Miscellaneous Expenses

[JuniorTT]

I feel that DW and I are way ahead of the curve financially. We are 32 and 31, respectively. At our age, I feel like we're in the minority because we don't have any credit card debt, our cars are paid in full, we busted our tails to finish paying off our house in full this year before DD was born, we max out our 401k's every year, we max out Roth IRA's every year, we max out our HSA every year, and we currently have a 9 month emergency fund. The ONLY debt we have is DW's student loans which are around $9k at only 1.625% so we're in no hurry to pay them off.

But even still, I feel like we spend a lot of money on miscellaneous stuff. I keep a spreadsheet that tracks everything from which day bills are due to our monthly budget to our net worth. The thing that's bugging me in my spreadsheet is that we are averaging $1500/mo of miscellaneous expenses. When I say miscellaneous I mean stuff that seems to vary too much from month to month to really categorize and track it separately...going out to eat once or twice a month, new clothes, books and toys for DD, parts for maintenance of cars and house, one or two vacations per year, gifts for birthdays and holidays, etc.

I feel like we do a good job of shopping around and getting deals on these miscellaneous items - just surprised how it all adds up to an average of $1500/mo ($18,000/yr!!). Now that DW is staying home with DD, $1500/mo is about a third of our take home pay.

How do other people handle these miscellaneous, varying expenses? Do you budget for them? I feel like it would be a waste of time to budget for them monthly because they vary too much. But at the same time, when they represent a third of our income I feel like I need to keep a close eye on them.

Thoughts? Suggestions?

[MonkeyMama]

Yes, we definitely budget for miscellaneous items.

We leave about $100/month if our budget for eating out, gifts, and misc. stuff like that. It's all we really have to spare.

We also set aside $1200/month for absolutely everything that is not a regular monthly bill. This does cover our property taxes and all of our insurance, BUT also covers the misc. items you mentioned. Besides the fixed expenses, covers car repairs, vacations, dental, and other. We just know how much we have left to spend on "other." Was about $3000 last year. School expenses and needs, along with splurges here and there.

Anyway, we personally work backwards with how much we want to save and then kind of go with what is leftover to spend. I think the fact that "misc." is 1/3 of your income is a bit of a red flag. I think it's a good idea to look closer at those expenses and know where that money is going. BUT, it could be you are making your financial goals this works okay for you. From a budgeting standpoint, you may just need to be more mindful and think about if there is anything you should cut.

I think I Can relate since we were in a similar position. I never spent a lot of time budgeting when we both worked because we were easily saving over 50% of our income. BUT, since having kids and going down to one income I have felt the need to be far more efficient with our budget. I can assure you we don't spend a lot of time on it. For me I like to know where every penny goes, so we use software to keep track of our spending. Is simply being more mindful. & then rather than spend a lot of time during the year, I just make sure we have the $1200/month in the budget for "misc." & i keep a spreadsheet so I know how much I need to transfer back out of savings every month, and if I see that account getting in the red, I know we are spending too much. But that way is pretty simple and not-time consuming. I couldn't tell you how much I spent in the 100 categories that may cover, I just know I had the cash for all of that and was still able to meet all our aggressive savings goals. (& I could tell you how much I spent in each of every 100 category because I do track our spending in Quicken. But the details are irrelevant from a monthly budget standpoint. We look at the details once a year and just make sure our spending is in line with priorities and goals). That is all that really matters when it comes to a budget. I don't see the point to make it overly complicated.

[GREENBACK]

If your savings goals are on track then it becomes a matter of personal opinion on extra spending IMO. If your extra spending makes you feel guilty or you feel it's just wasted money then cutting back on a few things might be in line but be careful of denying yourself too much. I track my expenses in a plain old composition booklet but I don't worry about what I spend since I have my goals and priorities in order.

You can set a budget for anything but that can become tedious if you try to limit yourself for everything.

[riverwed070707]

I wouldn't really call any of that misc. expenses -- more a form of irregular spending, meaning it's not a fixed monthly expense but you certainly spend enough on them each *year* to make it a category of its own. Sounds like you're doing just fine with your budget the way it is, but if it bothers you, break them out and make sure you're keeping an annual log of your spending (all 12 months on one sheet) to supplement your monthly budget. Then, for example, you figure out how much you're going to spend on your vaca in advance, divide it by 12 and that amount goes in savings until you take your vacation. For your situation this really and truly may be an unnecessary step, but the point I'm trying to make is those are things that could be budgeted, but obviously you're not going to setup a separate savings account for each so the system you're using is probably fine.

[feh]

How do other people handle these miscellaneous, varying expenses? Do you budget for them? I feel like it would be a waste of time to budget for them monthly because they vary too much. But at the same time, when they represent a third of our income I feel like I need to keep a close eye on them.

Thoughts? Suggestions?

You might want to use mint.com (or something similar) to categorize each transaction. Expenses that do not occur monthly need to be reviewed on an annual or semi-annual basis.

Personally, we don't budget for these things, outside of vacations. But, I do have the data to take a look at how much we spend on such things, so we're able to make an informed decision regarding whether we are spending "too much" on something.

[photo]

How do other people handle these miscellaneous, varying expenses? Do you budget for them?

I don't actually budget but instead am frugal about almost every purchase.

However, many items that people budget are not static each month. When people say they have a budget of X amount for clothing each month, most likely, they don't spend exactly that amount. Some months maybe the expense will be zero, and other months, more than the average.

Think of a group of glass jars and you put so much money into each pot. When you use all the money for one expense, you can't spend anymore in that category until your pot has more cash. Take that concept into your budget. It sounds like you just need to provide more categories into your allotment, and then you can more easily see where the money is being spent. Then, your budget will reflect not only the payments that are known each month, but the allocation of other items that will vary month to month.

In essence, you're averaging those other expenses.

[skydivingchic]

I agree with the others - it seems like this is not necessarily a real problem for you since you are hitting savings goals and have minimal, low interest debt. If it bothers you however, I would suggest spending at least a few months tracking and categorizing these expenses. I use Mvelopes and have spending categories for many of the things you mentioned - eating out, clothing, vacations, car maintenance, etc. Yes, these vary month to month, sometimes wildly, but I use more of an annual average. So for gifts, I put $100 per month in the gifts envelope and use it only when needed. So in November/December time frame that gets drained down significantly, but most months there is no money spent from it. I personally like seeing the various spending categories. It helps knowing exactly what/where I could cut if necessary since some of the spending is needs (car maintenance, medical expenses, etc), but some of it is wants that could be cut if needed (gifts, eating out, etc). After you've spent some time tracking and categorizing you can add things up and decide if you have a real problem with any of the spending and cut where needed.

I know there are several posters here that don't really budget spending. Rather they budget savings. As long as they are hitting their savings goals, they don't care how much goes to groceries vs vacations vs utilities, etc. If that method works for you, great! I personally like the granularity.