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Budgeting: do you, and how?

T

The Iron Giant

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Since my eight year old still refuses to manage the money in my household, I'm stuck with the task. I don't keep a solid budget, but I'm actually quite good at managing money, because to me it's all just a big math game where I try to have as high a score as possible, but the ultimate goal is just to stay in the black. I don't really stress about it at all, and in fact I don't check my bank statement daily or even weekly.

My ex-wife, on the other hand, insisted on managing the money, yet stressed over it constantly, and I know other people at a comparable level of income to mine with fewer expenses who worry about it a lot more, too.

How does money feel to you, and what do you do to manage it?
 

five sounds

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I suck at it. I just don't do any kind of budgeting at all, and have a really poor grasp on how much money is coming in and going out. I don't usually stress about it though. I just don't really spend very much money, and when I need to spend a big amount or feel like I've been spending more than usual, I go in and check my bank account to make sure everything's ok.

My strategy in a nutshell: live simply and try to think about money as little as possible.
 

Halla74

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I suck at it. I just don't do any kind of budgeting at all, and have a really poor grasp on how much money is coming in and going out.

Same here! :hifive:
In all honesty, I am likely the Antichrist of budgeting. :devil: :shock: :laugh:
As a 7w8 Sx/So ESTP when I get near money it vanishes into fun experiences, cool gadgets, and gourmet food & drink. :whistling:

My solution?
I give all my money to my wife.
She is a master of budgeting, so who the hell am I to try and do it? It just doesn't make sense.
My entire paycheck goes into her account every 2 weeks, and she sends me periodic emails with $ status info.
Problem solved! :yesss:


five sounds said:
I don't usually stress about it though. I just don't really spend very much money, and when I need to spend a big amount or feel like I've been spending more than usual, I go in and check my bank account to make sure everything's ok.

That's a great strategy. I wish I had your discipline!! :)

five sounds said:
My strategy in a nutshell: live simply and try to think about money as little as possible.

I was only able to get the knack of this after becoming a Dad.
That made my provider instincts go into overdrive and serve as a check and balance for my Epicurean nature.
 

chickpea

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I only use cash and my form of budgeting is only bringing out as much as I want to spend.
 

Totenkindly

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Since my eight year old still refuses to manage the money in my household, I'm stuck with the task.

Some kids are very ungrateful.

Maybe your kid figures you can sell your body parts + pints of blood in case of shortfall.

I don't keep a solid budget, but I'm actually quite good at managing money, because to me it's all just a big math game where I try to have as high a score as possible, but the ultimate goal is just to stay in the black. I don't really stress about it at all, and in fact I don't check my bank statement daily or even weekly.

My ex-wife, on the other hand, insisted on managing the money, yet stressed over it constantly, and I know other people at a comparable level of income to mine with fewer expenses who worry about it a lot more, too.

How does money feel to you, and what do you do to manage it?

Before my separation in 2008, we had all the credit card bills paid in full every month. But I can't say I had good spending habits, I just happened to keep things in check enough, had a thriftier spouse, and made enough money to pay for whatever I got.

Separated, the double household costs hit me hard and I accrued a lot of debt. Some of it was because I did not take my spending seriously. Part of it was because I suddenly had a social life (since I had some freedom and was lonely living on my own). And then I got hit with various incidents that I suddenly had to pay for. My debt creeped up on me, and sending half my money to the kids really prevented me from paying things down.

Then the divorce came, and court orders + a horrendous tuition expense ($35K more than I had been told). That pretty much finished me off. See, you just don't know sometimes when something in life will smack you. I still fear that my BCBS insurance won't be enough to handle a medical emergency, if one would ever occur. Some people get wiped out overnight.

Anyway, this all taught me to live with a lot less than I was used to, and be far more tight and directed with my money. It's not my natural mode and I can't maintain it forever, but it taught me to be more prudent and think more long-term. My normal budget is a "fuzzy" one -- i have my recurring expenses figured out and how much is left as "fuzzy money" and then I kind of play it by ear.

I got a kick this week in figuring out my budget (since I want to move, and my finances are changing drastically, with some more debt to pay down) and seeing how I can reduce what money I waste in interest each month. It's almost like a game. I'm not going to freak about it, but I feel a little more in control of my finances than I have in the past. I also need to position for retirement in a few decades.
 

DiscoBiscuit

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Didn't make a ton last year, but still managed to save enough for a down payment on a house (if I wanted).

I will not be doing that. I'm going to be my first client as a Financial Advisor and INVEST.

Depending on how that performs and how much I make this year, I may use the money to finance the purchase of a quadruplex.

That way, I can live in one of the units, use the rents from the other three units to cover the mortgage and (hopefully) ancillary operating costs.

