206 replies to this topic

[CostcoLover]

But you could take all that leftover cash in your checking, and buy gold immediately! Your net worth would skyrocket, along with your savings ratio. You should count it as an asset, immediately, and try and convert every penny to higher earning vehicles. Then, what's leftover (usually nothing) is "disposable income".

I count every penny in my checking as an asset. I have an equity-line, and any dime I don't move from checking into there is a negative ~8%. After 401k deductions, paying bills, budgetted frivilous spending, every penny moves into a higher asset class than cash (USD). It's not a before/after payday, it's constant.

Maybe they can afford it then? I would argue against that, because the debt catches up, and they're in the poor-house (not the life they want). That's why I don't pity or offer bailouts for people that lived the life the wanted "now" without thinking about the future. IF they can live like that today, and when rates adjust, more power to them, they can afford it!

Gold? Nah, I prefer Euros. It'll be easier to transact when the U.S. economy collapses and we move to Europe.

Wow, you have a "disposable income" line? Is there still such a thing?

Equity line? As in debt? Sounds like someone is living beyond their means... better cancel that beer....

[CostcoLover]

Yes, technically you are right...But when you're on the golf course, or by the pool, or doing yardwork, or just enjoying the weekend or the game, then technically you're wrong. Sorry, my friend.

I see you're not a serious beer enthusiast. A serious beer drinker isn't distracted by golf, the pool, yardwork, or tv while they drink their beer.

[ChipShot]

Equity line? As in debt? Sounds like someone is living beyond their means... better cancel that beer....

Nahhh. Equity lines are good. I've got a big one in the event of a catastrophic emergency (medical). No annual fee (Golden 1). Now, if you're using it to buy dumb stuff, then, well, you're dumb.

[Andrea V]

Oy vey, that is abstract. Though by that definition, Americans are the money masters of the universe!
"Best use" and "happiness" usually don't go hand in hand. Most people would be happier blowing all their money, though that's probably not the best use if they ever hope to retire, send their kids to college, pay their mortgage?
Budget? What's a budget? Has your spouse ever asked if their purchase is within the family budget?

Last working budget I ever saw was when I was single.

We budget.... everything. Chris pays ALL of the bills and puts in for savings/retirement...

and I am all of the play $$ and food.

If we did not budget, we would not know where the $$ was going.

[CostcoLover]

Nahhh. Equity lines are good. I've got a big one in the event of a catastrophic emergency (medical). No annual fee (Golden 1). Now, if you're using it to buy dumb stuff, then, well, you're dumb.

Catastrophic medical emergency and Equity line don't align.

As one who has had numerous surgeries and hospitalizations, I can attest that unless you have medical coverage of up to a million or two and major assets, an equity line won't save you.

I've seen many a home lost as a result of medical indebtedness in excess of medical coverage.

Now, for minor medical like having a baby naturally ($20k) or kidney stones ($60k) that might work out fine. For my mother's heart surgery 10yrs ago it was in excess of $1.2M. Nowadays, it'd probably be closer to $2M+.

[CostcoLover]

We budget.... everything. Chris pays ALL of the bills and puts in for savings/retirement...

and I am all of the play $$ and food.

If we did not budget, we would not know where the $$ was going.

So what's the calculation for diapers? Sure, some months the kids will be constipated so you'll save some dough, but then winter comes and they get sick so wow, they'll run through 100 diapers in a week.

[Andrea V]

So what's the calculation for diapers? Sure, some months the kids will be constipated so you'll save some dough, but then winter comes and they get sick so wow, they'll run through 100 diapers in a week.

That is part of what you BUDGET for...

there are funds for car repairs

funds for clothing

funds for dentist/medical (ie co-pays and Rx)

funds for Christmas

funds for gas

FOR EVERYTHING! And you only use the funds for things that are emergencies...

like if you saw a really cool shirt you wanted, then it comes out of my money (or the play $$ we call it) but if you....... rip your M/C jacket (that is $400.00 + , then there is a budget for that, and there is no problem getting it.)

It get a little harder if there are 1,000 emergencies happening all at 1 time, but that is what the SAVINGS is for...... in ADDITION to the budget.

[Andrea V]

Plus we only have *1* kid... can't afford diapers when the kid is sick, should not have had more then *1* kid!!

[CostcoLover]

Plus we only have *1* kid... can't afford diapers when the kid is sick, should not have had more then *1* kid!!

I didn't ask what a budget is. I asked how you budgeted for a specific item - diapers.

What's your budget for gas? How about medical?

Or do you simply find out how much your medical is for this year and then say that's your budget for medical?

Do you simply say, gas went from $2 to $3 dollars and we drive 50 miles a week so our budget is now $150 for gas?

[mylo]

Diapers are part of the "baby" budget line. It includes all baby-related items including medical co-pays, etc. I don't itemize as low as I probably should, but it works.

