Saturday, July 18, 2015

The Basic Budget

Settling into a new house creates a new budget.
We moved from a 3200sq foot house with a 5000 sqft barn with rural electric and water
to a house the same sized and a 1200sq ft barn in a town.

We have always been careful to budget monthly for expenses.
We use the envelope system and have been for 32 years!
Dave Ramsey was broke when we started- so were we! :)

This  is presented as percentage of spending vs income.

Taxes- 4% (Down  13% house and 4% vehicle in Kansas)
Insurance- 5% (down almost 6%)
Electricity & Propane- 6% (Guess.  We have not lived here a year yet. The electric is considerably less here because the source is nuclear!)
Auto gas- 10% (Up 2%- family is 70 miles away)
Food- 15% (up 5%- probably will go back down when we live together again!)
Phone/Internet/ TV- 2% (Down 1%)
Home repair- 5% (same)
Tithe -between 2-5 %

The basics are down 13% from our old house. We paid for both water and trash in Kansas.

To me those are the basics. It is about 50% of our budget right now.
It is the amount that we would need  if something should happen to pensions/SS.
Paring down the food and cable for emergency savings would be very possible.

Over the last six months that is what we have lived off us since we were paying a mortgage (32%) and had continuing moving expenses. Many moving expenses were taken from savings to be replaced at the sale of our Kansas house.
We both had personal savings from our allowances that saw us through the tighter times.

All of the rest of the amounts are considered "extras".
They can be eliminated from the budget pretty easily.

Gifts 7%
Pets 3%
Take out 10% (up 3% from Kansas- SEAFOOD!)
Allowance 20% (up 10% from Kansas)
PX/ Clothing 5%
Surprise expenses/ travel- 3% (No surprises=travel budget)

We have income tax and health care taken out before the check gets to us.
Together they are about 15% of income not shown.

We have saving accounts for :
taxes, insurance, house repair, propane (new), gifts, pets, travel and clothing.
Sounds like a bit of over kill- but it is an extension of our envelope system.

With the addition of SS this month we plan to split it:
30% savings for new cars
70% savings for dream trips or major expenses.
We have a good savings since our last five years of work we saved my entire salary.
Neither of us ever made more then five figure salaries- mostly low to mid five figures.

Do you budget monthly, weekly or yearly?
How do you save for the normal things that are billed quarterly or yearly?


RAnn said...

Our philosophy is that if we take care of the big things, we don't have to worry about the little things. We drive old cars. We bought far less house than we could afford. We use pre-paid cellphones that cost us a little over $100 per year each rather than that much per month. Those ar the big things. We are on-track with our retirement savings according to most things I read, and it comes out before we see our checks. After that, we don't worry about what percent, or how many dollars we spend on what. We don't spend money foolishly, and if we have too many unexpected expenses in a month and see our bank balance going down we try to limit discretionary spending for a couple of months.

Janette said...

Good points, Ruth.
I just need more structure. The envelope system is how my mind works best. We overspend when there is only one balance.
We learned that the hard way about 30 years ago!

RAnn said...

That would drive me nuts and make me constantly worry about money. Too much structure makes me feel confined, whereas it makes others feel safe. I remember when I was on maternity leave with Jay I didn't try to "force" any structure on him; then he got to a babysitter who enforced a routine. He thrived, and I quickly learned that he NEEDED that routine, even on the weekend. While the girls could go with the flow, upsetting Jay's routine meant I had a cranky kid on my hands. However that routine got old to me in a hurry and I'm glad the girls diddn't need it as much. It's all a matter of figuring out what works for you and I'd say we both have been reasonably successful.

Janette said...

Amen to that Ruth.