August 22, 2010 by Leah
Okay, back to budgeting. If our household were an organization, we would have an annual budget with line items for income and expenses. I know there are computer programs that make this sort of thing “easy” nowadays, but I’m not obsessive enough to track spending on a line-item basis BEFORE the fact. Our financial goals of paying off loans and creating an emergency fund, though, would both be helped if we put our money where our mouths are and started trying to live below our means. Say, on 90% of our income. THAT sounds like a reasonable target.
Looking at the debacle that was July should give us a good idea about where to start cutting back.
And, actually, when checked out in detail, July wasn’t as horrific as it seemed at first glance. If we were a corporation rather than a family, the furnishings for our new house (on which we spent over $800), for example, would be considered fixed assets. As such, we could divide the up-front costs of the furniture over its expected useful life (three to five years, say) and allocate some of that expense to our budget every year for that useful life, thus lessening the immediate impact of the purchases. We’re not going to do that, but it does put this portion of our spending in perspective. There’s no reason we should have to buy another table and chairs soon, or a bedframe, or bedside tables, or patio furniture. (The couch is another matter now that we have a dog who believes it’s HIS couch.)
Speaking of the dog, we spent a lot of money on our furry boy Duke last month. His adoption fee was only $50 because he is five years old and had already been neutered and microchipped and had all his shots. Unfortunately, Duke turned out to have really bad allergies, so the normal start-up costs associated with becoming a pet owner (bed, toys, food, quick vet consult) skyrocketed to over $1000 as he went through two regular vets, one team of specialists, lots of tests, and various medications. If the injected antigen therapy he is currently on works, the finances of Duke’s chronic illness will become foreseeable and therefore manageable. We’ve already racked up another $340 for vet bills this month, but we believe it’s our responsibility as pet owners to do everything we can to give Duke the best life possible. The unexpectedness of the situation is really what wreaked havoc on our finances and psyches (which goes to show that having an emergency fund is a great goal for us).
Two of the other big expense “pies” in July were travel and presents. We paid for four total round-trip tickets to Oregon (to attend three weddings over two weekends) and Aaron and I both have July birthdays (there were other gifts as well, like for weddings and babies and thank-yous). While none of these events will be occurring on a monthly basis, just being aware of how much such events affected one month’s worth of spending will help us be vigilant as we head into planning two more trips (and Christmas).
The giant piece of pie chart I’m avoiding should be obvious by now. Groceries. My friend Beth and I once had a conversation about specific instances that make us feel privileged yet guilty for being middle class. At the time, the thing that really made me feel rich was having so much SPACE to live in (a big one-bedroom apartment) when one reads about immigrant families sleeping in shifts in unheated tenements. For Beth, it was the ability to buy whatever she wanted at the grocery store (you know the scene – you’ve just popped in and dropped $24 on pine nuts while the overworked single mother behind you is paying with WIC coupons – guilt ensues). I should probably start trying to channel Beth, but with more guilt and less privilege.
I spent over $1100 on groceries in July (and I do mean I, since I do 98% of the grocery shopping). Included in this number because we have no way to track it separately is wine, which we both enjoy. Also included are start-up costs associated with being in a new house. We weren’t allowed to move anything refrigerated and/or liquid, which means we lost several vinegars, oils, sauces (Thai chili, Worcestershire, fish…), juices – really, all the things one takes for granted that one will find in one’s cupboards or refrigerator door. That said, the grocery bill is still obscene for two people, and it’s one area in which I can actually make immediate changes. We’re cutting back on the vino consumption (apparently that’s good for one’s health, as well) and I’m going to start trying to make our weekly grocery bill $100 or less. With an extra $100 cushion thrown in to make our grocery goal $500 a month. Which is good, since I just spent $97 at the farmer’s market this morning…