund for true emergencies, like a major car breakdown and ER visits for my dogs. There’s something about having $0 right after being paid that keeps me from spending any more money, which I think the reason being is I don’t have the money for it. I know sitting in my bank account is $3,000, but in a weird way it doesn’t feel like I have the money either, if that makes any sense. After my non-mortgage debt is gone, I’m going to go to a budget like you’re stating have, which seems to be one where you can budget and still have a life too, lol (which is not the stage I feel I’m in right now).
Jenny makes some good points. She’s right, what you’re doing has allowed your to make good progress and your system keeps things simple and it works for you. You might see faster progress if you were more detailed in your budgeting, but you don’t want to complicate things to the point where it would turn you off.
Yeah, Jenny did make some awesome points, for sure. But the thing is I think I made the progress I have because of the lack of detail in my budget, not in spite of it. I think if I sat pools of money aside for clothes, for watching movies, for whatever, essentially (which I 100% plan to do after my debt payoff) I’d be more inclined to spend it vs. going under the assumption I don’t have the money, regardless and throwing it all on my debt. Maybe if I trusted myself more, I’d be more willing to set money aside and put it towards debt if I didn’t spend it. Does that make sense?
I agree you need to do what works best for you – I personally like to have a category for everything and have some money in there for unexpected expenses. For example, we have a category for Medical, Dental, Pet Care, Life Insurance…..things like that which aren’t an every paycheck expense but it makes me feel better to know there is money in those categories if anything comes up….i.e. vet visit. I usually will keep enough in medical for example, to cover a couple of co-pays if we need to make a trip to the doctor…..not a huge amount, but enough to cover something unexpected.
I’m more like you Matt in that I just have a general savings bucket that I use for whatever irregular expenses arise. One thing I’ve found is that it’s almost impossible for me to keep significant amounts of cash in that account because it’s too easy to pull from. This year I have established an account outside of my normal bank account that I’m calling Pile O’ Money. This is where I’m hoping to save my actual emergency fund.
Once that one is separated, I’ll still probably use my general savings account for all of my irregular expenses. I keep an excel spreadsheet where I “earmark” the balance to specific areas, so I can still see the cash tucked aside for property taxes, car registrations, and vacations.
That sounds like a great way to it, Walnut. I actually have a known dental expense coming up for $350 for a crown. I have to rethink what I’m doing as to whether I’m going to start a separate E-fund and contingency fund, or set money aside, or just calculate it in when I get paid like normal, which should make for an interesting post, lol.
That is a really good point Walnut – while I like the idea of my different categories, I do end up pulling money from them on a regular basis for other things. I might have to re-think my own budget!!!
I think you’re doing fine for now – really getting rid of that debt is awesome!
I would suggest you start looking down the road for when your non-mortgage debt is paid off. That might be a good time to start savings in “buckets” for car repairs/replacement, travel/vacation, medical, pets, taxes, clothing, etc…..those things are going to happen so it’s best to be prepared.
In the long run I don’t think dumping all your savings into one pot is helpful. Maybe take some time to look back over the past year and see what you’ve spent in each category and think about setting up dedicated savings accounts (ING is really easy to have many sub accounts). It’s really not that difficult or complicated and – for me – it really helps me spend wisely.
Just my two cents – welcome to the blog!!!
Thanks for the welcome Den! My plan is to definitely look down the road, post student loan debt, and do what everyone here is describing. What I should have shown is I have all the months lined up on my budget spreadsheet. I have every year from 2011 onward on this spreadsheet and a tally at the end of each year showing my totals in each one of the categories I have listed, which gives me exactly what I spent. And you’re right, it is really helpful. I actually used to have various savings accounts of decreasing liquidity because of what you’re saying. However, my impatience got the best of me and I cleared them all out to pay down my debts. I’ll build all these accounts back up in 22 months once I’m post non-mortgage debt.