Sunday, April 22, 2007

Getting my budget back on track

I have been doing reasonably well with my personal budget over the past year, but it still doesn't feel as if I really have it totally under control. Three factors collectively conspired to put me in my current state of anxiety: 1) I spent too much on my holiday trip to NYC back in December, I made an unplanned, unbudgeted trip to Colorado in March, and I forgot to budget the expense of income tax preparation for April. All of these items are now explicit in my current budget spreadsheets through July, but I have a net deficit of over $600 in the middle of June when I am scheduled to pay off a credit card that gave me six months at 0%. In truth, I had saved the money in my PayPal account for that NYC trip since the middle of last summer, but 5% interest was more attractive than paying off that 0% credit card immediately. There is enough slack in my budget that I have been hoping to make up at least most of the $600 deficit over the next two months. Still, my desire and firm intention is to have more than enough slack in my budget so that I don't have any deficits popping up on my spreadsheets. Worse, I would still like to take a trip to New York in May, which would take another $900 unbudgeted bite out of my budget.

So, that's where I currently stand. Now the question is what to do about it.

I am expecting that the bill for my tax return preparation will be substantially lower than the amount I budgeted.

If I do travel to New York, I will make a diligent effort to use Priceline or some other technique to keep my airfare below $350 and to limit my hotel stays to five nights at no more than $90 per night. It would be best for me to forego this trip, but we will see.

Without the "extra" NYC trip, I would probably come in fairly close to budget with no actual deficit.

I just realized that my budget does not include about $115 per month in interest income on my rainy-day fund. I have no intentions of spending that money on my monthly budget. Most of that income does not show up in my main account that I use for my monthly budget, but I just now went ahead and transferred more than two months of that interest to my PayPal money market fund account anyway. My June deficit is now up to $860. Ouch. At a minimum, this puts significantly more pressure on me to skip the NYC trip, or to at least tighten up on my spending in other ways. The upside is that my balance sheet is now even stronger.

Still, I feel a need to refine and tighten my budget even more, while at the same time keeping enough slack so that every month or even every other month is not some sort of financial mini-crisis. The flip side is that keeping my saving pace sky high almost by definition keeps my budget on constant edge.

-- Jack Krupansky

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