I budget for gas based on trend history. Sometimes it's way under, sometimes way over, I usually look at a 3mo average for "gas". If I consistently overshoot it, we look at why and if it's just the cost of gas, we adjust the budget accordingly. Vacation travel (gas) goes into the vacation line, and work travel (gas) goes into another line that goes up and down as expense reports come in.

[CostcoLover]

Diapers are part of the "baby" budget line. It includes all baby-related items including medical co-pays, etc. I don't itemize as low as I probably should, but it works.

I budget for gas based on trend history. Sometimes it's way under, sometimes way over, I usually look at a 3mo average for "gas". If I consistently overshoot it, we look at why and if it's just the cost of gas, we adjust the budget accordingly. Vacation travel (gas) goes into the vacation line, and work travel (gas) goes into another line that goes up and down as expense reports come in.

Ah, so it's not really a detailed annual budget per se. At least you provided the methodology "trend history"

I'm just curious as to the methodology for these "budgets" I'm well aware that one can plan for replacement of a roof, broken window, etc.

But how many of you have budgeted for 7 car break ins and 2 apartment break ins? Not in your budget? Maybe it's in the "emergency" bucket? Anyone budget for a heart attack? Pretty prevalent in our society and it costs a ton of money even with good insurance coverage.

What, you guys don't think you're going to die or be broken into multiple times?

[mylo]

But how many of you have budgeted for 7 car break ins and 2 apartment break ins? Not in your budget? Maybe it's in the "emergency" bucket? Anyone budget for a heart attack? Pretty prevalent in our society and it costs a ton of money even with good insurance coverage.

I've had this debate before. I budget for usual circumstances, which includes insurance and an occasional theft loss.

Anything completely abnormal as you mention above, sucks, and is outside of my budget. I don't try and line-item for every possible situation, just what can be expected. I keep as large a liquid reserves as possible for exceptional cases. It would completely throw my Quicken graph, and cut into my savings, but I'm just not going to plan to get robbed 9 times.

[Andrea V]

I didn't ask what a budget is. I asked how you budgeted for a specific item - diapers.

What's your budget for gas? How about medical?

Or do you simply find out how much your medical is for this year and then say that's your budget for medical?

Do you simply say, gas went from $2 to $3 dollars and we drive 50 miles a week so our budget is now $150 for gas?

I was not telling you what it IS!! I was saying what WE do... calm down costco!

We base it on averages and pick the high end...

Like gas. On hard months we spend $500-$600 in gas (like if we travel a lot or vacation etc)
But some months it is $200 (like when we ride motorcycles a lot)

So we budget every month to be about $450.00 and the extra that is there from wen it is not that high, we use it for when it is "unexpectedly" that high....

so there is sometimes extra at some points, but usually it is made up later.

And we know we use a lot of gas/pg&e in the winter, but not the summer, but we still take $$ out for it all year, that way if we go over "unexpectedly" then there is $$ there for it.

It is only hard if there is a bunch of emergencies all at once... then you use a lot of the overflow, and have to start over building the budget back up...

It would have to be a HUGE thing, like ummm I DIED, for it to fark up our budget...

We have done pretty good in the last 9 years perfecting it. But it does take CONTROL not to just see a lot of $$ in an account, and just go on a spending spree.

[CostcoLover]

I've had this debate before. I budget for usual circumstances, which includes insurance and an occasional theft loss.

Anything completely abnormal as you mention above, sucks, and is outside of my budget. I don't try and line-item for every possible situation, just what can be expected. I keep as large a liquid reserves as possible for exceptional cases. It would completely throw my Quicken graph, and cut into my savings, but I'm just not going to plan to get robbed 9 times.

Well, it happened to me back in NY. In a span of 3-4 months.

Budgets are better than nothing I suppose and it's well intentioned, but it's best for highly predictive situations ie. a mortgage, car payment, student loan, cable, gas, electric, etc. and yes, I include replacing a roof, window, etc. as predictive. If I lived in FL I'd budget for a new roof every year.

It's not very good for the human factor - an illness for example. Once you find out what illness you have then you can budget for it, but the truth is that we can't plan/budget for everything, but we often feel like we can.

If budgets worked as well as we think they do, the government would be in great shape.

[CostcoLover]

I was not telling you what it IS!! I was saying what WE do... calm down costco!

So we budget every month to be about $450.00 and the extra that is there from wen it is not that high, we use it for when it is "unexpectedly" that high....

It would have to be a HUGE thing, like ummm I DIED, for it to fark up our budget...

I'm perfectly calm.

"Budget every month" told me everything I wanted to know.

Actually death can be quite inexpensive - cremation and life insurance payout, sure, it'll change the budget, but it wouldn't screw it up altogether.