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  • A case of the financial blahs

    First, my phone stopped charging. That was $100 to fix.

    I always stay up later than T, usually either reading or doing something online. I have a reading light with a switch on my side of the bed, so when I do decide to turn in, it’s just a matter of reaching up and flicking it. Sometimes I can’t be bothered getting up to put my laptop on the desk, so I plop it on the floor on my side of the bed. Last month, while coming around to kiss me goodbye in the dark, dark winter morning, he stepped on the edge of the laptop. $200 to replace the screen (momentary panic when someone I thought was reasonably web-savvy on Twitter told me it would be just as pricey to buy a new one, and my computer is starting to slow down a lot, but not enough to fork out for a replacement).

    T’s also motorbike needs some work. (He may  decide to sell it after that.) More moolah.

    Our annual car insurance bill arrived. The good news: the premium actually dropped, thanks at least in part to the no claims bonus increasing from 40 to 50 percent. I had planned to cancel full cover, but now that it’s decreased to less than $1000, I think we’ll keep it on. Even third-party, fire and theft alone is still something like $400-500. But that’s a hefty lump to pay all at once, nonetheless.

    Then the car itself. Oh, the car. We needed two new tyres and two lights fixed. We also needed a butt ton of wires fixed – some T melted ages ago while puttering around with the stereo. After all that, the ABS light was still on (which is stopping us getting a warrant) so a new ABS computer too. $1500. And after that, the light is STILL on. Now apparently there are more buggered wires in the back that need replacing. FML.

    And apparently I owe tax. Back in 2010 I pulled in a decent amount of side income through a freelance gig, and I think ended up owing less than $500 come 2011. That ended last year because I joined the company fulltime. However, my last couple of invoices fell within the 2012 tax year (and added up to about $2000). But add that to my normal income for the year and somehow I owe just over $1000 to the IRD. Grr. I personally can’t think of a fate worse than becoming an accountant (it’s just not up my alley) but I can see why they charge so much. Infernal taxes. To add to that, ACC seems to think I’m self-employed and has sent me a letter to confirm my cover. Goody – more dealings with government agencies to straighten that out. It was great being able to bank that extra $ at the time but the extra taxes and hassle almost negate the benefits.

    We splashed out on a bit of a staycation – a night at the Stamford, dinner out (with a voucher) and brunch the next day (plus parking, to the tune of $271. No regrets, and it was a much-needed break, but still a pretty penny.

    The government’s budget slashed funding for students. That’s put an end to one of my best friends planning to move in with us. I’m glad; I love living alone, just me and T, but the extra money would have been nice, and he’d be an ideal flatmate, a busy grad student rarely home. Our spare room is absolutely tiny and not worthy of being called a bedroom, but he was keen to move in nonetheless – he suggested it. OTOH, we’re technically not supposed to have any other flatmates, so we’d have to disguise the fact someone else was living here come quarterly property inspection time.

    Finally, my no clothing/beauty purchases ban is still going strong. But I may well need to replace two pairs of shoes very soon, and also, my handbag. I don’t believe in buying expensive ballet flats, because they wear out just as quickly on me. But I think it may be worth shelling out for a decent bag that won’t fall apart. What’s a reasonable amount to spend?

  • Giving money away – do you do it?

    One thing I’ve been putting off is sorting out all my receipts so I can do my taxes and get a rebate on the charitable donations I made last year.

    T asked me if that was the only reason that I give to charity.

    Donations

    (Photo credit: Matthew Burpee)

    I was all “WHAT? That’s ridiculous!”

    Yeah, I get the tax back on those, but it’s only a small amount (33%?) I donate because it’s a GOOD THING TO DO.

    Or something.

    If everyone gave a little bit every month, think how that would add up.

    And yeah, giving also makes me feel good. You’ve probably experienced the same thing. (Studies show altruism is a good thing emotionally and, potentially, even health wise.)

