Thursday, May 17, 2007

Category 10: Miscellaneous

The Miscellaneous category is probably one I should eliminate. You can’t buy a miscellaneous, so how can you spend money on it every month? That said, I find it incredibly convenient to have a catch-all category. It varies widely from month to month and is something I should do a better job of regulating.

My miscellaneous category covers the subcategories of mail, gifts, charity, and house wares to date. More subcategories will likely be added as I spend more times budgeting. I do mail a lot of letters and packages, often going to the post office a few times a week, making the mail category much more than a few stamps. Charity is not something I contribute to every month, but on a yearly basis I try to give ~5% of my gross income to non-profits. This year I’m planning on $2000 is my undergrad institution (with a matching grant from my employer!), and will be finding other smaller causes to donate to as well (such as my brother’s bike ride for cancer, or the Boston AIDS walk). Even though I’m trying to save money, I need to give to charity. Gifts are also not insubstantial, but need to be reduced a bit. I like being able to give “extravagant” gifts to loved ones, or send someone something that reminded me of them. I should instead remind myself of how I’ll be able to buy people things after grad school, when I have a real salary. The last subcategory, house wares, is not something I spend a lot of money on, it was just that I needed a juicer last month for a diet I was trying. I like house wares, but I try to resist them as much as possible.

Everything in my miscellaneous category is stuff I like to spend money on. I should really be careful not to abuse this category.

Wednesday, May 16, 2007

Category 9: Education

Education is not a category that I really want to spend money in right now. Sadly, there are occasional expenditures in this category. With the admission letter to grad school, there was also a request that I take a few classes before getting there, just to have a little background. I managed to take one of these classes in April and plan to take the other class in August, both from University of Phoenix online. I did fine in my first class, but found myself severely annoyed with the cost. $1700 for one, five-week-long class? For that price, I would almost expect one-on-one tutoring and a gold-plated textbook. I’m not really looking forward to going through the process again, but I will pay for my class, I will take my class, I will submit my transcript to the awesome grad school and be done with it.

The education category is fairly simple. There’s tuition, covering the cost of each specific class, there’s fees, covering things like the registration fee, and there’s books, which covers the grammar and style guide they force me to buy. I’ll probably be reselling the still-shrink-wrapped book on ebay.

I obviously believe in education, since I’m willing to put myself into so much debt for it, but I really wish it was less expensive.

Tuesday, May 15, 2007

Category 8: Beauty

Beauty seems like one of the most superfluous categories. I never really need new makeup, or even to wear makeup at all, so perhaps it should be cut, but it does cover other things which I consider to be pseudo-necessities, like shampoo, conditioner, face wash and soap. If I were more frugal (or less vain), I might cut back on these items, too.

The beauty category is divided into three subcategories, hair, face and body. These seem pretty self explanatory to me. Hair covers things like shampoo and conditioner, in addition to hair spray or pomades (not something I use), hair dye (something I don’t do anymore, hair cuts (something I do very infrequently, now) and hair ties or bobbles. Face covers things like face wash and makeup of all varieties. Body covers soap and deodorant, lotions, shaving supplies and other sundry body things.

Calling this category beauty makes me realize how unnecessary most of these things are and gives me a wonderful guilt complex about putting anything in it. It tends to be pretty sparse.

Category 7: Health

I am a generally healthy person. I’ve never had a cavity in my life and have no prescriptions that would be classified as life-saving. There have been no surgeries in my past and hopefully won’t be any in my future for a long time. That said, I still budget some money to health because I can’t always count on being healthy. I do have an HSA to cover these expenses, but I admit that I’m generally not using it because I’d like to save it for my more lean grad school years to come. Aside from the HSA, I have fairly good insurance coverage as well.

My health expenses are broken down into 5 subcategories, prescription, non-prescription, doctor’s appointment, vision appointment, and dentist appointment. My prescription category covers my current elective prescription and my glasses. Non-prescription is for things like over-the-counter cold medicine or a bottle of Tylenol. The other three categories cover all expenses related to an appointment with a medical professional.

