Budgets

October 2008 Budget: Back in the Black

One of the things that I noticed catching up with our budgeting is that our budget is totally out of whack now that we don’t pay rent, don’t pay for phone and internet, don’t pay for energy, and don’t have to pay that much for my commuting.  Just take a look at how our new spending matches up with our old budget:

october-2008-budget

Our categories need some major adjustments. Our monthly bills have dropped from over $1000 per month to under $100 since we moved out of our apartment. If we drop our gym membership for my wife, which I think we will soon, our monthly obligations will drop below $50. 1 With these changes this portion of our budget will have been reduced by over 95%.

Another area where we seem to be spending a lot less these days is on gas/transportation. I have recently talked about how my bike commuting is turning out to be very frugal, but I didn’t really realize how this savings was translating into our monthly budget. The $71.01 we spent in gas this month represents the cost of two tanks of gas and a single one way bus fare. This category has been effectively reduced by 50% given previous spending habits and could see additional reductions now that gas prices have fallen sharply. I might leave some padding in this category in order to accommodate for the seasonal changes in fuel prices.

With all the dramatic drops in our spending habits, it might be a better gauge of how effectively my wife and I are managing our money by looking at our cash inputs and outputs for the month.  I call this tab on our monthly budget spreadsheet “the ledger”:

October 2008 Budget Ledger

Oh the glories of a positive cash flow. Our effective savings rate in October was 52.66%. I would love to keep that up, but I have a feeling that this will be increasingly difficulty once we move east to go to school. I probably won’t earn very much of anything then, so saving around 50% of it seems like a pipe dream. I’m just happy with what we did this month.

It seems like I have a few points of action over the next month in terms of budgeting:

  1. Come up with a more realistic budget given our current needs and priorities
  2. With the coming of our baby at any moment this month (due date is the 10th of November) I should really try and think through how the baby will affect our budget as well as observe how our baby is affecting our budget.  This may take a few months to determine, but I hope to have some idea of what I need to do by the the beginning of 2009.

Which reminds me – my son is due to be born soon!  I am so excited, I can taste it.  Whatever ends up happening over the next month or so is going to be awesome – even if we spend twice as much as we did last month – because I can’t wait to hold my baby in my arms.

  1. The only obligation that will remain is my wife’s cell phone plan. I don’t own a cell phone and don’t really see myself getting one anytime soon. []

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