    He sometimes teases me and says we can’t afford to give away money. But of course we can. Frankly, I don’t give a ton – sometimes only $5 or 10 a month. Occasionally enough to hurt – maybe $40. I don’t have any causes close to my heart, so it’s generally a new organisation every time. (I’ve actually run through my whole list now, so if you have any worthy suggestions, leave a comment.) And of course, when people I know are doing fundraisey things like growing moustaches and running races, that’s another avenue for my monthly pledge too.

    Anyway, time to stop procrastinating and print out those receipts. And maybe this year instead of saving that refund, I’ll donate that extra amount, too.

    Do you give to charity? How do you decide where your money goes?

     

  • Motivation: Saving vs paying down debt

    It’s closing in on a year since T bought his motorbike.

    There were vague plans that once he got his restricted licence and was legally allowed to ride something bigger than a 250cc, he would eventually look to scale up to something with more grunt. Loud as his CBR is, and powerful for its size, he’s still a 120kg dude.

    But I think a bit of that shine, that novelty, has finally worn off. The weather is easing into another cold, wet winter. The bike is starting to require some work. That desire for an upgrade to a bigger bike is fading – and that’s patently obvious in the fact that he’s been eligible to sit his next licence for months but hasn’t got around to it.

    Now he’s got another plan in the crosshairs: another car. (You might recall we’re a one-car household.) Kind of a project car – not in the sense that it will sit in rusty pieces on the lawn for years – but it will be an older, restored vehicle that’s not for everyday errands.

    Bike, car, whatever. I would have obviously preferred his next big purchase to be paid for in cash. I wasn’t diametrically opposed to a loan – I was open to the idea – but saving for something major is my MO.

    He’s been frustrated with his savings progress, though, because at heart, he’s a spender. And so the other day he brought this up. He thinks going the loan route will encourage him to pay it down quickly – that he’ll set up big automatic repayments that won’t leave him with much to fritter away after also accounting for living expenses.

    This seems, on the face, absolutely ridiculous to me. Particularly as it pertains to T, as he has never shown any particular hurry to pay down debt before.

    But I also recognise that personal finance is individual and there’s a huge psychological factor.

    So what do you think? Have you ever found yourself more motivated to pay down debt than to save? Have you struggled with either?

  • Friday Five: My worst financial decisions

    Y’know, I may not ever have gotten myself into proper debt, but I have made some less than choices moneywise. For example…

    Furniture hire

    My plan was to move into the student apartments once I got to uni. But in that interim year, I needed a bed. And hiring one seemed the easiest move at the time – it would get delivered, and I wouldn’t need to worry about getting rid of it at the end.

    That overdraft

    For about six months back in 07, I had a bunch of different accounts at various banks (when they throw themselves at you during O-week, it’s rude to say no, right? Student accounts FTW!). And for awhile, T used one of these because it was free and handy. Only this was right back when he was truly awful with money, and he ran up the (thankfully interest-free, although National Bank kept trying to charge, and I had to keep calling them to sort it out. Also, their internet banking was shitola. Avoid) overdraft on it.

    Not getting contents insurance earlier

    This, along with Kiwisaver, was one of those things I kept putting off because things were tight – I was studying full-time, T got laid off, things were not great on the financial front. Then we got burgled. Yep.

    Contents insurance is cheap, and protects renters in case you accidentally burn down the house or something. Do it. (We also got robbed a handful more times after that, so a good investment all round.)

    Being the head tenant

    All the headache, all the responsibility. The only good thing was rounding up everyone else’s share of the bills so I could pay a little less, which I considered my cut for all the rest of the crap I dealt with. Nightmare flatmate from that house still owes me nearly $1k.

    And … I’m out, actually. I can’t come up with a fifth. Maybe choosing a higher-paying industry? Nah. I’m not a proponent of starving for passion’s sake but neither do I believe in staying in a lucrative job that makes you miserable. What I do challenges, excites and interests me and pays decently enough. And that does me just fine right now. Yes, I’ve chosen a fairly flat industry with low starting salaries and a similarly modest long-term pay trajectory. No doubt I could find enjoyment and meaning elsewhere and make more money, but I know that would not make me happier.

    Got any financial regrets to share?

