Friday, February 03, 2012

Slowly but surely

I am slowly but surely making my way toward being debt-free.  If I really, really tried hard and barring no further emergencies I could do it by May.  But that would put me under a lot of pressure that I don't need at the moment and so I am now aiming for debt-free by July, which gives me a little money to actually spend on things other than the basic just feeding myself.  I had a dental appointment on Monday and hooray! don't need to get anything done.  Implant, crowns and fillings plus the small amount of, you know, tooth that I have left are all doing well.  Long may it last - if I have no more dental issues for four years it would be very good.  At that stage full cover under my additional dental insurance plan will kick in and at least financially, dental issues should be less of a worry.

This month I am trying out a variation of the envelope system for budgeting.  My budget weeks run from Friday to Saturday and for once, I wasn't so desperately waiting to get paid (last day of the month) that I needed to spend my first week's budget during the first few days of the month before I even got to the 'budget' start of the month the following Friday.  Previously I have budgeted for all known expenses (fixed amounts), divided what was left by four or five and that was what I had for the week for food, going out, shopping and so on.  Usually somewhere between 40 and 100 euro and often with me spending most of it in the first week or two and having almost nothing for the second half of the month.  Years ago I did a variation of the envelope method which involved a set amount per day (I think it was around 8 euro a day) and the goal was to save enough every day to have money to go grocery shopping at the weekend.  It actually worked really well for a while.  This time round I'm going to try something closer to the generally used envelope method and to do so I'm going to use the waiter's purse that I bought a few months ago in anticipation of doing this.  Looks something like this one (picture from a random website called, in case you've never seen one:
There are eight slots as well as the zipable bit at the front and the space where the coins are.  I have divided my money into categories and on a spreadsheet these categories are broken down further to give me the best chance of properly figuring how much I really do need.  I've given myself a fairly generous budget in the hopes that early success will convince me to keep this up even after I tweak everything down over time.

What I realised though is that if I take all the money for an entire month out of the bank at the same time, I will just end up spending it.  So I wanted to just take out enough for a week.  But some categories are for things I don't expect to spend on every week and the amount divided by four just leaves a strange amount.  So I've taken each category on its own merits and will take the cash out of the bank for some of them weekly and for some of them monthly.

  • Supermarket - 10
  • Farmers' Market - 20
  • Fair Trade shop - 15
  • Going out/entertainment - 40
  • Book club - 40
  • Presents (including postage/shipping costs) - 30
  • Drink - 30
  • Miscellaneous - 45
A word about the categories
Supermarket and farmers' market will be fairly fluid and is essentially the bulk of my food expense.  The aim is to cook at home and not eat breakfast on the run, to bring lunch to work with me and make sure I'm home on time every evening to eat properly.  But any money I need to spend on doing the opposite of all that basically has to come out of those categories as well.  My first aim in this respect is to be not spending it all at the weekend so that I already have money to use if necessary during the week rather than to be 'borrowing' from next week's supermarket money.  If you see what I mean. 

Book club is probably my biggest entertainment expense.  We go out to eat and I would usually also have a glass of wine or two and spend between 20 and 30 euro.  40 gives me some leeway and hopefully a bit left over to put towards buying the book the following month (since it's an English book club, it's not always possible to get the book from the library).  Other going out/entertainment is for things like cinema, books, concerts and so on. 

In comparison my budget for drink might leave you thinking a have a bit of a problem but although I will leave that open to potentially being used for drink in the sense of going out/entertainment, for the most part it's intended to cover buying crates of water as well as juice if I'm in the mood.  And to pay for getting a few bottles of wine in so that if invited to someone's house for dinner, or if I invite someone to mine, I don't have to stress about where to find the money to buy something to bring with me.  It's nice to have four or five bottles on hand.

Miscellaneous is for things like doctor, dentist, chiropodist, hairdresser, choir music and anything else that may come up.  This month most of it will go to the chiropodist. 

So that's it.  Will see how it goes. I also have one of two larger one-off expenses that aren't included in the above, such as paying a deposit for a choir trip at the end of the year and paying for a ticket to Frankfurt next week as well as the usual things like rent, insurances and money towards annual expenses.

Now all I need to do is concentrate on not spending next week's or next month's money.  And in the meantime start trying to figure out things like how much of an emergency fund I should be aiming to save once I am out of debt.  Any thoughts on that?  I kind of like the sound of 10,000, which seems to be what a lot of people aim for.  But on the other hand, if I had ten grand, I'd be trying to use it as a deposit to buy a house.  Am very conflicted about the whole thing really.