Sunday, June 10, 2007

Gradually getting my budget back on track

My monthly budget had gotten a little off track because I had a few unbudgeted expenses (I spent more on my trip to New York City back in December and put the balance on a 0% credit card, I had a trip to Colorado in March, and I forgot to budget my accountant for tax prep and some web hosting). And then on top of that I decided to take a trip to New York City this month. All of that led to a non-trivial hole in my budget for June. But, I scrimped and saved enough during the past two months to recover most of the shortfall. My current budget for June now actually shows a modest surplus, but unfortunately not enough of a surplus to prevent another modest budget hole in both July and August, although I have a surplus again in September. I actually need a larger surplus each month to cover expenses early in the next month.

I believe that I can completely recover the July and August deficits simply from the fact that my budget always includes a little extra slack so that the budget is greater than my actual expenses. This isn't the situation that I want to be in, but at least I had set up my budget with enough contingency nets so that I'm not in bad shape. My real goal is to have no budget holes and to shovel the surplus into savings.

Another change that I have made is that I am now trying to budget in advance for trips. I expect to go to Washington, D.C. in October, so I have plopped an estimated travel budget in my October budget. That actually leads to a new budget hole in October, but still modest enough that I can probably recover all of it through my normal budget slack without trying the scrimp on actual expenses (which I'll try to do anyway.)

I don't yet have budget spreadsheets beyond October, so I don't have a handle on travel expenses for the end of the year. I really don't have a clear idea what I'll be doing at the end of this year, but I do know that I won't be spending even half of what I spent last year. I may want to try to squeeze in a short trip to San Francisco sometime in the Fall. In any case, this time I'll endeavor to have budget spreadsheets in place well in advance of any travel so that I can come up with solid, rational plans for eliminating budget holes that pop up.

The good news is that I've successfully refrained from dipping into savings or carrying a credit card balance to cover budget holes. All too often, savings can unfortunately be the grease that eases our way down slippery slopes.

Actually, I did carry a credit card balance for my last trip to New York City, but mostly because I had a new credit card that offered 0% finance charge for the first six months. That let me use budget slack to pay off much of the balance and I just made the final payment last week. I'm now looking forward to using that card on a regular basis (and paying off the statement balance every month) since it offers 2% cash back (up to $400 per year in $25 increments.) The 0% finance charge thing did work out fine, but it did require that I exert extra effort and diligence, so I did find it to be a bit of a hassle. I'll try not to do that again unless I really was expecting to pay the balance on the next monthly statement.

In short, I'm still not out of the woods, but I'm making significant progress. I also have a bridge that I can sell you... well, actually I don't -- I'm too honest for that kind of thing.

-- Jack Krupansky

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