Continued about budgeting...

Man I was knocked out after posting up. Feeling under the weather too. Thinking back, its been more than 5 months and I havent had to see the doc so far for any medicine. So I am actually healthier this period and not to mention, can concuss and sleep things off like today.

Really knocked out from 5pm until when I woke up, its already close to 9pm. No intention to practice guitar. Signz this week been rather busy, feeling the tiredness creeping back on me. I better clock in 1 more gym to make it twice. Past two weeks, I managed once a week only... but weighed myself just wednesday. Surprised that almost back to my original fat self firstly. K small consolation that the Christmas and New Year binge didnt leave a lasting impression. Good, now to up my exercise...

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I wanna comment about the 2 different budget method I mentioned in my earlier post, the one about Phantom money.

I feel there are 2 ways of budgeting, which I use at times.

First one is fixed amount a day for 30 days calculation.
I decide to spend between $20-25 per day for 30 days. This amount excludes driving and guitar course. Cos these are higher cost and they are really for a rather transient period of my expense. Also if these are included, it is near impossible to keep to $20-$25 a day target unless I really go into Scrooge and Bear mode (stinge and hibernate at home) I rather take this 2 items out and not consider them my monthly expenditure. But any other things like hp, internet, shoes, clothes, transport all goes into this. But of course I recognise that I spend money on guitar and driving. They are outflows too.

Hence I target a monthly expenditure of $600-$750 for normal expenditure, adding in $120 guitar and maybe $200 driving. That would bring to a sum of $920-$1070. Not an astronomical figure but remember for now, my income is near nil. Hence would have to see if can further minimize, if not, at least keep it within this range, NOT way beyond this figure.

Now at the end of a day, I would recall all the expenses for one day and get a TOTAL figure. Say by today, its already 8 days into the month of January. I recorded immediately the expenditure for today and yesterday which are very fresh in my mind. Receipts helped also. Then I work backwards a bit to trace, starting from New Year party and then the weekend, and then this week where I worked 2 days, went 2 interviews. Of course if you already started a bit late eg >10 days and really cannot get a pic, well simple. Start from today and end your 'accounting' exactly on the date 1 month later. Just to get an better idea of the cash outflows. I am not too concerned if I missed a few dollars, cents but I have to record most of the expenses accurately and also capture all large expenses.

So I am going to show my actual figures. No harm to me. Dont mind ya knowing my expenses pattern. I managed to get a figure accumulated for 8 days $321.10, I paid guitar $120 already. So I am going to subtract it out, $201.10. This seems like a high figure but remember I had a target of $20-$25.

Lets see how I fared, $201.10 / 8 = $25.14. Okay very close. But still at a higher end after averaging. Hence it meant for the weekends and even next week, I will consciously reduce spending, head out lesser etc. I will come back to check this average figure. Definitely would be better if I can lower to closer to $20 but I still have 23 days of the week to fiddle around with. Not to mention other bills like hp, cable tv coming in. Yup its going to be a challenge.

The 2nd method is discussed in the previous post. To put aside a TOTAL amount for each expense item that usually appear in your monthly expense. Eg $200 transport, $100 hp, $200 clothes, $100 shoes, $50 hp, $50 cable, $100 misc, $800 food, $300 outings, $120 guitar, $50 CD, $50 comics => $2120

Now for a nett pay of say $2900 (my old pay), it meant $2900-$2120 = $780. So IF I finished spending most of those amounts allocated in the expenses and didnt exceed much, I should have a nett figure of $780 in my bank account by the end of the month.

Whether how u check it, either using checking nett difference at end of the month method or actually drawing out $780 physically and putting into another savings account.

But of course, sometimes expenses are rather high, maybe cos I take public transport. Maybe I take cab more now, shop more cos need change of wardrobe that even $200 a month is too low. So the planned figures changed.

Cab $250, transport $100, $100 hp, $500 clothes, $200 shoes, $50 hp, $50 cable, gifts $200, misc $100, food $800, outings $500, $120 guitar, $50 CD, $50 comics => $3070

Now you see that this is above the nett salary of $2900. It is NOT FEASIBLE unless I have more income inflows. This is just the bitter truth of Reality. You are spending way too much for your income. There is no other way about it but to either GET more inflows per month immediately or cut next months expenses immediately.

Why do I say immediately? Because this is a situation of negative budget. You are running a negative. Now since money doesnt drop out of the sky, it means, this negative of $170 is being financed out of your savings. It will drain your savings down(like what I am doing now) But at least its your own money. BUT if you dont have savings, its being financed by debt. Either overdrafts or credit cards, cos these are the consumer loans out there, that is easy to draw up on and without having to put in asset as collateral/mortgage. The downside is the higher Interest Rates.

And had earlier explored the whole interest on interest on rolling over debt. It is really difficult to pay off, if every month is tight. So I rather err on the downside and ensure that every month is a surplus instead of a deficit. Some months cos of travelling, so really overshoot. I still have to see how much deficit, so that I can ensure the following months, there are enough surpluses such that the Nett figure at the end of the year is still positive.

I must admit, it wasnt easy, and required more discipline and also monitoring and conscious decision making, deferring Wants alot of times, even evaluating whether this purchase can wait, or even if its a real need. I must admit my guitar course is not a need. But I have my vices too. I dont want to earn an income and yet spend $0 on things I like. BUT I recognize that I shouldnt indulge in everything or most of it at too regular a basis. Its a give and take situation.

K think, I have finished my thoughts about personal finances for now. Subsequent posts will go back to normal unless something hits me in the head to share.