That way I'm building equity in a tangible asset, living somewhere for basically free, getting business start up experience by creating the LLC (most likely) that I'll run the quadruplex under, and building equity. Given that I was a realtor I know what property values are doing all over town, and know where to invest and in what kind of building to invest (brick is KING).

However, I will only do that if the net gain outweighs the returns I could receive using more common investment vehicles.

:D
 

DiscoBiscuit

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Gotta love the tax treatment of LLC's (and other similar corporate structures).

The pass through of profits and losses doesn't hurt either.
 
T

The Iron Giant

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[MENTION=6724]DiscoBiscuit[/MENTION] -- awesome.

The investments I have are entirely part of a 30-year aggressive portfolio that's managed by Fidelity. That's my 401k, but I also have a pension. I don't actually own any property.

I think seeing those retirement benefits in my future (though I'm trying to pretend the pension isn't there since so many of those are evaporating now) makes me less inclined to think about savings or other investments now, though I do earn more than I spend, so I do have a small savings.
 

DiscoBiscuit

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[MENTION=6724]DiscoBiscuit[/MENTION] -- awesome.

The investments I have are entirely part of a 30-year aggressive portfolio that's managed by Fidelity. That's my 401k, but I also have a pension. I don't actually own any property.

I think seeing those retirement benefits in my future (though I'm trying to pretend the pension isn't there since so many of those are evaporating now) makes me less inclined to think about savings or other investments now, though I do earn more than I spend, so I do have a small savings.

Max that 401(k) as quick as you can.

As always, live as far within your means as you are comfortable doing.

I find that political winds are often leading market indicators, lighting the path ahead before even the markets get hip to it (but not by much). That's why I'm so excited about the new job, in certain circumstances it's like knowing the future (in an incredibly vague yet still definite sense). There was a hearing back in 2006 (that I was unable to find a link to) about huge new discoveries of natural gas reserves in America.

I wish I could go back in time with like $50,000 to invest. There are a couple of people worth billions now who made the very same bet back then.

Get in front of this energy boom my friend.

And Robots. Have a look at this article:

Bringing back jobs to the U.S. via the robot

(CBS News) Payroll processor ADP says private businesses added 166,000 new jobs in September. In the future, some of those could be manufacturing jobs returning from places like China, thanks to a new piece of technology already working an assembly line in Pennsylvania.

Meet Baxter, a robot. Just seven months on the line, he's the newest member of the team at Pennsylvania manufacturer Rodon.

Factory VP Lowell Allen has put Baxter to work at what he's best at: boring, repetitive jobs.

131005-reshoring-robot.jpg


"Our people have really taken to Baxter," said Allen. "He's non-threatening. He's helping them do their job."

Baxter is designed to work safely alongside humans. Six facial expressions communicate status to human partners -- a raised eyebrow signals confusion if something's not right on the line. But most of time, Baxter works alone.

"And the best part I like is that Baxter doesn't have a mouth," said Allen. "So Baxter doesn't talk."

Slow but steady, Baxter toils on 24/7 without breaks or benefits. He costs only $22,000. And even with power and programming costs, Baxter is a $3-an-hour worker.

"He doesn't necessarily replace anyone," said Allen. "In fact, we need to hire skilled people to maintain and program those pieces of equipment. They just enable jobs to be performed more efficiently and therefore less expensively."

Baxter is part of the new factory floor: a cutting-edge mix of people and technology that has helped to reduce production costs enough to bring manufacturing back from China.

"So we're seeing now," said Hal Sirkin of Boston Consulting Group, "is companies bring jobs back to the U.S. Not just because of patriotism but because of pure economics. The wages are rising in China, the U.S. is getting more competitive. The average American worker is at least 3 times as productive as the average Chinese worker."

For Rodon and its sister company K'nex, that means 25 new jobs in three years. "We're adding equipment, people and possibly breaking ground next door," said Allen.

Sirkin said: "Had the automation not been put in place for a lot of these companies, we would have no jobs coming back to the U.S."

Three to 5 million jobs are expected to be returning to the U.S. by the end of the decade.

There's a lot more, but I can't give away all my secrets. :devil:
 

Qlip

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My finances have settled down that I can actually predict my income and expenses, that means BUDGET! I can do. If I'm not, I hardly ever check my numbers and I have a natural and eerie ability to spend almost all of my money, all somehow without ending up on the street.
 

ptgatsby

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I don't budget, but I did track my expenses in great detail.

Budgeting is not very effective at anything except cost estimation. Most people use it as a way to set hard limits on their spending but this tends to result in sub-optimal utilization of money.

The real goal is to optimize utility. For example, we spent something like 800-1500/month eating out. That's a lot of money, and the question isn't if we should budget a lower amount (because we want to save), but if we'd rather eat out less and take more vacations. Relating costs helps constrain spending better than limiting yourself.

