Tuesday, March 16, 2010

Budgets

Back in 1999, I used to do monthly budgets using spreadsheet software on my computer. I meticulously kept it updated, putting in each receipt, all the way down to the last penny.

A normal (there are no tangents in my world): Tammy designed the spreadsheet to break out how much we owed based on how much we each took in. I was an overpaid SiVl engineer at the time, so naturally my share was higher. One hot summer day in 2000 I was pouring over the spreadsheet trying to figure out how we'd get Tammy through community college (much less Stanfurd, by Pollux and Castor that was expensive!) and I found a major math error. The details are lost in time, but basically we weren't actually multiplying 2/3 by my income or 1/3 by hers (or whatever the ratio was). Since we overwrote the speadsheet every month, we had no way going back in time. Tammy cried, as she had no idea if she'd being pulling her weight (she could have under or overpaying, we couldn't tell). In the end we merged our finances, we were in this together. Later the same year I proposed to her, but tax shelters are another post.

Time went on, Tammy graduated, we made more money, we bought a house (or our bank did), I updated the spreadsheet less often, and by 2009 I was lucky if I could remember to check in once a year. Keeping it up-to-date took time away from actually living my life, which is kind of the point of saving money, so I can spent it on fun and important things.

Enter Mint.com. I was at first wary putting all my online financial info into it, but I can't live without it now. I've created budgets for our gas and grocery and a bunch of other categories. I still have to put in manually cash purchases, and that's a bit of an annoyance as they haven't really made that interface very smart. (First I have to split the purchase, then afterwards I can date it).

But the automagic stuff is awesome. It pulls in info from most of my banks (my credit union isn't supported yet, grrr), categorizes it, and lets me view from a hundred different angles. For example, We're overbudget this month for restaurants (thanks to a very fun but very expensive trip to Pizzetta 211 with Viola's 2nd cousin). I can compare my spending to previous months, and I can roll over any underspend category into other month.

The big shocker for me was when I realized how much we spend on food. I thought we spent $150 max, but most months we're pushing $500. Since Tammy and I are saving up to one day move to East Bay, it's good to know this. I don't want to stop eating well (more on that in a future post), so with a little math-- (groceries+restaurants)*12/income, I quickly see that this is 10% of our pre-tax expenditures. Not bad, but maybe we can do better.

At this point though, it's pretty simple. DON'T SPEND MORE THAN YOU MAKE. If you do figure out why using a tool like Mint.com or a spreadsheet or Quicken. Otherwise you'll go into credit card debt. And then you're pissing your money away to the banks who have done nothing at all to deserve your hard-earned cash.

Next time, credit cards! Why they suck, and how to use them to your advantage.

3 comments:

  1. I feel better. We, too, spend $500/mo on food which is mind boggling to me and the more folks I speak to, the more 2-person households spend the same!

    ReplyDelete
  2. heh, look: you've distilled http://www.powells.com/biblio/17-9780671015206-14 into a sentence. "DON'T SPEND MORE THAN YOU MAKE." that book is a best seller.

    I believe mint is now part of the intuit kingdom, no?

    ReplyDelete
  3. That grocery also includes household items like TP and laundry soap and toothbrushes. Mint.com will let me break it up, but I think that's granularity I don't need. I didn't worry about our grocery bill when we were two-income, but I make a lot less now, I need to figure out how to still eat well and not spend as much money.

    Yes, Mint.com is now "brought to you by the makers of Quicken". That's why there's so many ads for Turbotax on the site.

    ReplyDelete