The Year of Living Frugally – Baseline Budgeting

It’s time to do the nasty.

Whoa – hold on, not that nasty…

I mean the nasty of taking a cold hard look at where my money is going. I dread this in a way – I like keeping some parts of my life personal. I can only hope that my pseudonym provides some sort of a buffer…

As I mentioned in a previous post, I’ve been down-sizing my expenses for a year and a half already. I’ve already picked most of the low-hanging fruit (I sold the gas-guzzling SUV, stopped the Starbucks habit, and brought my lunch to work – I’ll write an analysis of this in a future post… did the motorcycle really save me money?). I’ve managed to get to a financial stream where I’m treading water instead of sinking. What next?

It’s time to do a thorough budget.

(some time elapses)

Okay, I have just realized that I am spending $549 more than I am earning with a regular paycheck – each month. I’ve been working overtime most months (~$800 per month) over the last year – and any extra money was going towards debt repayment. I was wondering why I was not making as much progress as I had hoped.

Actually, I had to leave the house for awhile after learning that. I had no idea it was that bad. I thought I was treading water.

Then I did some research online into frugal living for some inspiration. The people inhabiting the forums at frugalvillage.com and about.com frugal living have been more than welcoming to newcomers (me) looking for advice. These are some financially disciplined people – I read about all the ways they save money and cut expenses and it seems a bit extreme to me (but what do I know, I’m the one with the debt…). I suppose it’s all relative – I have friends and family who think that me driving a beat-up truck is a bit extreme (versus financing a new truck).

Reading through their posts and advice and lifestyle… it makes me feel a bit selfish wanting to get my finances together – so I can vacation for long periods of time…

The vibe at these forums is one of support, understanding, and really helpful efforts to assist others – much different than the usual internet forum (no flaming). I introduced myself and confessed my sins – it felt like an Alcoholics Anonymous meeting, where the first step was admitting my problem followed by unconditional support.

I am sumdumsurfer, I spend more than I earn, I have some persistent debt that I am trying to pay off, and I don’t understand how I am spending so much.

In the spirit of confessing my financial sins, accepting the advice of helpful strangers, and maybe learning something about my wayward budget (and possibly inviting ridicule)… here are the gory details…

(those with a poor constitution may want to avert their eyes...)

Total Paycheck 3993.6

• Taxes 936.74
• Pre-Tax Expenses 338.2 (pension contribution, union dues)
• Taxed Deductions 44 (gym membership)

Total Deductions 1318.94

Total Take-Home Pay 2674.66

Monthly Expenses

• Total Housing & Utilities 1036
• Total Debt Maintenance 636
• Transportation Total 337
• Total Dog 200
• Subscriptions Total 33
• Food total 390
• Webpage Total 22
• Emergency Fund 100
• Vacation 300
• Misc Total 170

Expense Subtotal 3224
Balance -549.34

Okay, that wasn’t so bad – was it?

Time for the detail…

Housing & Utilities

• Rent 850
• Power 80
• Phone/DSL 33
• Cell Phone 61
• Misc Finance 12

I’m spending too much on rent. February is my last month of that – I still do not know what it will be for March. Also, my two-year contract for my cell phone is up in February sometime – it’s time to find an alternative.

Debt Maintenance

• Student Loans 231
• Credit Card #1 200
• Credit Card #2 200
• Miles Credit Card 5

The student loan is ~$40,000 and locked in at 2.25% for 18 more years (I’m 3 years ahead of schedule). The card balances are $2800 and $5900 with minimum payments of $65 and $120 (locked at 4.9% each). An obvious answer is pay the minimum to cut expenses…

Transportation

• Truck Insurance 35
• Truck Reg 8
• Truck Maint 20
• Truck Gas 200
• Moto Insur 19
• Moto Reg 5
• Moto Maint 10
• Moto Gas 0
• Moto Gear 40

The motorcycle gear was my initial safety-gear purchase spread over 12 months – I shouldn’t have that much of an expense this year. Right now it’s all truck gas and no moto gas (bad weather) – which should change in a month or two.

Dog

• Food 25
• Vet 10
• Misc 5
• Sitting 160

The dog-sitting is a good friend who watches my dog while I’m at work. The sitting cost is to take him out to dinner once a week. My dog is well cared for.

Subscriptions

• Netflix 16
• Surfline 5
• Surfer Mag 1.5
• Surfer’s Journal 4
• Surfrider Foundation 1.5
• AGU 2
• Public Radio 3

Uhhh… I guess I could give up Netflix… or get a cheaper plan…

Food

• Grocery 300
• Coffee/Water Clubs 10
• Out 80

Okay, this was a suprise. I did not think I was spending $300 a month on groceries and toiletries. Of course the extra eating out doesn’t help either. Did I mention I gave up coffee-house coffee and joined the club at work?

Webpages

• Domains 10
• Web Hosting 12

Emergency Fund 100
Vacation 300

I have two hosting plans – one is an old one that has been automatically billing me for two years. The emergency fund is a good thing. I spent quite a bit on vacations in 2007. Two dedicated trips, plus three work trips where I stayed for a couple extra days each.

Misc

• Books 20
• Booze 20
• Hobbies 60
• Haircut 10
• Other 60

The booze consumption is pretty low (but it could go lower – only buying for social occasions). The hobbies and misc. impulse buys are pretty high.

Overall, I still think there are some thing that I’m doing correctly, but far too many places where I’m overspending.

I’ve thrown myself on the mercy and advice of the frugal forum communities. The threads are posted at the Frugal Village and the About: Frugal Living. In the spirit of the helpful advice they are offering; I’ll post some of the advice, what changes I’m making and monthly progress. First, I need to write down all of the many suggestions and see what I can try cutting!

(continue on the One-Week Adjustments)