Anyway, I had spreadsheets that tracked all expenses, then balanced it against income and savings. Same concept as any business accounting. It gave me an idea how accurate I was. I also used it to check credit card bills, etc.

It actually helped quite a bit in making decisions later, like should we move to a nicer apartment and lose that bit of money. It's much easier to visualize what you need to sacrifice when you have the data.

Kinda stopped tracking it when we spent all our money to travel around the world. It also changed my view on saving. I'm not a big fan of saving anymore. Seeing so many old people with money, but no energy left to enjoy it, was very sad. Not to mention, they seemed no happier for it. (All this within reason, of course.)

I also tend to be a model builder and more data is always helpful.

Anyway, this all taught me to live with a lot less than I was used to, and be far more tight and directed with my money. It's not my natural mode and I can't maintain it forever, but it taught me to be more prudent and think more long-term. My normal budget is a "fuzzy" one -- i have my recurring expenses figured out and how much is left as "fuzzy money" and then I kind of play it by ear.

Budgets are pretty useful in these dire situations. It's a real shock how hard it is to survive in these cases... and at the same time, a shock how far money can go when you are pressed to the limit. Because it has to. Many people never experience that feeling.

But whatever discretionary money we all end up with is normally best spent doing what we enjoy the most. Humans are normally pretty good at knowing that! It's the whole "pay down debt, save for retirement" that really has very little value to us at the time that is hard to do.
 

Totenkindly

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The real goal is to optimize utility. For example, we spent something like 800-1500/month eating out. That's a lot of money, and the question isn't if we should budget a lower amount (because we want to save), but if we'd rather eat out less and take more vacations. Relating costs helps constrain spending better than limiting yourself.

...It's much easier to visualize what you need to sacrifice when you have the data.

Yes, I agree with that. I view life now (after this experience) more as a matter of priorities: Since I'm not Bill Gates or a MegMillions winner, pretty much if I do one thing, I can't do something else. So I think in terms of, "If I eat out tonight, I can't really eat out over the weekend, and if I don't eat out 3-4x, I can afford to buy [whatever] that I would like to have, so what do I want the most?"

It's MUCH easier to not spend money on one thing you want in the moment, when you know that if you save it, you can get something else you want a little further on that you will have with you.

The bad cycle starts when I eat out AND spend the money to buy something else, when I really am just going into debt and spending money I don't actually have.

...Budgets are pretty useful in these dire situations. It's a real shock how hard it is to survive in these cases... and at the same time, a shock how far money can go when you are pressed to the limit. Because it has to. Many people never experience that feeling.

Yeah. It was kind of scary to me, but it helped me to realize what I really NEEDED vs just badly wanted.

It's helping me mentally to prepare for weight loss. All that I really need to do to lose weight is (1) don't eat when I'm not hungry and (2) burn some calories consistently. But it's amazing how much I just FEEL like eating something or DON'T feel like exercising for 20 minutes... it feels almost undeniable, yet all I really have to do is make myself do something or not do something ... it's a choice.


...Seeing so many old people with money, but no energy left to enjoy it, was very sad. Not to mention, they seemed no happier for it. (All this within reason, of course.)

But whatever discretionary money we all end up with is normally best spent doing what we enjoy the most. Humans are normally pretty good at knowing that! It's the whole "pay down debt, save for retirement" that really has very little value to us at the time that is hard to do.

yeah, that's what I'm feeling too. I want to have enough money that I can actually survive when retired, but I don't see the point in living miserably in the now for a future that might never even happen. We only really live in the "Now" moment anyway, it's where we exist, so our existence should be meaningful. (Note that meaning and money are not synonymous, though.)
 

Tiltyred

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I suck at money management and am overdrawn nearly every other month. I don't worry about it too much -- twice a month, my employer dumps some more money in the account and I'm all good again. Things like the mortgage payment, car payment, utility bill, 401k payment, and flex account money come out via auto-deduction, leaving to my discretion what to do with the rest. Sometimes I feel virtuous and pay the bills. Sometimes I feel self-indulgent and buy perfume and jewelry. My credit score fluctuates. It bothers me not. I would like to do better than this but I never seem to get around to it.
 

skylights

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Since my eight year old still refuses to manage the money in my household

:laugh:

My style of budgeting is pretty low-key, since I tend to save money by nature. I try to work around 30 hours a week, as long as school allows it, try to spend reasonably, and pay my credit card off in full at the bank a week or so before it's due. I haven't even bothered to register with the online account service yet since I rarely check it. Most of my money is spent on "experiences", especially travel.

When I was working 40+ hours a week and not in school I spent a lot more. Now I have to be more restrictive. But it's cool, I've adjusted. I'm also working on saving money to start a 401K. It's been harder since moving out of my parents' place and going back to school, but I'll get there soon. I did just get my money market data for the year and I made a tiny bit on that, yay. :)
 

Galena

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Yes, when money is spent on something. That isn't very often, so I don't have to do a lot of work here.
 

cafe

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I have a fairly accurate idea of our expenses from repetition. I struggle with a lot of bad habits that come from chronic poverty. Statistically, we're low-income, but we live in a low cost of living area, so we're doing okay right now, but we don't have much of a safety net.

