Running the Numbers

[hrj]

I love spreadsheets and playing with numbers. (My co-workers have decided this is an Amusing Quirk and tease me about how many graphs and tables I include in each investigation report.) A number of years ago, I decided it was time to unleash this tendency on my own finances. After spending entirely too much of my life by the principle "as long as I don't spend more than I make, I'm doing ok", I felt an overwhelming urge to find out exactly where my money does go. So, in typical going-to-extremes fashion, I set up an accounting system in Excel that not only served as a "smart" checkbook register, but also had pages to track each category of financial transation (credit cards, loans, etc.) including cash transactions. This means that I now feel inadequate if I don't know to the penny where my money goes. But it also means that I have a much more finely-tuned sense of what I'm spending and what I'm getting for it.

Every year around this time, I run the numbers and do an annual summary. The first couple years, I let the categories develop organically, but this year I had gone back and worked out a systematic set of categories that now appear in a drop-down menu for each transaction. This makes sorting things out a lot simpler. While I'm old fashioned enough to feel uncomfortable putting specific figures out in public, here are a few observations:

I succeeded in spending less than I earned last year. Significantly less but not enormously less. This is unlikely to change now that I have a mortgage.

While my grocery expenses have remained startlingly constant over the last half dozen years, last year I about doubled what I spent on eating out. This was a direct result of "feeling flush" and I'd already decided I needed to tighten the reins a bit. I want to feel that I can eat out whenever I feel like it without letting it get out of control -- which means I need to really think about it each time.

Somewhat surprisingly, I'm not spending any more money on books now than I did in grad school. While I feel like I can afford them better now, I don't have as much time to read or do research. (And all those dangerous campus-area bookstores are less convenient.)

The "entertainment" category has been going up steadily since I left grad school. Movies are a significant chunk of this, as well as having started collecting CDs and DVDs.

I need to analyze and break-out the category "Misc: Misc" since it's jumped about 10-fold in size in the last couple years.

I need a computer hardware/software budget and I need to stick to it. (Albeit, last year was a bit special since I bought both a long-scheduled and specifically budgeted desktop and had to replace my laptop due to theft. If you subtract those items, I was actually rather good.

I've been rather looser about travel in the last two years, especially being willing to spring for hotel nights. I can cut some significant costs in that area in exchange for a little less luxury without much trouble. I also need to be more proactive about making plane reservations enough in advance to get the best rates. There's no excuse not to.

All those little utilities add up. Do I really need cable tv? (No, but I really want it. Especially given that there's no local NBC station -- I couldn't watch the Olympics without cable.) Do I really need to spend what I'm spending on phones and internet? (I've made some deeply-considered choices here. I'm spending more than I need to, but for specific reasons and priorities.)

This year's addition to the financial management is a set of budget categories that will display running totals. Each pay period will allot a budgeted amount, and everything spent in that category will reduce it. My goal will be to keep the balance positive at all times, which means that if I want to spend a chunk, I'll need to save up. I think this will especially help on the restaurant and computer categories.

Next step ... Taxes!

Comments

[albionwood.livejournal.com]

Sounds like you just reinvented Quicken. ;-)

[hrj.livejournal.com]

Quite possibly -- but there are additional advantages to having re-invented the wheel. I know how to do a bunch of stuff in Excel that I'd never had an excuse to learn before. And it does exactly what I want, not some compromise between what I want and what the program designers think I want.

[klwilliams.livejournal.com]

I have high speed internet access through my cable modem. One interesting plus to this is that I now have AT&T One Rate phone service through the cable, too. I pay $50 a month for unlimited local, in-state, and long distance calls to anywhere within the continental U.S. I save hundreds of dollars a month by doing this.

[aastg.livejournal.com]

Now that you have a new mortgage, you can run amortization schedules and figure out your interest savings on prepayments, estimate your interest deduction in advance, and determine when you're ready to refinance. Wheeeee!