I consider myself to
be a smart bloke. How is it, then, that I am not good at predicting how
much money I should have left over at the end of the month?
It seems that no
matter how frugal I feel I am, I did not save as much as I thought I would. I've
thought about this one for a few years and think I have it within reach.
It's not that I don't have enough money but I'm just not serious with
myself about how I spend it.
To illuminate the
issue I created three reports.
·
Total Inflows versus
Outflows by Category
·
Inflows versus Outflows
except for Retirement
·
Inflows versus
Outflows sans Taxes and Retirement and Housing
The first report will
tell me what I have left over at the end of the month to manually deposit into
a savings account. I have a goal amount each month and I'm just not
making it.
The second report
really allows me to see the huge tax burden (that's the name they give it, not
me) I face. This report also removes the psychological 'happy' feelings
of having some non expense items on an expense report, which allows me to say
while that number is large, some of it is actually going to savings.
Report number three is
the one that allows me to, in a healthy and positive way, get hold of
all of my discretionary spending and tighten down the screws on
those categories I wish to make sacrifices in
I know what you may be
thinking. It is possible to reduce housing and tax expenditures.
You could re-finance, get a better tax adviser, lie to the IRS, etc.
Sure - but my point here is that the (possibly) easiest thing you can
control is your discretionary spending. You are also pointing out to me
that the majority of my outflow is in housing and taxes. You are absolutely correct!
I can't help you, however, in this economy deal with you having
bought too big of a house. Also, for us starting out on
this financial journey, looking at these three reports may be the
first time we realized that taxes/housing are such a huge component of our
outflow.
I'll admit - I'm
already pretty cheap. I could spend less on groceries but not much.
Using these three reports I've clearly seen that my problem is larger
electronics purchases throughout the year during moment's of weakness.
Today I vowed
no extraneous pending that hasn't already been planned
(vacation expenditures in my case) between now and mid May. With this, I
will hopefully be able to make good on savings outside of retirement funds for
a down payment on a house.