  • Price no object

    A little while ago, we drove out to the Clevedon farmer’s market for the first time. (I highly recommend it if you haven’t been before. There were llamas. And donkeys, one of whom we christened Graham.)
    Llama at Clevedon market
    There was a pie stand. It’s darn hard to find a good pie these days; bakeries aren’t what they used to be. It was also close to lunch time. T wanted a pie, so it was settled. I marched on up to the counter and ordered without pause. I didn’t even ask how much it cost ($6, by the way). I never do that. But it was what he wanted; at most they couldn’t possibly have charged more than $8 or $9; and it didn’t matter because we were buying one anyway, and knowing the price wouldn’t have changed anything. (There was no sign with prices, obvs.)

    Then a few weeks ago, we made a rare outing to the cinema when The Avengers came out. I had movie vouchers in my Entertainment Book, but for a different cinema chain; we’d have to drive all the way to Sylvia Park to get the deal, when there’s another movie theatre less than 5 minutes’ drive from home. I decided the extra long drive didn’t warrant the savings, so scotched that idea, and we headed to our local and paid full price. We were in a rush to make the next screening, so again, I didn’t stop to actually confirm the price of a Saturday daytime ticket (which has gone up). In hindsight, it might have been worth it to make the drive …

    Have you ever bought something without knowing how much it cost? 

  • Guest post: OTT weddings and cutting costs

    Today’s post is part of a Yakezie blog swap on the topic of weddings! You can read my post over at Fiscal Phoenix.

    Before we cut our cable, I enjoyed watching Say Yes to the Dress.I was continually fascinated by the women who would spend $10,000 to $20,000 on a dress. True, the dresses were often gorgeous “princess” dresses with elaborate detailing and beading and a gorgeous train. Yet, I could never imagine dropping so much money on a dress I would wear one time for one day. ONE DAY!

    American bride wearing a Contemporary Western ...

    (Photo credit: Wikipedia)

    How We Cut Costs for Our Wedding

    When I got married 10 years ago, I just happened to fall in love with a wedding dress that cost a little over $100. After alterations, the final price tag was just a bit over $200.

    Because I come from a very large family (my dad was the youngest of 10 kids and my mom was the second youngest of 9 kids and I have over 40 cousins on my mom’s side alone), my husband and I knew we would have to keep things simple to be able to afford to invite over 250 guests. In the end, my husband and I made all of the table decorations, made our own flower arrangements and did much of the other prep work ourselves such as wrapping the silverware in a napkin with a bow around it and even making our own arch to walk through when we entered the reception.

    My aunt made our wedding cake, my cousin was the D.J., and my uncle took the wedding video. We had a hot buffet of food we had made the night before the wedding. Our wedding was DIY, and we only spent $6,000 for 250 guests. That price is not just for the reception, but for every single wedding expense.

    What I loved about our wedding was that there was no residual effect. We didn’t have to put any of the wedding expenses on credit. We weren’t still paying for our wedding years or months after it happened. What I disliked about our wedding was that we did so much ourselves, we were exhausted when it was over!

    Over the Top Weddings

    I have attended plenty of weddings where the bride and groom dropped a great deal of money and were paying the wedding off for several years. What I noticed about these weddings is that they had a lot of little things that people didn’t want.

    My friend had a wedding where they gave out flower bulbs so people could plant them and remember the wedding. This is a nice idea, but in reality, most people probably didn’t want plant bulbs, so they didn’t plant them. To me, that was wasted money. While the napkins that have the couple’s names and wedding date embossed on them are pretty to look at, at the end of the day, they are just napkins. People aren’t going to bring them home and cherish them; they are going to use them to wipe food off the corner of their mouth.

    I may not be the best person to ask about these issues because I am a bit of a minimalist when it comes to parties and decorating. However, considering fights about money are the number one cause of divorce and couples tend to fight more when they are saddled in debt, starting a marriage in debt because you had an expensive, over the top wedding doesn’t seem like the smartest relationship choice.

    Melissa blogs at Fiscal Phoenix and Mom’s Plans where she writes about finances, getting out of debt, food and family.

