2007 Budget?

[Langlo Family]

Does anyone try to budget out their entire year? I am attempting this, only because my wife and I are looking to purchase our first home ASAP. We will be completely debt free by April 2007, if not sooner. We have a set income coming in every month, so of course our expenses will be estimates. But I was curious if anyone does this. I'd love to hear some tips or ideas.

[JanH]

It sounds like an interesting idea to set goals for the year. I bet it could be done on the computer--a spreadsheet to set goals and budgets for each month and tweak it when necessary (unusual expenses and such). You could set long range things that way. I might just think about this--especially since I've fallen in love with spreadsheets. Let me know how yours is going.

[sarah]

I have a 5 year financial plan that should only need to be tweaked. Of course it has certain assumptions built into it. i.e. conitnued employment etc. but I think it will work

[Broken Arrow]

That's an interesting thought!

Perhaps this is some short-sightedness on my part, but I... don't understand why I should do this? No offense intended. I just... don't get it. My budget revolves around pay periods.

On the other hand, as JanH suggests, perhaps this is meant as a way to set financial goals? If so, my goal for 2007 is simply to pay off my student loans. That is, without compromising anything else on the budget. It would be quite a challenge, since this should normally take several years to accomplish this. But then, I like a good challenge once in a while.

[sarah]

BA I have several advantages in planning. My employment is very very stable and as a public employee my income is very predictible. Of course being paid once a month for 9 months is a hugh disadvantage so it balances out.

[Langlo Family]

Yeah, I meant for it more as a goal. As I look at things, if I keep everything as I'm doing now and I don't go over budget, I should be debt free in April. Like I said before, our main goal is to purchase a house. So I'm working on it now to see if we stick to our budget, how much money we would have at the end of the year to use as a down payment. It would be a good thing to shoot for because then when we want to go out to have a fancy dinner that would put us over budget or something like that...We'll have to decide what is more important. The meal or the house. My wife and I both are on salary and know exactly how much we'll be getting each month. Our expenses will be estimated of course, but should give us a good idea of where we stand.

[Bookie]

I do budget for the entire year, or rather I have an annual spreadsheet set that lays out my cash flow on a 12-month basis. This works for me because I live alone, my expenses are relatively uniform, and I have emergency funds that cushion me against disruptions.

One advantage is that I can watch the impact of any financial decision as it ripples through the year. My base budget covers all fixed expenses and estimates my variable ones based on previous years. Savings and irregular expenses are all funded monthly as well. As I transfer funds in disbursements or write checks, I note the transaction as completed and have a running record of my payments.Subordinate linked spreadsheets track savings and debt service as well as tax-related transactions. The whole apparatus operates rather like an automated check register in Excel, and once set up, it requires relatively little effort.

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I can't do that in a year... I tried and I failed. -.-" I'm still a newbie at this.

[tinapbeana]

i currently run month by month, but have the capability to have it set up for the entire year. i basically group all the months together and at the end of month 1 i have a balance statment for checkings, savings, and other accounts. these balances can be updated by activites in month 2, and therefore the balances at the end of month 2 get updated. so on and so forth for a 12 month period, and like Bookie i can watch my unneeded purchase of today ripple through the year.

[lgslgs]

We always budget by the year. Most things run the same month to month but things like annual veterinarian visits, car registration renewal, holiday gifts and a few other expenses occur on an annual basis, not monthly. We also build in total annual cost for car repair and maintenance, health care, and unexpected veterinarian costs (we have livestock).

We've been doing this for about 6 years and we don't increase our total budget each year if prices go up. We just get more clever about cutting costs in other areas. This is all habit by now and we have no trouble living comfortably within our budget and each month we challenge ourselves to see how much we can come in under budget by finding less costly ways to do things.

We actually run a second spreadsheet with savings, investments, income and expenses run out to age 100. That one's really nice because we can do things like see how spending the next year running $100 under budget each month will affect us at age 70.

Focusing on the long term works well for us. When I first started doing this we used to track how long it would take until we could afford to retire early. Watching that every day and knowing how each $1, $5 and $10 not spent would really affect it was so important to achieving our goal. I would not have been anywhere near as motivated to save wisely if all I was thinking about was the current month.

