The Naked Ledger

Good news!

Club Mom has officially picked up The Naked Ledger.  You can now find it at:

http://nakedledger.clubmom.com/

Budget Update

We're only FIVE DAYS into the month and we've already managed to spend almost $240!  Here is the breakdown:

                                                                       

Item	Budget	Actual
Food	$ 700	$ 7.75
Dining Out	$ 100	$ 74.05
Entertainment	$ 40
Gas	$ 180	$ 25.00
Household	$ 150	$ 12.21
Cash	$ 80
Alex	$ 50	$ 39.46
Clothes	$ 150
Gifts	$ 50
Other	$ 100	$ 81.47
TOTAL	$ 1,600	$239.94

Most of the categories are pretty self explanatory.  The $81.47 in "Other" is a trip to Safeway where Dave bought something small and took out $80 cash for some business travel he had to do.  He should easily get it reimbursed before the end of the month and when that happens I'll just credit it back to the "Other" category.

Also?  I'm already missing a bunch of receipts.  AND?  None of them are my fault.  My husband is TERRIBLE, HORRIBLE, AWFUL with receipts.  He NEVER keeps them.  It used to be a big problem in our marriage, back in the days before you could magically pull up your checking account on-line and up-to-the-minute.  We'd walk out of the grocery store and he'd pitch the receipt in the nearest bin and I'd scream at him.  It REALLY used to piss meoff, but I slacked off nagging him once The Internet was invented.  Now it's back to the drawing board again. 

First Q&A!

Heather G was brave enough to be the first to solicit my mad financial planning skillz, yo. 

Heather's Question:

"My financial Dilemma-

Credit cards.
I don't own one.
Debit cards.
Don't own one of those either.
which is a good thing.............and a bad thing!

What do you think about this?

We either pay cash or write a check. In some aspects, it really saves us money because we don't carry alot of cash on us, and convenience stores and such, don't always take checks, so its not like we can just swing in for something quick, and we cant eat out lunch everyday (we both work outside the home) because, again, its not like we can write a check at a Wendy's drive-through, therefore we don't have "quick purchases" so we save...........

BUT (there's always a BUT)

We also cant go on vacation as easy either. (Or even short trips, or emergency trips)  We literally have to plan, research and have the cash on hand. We are a family of 6 (Yes, 4 children, I know we are nuts) so that makes vacations and such more stressful, making sure we always have the cash. It makes other big purchases difficult as well, hence we either buy it outright, or we save for it. We have been saving and purchasing for years, we have my car loan, his is paid off, and our motorcycle loan. Outside of that, we live debt free (not including the basic mortgage and bills) so maybe getting a credit card wouldn't be so bad? 

Then I worry with interest rates also. Our credit is good, not excellent, and we are not by far rich, or wealthy and only teetering on comfortable.  We just have waited until we saved enough and got what we needed, so I'm afraid to step into the never-ending circle and habit, of buy now, pay later.

I would like to hear your take on this...........

Am I neurotic? I am a bankers daughter so all my life, bad credit decisions has been my fear. I am just really teetering with opening up this can of worms, I've heard such horror stories about people and credit cards. And what sense would it make to get one for emergencies and never use it. Wouldn't I have to pay a yearly fee on it? 

I would appreciate any direction you can give me on this..........

Thanks!

Heather G"

And here's my response:

Hi Heather,

I think this is a great question and DAMN GIRL, do you have some discipline!  I rarely use my credit cards, but I don't think I could live without my debit visa.  I'd probably spend a LOT less money, though!

A few things:
1) If you really want the convenience of a credit card while you're on vacation, etc, then you can get a card where you pre-fund the balance. (like a gift card)  American Express, Visa and Mastercard ALL have these available and it might make your life easier since you wouldn't have to carry cash.  I'm pretty sure you can even buy them at Safeway in pre-determined denominations.  Just watch out for the fees. Some of them charge a percentage for each transaction.  But a lot of them don't, so just look around.

2) Reading your question, my biggest thought was "What is she afraid of!?"  You sound like you have a zillion times more discipline than most consumers.  Shoot, I'd probably trust you with my OWN credit cards.  As long as you're careful (which doesn't sound like it would be a problem for you), credit cards can be useful and convenient.  Just pay them off every month and you'll be fine.  Finding a card with no annual fee is a breeze, too.  If you don't plan to carry a balance, then I'd shop around based on fees, not on interest rates.  I have a Capital One card with a bunch of perks.  The interest on it is outrageous, but we never carry a balance, so it doesn't really matter.

3) You guys sound like excellent savers.  Really, truly excellent.  I wish I had had more clients who thought to save BEFORE making large purchases or going on vacation.  But what is your emergency fund like? Having enough for a few months expenses saved up is critical to a family's financial wellbeing.  I would probably do that FIRST before getting a credit card.  That way, if you do end up getting into any trouble, you'll have a nice safety net to back you up.

-Amanda

PS - you are totally neurotic, but in good, good way!

AND HERE'S A MAJOR CAVEAT!!!: For the record, my advice for someone WITH excess credit card debt or a history of over-spending would be almost completely opposite from this.  Usually, in that case, the first thing I do is hand the client a pair of scissors and ask them to cut up all their credit cards.  It's because Heather and her husband seem to have such excellent discipline that I don't at all mind the idea of them having a credit card.

