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Treasured Social Butterfly
Posts: 6,950
Registered: ‎02-28-2008

My secret to budgeting

This is NOT rocket science but I wanted to share it with someone and you all "got lucky",  

 

Decades ago, my wife and I tried to start a small business and it did not work out. My previous company took me back so I had a good salary but nothing left in the bank.  I was forced to pay off my credit cards from savings in order to get a home loan when we moved back.  I realized I had no plan for staying out of debt and building my assets.  I did accounting, for God's sake. I should be able to figure this our. 

 

I started with a spreadsheet (since moved to Quicken but  you can do this in Mint; which is online and free).  I realized that, if I planned to pay off the credit card every month, there was no difference between charging something and writing a check. If I write a check, it takes time to clear but I know it is coming. Same with the credit card charge. So, I recorded them EXACTLY the same way and I can tell exactly how much money I had to spend.  

 

Then, the quarterly auto insurance bill hit. The logical question?  Why does this put a hole in my budget for one month when I KNOW it is coming?  So, I added a deduction to my calculations for auto insurance and then looked to see what other quarterly, semi annual, and annual bills I knew were coming. I can't tell you the warm feeling when the next quarterly auto insurance bill arrived and I had already put aside money for it. 

 

Finally, a friend turned me on to Quicken and I just track all of this in there.  I run a daily report of checking-credit cards-accruals and I know if I can afford to buy a second beer this week.  It works!!!

Posts: 29,510
Topics: 594
Kudos: 7,866
Registered: ‎02-27-2008

Re: My secret to budgeting


Richva wrote:

This is NOT rocket science but I wanted to share it with someone and you all "got lucky",  

 

Decades ago, my wife and I tried to start a small business and it did not work out. My previous company took me back so I had a good salary but nothing left in the bank.  I was forced to pay off my credit cards from savings in order to get a home loan when we moved back.  I realized I had no plan for staying out of debt and building my assets.  I did accounting, for God's sake. I should be able to figure this our. 

 

I started with a spreadsheet (since moved to Quicken but  you can do this in Mint; which is online and free).  I realized that, if I planned to pay off the credit card every month, there was no difference between charging something and writing a check. If I write a check, it takes time to clear but I know it is coming. Same with the credit card charge. So, I recorded them EXACTLY the same way and I can tell exactly how much money I had to spend.  

 

Then, the quarterly auto insurance bill hit. The logical question?  Why does this put a hole in my budget for one month when I KNOW it is coming?  So, I added a deduction to my calculations for auto insurance and then looked to see what other quarterly, semi annual, and annual bills I knew were coming. I can't tell you the warm feeling when the next quarterly auto insurance bill arrived and I had already put aside money for it. 

 

Finally, a friend turned me on to Quicken and I just track all of this in there.  I run a daily report of checking-credit cards-accruals and I know if I can afford to buy a second beer this week.  It works!!!


Great advice!   I don't use an electronic program but learned early in life to budget and plan your expenses.  Another necessary step is to maintain an emergency fund, as no matter how well you plan you will have things happen and having a monthly budget item for this fund will help with that. Thanks for sharing.

Life's a Journey, not a Destination" Aerosmith
Treasured Social Butterfly
Posts: 15,270
Registered: ‎12-25-2011

Re: My secret to budgeting

Great minds must think alike! I use an Excel workbook, and start the year with listings for all of my recurrent bills & amounts from the previous year .. utilities, insurance, medical insurance premiums, etc. Another sheet combines monthly projections & then actuals, compared to income from another workbook. Because all of my income is from investments, it varies from month to month, but from the 2nd sheet, I know which months there will be a shortfall, so I can plan ahead by makiing sure there's extra money available for the next month. As playments are made, those line items move into a checking account listing, or one of my 2 major credit cards. All the expenses are broken into about 15 categories, so it's easy to see where the money's being spent, and compared from year to year.

Registered on Online Community since 2007!
Recognized Social Butterfly
Posts: 17,915
Registered: ‎08-22-2008

Re: My secret to budgeting

[ Edited ]

Good basics!  My story is a wee bit different.

 

I was most fortunate to have been able to have a very good income while my kids were growing up, but did not do anything to prepare for retirement.