I could decide to quit taking my current prescription, but I think the benefits outweigh the cost. Other than that, I’m happy and healthy.

Monday, May 14, 2007

Category 6: Travel

Oh, Travel. We have such a love/hate relationship, but it’s definitely worth it. I love you because you let me see all those people I’ve left to live in this small town in the middle of nowhere, but you hate me by being much more expensive than every day living. You break my budget, but I will continue to use you as my excuse to splurge.

Travel actually is a difficult category for me. I do live in a very small town, very in the middle of nowhere. My family all live 1000+ miles away, my boyfriend is about 500 miles away, and I really miss city life. All of these factors come together to create incredibly high travel expenses.

Currently, I break travel into three subcategories, lodging, transport, and banking. Other related travel expenses, such as food and entertainment, stay in their original categories; I would have to eat whether or not I was traveling. Lodging is self-explanatory and something that I generally minimize due to usually visiting other people. Transport is only the cost of transport that doesn’t happen in my car. If I drive to Boston, it doesn’t fall in this category, but if I fly it does. It could also include train tickets or taxi rides. Banking is a subcategory that doesn’t get utilized that often, but occurs occasionally when I’m away from my home bank. If I’m traveling internationally, it accounts for conversion commissions, while if it’s more domestic, it’s the ATM fees I generally try to avoid.

This category does vary wildly from month to month and is something I should really work on, perhaps budgeting a small amount each month into a travel account, then only traveling when I have the funds built up. I don’t know that I’m disciplined enough to actually deny myself travel, but it’s something to consider.

Category 5: Clothing

Clothing is one of my more frugal categories. It’s not that I don’t like clothing; it’s that with my current job and life, I just don’t feel that buying new clothes is practical. No one is going to appreciate them and they’ll just get dirty or torn. Moreover, when the only clothing store in town is Walmart, it tends to limit your options a little more than you would like.

I do have several subcategories under clothing, but I usually only use one of them. The maintenance category, covering the cost of doing laundry or getting things dry cleaned, does get used a couple times a month, but even that is used frugally. I feel like my apartment and the Laundromat charge a little too much for laundry, but without any other options, I do what I need to in order to wear clean clothes to work. I try to hang my clothes up around the house to dry them instead of paying for a drying cycle and can often go weeks between loads. Dry cleaning is also kept to a minimum.

The other categories have to do with acquiring new or new-to-me clothing items. Since I began to track my expenses in March, I can honestly say I haven’t acquired anything. I don’t know how much longer I can keep this up considering that my work shoes are threatening to fall apart and my trainers are so worn as to cause blisters, but I’m delaying purchases as long as possible. Everything that I don’t buy now I can save for a grad school wardrobe.

Friday, May 11, 2007

Category 4: Transportation

Transportation is a mixed category for me. Some of the categories are fairly easy to track. I put all my gas purchases on one credit card, for instance. Others are more nebulous, like how many tolls I paid during my last 8 hour road trip. I can’t exactly pull over and whip out my laptop on the side of the road to record that immediately and by the time I’ve reached my destination the tolls all blend together in my head. Still, I’ve tried to subdivide this category into Car-Normal, Car-Maintenance, Public Transport, Special Transport, Tolls and Parking.

Car-Normal is just gas purchases. It doesn’t matter if the gas is just for getting to work or for driving two and a half hours to the airport for a trip. If I never really traveled, this would be a very small expense. I live 1.4 miles from work, the animal shelter I volunteer at is ~3 miles from home, the gym is 1 mile and the Walmart is ~4. The town ends after the Walmart. With the weather getting nicer, I’m trying to walk to the gym more and will take up walking to work when the mornings are less chilly. I try to only go grocery shopping once a week and generally only go to volunteer once a week. As a reference, since I got gas a week ago, I’ve driven less than 30 miles. If I never had to leave town, I could probably go for more than 2 months on one tank of gas. Unfortunately, this is not the case, so I do spend more than that on gas. Last month included a trip from my Western PA town to Boston, while this month will involve a drive to the Pittsburg airport and a road trip to DC. All told, I usually spend less than $120 on gas, but that could change with rising prices.

