Sunday, February 08, 2009

January 2009 budget

Part of dragging myself out of my latest downturn has been to track my spending very carefully. I managed to get my spending under control a few years ago and consolidated all my debt into one loan (which I still have a little over two years to pay off but on a fixed rate). At that time I held on to my credit card but with a low limit and paid it every month. I only used it for the convenience factor of booking tickets etc and on my budget spreadsheet had things set up so that as soon as I spent something on my credit card I entered it into my budget as money gone from the bank.

This has worked well for me but sometime last year I read a very interesting blog post (more than one in fact) where somebody talked about knowing how many hours you actually need to work to finance a particular thing (taking your hourly rate, subtracting tax, expenses of getting to work etc) and also talking about things as a percentage of your total income. With that in mind I added a new section to my budget spreadsheet to track my spending. Previous attempts at tracking spending had involved my carrying around a little notebook or using my diary and I never seemed to be able to keep it up for more than a couple of weeks.

Being aware that I was moving and knowing I had almost no savings with which to finance the move I upped the limit on my credit card and increased my overdraft facility so that I would be able to use both of those things as interim financing (and aware of it being not the cheapest way to finance anything). I had calculated that between getting the deposit back from the house I was renting, one pension which I was able to cash in (if you've paid into a pension for less than two years in Ireland you can cash it in if you want to although will have to pay a lot of tax) and what little savings I had plus tax relief I needed to claim for medical expenses and any I'd be due on leaving the country I would have enough to cover the main moving expenses. This was indeed the case although I haven't actually submitted the last of my tax claims and so the credit card and overdraft are still there but their days are numbered. I did not, however, stick entirely to budget and didn't keep as tight a control on my spending as I should have during the first few months here. Many of my frugal habits are second nature by now so I haven't done too badly but I needed to rein things in and really get myself under control and so in January I started tracking properly using my spreadsheet again.

It is split into two sections, one for money coming straight out of the bank and one for cash spent. There is still some overlap between the two but I hope to start using it more accurately as time goes by so that the amount I have on the top section as miscellaneous/food etc should equal the amount of cash that I track on the bottom section, where I have each day divided into the categories I mostly spend stuff on. Since the spreadsheet is in excel and I don't yet have office on my home pc I make a note of whatever I spend over the weekend (take receipts in shops that offer them and write everything else on the back of those receipts) and fill it in on Monday morning in work.

So, for January my breakdown of spending as a percentage of my net income was as follows:
From bank
Loan 22.11%
Rent 24.73%
Concern 0.94% (this is a very small standing order to a charity in Ireland)
Transport 2.39% monthly ticket
House related 4.42%
Phone/internet 3.14%
Misc/food etc 16.44%
Gas/electricity 2.61% (I pay the same amount as the previous tenant, they will take readings once a year and adjust my payment up or down accordingly. I'm hoping it will be less.)
Transport 0.98% (a couple of taxis plus paying trams for visitors)
Food necessities 9.64%
Food luxuries 7.16% (there were a few bottles of wine this month, which pushed this up I think)
Canteen food 4.75% (I added this as a separate category as I could never make up my mind if it fit better under food luxuries or necessities - I brought food from home into work about half the days in Janaury. This includes not just canteen food but also the occasional lunch out in a proper restaurant with colleagues)
Toiletries 0.07% (I'd have to check the receipts but I'm pretty sure this was for toothpaste. I find it really interesting to know that a tube of toothpaste cost me 0.07% of my take-home pay)
Gifts incl. postage 2.17%
Lotto 1.49%
House/garden 1.77%
Medical 0.27%
Other 2.47% (this included music for choir and joining the library)

This all gives me a total of something like 106% and as I know I didn't use my credit card and did actually have money left over at the end of the month (had to make sure I kept some as I had finally gotten the bill to pay the real estate agent's commission and couldn't afford to pay it all from one month's pay) that's why I want to work on getting rid of the overlap between the two sections of my spreadsheet. The easiest way to do this is to use cash to pay for everything other than standing orders and as this is something I would like to do anyway it's what I'm going to do.

Ideally I'll have something like bank 65%, cash 25% and the remaining 10% would be what I had left at the end of the month, which then goes into savings. At least here I have some hope that simply the cost of living won't use everything up. I have been managing on what I earn (gross salary is higher than Ireland but taxes and insurance are also much higher so I earn less net) and taking into account I've also bought furniture etc I am hopeful about my chances of saving properly in the future. My goal for the moment is to have at least 100 euro still in my current account at the end of each month. This month I had to pay the real estate agent fee and will have the expense of a choir weekend away and I am going home the first week in March so I may not be able to start with that until the April but I will take each day as it comes. As with everything else what for others are minimum limits, for me are triumphs and if I get to the end of the month and still have any money left it is a big deal.

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