Budget cushion?

[heyaim]

I'm having trouble creating a cushion. I set it at $100 month. We went well above that this month...mostly in gas...which does not make me happy! Next month I am going to seriously plan out our trips in town (20 minute drive each way). In 2011 hubby and I made $58k. For our April budget our cushion is going to increase to $200 month. Our fuel/gas will also be increasing $100 month...a total of $500 month

[kork13]

I generally try to keep 2-3% of a slip (cushion) in my budget... I basically consider that "slush money" as a regular expense that is accounted for every month, and that pretty much always covers any higher-than-average bills, and also covers my other random little expenditures. I find it works pretty well, and just assigning a flat percentage makes it easy -- never have to adjust it.

[BudgetSurgeon]

I think a really good way to create a cushion is by itemizing in detail on all of your monthly budget expenses. After you have established this comprehensive list, aim to cut your expenses by at least 10% across the board. Look at each item individually, and say, "if my life depended on it, how could I cut this item down by 10% on a monthly basis?" There are some things like mortgage or rent that may be fixed, but you should be able to cut many of your expenses by 10% from the get-go, if you seriously put your mind to it. This will create your "slush cushion" for you, and create more disposable income, which should promptly be saved and/or invested, and will be there as a reserve cushion, if you need it for emergencies.

Here's an example. Let's say that you are spending $400/month on food expenses. What I am asking you to do is cut that amount down at least 10%, to at least $360/month. You can achieve that easily by eating breakfast at home, bringing your lunch to work instead of going out to lunch, avoiding those super-expensive cafe lattes in the morning, reducing the amount of times you go out to eat in a month, using food coupons at your favorite supermarket for items that you already plan on purchasing, etc. Those are 5 ideas to reduce your monthly food budget, and add to your "slush fund". Now go through the same exercise for each and every budget item of yours. Your slush fund will grow by leaps and bounds..........just make sure you don't start frivolously spending this additional savings amount, or you will be defeating the purpose of this valuable exercise.

[disneysteve]

If you are overspending your budget, you need to re-examine your budget. Sometimes, the overage is out of your control, like higher gas prices. But if that's the case, you need to find other places to trim spending. That might mean switching to some more store brand grocery items. It might mean packing more lunches or eating out less or not buying that new pair of shoes you've had your eye on. Maybe you need to downgrade the cable package or your cell phone plan. Whatever.

[snafu]

heyaim, what put you over your cushion? Gas and food prices have increased do those line items need to be increased. If necessary, you may need to decrease other spending categories. It's always a good plan to examine driving habits and add errands to regular trips for efficiencies. Do you know alternate routes or alternate time frames to avoid getting caught in traffic jams? Do you check on-line Gasbuddy to track best fuel prices on your fav routes? Do you have an outlet that offers lower gas prices on a specific weekday that isn't listed on their signage? It can pay off to check on-line for various gas savings.

[heyaim]

Here's our budget...

Category Total Spent Budget Remaining Amt
Car-Gas $383.75 $400.00 $16.25
Cable/Internet $- $53.00 $53.00
Home Expenses $108.47 $50.00 $(58.47)
Cell Phone $148.06 $130.00 $(18.06)
Clothing $74.53 $50.00 $(24.53)
Eating Out $120.00 $120.00 $-
Electric $149.92 $150.00 $0.08
Car-Repairs, Tags $87.32 $100.00 $12.68
Gifts/Christmas $80.00 $80.00 $-
Groceries $358.88 $400.00 $41.12
Gym $20.00 $50.00 $30.00
Insurance-Auto $196.25 $196.25 $-
Insurance-Home $99.16 $99.16 $-
Kids Expense $50.00 $50.00 $-
Pets $8.20 $25.00 $16.80
Savings-Emergency $625.00 $500.00 $(125.00)
Savings-Extra $40.00 $40.00 $-
Insurance-Life $17.01 $100.00 $82.99
Savings-RE Tax $127.00 $150.00 $23.00
School/RE Fees $179.44 $50.00 $(129.44)
Snowball-Car Loan $320.00 $635.00 $315.00
Snowball-Credit Card $- $0.00 $-
Snowball-Equity Loan $150.00 $150.00 $-
Snowball-Mortgage $715.00 $715.00 $-
Utilities $128.13 $150.00 $21.87
Vacation $80.00 $80.00 $-
Work (Tony) $218.04 $160.00 $(58.04)
Work (Amy) $30.00 $40.00 $10.00


As of today, we are ok with our gas budget. But we both need to fill up today or tomorrow, so there goes another $100!!! We both get decent milage...I get 27 mpg, he gets 24 mpg.

