Posts Tagged ‘confession’


Stephen is a terrible procrastinator

May 30, 2010

Would you believe I wrote this in December? Thinking it would be a great post? And then did nothing at all, neither posting nor budgeting?

A budget plan for next year:

1. Get last year’s spending recorded and itemised as far as possible.
2. Apportion that spending into categories at some sort of sensible level.
3. Think through any changes in habits that might increase or reduce spending in those categories.
4. Based on previous steps, work out monthly expenditure
5. Note the big regular things (like annual insurance premiums, car registration) and tweak provisions for previous months to make sure there’s enough.

Better late than never, I say. The last couple of Sundays I’ve snatched an hour here and there and I’ve nailed everything I spent and everything I’ve earned in the last tax year, whipped up a spreadsheet or two to break it down monthly and set myself some targets for various categories. And the first Sunday of every month from now on, I’m going to track my progress.

I took the opportunity to take my number crunching back a couple of years. I noticed more spending on power, more spending on groceries, and more spending on air travel. I’m not sure there’s much to be done about that. I refuse to be cold over winter, and until we’ve bought a house, we’re stuck where we are. I’m pretty sure the increase in food costs really reflects prices going up. And because of my family circumstances, flying me to my daughter or my daughter to me has to happen regularly.

Unfortunately, there’s still a giant hole in my data. Remember early on in the piece I wrote about  tracking every last cash purchase? I thought of that as an interesting exercise, so once I felt I’d learned from it, I stopped. That was a really bad idea. What I should have learned, but didn’t until too late, is that recording things only works as a discipline against impulse spending if you keep doing it. Now it turns out that I have withdrawn actual thousands of dollars in cash from ATMs and I don’t know where it went. And unfortunately, it looks very much like that biggest blowout from 2009 compared to 2008 was in cash, somehow. I dunno. Maybe I’m buying illicit drugs in my sleep or something. But anyway, it’s shameful.

I am dealing with this in three ways. First, I’m going back to recording everything, every day. If it turns out to be annoying, I’ll let that provide more incentive not to spend. Second, since I don’t pay EFTPOS transaction fees, I’m going to make a real effort to put everything I can through EFTPOS so it will get recorded. And as noted, I’m marking my calendar to do budget updates so I don’t fall off the wagon.

Expect riveting posts in a month or so about how this is turning out.


Budgeting on an annual basis — what an eye opener

October 5, 2009

Part of buying a house is getting a mortgage; part of getting a mortgage is figuring out what repayments you can afford; figuring out what repayments you can afford requires budgeting; and to make a budget, you need to figure out what you spend already.

I use a program called Gnucash to track our spending. I export statements from internet banking, and Gnucash sucks the data in and categorises it.

Now I often run reports on a monthly basis in Gnucash, but there’s an obvious thing I should have been doing but only just thought about now.

Obviously, there are a lot of expenses that only happen once a year, like paying our insurance premium. And there are other expenses that are irregular, even though they’re certain, like holiday spending, or going to the doctor. So the right way to work them out for a monthly budget — we both get paid monthly, so that’s the best way to work it out for us — is to total expenses over a whole year, and then divide by 12. Or maybe even over two years, and divide by 24.

And what a sickening revelation that was. It turns out that there are things that I think of as “one-off” that really are recurring expenses, just not frequent or regular ones. For example, we spend quite a bit flying around the place visiting friends and relatives. I drink a lot. I buy $40 of books every month, on average. And so on.

The only comfort is that our grocery bill tells me that I am a supermarket ninja. We eat well on only $125 per week, and that includes a fair amount of wine and a teenage girl 12 weeks of the year. But apparently I have a long way to go in other departments.

I do sort of have a system for irregular stuff. I have an account called “bills” and put a fixed amount in it every month, and pay all the bills out of it, so if some months we spend less, there’s a buffer building up for the months when we spend more. But maybe it’s time to actually do a real business-style budget, with a forecast for the coming year, and a monthly update to track actual spending against the forecast.

As always, your suggestions on budgeting for irregular, infrequent things are welcome.