  • Layby vs hire purchase

    I’ve been doing some higher-end mystery shops of late: jewellery, luxury fashion. They’ve been awesome experiences, actually. The staff know their stuff and when it comes to making suggestions for improvement, I really don’t have any ideas to offer. In fact, one of the surveys went so well I very, very nearly went through with the purchase (and if New Zealand had strong return policies I probably would have). This wasn’t one of those surveys that included purchase, or purchase followed by return. Just one of those teasy ones where you pull out at the very last minute.

    Luxury retail, SoHo

    Luxury retail, SoHo (Photo credit: La Citta Vita)

    One thing they always make a note of is to mention a layby option. I never really understood this until I got older and realised that some people spend hundreds of dollars on a single item of clothing. (Personally, the most I’ve ever spent is under $200, on a coat, and a pair of a boots respectively.) Since the big bad GFC, layby is apparently making a bit of a return to the retail scene.

    If you’re not familiar with the term, layby involves the shop putting aside the item for you. You pay weekly instalments toward the balance – usually interest-free – and once it’s paid for in full, that’s when you finally take it home.

    For those who can’t pay in full upfront, I think it’s a great option. It beats paying 20 percent interest on a credit card, that’s for sure. And I certainly am not going to argue with a system that promotes delayed gratification (something I think our generation lacks a little, myself included).

    Then there’s that other beast – hire purchase, offered on bigger-ticket items. Electronics. Appliances. They’re not such a good deal, in my view.

    I did consider taking out a hire purchase on one of my laptops. It was a lovely interest-free deal, and interest rates were high enough that I figured I might as well keep money sitting in my account as long as possible.

    But digging down into the fine print, I found upfront fees and annual charges that totally wiped out the interest-free carrot. And that’s why I whipped out my credit card, took the rewards points, and took the savings hit.

    I can see in some situations this might also be preferable to carrying a credit balance, depending on the specific numbers. But I don’t anticipate a hire purchase ever worming its way into my list of financial liabilities.

  • Carnival of Personal Finance #358: Anzac edition

    Roll up, roll up. Welcome one and all to this week’s carnival of personal finance!

    This week’s a short one for me – it’s cleaved neatly in half by Anzac Day.

    For those not familiar with Anzac Day, it’s a national holiday commemorating our soldiers who fought at Gallipoli during WWI.

    They fought for a mission, a cause larger than any single one of them.

    While most of us will never be part of something on that level, we are united in a common journey – that’s what this carnival is all about! We’re all on a quest to achieve financial savvy, stability and independence. And as always, here are the links to the best of this week’s writing to prove it.

    Editor’s Picks

    Should kids have to take a minimum wage job when they’re teens? Nicole, Maggie, and the grumpy readership weigh in on whether grunt work is worth it. (My general feeling is that unless they’re genuinely tied up with other things – Olympic training, practising for a performance at Carnegie Hall, prepping for early entry to uni or other pursuits at that level, why not?)

    Want to pick up your blogging game? Here are 12 tactics to build up a money-making blog, via The Financial Blogger. (I have a post tomorrow on why I’m doing the exact opposite.)

    Eric from Narrow Bridge Finance explains why he hates bad tippers. (We pay our hospo staff a living minimum wage. I’m very glad tipping is not part of our culture, though most places now have tip jars – and the higher-end places usually offer an option to add on a tip when you pay by Eftpos.)

    Some fees just can’t be avoided. Boomer & Echo presents 10 Fees that are actually worth it. (Sometimes it pays to pay for a privilege.)

    According to the Weakonomist there are only six kinds of employees. (I’m fortunate to work with great people – that’s such an important element when it comes to a satisfying work environment.)

    Career

    MISSION: Rock the search, the work and the exit.

    There’s been a lot of brouhaha over employers asking for Facebook passwords. Obviously these are a very select few. Still, Glen Craig from Free From Broke presents Should You Give Human Resources Access to Your Facebook Profile?

    Some jobs are downright awful. Everyone’s heard stories about people who stuck it to their employer and stormed out of the office. Jeremy from Modest Money presents Avoid Burning Your Bridges, and reminds us why that should always be a lst resort.