I'm not sure I can cut much more from grocery. I coupon and buy store brands. We are a family of 4 with 2 kids (16 and 19). We are basically feeding 4 adults. I could probably cut back on alcohol purchase...with 2 teens not sure I want to

We have seriously cut back on eating out! $30 week is a major change! We both work 50-60 hours week. He works 3 jobs (not year round) and I work 2 jobs. I am having a talk with hubby about his spending money...which includes smokes. He's going over and I'm not happy about that!

I did go over on my Real Estate Fees...but I will be able to recoop in the next couple months.

Our Credit card is paid off. We are in the process of refinancing the house and equity loan to a 15 yr mortgage at 3.5%. Our payment will be the same as now...maybe $15 less.

Our goal is to build 3 month emergency fund (we have 2 months so far), then start paying off my car.

Our cell phone bill is stuck til October. If we make any changes to the plan it extends our contract 2 years! When October hits we plan on going with a pay to go plan which will save us $50 month!

[disneysteve]

Cell Phone --- $148.06 --- $130.00 --- $(18.06)

Our cell phone bill is stuck til October. If we make any changes to the plan it extends our contract 2 years! When October hits we plan on going with a pay to go plan which will save us $50 month!

Can you clarify this? I understand you are waiting to switch to a cheaper plan and that's a good thing, but why are you over budget for the month? If you contract amount is $130, your bill shouldn't be $148 unless you are exceeding your contract terms and that is something that you can control. Or maybe you just need to adjust the budget to reflect the true cost of your plan.

[heyaim]

Yeah, when I opened that cell bill I wasn't a happy mom!! Our boy downloaded a couple songs and a game. Needless to say that's blocked and he paid for the extra fees...along with some extra chores around the house.

[heyaim]

My excel format sure didn't copy over nicely! Not easy to read at all!

[disneysteve]

Savings-Emergency --- $625.00 --- $500.00 --- $(125.00)

What about this? You are "over budget" for savings, but that isn't a bad thing - it's a good thing. If you were able to put an extra $125 into savings, didn't that take care of what you are calling your cushion?

[bjl584]

I always keep an extra $500 or so in my checking as a cushion of sorts. That way I don't have to worry about running out of money should some unexpected expense arise.

[Bishop12]

I find it's helpful to have a generic phone. I know that most people prefer iphones or blackberrys. But I have a generic phone that I just use once in a while, on a pre-paid voucher.

[snafu]

heyaim, you're way ahead of the cure by having goals, a budget, paid off CC, teeny restaurant spending, and tackling new challenges. I fully understand that 16 & 19 y/o eat incredible amounts of food and never seem full-up for more than an hour! You must be incredibly organized to work two jobs and manage a household.

I wish I knew what words to use that might convince your DH to quit smoking. You'd all have a fantastic vacation sum accumulated if the cost of every cigarette was re-directed to holiday spending. His decision to smoke is reducing his life-span, increasing insurance costs, denying future grandkids fun with their gramp, having his clothes smell awful and most wicked...giving the government more uncredited tax dollars for politicians to spend.

[stazstaz]

Your budget needs to be constantly adjusted to take in the rising cost of inflation especially with gas and food. Having a bit of a budget cushion is a good idea although a better idea would be to adjust it as you go along and if you find it's simply more than you can afford, sit down with your hubby and fins a better way to deal with it such as getting another stream of income or cutting back on certain expenses.

[heyaim]

OK, new month has started...which means new budget is in place. I think we will need to sit down in the middle of the month to see how the budget is going and if any changes need to be made.

I guess overall for the month we didn't do to bad. We went over budget in quite a few categories. We also had a couple major unexpected issues come up. Looks like we are going to have to put about $1000 in our back yard to take care of the drainage issue. It will be worth it in the end...there's nothing worse than all that muddy water being washed in the basement. We are hoping to get started on this next weekend.

Hubby's car also broke down. Not an expensive fix, about $75. The problem is whatever he needs to replace is siezed up and he can't get it replaced. Which means he has to drive his truck (12 mpg) til it's fixed. Yuck!

On a good note...Real Estate season is kicking in nicely! I'm trying to get as many houses sold as possible. Currently I have 1 under contract, with 2 hopefuls within the next few days. It's not easy juggling a full time job + real estate, but will be worth it in the end.

Everyone have a great money saving April!