AND A LITTLE MORE ON EMERGENCY SAVINGS ACCOUNTS:  I mean cash.  In your savings account or even better, a Money Market account.  I DO NOT mean your home equity line or your 401(k) or your credit card with a zero interest rate for three years.  I. Mean. Cash.  Enough cash to pay all your bills for a period of no less than three months.  This means that the more money you make, the larger your emergency fund needs to be.  This is the FIRST STEP in any sound financial plan.  Before you invest ANYWHERE else, you need to invest in your own security.

Comments

Somehow I forgot to tell Typepad to send me an e-mail when I got a comment, so here I thought no one was reading this yet!! 

Here are some replies to your comments:

Leticia (who is also a finance manager who sucks at keeping a budget): I think it's just HARD to keep a budget, no matter who you are.  I know PLENTY of financial planners who never even LOOK at what they spend, only what they save.  Which is fine, I guess, I just know I can do better if I'm proactive about it.  A lot of professionals in our field actually HIRE an accountant to do their personal bookkeeping, which just goes to show how important they think it is to at least keep track of your spending. 

Rayne: French lemonade is just fizzy lemonade.  I've often made it myself with a bottle of carbonated water and some frozen lemonade mix.  TASTY.  It's even better if you use frozen OJ concentrate.

Kari: I figured I'd get a ton of flack for that $700/month figure for groceries.  When you see it in print, it seems HUGE.  Like, I could buy a new fancy schmancy digital camera EVERY SINGLE MONTH just using our goddamn grocery budget.  But? At least where we live, that's what it costs.  I'm not even going to try to make anyone believe we're being frugal, because we're really not, we're just spending what we need to spend.  Of course, Alex and I are on an all-natural food diet, which really doesn't help (I sometimes think about how much money we'd save if I could feed him Ball Park franks for $1/pack instead of the nitrate-free ones that run $3.99 for FOUR).  The sad fact is that if we're not careful, we can EASILY spend closer to $1,000/month on groceries, particularly if I allow myself to walk into Whole Foods or if we decide to do a lot of entertaining.   

And when I say "That's what it costs", I don't just mean for me and my family.  I've seen enough bay area budgets to know that unless you are a family of super-skinny, non-eaters, groceries run from $600 to $1,500 for a family of four.  I've even seen budgets of as high as $2,000 a month!  CRAZY!  But seriously, aren't food, sex and sleep just about the most important things for a person's mental health?  This was NOT a category I really wanted to waste effort trying to reduce.  It's not like we're buying caviar or anything!

I'm really looking forward to getting feedback on our budget.  It's FASCINATING to me to see what other people spend, particularly people whose budgets look vastly different from ours.  So what I'm saying, is keep the comments coming!

So here's the deal

Despite the fact that I've been a professional financial planner for the better part of the last eight years and that countless families have actually PAID ME good money for my budgeting advice, I am, admittedly, a HORRIBLE budgeter when it comes to my own family.  It seems that every time I sit down and try to keep track of what we're spending, I get overwhelmed and distracted and we end up throwing caution to the wind and just spending whatever we need to.  Looking back, I can't believe the amount of money we've wasted by NOT budgeting.  I'm, like, physically afraid to add it up.

So, in an effort to set us straight, I've opened a second checking account and every time my husband gets paid (the 15th and the last day of the month), I'll be transferring a budgeted amount to the new account.  You, The Internet, will be privvy to literally every dollar that comes and goes from that account.  Not only will I be sharing the budget categories and how well (or horribly) we're staying on track, but I'm going to upload a copy of every single receipt so you know I'm not bullshitting you.

Of course, this still does leave us a modicum of privacy.  I fully intend to keep my husband's salary a mystery and as such I won't be disclosing any of the bigger items like rent, taxes or our regular monthly bills.  Frankly, there isn't anything exciting about them
anyways.  Instead, the focus of this website will be our discretionary budget, the fun stuff - everything that is NOT a bill and everything that has gone so. horribly. wrong. in the past.  Ever wonder what other people spend at Target every month?  Well look no further.  You can see the trainwreck right here.

The Budget

So here's my best laid plan:

                                               

ITEM	AMOUNT
Food	$ 700
Dining Out	$ 100
Entertainment	$ 40
Gas	$ 180
Household	$ 150
Cash	$ 80
Alex	$ 50
Clothes	$ 150
Gifts	$ 50
Other	$ 100
TOTAL	$ 1,600

I came up with this budget simply by looking back at what we've spent over the past couple of years.  Frankly, it's always been MORE than this, which is just sad and pathetic and LAME.  Most months, these categories have added up to something closer to $2,000, so I figure if we can reduce our spending by $400 per month, we'll be $4,800 richer. 

I don't know about you?  But I can think of a hundred ways to spend $4,800 that are TONS more fun than groceries, fast food and diapers.  I just have to keep reminding myself of that as I'm standing in the cosmetics section of Target.

Food. Gah.

Groceries have always been and will likely continue to be the bane of our budget.  We ALWAYS seem to need food and yet, somehow, I never have any room in my cupboards.  In college, Dave and I ate our way into debt, constantly putting extra trips to Safeway on our credit cards.  Our new target budget for groceries is $700 per month, which seems like a lot to me, but sadly we've been spending more than that for a while now.

Since I'm eight months pregnant and totally exhausted, Dave has been helping me with the shopping on Sunday nights.  Normally I would just take Alex with me and go during the week.  So Sunday we did the rounds: one trip to Trader Joe's for $77.35 and another stop at Safeway for $39.99.  TOTAL: $117.34.  If we could keep it to JUST that amount every week, we'd be fine.  But I have no doubt I'll be at the grocery store AGAIN in just a matter of days.

Scanned receipts are under the cut.  As always, click to bigify them.