    Credit

    MISSION: Minimise charges, maximise rewards

    Apparently there’s a new credit card fee making a resurrection. Beware!, Matt Schulz from InvestingAnswers.com says.

    And on a similar note, Liana from Card Hub presents Get Ready For More Credit Card Fees – watch out for offers that require you to pay a fee before your account is even open.

    What do you really know about credit cards? John from Wallet Blog presents 6 Fun Facts about Credit Cards.

    We’ve all heard the typical advice for a healthy credit score: Pay your bills on time. Don’t max out your credit cards. Don’t close your oldest accounts. But the problem is, this advice is just that: typical. Bethy from Credit Karma Blog presents 4 Ways to Get a Better Credit Score Now.

    Debt

    MISSION: Kill it

    Ryan Yates from Deliver Away Debt presents The Fine Line of Debt Refinancing – Rescue vs. Ruin, and says, “Talking with a bank is a lot like being on a first date; if you don’t shave your financial legs, you won’t let them get too far the first time you meet.”

    Danesh Parhar from The Financial Rebellion says there’s more to worry about debt than just the amount of debt you have – consider the monthly payment.

    In Debt Consolidation Programs, Ben from ReadyForZero Blog explains the different types of debt consolidation available.

    Finance

    MISSION: Forewarned is forearmed

    The Pareto principle states that, for many events, roughly 80% of the effects come from 20% of the causes (or effort). FMF from Free Money Finance suggests you should 80-20 Your Finances, too.

    Since the GFC, the US government has increased the insurance limits on deposits. Jim from Bargaineering elaborates further in FDIC Limits.

    Frugality

    MISSION: Do more with less

    Hosting people can be expensive (and exhausting). Amanda from My Dollar Plan presents How to Host Out-of-Town Guests Without Breaking the Bank.

    Babies are a blessing, but they are also a target for materialism. Don’t get sucked in, warns Everything Finance! Here are some Baby Essential Costs You Can Skip.

    What’s a good car to own in your 20s? Green Panda from Green Panda Treehouse presents Best Cars for College Graduates to Drive.

    Don’t be foiled by food labels. Sandy from Yes, I am Cheap presents Food Labels And Terms That Fool You.

    In Buy Current Technology, Not State of the Art, Ryan at yourlifeforless says it’s important to focus on your needs, and avoid buying state of the art technology just for the sake of it.

    Jason from Live Real, Now reminds us in Be Happy with What You Have that it’s not possible to buy happiness, either directly or indirectly, through the accumulation of “stuff”.

    Once upon a time, the two-income household was virtually unheard of. Justin from The Family Finances asks, Is It Still Possible To Raise A Family On One Income?

    Money Thinker from Money Thinking presents Sifting through Needs and Wants, with a few handy questions to ask yourself before whipping out your wallet.

    Investing

    MISSION: Work smarter, not harder

    Acronym alert! Is SIPC like being FDIC insured? Not so, says Evan from My Journey to Millions, in What Is SIPC? Recent Sanford Case Should Lead to Interesting Results.

    James from Short Road To Retirement presents How To Invest Your 401k Plan, with a link to a calculator that will tell you how to allocate your assets based on your age and risk tolerance.

    Bonds have a place in many an investment strategy. SB from One Cent At A Time reckons Bonds are Paramount in your Portfolio; Even with Room for Volatility.

    Over time, tax treatment can make more difference than net returns or expense ratios. Dan from ETF Base explains What Makes an ETF Tax Efficient.

    How much do different investments really return? Drew from Objective Wealth presents Investment Asset Classes, Start Your Engines! with a car racing twist.

    In Sprint in $300 Million Tax Fraud Lawsuit, Flexo from Consumerism Commentary says, “Sprint says it was just “looking out for the consumer” when it failed to collect and pay $100 million in taxes.”

    Thinking of joining the IRA bandwagon? Mike Piper from Oblivious Investor presents Where Should I Open an IRA?, and says, “With all the new commission-free offerings in the last couple years, the answers to this common question have changed.”

    Money Management

    MISSION: Keep the ship running smoothly

    Gender roles often influence the division of household tasks. Ray from Tie the Money Knot asks, Who is the Financial Driver? in your relationship.

