In this blog entry, I’d like to give you an overview of where our money goes right now. You can look at other planning articles here. It’s not so much a budget, as it is an expense report. Our budget is based on this information, but it is changing all the time to suit the needs of the current month. We’ll discuss the budget we use more in a future post.
There are fixed expenses and variable expenses. Fixed expenses are items that we have to pay every month based on contracts, obligations, laws, etc. Variable expenses are those that we can play around with each month and modify to best fit our situation.
Here is a chart of all our fixed expenses and the amount of our total net income (after taxes, deductions, etc.) that they consume:
|Auto Loan Payments||10%|
|Life Insurance/Auto Insurance||2%|
That leaves us with 61% for variable expenses and saving/debt reduction.
Here is a chart of all our fixed expenses:
The 401(k) percentage doesn’t actually come out of our net income because it came out before that point. If we change that percentage, then the the overall pool of money could be affected to have more or less available.
Charity is not a fixed expense, but as we are religious individuals, we make sure and donate 10% each month. Of course if we lose our income, that will end up being $0 which is the variable part of the equation.
Household is an all encompassing category that includes groceries, liquid soap, paper towels, light bulbs, clothing, etc.
Transportation includes fuel, oil changes, and other items like that.
Having 31% of our net income available for saving, debt repayment, and projects seems like a lot. I was surprised when I was working on this post how much there seems to be when it always seems like we’re extremely tight on money each month.
I think a lot of that feeling probably has to do with how long we’ve been pushing to get our debts under control. We knew they were going down. We just didn’t realize by how much. Also, the home remodeling projects we’re working on seem to be draining a lot more of our disposable income than we had previously assumed.
This has been a helpful exercise for us, and I would recommend doing it for your own situation. Where do you stand? Are your percentages significantly different from ours?