If we have anything like a strategy it's:

We try to keep fixed expenses low:
-paid cash for a crappy house and make what major improvements we can afford with each tax refund
-cars are paid for, make repairs as needed
-don't use credit for anything: if we don't have the money to do it, we don't do it
-we have a grocery buying routine that reduces the temptation to eat out
-regularly scheduled weekly date night that averages $30, including generous tip

Keep taxable income low (among other things, helps kids be eligible for scholarships and the lunch program at school)
-we buy the best health insurance husband's employer offers
-we max out our medical savings

savings (this is something that is a challenge for me)
-we have an automatic withdrawal of $40/wk from husband's check go into separate account for emergency fund. It is in his possession because money burns a hole in my pocket
-I just started a $20/wk withdrawal schedule for Christmas savings
-husband is now eligible for 401K at work. we will up our contribution once we have a few $K in the emergency fund (it is going to be awhile before he is vested anyway)

Because our fixed expenses are pretty low, it's usually not hard to pay utilities, etc, so I just pay them as they are due, trying to spread them throughout the month so they don't all pile up on one payday.

If my husband has an extra good paycheck we buy the stuff we can't always afford, like clothes, haircuts, etc
 

ptgatsby

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It's helping me mentally to prepare for weight loss. All that I really need to do to lose weight is (1) don't eat when I'm not hungry and (2) burn some calories consistently. But it's amazing how much I just FEEL like eating something or DON'T feel like exercising for 20 minutes... it feels almost undeniable, yet all I really have to do is make myself do something or not do something ... it's a choice.

It's a bit off topic, but weight loss is more about diet. Health goes with excercise, but ver few lose weight by excercising. We adjust our need for food whenever we burn calories. Of course, you get more benefit from excercising than dieting :D

Its actually a good analogy for budgeting. Few spend less by budgeting but most people will spend less by tracking expenses. It's like tracking calories/food diary. If you associate calories as the "cost" with food, not money, it becomes much easier to lose weight. Tracking expenses makes us focus on the cost and then links the cost to the activity. Or, put another way... it makes you suffer for eating/spending, and negative feedback reduces the activity!

I say this as I sit next to a costco sized chocolate bin and a bag of potato chips.:unsure:

yeah, that's what I'm feeling too. I want to have enough money that I can actually survive when retired, but I don't see the point in living miserably in the now for a future that might never even happen. We only really live in the "Now" moment anyway, it's where we exist, so our existence should be meaningful. (Note that meaning and money are not synonymous, though.)

Certainly within reason.

Another reason, for myself anyway, is that technology is decreasing the cost to enjoy life so dramatically that sometimes I wonder if we are actually in a deflationary spiral. I don't really need to spend money for discretionary things anymore. Even when I do, the cost for everything keeps dropping so fast. It doesn't matter if I'm streaming music, watching netflix or reading e-books. Besides rent, food and utilities, I could survive fully entertained forever. And none of it requires me to be paying the astronomically high amount I am currently paying, hah.

I would use blizzard's hearthstone as an example (since I just got into the beta, finally). Many solid games are going f2p, and if you just enjoy playing...
 
W

WhoCares

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Money comes easily to me, I like it, it likes me and we hang out often. I've never had a budget because I find the more you watch a budget and see the money slipping away the more stressed you feel. I work on a set and forget system of money management. I work out what it costs me to reasonably live via this formula...

Regular bills + food + eating out once or twice a week + nice things to buy once or twice a year = reasonable living expenses.

Then I get my entire pay put into my savings account and set up an automatic debit for my weekly expenses into my account with a card attached. I spend whats in my card account and forget the rest exists. If I over-run my card account consistently I revise my living expenses. If I've got money left overr its mine to spend however I choose.

Using this system I save on average 35% of my after tax income a year. It doesn't seem to matter too much how well paying my jobs are or not I still manage to amass fair amount of savings within short periods of time. I'm a big believer it matters more how good you are with the money you've got than how much money it is you make.
 

Rasofy

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My basic needs are kinda spartan, so saving money is somewhat effortless.
 

The Ü™

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I use my credit cards because I hate carrying wads of cash around. It's also easier to fix losing a credit card by reporting it lost or stolen (God bless you, Android apps)...if Iost cash, i'm probably never gonna get it back.

In the case of budgeting, I never really felt the need for it, as I tend to at least break even at the end of the month, and I have my credit cards set to pay themselves. I don't like to think about things like budgeting...I've got more important things to worry about...like spending...and investing.
 
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