Lynda

[MonkeyMama]

I do use a spreadsheet. There are so many expenses that are just 1 month, and since I know my income and most of my expenses for the year (down to the penny) I put it in an excel spreadsheet for the entire year.

I guess what I did was put in my income and my known expenses, and then tried to see what I had leftover for savings, and tried to prioritize where it should go based on my goals. I haven't relaly implemented it, as this year we are just practicing the new budget and seeing where we can still cut back.

But I have the annual budget which really helps because I am more of a "big picture" person. & then I have a worksheet for every month, so I can copy and paste the correct column each month and see how I did budget vs. actual for that 1 month. So I do a little of both. The annual budget is more of a planning tool to help me set a goal for the year. Thought I pretty much just track it on a monthly basis.

I have a lot of big bills throughtout the year - property taxes, insurance, and such, so I calculated how much all that was for the year and divided by 12. I put that aside every month so I have the money for all of the 1-time bills. But it is really nice to see it all laid out and when all the big bills are due. Plenty of time to prepare.

I think the advantage to doing an annual budget like this is that I can vow to set aside x amount each month, and know all of the little things I would have forgotten are accounted for. I have acocunted for the fact that energy bill is high in summer and low in spring and fall, that the newspaper bill is due in august, etc. So I have a set goal on how much I Can save month by month because so many things vary month by month. I find it much more exact that a monthly budget.

Good Luck!

[Aleta]

I do the same as you. I take for instance the insurance (house or car) and divide it by 12 months and that is how I budget that amount each month and put it into a money market until it is due. I do the same with utilities. I take a total of 12 months and divide it, knowing that some months will be lower and some will be higher. That's much what utilities are doing today to help customers out. I alway round out the amounts and of course there will be a left over amount. I still like Elizabeth Warren's bood. All Your Worh. For the most part, it really gives you a grip on what you should and can do. You will automatically start cutting out the unnesessary stuff. Like all books, there are some things that you may or may not agree with. I found the book an easy read and just a lot of common sense. Oh, by the way, save yourself some money and get it at the library. If you like it, you can buy it later. After I looked at what we pay for library taxes on our property tax, I decided that I would utilize the library more often.

[Langlo Family]

Since I am pretty new to excel, does anyone have a template that they have been using?

[Broken Arrow]

Come to think of it, I do budget certain things annually. However, that is also because they only occur on an annual basis. Car tax is one example. The kid's birthdays and Christmas are another. I do fund with a little bit every paycheck though... so perhaps that counts eh?

Generally speaking though, the way I do my budget is that, no matter when the deadline is (annually, quarterly, monthly, etc.), I would take the amount of what I need at the end, and divide that into per paycheck increments. So, pragmatically speaking, it really doesn't matter when it's due. If I budget correctly every pay period, I will have enough when I need that money.

[MonkeyMama]

I just used the standard excel personal budget which was actually annual. Someone around here should have a link??? It works in Open Office as well...

[rduell]

Originally Posted by Broken Arrow

Generally speaking though, the way I do my budget is that, no matter when the deadline is (annually, quarterly, monthly, etc.), I would take the amount of what I need at the end, and divide that into per paycheck increments. So, pragmatically speaking, it really doesn't matter when it's due. If I budget correctly every pay period, I will have enough when I need that money.

This is what I do, also.

Our bills are divided between our 2 paychecks. I have a binder that I keep that has a piece of paper for each bill and the amount that needs to be set aside weekly (or bi-weekly in my case) is written at the top. Each pay period that amount is added on that paper so I know how much I have in each account. As I pay the bills I subtract from that category.

Categories like car repairs, gift money, house repairs, etc. are kept in a savings account but ones that are paid monthly are in our checking.

I've done it this way for over 10 years and it works well for me.

[Ima saver]

Well, I don't know anything about computers, so I just write all my monthly expenses on a yellow pad. Every payday, I take 1/4 of what is need for the month and put it into envelopes.
I take the 4 car insurances, house insurance, and property taxes and total it and then divide by 52 weeks. I put that amount away in an envelope also. I put away $100 a week for health and pet car. Any large emergency comes out of my emergency fund.