    Mike from Do Not Wait explains Why Simplicity is Key For Retirement – as it is in many aspects of life.

    Laura @ Frugal Follies on what a 1940 census taught her about saving. Digging into your ancestry can be uber-revealing!

    Robert from The College Investor shares his Top Apps for Finance, Investing and News.

    Would You Rather Live a Little More Now? Or Have a Pile of Cash Later?  Smart on Money wonders if we have to sacrifice everything right now to save up for the future.

    Other

    MISSION: Educate yourself

    Learning to handle your time wisely must be one of the hardest things about adulthood. Miss T. from Prairie Eco Thrifter lists 7 Time Management Tips that Will Help You Work Efficiently.

    Is ProvisionRX a Scammy Pyramid Scheme? Lazy Man and Money says ProvisionRX looks like the most basic of scams.

    In Shopping for Health Care, Money Walks offers some tips for buying health insurance.

    Real Estate

    MISSION: Learn from the property gurus

    In Home Mortgage Pre-Approval Letter Received, PT Money Personal Finance reaches a new chapter in the journey to buy a new home and become a landlord.

    Family Money Values presents Real Estate Investing – Get Better Cash Flow from your Rental Properties, and says, “Here are some suggestions on how to evaluate your properties to make sure that you are keeping a taut ship.”

    PK from Don’t Quit Your Day Job asks Who Decided 417:1 Leverage is a Good Idea?, and wonders if another federal bailout is imminent.

    Taxes

    MISSION: Crunch those numbers

    Those deductions can really add up when you run your own company. Teacher Man from My University Money presents Claiming a Business Loss – Losing Money Never Felt So Good.

    Left your taxes to the last minute AND made a boo-boo in the rush? Peter from Bible Money Matters has 8 Tips for Amending Your Tax Return When You Make a Mistake.

    Darwin’s Money explains Obama’s proposed ‘Buffett’ rule and why it’s a horrible idea for America in Senate Rejects Buffett Rule – Fighting Stupidity with Logic.

    Believe it or not, the IRS offers installment plans. Rob from Dough Roller presents Can’t Pay Your Taxes? Read This.

    Thanks all for taking part! Be sure to get your submissions in to next week’s Carnival when it is hosted by My Personal Finance Journey.

  • Personal finance topics I’m so over

    personal finance topics i'm so over

    Let’s kill all these off for eternity, thanks.

    Saving for your kids’ university vs saving for your retirement

    I may be biased.

    In New Zealand, everyone can get an education, if they are so inclined. Schooling is “free” (annual fees, or “donations” as they call them, are just short of being compulsory – but you can get away without paying them. I didn’t pay my fees in the last year of high school as I was financially supporting myself and that $150 or whatever was a lot of money. It does mean you might miss out on certain things, like getting a yearbook, and of course you have to pay for school trips and stationery and whatnot). And everybody is entitled to an interest-free government student loan to cover your tertiary education.

    But you know what? No matter where in the world you live, some things don’t change. You, and you alone, are responsible for your financial situation. Nobody else will put your interests first. So if you don’t, what do you expect to happen to you?

    Sure, you can help out your kids, if you would like to and can swing it. I know fees in the US are reaching ridiculous new highs. But you won’t be doing anybody any good by jeopardising your own twilight future and potentially becoming a burden on your offspring later down the track.

    Do both by all means. But put one of these priorities – yourself – first, and don’t go for the other on its own.

    Why buying name brand items is a waste of money and how a kitten/fairy/unicorn dies every time you do it

    Look, there really is no difference sometimes. Budget milk is the same as Anchor (and even if not, the price difference is too staggering to make me fork out for the blue label). Budget pasta is the same as the next brand up, and a few more beyond that. Heck, T gets by just fine wearing Warehouse own-label jeans, though he does spend most of his time in Dickies.

    Here’s the thing, though. Some generic brands are downright godawful. No-name ketchup. Instant noodles. Canned vegetables. I’ve done it, and never again. That’s wasted food I couldn’t stomach, that never got finished, and money down the drain. I know what items it pays to pay a little more for, and I stick to it.

