spend less than I earn

The last I checked up on this goal, I was attempting (futilely) to budget, and to balance my income and expenses each month. However, this was a total pain in the ass, so I fell way behind on doing it.

Well, today I forced myself to sit down and actually do some financial paperwork, simply starting from a blank spreadsheet. I did a Balance Sheet first, which is a snapshot of your accounts at this point in time. You add up all your assets (savings, retirement accounts), and compare that to your liabilities (credit cards, mortgage), which will give you your Net Worth. Luckily I am on the positive-side there.

Next, I did a cash flow statement, and that will show you which way you are trending. What is frightening is that, even though my accounts and spending feel like they are in order, this exercise proved beyond a doubt that I am spending more than I earn. However, I am really glad I did this now, cause I feel like I have the time to fix it.

While this was fairly tough, it really helped that I had the majority of my financial transactions recorded in Quicken, cause it allowed me to easily pull down different categories of spending. For instance, I can say “for this year so far, give me a report that tallies all my spending for Medical:Vision or Dining or Cell Phone.”

I was a bit in the hole for April, but not horribly.

What’s good is that I put 100% of my income tax refund into my Roth IRA. So, I technically spent more than I earned, but that’s acceptable because the over-spend went into long-term savings.

I balanced my checkbook for March using quicken, and came out on the plus side. So, I feel like my spending is under control, but I could be doing better.

Luckily I also got my “Christmas bonus” from work, which totally went into savings. Without that, I would’ve just barely met this goal for the month.

In January I stuck pretty tightly to my budget, and I got a great bonus cause my credit union bank merged with another bank. I haven’t been carrying cash, and my credit card bill hasn’t been out of control at all. I was up at the end of that month.

Then, February rolled around, and I’m back in the hole pretty bad. But, looking at my expenses, it seems there’s a lot I could’ve avoided. I got a speeding ticket, and then last weekend I had to stay at a hotel cause of a storm… when we shouldn’t have been travelling at all. And way too much money spent out at the bar after soccer games and on wine and dining. I know I can also reduce my cell phone bill by removing features I don’t need, which is just an absurd cost for the service I get.

At least I can see what the money is being blown on; March will be a lot better. I’ve got a fat yearly bonus coming from work, and (hopefully) a half decent tax return. And, I am committed to getting this thing turned around by not wasting money.

Ok, tonight I analyzed my spending by category using quicken, and came up with a starting budget.

I will probably have to tweak it month by month, mainly because:
A) it may not be realistic
B) my limited knowledge of how to get quicken to work

Unfortunately, my first shot at this wound up having me losing money this year on the whole. In my plan, I still lose more money than I’m earning. This is mainly due to the fact that I had to work in expensive IRA contributions from January thru April, which will ultimately result in an extremely nice tax deduction. Starting in May 2007, I wind up on the plus side each month!

It does feel pretty good to at least have a plan though, even knowing that I may not be able to stick with it.

I just freaked out after quicken told me I’d be broke by June of 2007 with my current spending level (Cash Flow Forecast report). I guess an HDTV or new car isn’t an option any time soon.

I can easily cut down on frivilous items like going out to eat so much, and using the credit card so often.

My goal is to learn to use quicken a little better, as I feel lost using the software. Why the hell doesn’t my crippling mortgage payment show up in a category under expenses? I will figure out how much I actually make per month after taxes. How much can I actually spend?

This may be impossible with some required home repairs coming up, and the fact that I want to invest in an IRA before taxes come up.

January is really out of the question, because of the holiday gift expenses. But, can I be ready to stick to this in February?