Car-Maintenance is intended to cover normal maintenance cost. Last month I got an oil change. This month I got my once yearly carwash to scour the bottom of my car for road salt. It will probably include a good vacuum in the future, and perhaps some touch-up paint. This would probably also include tune ups, but I still have 1500 miles until my 75000 mile maintenance and there’s no Mitsubishi dealership in the area.

Public Transportation is a category that doesn’t always get used. There is no public transportation to speak of in my little town unless you are old. When traveling, I do try to take advantage of public transportation when it makes sense.

Special Transportation would likely include airport shuttles or rental cars, but I’ve never had to use it.

Tolls, are, as expected, but are sometimes estimates.

Parking is something I try to avoid paying for, but sometimes it’s much easier to just pay and park then take public transport everywhere. It feels like such a rip-off…

That’s more or less and overview of my Transportation category. You’ll notice that there is no category for car payments, insurance, or Car-Repair. I bought my car used 2 years ago and paid for it in full, so I have no car payments. Insurance is through my parents due to my residency status and is something I generally pay for all at once in January. This year it was $500, and when I have to pay it again, it will likely get its own category. Car repair is obviously something that I try to avoid and have been good at so far. I’ll only add this category if I absolutely have to.

Aside from traveling less, I feel like this category is fairly in control.

Thursday, May 10, 2007

Category 3: Entertainment

Entertainment is a difficult category for me to both define and track. Many entertainment expenses are paid in cash and don’t involve a receipt, so after a hard night of drinking it’s difficult to remember how much a bloody mary cost at that dive bar or how much I tipped the cute bartender. Still, I try, and my entertainment category is divided into 3 subcategories, home entertainment, entertainment while out that involved drinking, and general entertainment out.

My home entertainment has lately consisted of my cable internet bill. I don’t own a television and rent all of my books and DVDs from the small library in my town. My gym membership is prepaid, but even if it weren’t, it’s subsidized by work to be a mere $6/month, so it likely wouldn’t break the budget. I do include my home beer and wine purchases in this category, but they are only for when I have visitors, which is rare. I go for a lot of walks and just don’t really have a lot of entertainment expenses when I’m at home.

Entertainment with drinking is something that I only do with other people, and thus really only do while traveling. I’m not a heavy drinker, but there are occasional binge nights. It’s hard to account for these nights because, as mentioned above, they are mostly cash transactions, there are no receipts, and I was obviously drinking at the time. These nights can get expensive, so I’m trying to watch my money more carefully this month, but luckily (for my budget) these nights are few and far between. I really separate out this category just to see how much I could save by not drinking, but I have no plans to quit.

Entertainment without drinking is another category that I really only do while traveling and usually do with people. It can include things like museum tickets, kayak rentals, or fair admission. It’s usually a little easier to track than drinking, but also not a category I use a lot.

Overall the Entertainment category is very difficult for me to predict, but hopefully with a little more time patterns will emerge. It’s obviously tied to my travel and visitor schedule, but other than that, I’m at a loss. I should probably aim to spend less than $200 a month, because $2500 in a year is a lot of entertainment.

Category 2: Housing

Housing is an easy category. I rent a small apartment in a subdivided house. For a mere $450 a month, I get my apartment with electricity, gas, water, sewage and garbage collection included. I’m probably paying too much for this apartment considering where I live, but I didn’t really have many other options, either. In addition to rent, there are very few other expenses related to housing. I include a little extra in the budget that can fall between two other subcategories, maintenance and improvement. I’m not really doing any major remodeling or handiwork around the apartment, instead these cover things like cleaning supplies (maintenance) and hanging pictures (improvement). This category is as basic as it can be.