 

When a nice early retirement came available, I still grabbed it and figured it was time for changes.  It took me a few years in various industries to find that accounting was the field for me.  I was still legally married to my 2nd husband who promptly decided to leave town when I told him I was retiring.  So, when I had to choose whether to take a pension with him, or have him sign his away, or take a lump.  I had no one to really discuss the issue with, and decided on the lump rather than to maybe have to deceive him in signing his share of the pension away.  Unfortunately, I had a LOT of trouble changing my style of living until that lump was gone.

 

So now I live on SS only.

 

I too have financial software and feel that I would not be doing nearly so well without it.  I bank with a credit union, and have set up 3 savings accounts in addition to my checking, for bills, and a credit card for annual and occassional expenses.  I also now have a Discover card for groceries and 'fun'.  My savings accounts are for: my trust fund which will go to my 8 heirs; another for home repairs and renovations; and the third for medical, drugs and vet bills as they occur irregularly.

 

Currently, it appears that starting next year I will be able to take an annual cruise or other trip in addition to my annual visit to my family.

 

Oh yeh, I have Money software which is no longer available.  It's from Microsoft and came with one of my upgrades.  Since it's no longer available, I can share the CD with anyone I want to and they don't have to give a registration.

Treasured Social Butterfly
Posts: 6,950
Registered: ‎02-28-2008

Re: My secret to budgeting

I am always amazed at how people control their finances.  I moved from Excel to Quicken when a friend turned me on to it. It is great for tracking but I find the bugeting and tax sections to be poor.  The tax section seems to have several undocumented features (bugs). Still, it downloads all my transactions and posting is a breeze. I can track all of the activity daily. 

 

I am building an Excel workbook to do projections.  I started with a workbook created to do 2013 taxes and added a worksheet for my projected income and expenses. I may be comfortable with it someday but not yet. 

Treasured Social Butterfly
Posts: 15,270
Registered: ‎12-25-2011

Re: My secret to budgeting

Years ago, I tried Quicken because I was Treasurer of an organization, and that's what the President wanted (not that she knew how to use it .. or Excel even). I found it was limiting; for myself, I want to create whatever categories I want, not just the categories they think I should have!

Registered on Online Community since 2007!
Recognized Social Butterfly
Posts: 17,915
Registered: ‎08-22-2008

Re: My secret to budgeting


ASTRAEA wrote:

Years ago, I tried Quicken because I was Treasurer of an organization, and that's what the President wanted (not that she knew how to use it .. or Excel even). I found it was limiting; for myself, I want to create whatever categories I want, not just the categories they think I should have!


Quicken is for personal finances, you should have used QuickBooks for the organization.  QB is not my favorite business acct. software, but it would have been sufficient for that org.  

Recognized Social Butterfly
Posts: 17,915
Registered: ‎08-22-2008

Re: My secret to budgeting

I really like Excel for all sorts of uses!  But you really have to watch it when it comes to exchanging information between sheets.  It's really easy to get off.  I presume Quicken allows you to make an entry and have it shown affecting whichever other account is necessary, such as a transfer to a credit card.

Treasured Social Butterfly
Posts: 6,950
Registered: ‎02-28-2008

Re: My secret to budgeting

I am the treasurer of my HOA and use Quicken to keep those books. I have often thought I should move to Excel or Google's spreadsheet function but I like Quicken and it works for me. I agree that, if we had any real volume, Quickbooks or Excel would be the only possible solution. 

 

If Astrea is anything like me, she looks at her spreadsheet so often she would spot an anomaly between worksheets pretty quickly. 

 

As for Quicken VS Excel for personal. I like how it loads the daily quotes on stocks and you can now create your own categories and tags to group transactions. But it does have its limitations. 

Treasured Social Butterfly
Posts: 15,270
Registered: ‎12-25-2011

Re: My secret to budgeting


LeCherie wrote:
Quicken is for personal finances, you should have used QuickBooks for the organization.  QB is not my favorite business acct. software, but it would have been sufficient for that org.  
That was back in 1998, so it might have been QuickBooks, rather than Quicken .. I just don't remember.

 

Registered on Online Community since 2007!