Tilted Personal Finance

[Baraka_Guru]

As many of you have noticed, one of the newer forums here is Tilted Economics. It's a great place to discuss such macroeconomic topics as the current global financial crisis and resulting recession. Already there are a number of great discussions on the go, and I'm sure it will continue.

I'd like to shift some focus away from that, if I may, and open things up to the other side of the economics coin: microeconomics. Some of you have shared your personal stories related to tough economic times, and others have shared grave concern. This is why I have decided to create a general thread "Tilted Personal Finance."

I'm not a finance guy, but as a book editor, many of my projects are on investing and personal finance. I've worked on cold, hard finance titles, as well as holistic, psychology-driven titles. I have a lot of knowledge and tips related to general topics on finance, plus I'm currently shifting gears myself: I want to manage my debt more actively, while at the same time saving up for a down payment on a home. My first step: the dreaded monthly budget!

I welcome finance people and others alike to participate here, as we help one another sort through our personal challenges in tough times ahead.

Warning: Do not, at any time, share sensitive personal information. Identity theft is a growing problem, so be sure to protect yourself. The purpose of this thread is to share general knowledge and tips. We can get into some specifics if you want, just be sure to remember that this stuff will show up on Google and beyond.

That said, feel free to post your advice, share your stories, or voice your concerns. Please try to keep the focus on the level of the family or individual, as there are many topics here already on the economy at large. They are related, but let's keep perspective.

Good luck, and I wish you all prosperity over the long term.

[Cynthetiq]

The dreaded budget.

I can't seem to do it, at all. I've tried, and I'm just not able.

What I do know is that it is most important to spend less than what you take in.

Since I couldn't do the budget or tracking. I did the simplest which is, do I really need to spend this $ right now? I made simple rules like NO impulse purchases this went for food, soda, drinks, snacks, CDs, DVDs, and any purchase over $100 required me to wait 24 hours before making the purchase. It really was making sure that I tried very hard be vigilant of my mony coming out of my pocket.

I scrutinized every bill that came in. Each and every line item and charge, fees, taxes. I talked to customer service to find out what each and every item meant and how I could reduce them.

I stopped thinking about bargains and sales, and understood it as more money out of my pocket. It isn't about how much you save, it's about how much you keep.

[Baraka_Guru]

Cyn, a lot of people can't do the budget thing despite their best efforts. It's not an easy thing to do. Personally, I haven't given it a fair chance yet, but I'm a big details guy, so I might actually enjoy it. But what you are doing in its place is a wise plan. Impulse buying is usually what gets people, and I completely agree with what you said about "saving" money on purchases vs. simply keeping it.

One alternative to a formal budget is what some people call the "un-budget." Rather than map out your limits ahead of time and then compare goals vs. outcome at the end of a period, the un-budget (one of them, anyway) is to do a "debriefing" on each month to see what you took in and what you spent and where (especially in a well-organized "snapshot" format). At least looking at where your money is coming from and where it is going month to month is far better than not looking at it at all.

For example, if at the end of each month you notice you keep spending too much money on fast food, you might eventually cutback consciously over time. If you simply don't care to know what you're spending in this respect, you just might keep it up and not ever realize how much fast food is draining your finances. Five to ten dollars here and there doesn't look like much if it appears intermittently on your bank or credit-card statement, but if it actually adds up to $100 to $200 per month or more, it suddenly looks like a bad habit.

[NoSoup]

So, bringing them back from the dead, but lots of good info -

Ask a Loan Officer

NoSoup's Guide to Buying a Property: The Basics

NoSoup's Guide to Obtaining and Maintaining Excellent Credit

[Baraka_Guru]

Hey, NoSoup. I remember the property and credit ones. Actually, the property one I should go through again because my wife and I are starting to plan the purchase of our first property in a year or so.

Anyway, it'd be great if you would contribute to this thread as well. I'm sure those guides will get more traffic as people come through this thread--some nice cross-referencing there.

Maybe I'll have some questions for you soon. I think the first one might be related to insurance, as we won't have a 20% down payment. (The Toronto market is expensive!)

[NoSoup]

Absolutely. Long live TFP Finance!

[ASU2003]

The thing with budgeting is that you need to be realistic. And know that you will need to buy things that were not anticipated. The second part of it is to look at the long term costs of things, not just the month to month costs. I could be paying $40/month ($480/year) for cable and watch exactly the same TV shows. I do have to watch or read some news shows on-line, and get the weather on-line(or just look outside). The last thing is to get out of debt. Do whatever you need to do, learn to live differently (doing free things) for a few months to a year. Change a few things to save money or use what you already own.

I have a basic budget for expenditures that is fairly fixed. I probably go over by $100 or so, but that is still OK. And I understand that others may have other fixed rates, but everyone has different numbers.

$1000/Home and $30/month repairs/improvements - fixed rate (unless something bad happens and I need a major repair)
$25/auto insurance - fixed rate (or can go down the longer I drive the same car safely)
$25/phone - fixed rate (could be lower if I went with a pay as you go phone)
$2/TV ($20/year) - fixed rate
$25/electric - this has been higher than it should be in the past few months
$25/gas - averages out throughout the year, but I would like to see it lower
$31/water&sewer - fixed rate
$69/home owners association/trash pickup - fixed rate
$82/health insurance
$50/gasoline - less in summer
$198/food & Misc
---------------------------
$1400 per month.

There are a lot of free things like exercising, public wifi at mall, bike riding, gardening, watching movies and reading books from library that aren't on the list that are fun to do.
I should get into cooking, because even though it costs some money, it would be considered food.

I do have other hobbies like home theater stuff, traveling and restoring a pickup truck that I don't need to do, but are fun to work on and I can spend my money on those things.

As for my budget, the reason I go over each month is because I spend more on food since I eat out a little too much still. I will be working on this in March when I start eating at home more.

[dixgomez]

With budgeting is that i need to be realistic and need to know the needs and wants....
Try to save a little bit for some time... consider the most needed in every day to make sure that every needed will be taking into a right time to buy them...

[tisonlyi]

Like the unbudget idea from Baraka above, keep a diary or collect the receipts of your spending every day, then at the end of the month have a look through, add up your spending on necessities, semi-necessities and complete waste. Don't kid yourself as to what ounts and doesn't, it all counts.

Set yourself treats equal to about half the value of what you an cut out, over increasing periods. Week, fortnight, month, quarter, half-year, year.

You'll be amazed how much you waste on aggregate, probably, and from that a drive to budget can be forged.

(it works for weight-loss as well, or did for me, i could see the aggregate effect of all those innocent treats in black and white... sobering.)