Posted by Tim Stobbs on June 9, 2009
So over the years I’ve realized that making things easier is often results in less frustration and more happiness. The classic: KISS (keep it simple stupid). I used to be a control freak and watch every penny with my money, but over the years I’ve been easing up on my control freak tendencies. For example, I’ve stopped balancing my cheque book weekly, now I just review my monthly statement for obvious errors.
My latest realization is I need to stop tracking so many sub-accounts in my savings. Currently I track several sub-accounts including:
- Christmas savings
- Insurance savings (house, car, life)
- Property Taxes
- Heating fund (I self equalize my payments)
- Emergency fund
Yet over the years I’ve noticed the account never runs out of money as a whole. Everything is spaced out during the year that the account always has a healthy balance into it. So I’ve decided to give up some more control over things that don’t matter that much and create the super saving fund. It will have one balance and replace all of the above sub accounts into one. I will also then put in an automatic savings transfer to avoid having to rebalance the sub funds monthly.
I will still track the invoive amounts of what I spend for each old sub account so I can review if the monthly contributions are enough annually, but otherwise I won’t be looking at it on a monthly basis. In addition, this means if I’m over saving I just end up with a larger emergency fund which I can remove any excess from on an annual basis.
Overall this should makes things simpler and reduce my time looking at numbers. How about you? Do you keep any sub-accounts in savings or just mash it all together? Why?
Posted by Tim Stobbs on June 8, 2009
Budgets despite being common in just about every business in existence seem to have problems being used by lots of people for their personal finances. People try them like diets over and over again and keep failing. Yet why do they fail? Well I’m not an expert on this but here are my thoughts of what I’ve seen go wrong.
- Too Much Change. People often try to go from overspending to underspending by huge amounts in record time and then get frustrated by the entire process and quit. It’s sort of like a crash diet. It doesn’t work that way for most people. Phase it in slowly. Stop over spending and break even for a month or two then start to devote a bit more to paying down debt. Slowly change your life and you will see results.
- Not Enough Data. Another major issues budget fail is people assign numbers with no idea with what they are really spending in a month. So instead of just trying to create a budget from a canned magazine article, make one based on how you actually spend. Just track your spending for a month and then use that as a template for a budget. It won’t be perfect the first time, but it will be closer than than a canned budget.
- Not Expecting Changes. Budgets are not static numbers in a sheet, especially in the first few months of using one. Don’t worry about having to change the numbers that is a normal part of a budget till you get a good handle on what your spending is. I track changes on ours and update the version number (eg: version 1.4). Minor changes only get a decimal number (like adjusting the power bill), while big changes get a major one version (the new baby). I’m currently on version 8.3.
- No Controls. Budgets don’t work unless you have some sort of controls on some areas of your spending where you know you are likely to go over. That is why I use cash for certain items in a month like spending cash. Otherwise I would have no idea what I’ve spent so far. Cash makes it easy to track those minor transactions and do some quick planning by looking at what cash you have left. For example, I’m going out on Saturday night and down to $40, I guess I shouldn’t go out on Friday as well.
- No Misc line or float. Life happens when you don’t expect it. It’s a fundamental rule, unexpected things keep showing up all the time and often with a bill. So rather than getting frustrated by it, plan for it. Keep a $100 a month or more around for those things that just happen. If you don’t spend it carry it forward, but often it will just get used up.
That’s my thoughts, if you have failed at a budget what went wrong for you? Or if it worked, what made the difference?
Posted by Tim Stobbs on June 5, 2009
So of you may recall I made a decision a while back to be un-green and drive to work instead of taking the bus. It was a hard decision at the time because I wasn’t sure I was doing the right thing. Now I’ve been at it for a while I’ve come to realize something very odd. It’s costing me less to drive to work than take the bus.
Ok, that conclusion made me go “WHAT?!?!” when I first realized it, but it is true. Parking costs me $37/month, and then I initially started with an extra $20 for gas each month beyond I what I normally put aside for gas. Then in a few months I realized I was using any of that extra money. So now I’m down to my regular amount of $60/month for gas. Then during the last few months I realized I’m not even using all that money a month.
So once you take out the usual errands and other things I realized I’m spending $20 or less a month on gas to drive to work. (By the way for those wondering how I can do that with gas over a $1 per litre again. Short commute + driving the speed limit + small car = dirt cheap commute.) A bus pass in comparison used to cost me $57 a month. So driving is at least equal if not cheaper and saves me an hour of my day.
It’s so not fair. Why is being a self absorbed energy hog a financial reward? That is a problem to me. Everything is setup to be easier to use more and harder to use less with little to know financial reward to doing so. So in the world of easy I really do get why people aren’t green. It takes effort and thought. It’s just easier to eat your fast food toss the packaging in the garbage, watch your huge power sucking TV and forget about doing what’s right.
Somethings aren’t fair. I wonder if it will ever be changed.