Wednesday, May 9, 2007

Category 1: Food

The Food category is divided into 3 sub-categories, dining in, dining out and baking.

The dining in category is fairly self explanatory; it covers groceries intended for my own consumptions, breakfasts at home, lunches brought to work, dinners cooked at home and snacks. I try to be fairly frugal and bring lunch to work daily, but on occasion I get convinced to join the coworkers for lunch out. I rarely snack and even more rarely buy snack food. Living alone means most dinners are fairly modest and leftovers can last me for days.

Dining out is a subcategory that has the ability to break my budget. Most of my dining out happens when I’m traveling, as I find it harder to resist the plethora or food options I just can’t get in my small town and the social experiences of dining with people I rarely get to see. It’s a bit difficult to separate dining out from entertainment in these circumstances. This is also a category where I let generosity get in the way; I hate feeling petty about money and will often put things on my credit card, telling people that we can work things out later. We rarely do. I also feel a bit of the motherly instinct which wants to take care of people, meaning that if I earn the larger paycheck then I will often insist on taking someone out so they won’t need to worry about money. I pay for birthday dinners. These aren’t very frugal things to do.

Baking is a category we’re working on. I bake a lot, but I don’t really enjoy eating much of what I bake. Instead, I bake things to send or take to others, making it more of a gift than a consumable. In the past I’ve been fairly lazy about accurately recording this category because it involves breaking down my grocery receipts, but I’m working on being a little more diligent this month in order to get an accurate view of how much my little habit is costing me. It may be one of the categories to get slashed if I need to find extra money.

All told, I budget between $300 and $400 a month between these three categories, which doesn’t look bad on its own, but over the course of a year adds up to ~$4000. If I cut out going out, my monthly cost would drop to less than $150. If I decided to live extremely frugally, it would probably drop below $75. I could definitely be more frugal in this category.

Breakdown of my Finances

After reading other blogs which broke down their finances, I decided that it would be a good exercise for me. I admit that my system is rather new to me and not exactly perfect, but for the remainder of this year I’m trying to keep a consistent system. Perhaps next year I will upgrade to something beyond a basic spreadsheet or change my categories or start more of an income-based budget, but for the moment this system is working for me.

My budget is currently divided into 10 categories, Food, Housing, Entertainment, Transport, Clothing, Travel, Health, Beauty, Education and Miscellaneous. The order is completely random, but may say something about my priorities, I really love to eat while beautifying myself does seem rather superfluous. Some of these categories are fairly stable from month to month, like Housing, while others can vary by thousands, like Education or Travel. Perhaps I should be working on control, but for now, just and overview.

Friday, May 4, 2007

Five Cent Nickel and Saving

The personal finance blog Five Cent Nickel is running a give away this week. In return for writing a review or responding to a previous post and linking to his website, people are entered for a plethora of prizes. I have been considering getting an ipod and I've been flirting with becoming a more serious PF blogger, so this could do both of those while also providing publicity to an excellent site. Very shrewd way to increase readership, too, I might add.

Anyways, a while back, Nickel posted about where people should focus to save money, large purchases or small purchases. He came down on the side of saving a small amount on numerous small purchases, but the topic is rather difficult. Since I've started to track where all my money is going on a daily basis, I've found plenty of ways to painlessly cut back on spending. Eating lentils a few more times a week instead of fresh vegetables lowered my grocery bill. Soda, a normal beverage when eating out, not only raised the cost of my meals out while adding nothing substantial, but also gave me empty calories. These and other eliminations were all low hanging fruit. I barely notice they're gone.