    Cellphones are a luxury and if you think otherwise, you’re a spoilt, entitled Gen Yer

    I work in media. Having a cellphone is expected (and in fact I now have a work phone). But even when I worked in hospitality, I was still expected to be easily reachable for last-minute shift changes or in the case of another job, to be contacted in regard to my availability to serve at various functions and events. You don’t have to be super important and way up the hierarchy to be needed, if you know what I mean.

    Cellphones don’t need to be expensive, either. I’ve had a phone since about 16 (I’m now 23) and in those years, I rarely spent more than $20 a month. A home phone costs more than that, with extra for voicemail. (Incidentally, we do have a landline with our broadband package, but doesn’t actually work with our modem – we have to unplug it to use the phone – and we use it so infrequently I can’t be bothered doing anything to remedy the situation.)

    Any blog topics you’ve had enough of, finance or otherwise?

  • How I FINALLY learned to budget: The long road to budgeting bliss

    How I learned to budget

    I’ve always been good with money. I got my first job – a paper round – at 13, making something like a whopping $80 a month, and saved every dollar I earned.

    I got my first real job in Year 11 at a cafe, working weekends. Then I decided I wanted to get an electric guitar, so I got another job at a call centre working weekdays after school. I worked constantly for months until I scraped together the $600 for my Ibanez and my amp, plus other paraphernalia like cords, a case, picks and the like.

    I moved out of home the following year and got by with barely $20 a week to spare, but I made it work.

    Then I – we – lost track a bit when T and I moved in together, throwing a car into the mix, along with other things. After a few months I sat down, went through our bank statements and was shocked to see what we were spending on food. (The first step to budgeting: tracking, and knowing what you’re spending.)

    Thus began some pathetic attempts at budgeting, stymied largely by variations in numbers. Income varied every week. Rent was the same every week, but all our other expenses varied. Plus of course, there are all the irregular expenses that crop up at the least opportune times. Cue head explosion.

    I would mock up beautiful budgets with colourful bars for each category. Breathless, I would log on after pay day and see how the numbers stacked up against the plan. Almost always, I would be thwarted, and give up yet again, thinking I could never make it work.

    Until one day I realised something very simple. The numbers fluctuated. And so should the budget. A budget is a living document that evolves as necessary.

    Instead of trying to make the money match my ideal budget every week, I needed to tailor the budget to that week’s numbers.

    Amazing, right?

    So simple, so obvious. Nonetheless, this was a major epiphany that cut through the fog.

    Did some overtime? That can go into savings.

    Lean week? Time to trim and eat in all weekend.

    The next step: figuring out how to handle those irregular expenses. I sat down and calculated what power, phone and internet was costing us, as well as less frequent payments like insurance, car registration and all those other bills. I added up an annual figure and divided that by 52. Every week, I put aside that amount into a subaccount, and then draw money from it as bills come due.

    Then simplify, simplify, simplify. Now that I’ve got a good system going, our expenditure in any one week is pretty predictable. Rent, groceries, petrol, bill money, and a little bit for fun – eating out, entertainment, etc. Done. It’s at the stage where I no longer budget, in fact, although I carefully track our spending every month.

    In my mind, budgeting bliss comes down to three steps:

    • Awareness – getting your head out of the sand about what you’re spending and facing up to the numbers
    • Action – doing something about it. Tackling debt, cutting back on frivolous spending, finding ways to trim your essential expenses
    • Automation – getting into a comfortable routine. Once this is second nature (I might even venture to use the term “autopilot”), you may not even feel the need to budget as such any more

    Need some more guidance? I like the 60% solution – a basic formula with suggestions for how much you should spend on various things:

    • 60% to Committed Expenses
    • 10% to Retirement.
    • 10% to Irregular Expenses
    • 10% to Long-Term Savings/Debt
    • 10% for Fun

    And if you’re after a budget spreadsheet, Budgets are Sexy has a handy list with a ton of free templates here.

    Are you a stringent budgeter, or more of a hands-off gal like me?

    This post is part of Women’s Money Week 2012. For more posts about budgeting see the Budgeting Roundup

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