Sunday, March 20, 2011

Budget is No Longer a Four-Letter Word

Budgeting used to be one of those things I thought were for other people, not for me. I thought a budget was a good idea for someone who couldn't manage their money, and I was managing mine just fine on my own. Never mind the fact that I was racking up debt and overdrawing my bank account every few weeks!

When I finally realized I was out of control, I broke down and made a budget. And failed miserably at staying within it. Why? It wasn't realistic. I had no trouble organizing my fixed expenses, but I severely underestimated how much I spent on variable expenses because I was in denial. I never budgeted for my pack-a-day smoking habit, for example, because I told myself I was going to quit soon. Yet I kept buying cigarettes and wondering why my perfect (on paper) budget wasn't working.

Now that I have a bank account that helps me track expenses, it's easier to see where my money goes and budget accordingly. If I exceed my limit in a particular category, I have to decide - was the amount I set insufficient, or did I overspend? Usually I find I spent too much.

I only bring home $1075 every two weeks, or $2150 a month, after taxes, health insurance, dental, life insurance, long/short term disability, etc. My agency does not offer a match on their pathetic 403(b), so I don't contribute. My salary sucks! Still, that's what I've got until I start my second job next month.

Here's the breakdown of where my money goes:

  • Car payment: $360 (accelerated to pay off sooner)
  • Groceries/household stuff: $250
  • Gas: $200 (I commute 500 miles a week for work)
  • Roth IRA: $200
  • Savings: $200
  • Utilities: $150
  • Restaurants: $150
  • Credit card payments: $130 (debt snowball)
  • AT&T: $110
  • Cigarettes: $100
  • Car insurance: $90
  • Cable/internet: $60
  • Misc./clothing/other: $150
  • TOTAL: $2150/month 

You'll notice there are lots of places where I could cut expenses. The sad part is, this is my budget after making a ton of cuts already. After I've learned to maintain this budget for awhile, I'll make further changes. I really do need to quit smoking - it pains me to see that $100 being thrown away each month.

So that's what I'm working with for now, and I'll post updates every month to see how I'm doing.


Perfect Dad said...

Hi Andrea: I love your blog so far. I read a lot of PF blogs and am a frequent commenter- I work in the finance dept of a huge company. My own blog is a parenting blog, but there will be some PF content as well.

I see you have a child. Maybe we can work together, at least comment on each others blogs, like each others pages, put each other in the readers, cross-promote relevant posts, etc.

I would have sent you an email but I couldn't find a contact form ...

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