To me, larger purchases are harder to say no to. I have a friend getting married in Hawaii. I'm not in the wedding, but I couldn't bear to say no when she was so excited, so now I find myself "needing" to pay for a plane ticket, hotel, food, and transport in Hawaii. For the month of May my miscellaneous spending category is huge because I can't say no when my siblings ask to go in together on an extravagant Mother's/Father's Day gift. I have the money and feel miserly saying that I was meaning to save that money instead.

Although the denials in the small spending category and acceptances in the large spending category seem unrelated, they are both sides of the same guilt coin. Depriving myself is perfectly acceptable while disappointing others is much more difficult. Small spending purchases rarely seem to affect others, while larger outlays much more often involve to feelings or perceptions of others. In this case, it makes sense for me to save in the everyday situations in order to hopefully allow the larger financial decisions to be less guilt-ridden. For other people, the reverse may be true; turning down lunch with coworkers may be much harder than putting the kids' riding lessons on hold.

Through it all, what really matters is that people are trying to save in one of the categories, and not blowing it completely in the other. The only way to save is to cut consumption somewhere, as unfun as it may be.

Visit Five Cent Nickel. He inspires me.

Another Tranfer down

I have another transfer pending from my checking account to my money market account where I'm collecting my grad school CD money. I ended up deciding to transfer only $1700, rather than the originally expected $2000. Although $300 may not seem like a lot of money, I get uncomfortable when my checking account is less than $500. It's stupid to keep a lot of money in a low interest account, but sometime piece of mind is worth the financial stupidity.

$8719 down and two more paychecks expected in May.

Thursday, May 3, 2007

May budget outlook

This is my current May budget:
Category Budget
food $300.00
housing $500.00
entertainment $250.00
transport $200.00
clothing $100.00
travel $200.00
health $200.00
beauty $100.00
education $0.00
misc $600.00
total $2,450.00

While most categories are in line with pervious months, I have to admit the miscellaneous category is way out of line. This particular month, that includes both a Mother's and Father's Day (combined) present, a graduation present (TBD) for the boyfriend, a donation for the AIDS Walk Boston, and a rather hefty donation for my brother's cross-country cancer bike ride. Travel for the month includes a trip to Boston for the aforementioned graduation, a trip to DC for Memorial Day weekend (because I can't handle living in a small town), and ends with another trip to Boston for work starting the 30th. These should very well eat the food and entertainment category. Not my most frugal month, but I do get three paychecks and hope to have the full $10,000 saved by the end of it.

Tuesday, May 1, 2007

April Results

With April officially over, I closed out my budget. It looked like this:
Category Budget Actual Difference
food $350.00 $385.97 ($35.97)
housing $550.00 $450.00 $100.00
entertainment $200.00 $102.69 $97.31
transport $200.00 $144.03 $55.97
clothing $100.00 $6.50 $93.50
travel $1,000.00 $797.47 $202.53
health $300.00 $5.18 $294.82
beauty $50.00 $4.42 $45.58
education $0.00 $0.00 $0.00
misc $300.00 $211.36 $88.64
total $3,050.00 $2,107.62 $942.38

I did rather poorly on food. There are a number of reasons for this, visiting the boyfriend for his birthday, taking a friend out to dinner for her birthday, spending a weekend at Penn State, etc, but those are just really excuses. I should be better about this in the future, but I also need to work out some way to merge food and entertainment. Sometimes dinner isn't just dinner. Aside from being bad with food, I did go ahead and buy both a plane ticket to Hawaii for the July wedding and a ticket to Boston for graduation, which made the travel category high. There was also a donation back to my college's alumni gift contributing to the miscellaneous category, but my charitable giving is just going to get worse before it gets better.

At least I did manage to put some more money into my grad school savings this month.

A general note on my budget: I set my budget at the beginning of the month based on what I think I will spend, not my net pay. Everything is then tracked and entered as soon as possible after purchase. All purchases are recorded on a cash basis, meaning that if I paid for it in a given month, it's in my budget for that month, hence the plane tickets. I do try to be frugal, but I also try to budget for things I know I'm going to do.