Great minds… are sexy OR the bulletproof budget
Great minds think alike (circa 1898). Or so I would like to believe since that also means that I write about a sexy subject. My post yesterday about the need for a slush fund was mirrored today by J. Savings over at BudgetsAreSexy.com. His description is a great writeup and written in an entrepreneurial sort of way (yes it is a word). Not only that buy he is much more gifted with graphics and layouts than I ever will be. I’ve been spending far too much time fighting with CSS this week. I’m hoping I can tame it somewhat before my Sunday flight to San Fran. The MoneyGardener has a great writeup on the difference between a bear market and a recession.
But you probably came to read about the bulletproof budget didn’t you. Alright, here is the short version (the image links to the longer version):
To start with, I include 3 pay periods even though I only have two in March. This will just make it easier for the months ahead which do have three pay periods. Expenditures are divided into five categories.
Common are costs which I consider fixed since I either cannot live without them (food) or it would be too inconvenient to change them to any great extent (haircuts). That doesn’t mean there isn’t room for improvement, it’s just that the other categories are likely easier to change in the short term.
Debt repayment includes payment of both interest and principal to my student loans. I hope this is the most consistent category.
Investing includes my 403 (b) contributions as well as my Share Builder account. Since my 403 (b) is automatically withheld from my paycheck, I’ll need to increase my paychecks by the same amount. This is easier than it sounds since the contributions should be consistent each paycheck (and based on a percentage).
Emergency includes medical and maintenance / repairs. I won’t have much control of these costs but by tracking them I can get a good idea of what I’ll need to have on hand each month in my emergency fund.
Other is made up of gifts, travel, entertainment, books, slush fund, and clothes. This is where I have the most wiggle room and will most likely be where I’ll get into trouble. Eventually I’d like to have separate accounts setup to automatically withdraw specific amounts each month giving me specific limits for spending on these categories.
Phew, now the fun part. Gross income (paychecks received) less expenditures plus passive income (interest and dividends) equals disposable income. This remainder I’ve divided into three parts, my Scottrade account (retirement), money market account (emergency fund), and a down payment fund. Given how much I save in each per month, I can then calculate how long it will take to reach specific goals. For example if I contribute $100 to my emergency fund each pay check and my goal is $1,000; then it will take 1000/100 = 10 pay checks to get there.
Comment from budgets are sexy
Time March 21, 2008 at 8:37 pm
Hey thanks for the shout out and compliments Adam! I’m glad you enjoyed my post…and i’ll have to admit i went to school for graphic design, although i’d LOVE to go back for something in the financial field.
That’s awesome that you’re working in it! I’ll have to check back and pick up some pointers from ya. Thanks again, and keep on posting