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Unformatted text preview: The Estimated Expenditures in Chart A indicated to me that, with my current income, I would need a part time job to u supplement my expenditures. Knowing what was a necessity and what was a ‘nicety’ has always been easy but with a sudden decrease in income, I knew I had to respect those differences more stringently. You will notice a few items I allocated $0 dollars for. Clothing and charity were two items that I knew I could not afford right now. Historically, we have always given to charities. Once I have a good spending plan and my life stabilizes, I am hopeful to be able to resume donations to my favorite charities. Since I’m not a clothes horse, maintaining what I have is a good alternative to buying new clothing. I have also been known to shop at thrift stores for some excellent buys. Of course, if I ‘need’ new shoes or other clothing necessities I would not deny making those sensible purchases. Chart A 21% Estimated Spending Plan 8% 0% 1% 3% 7% 0% 4% 10% 2% 3% 6% 35% Catastrophic Food Insurance Utilities Clothing Giving Luxury Discretionary Health Personal Education Home Transportation With excess income it was easy to give in to the niceties. Now, my limitations have encouraged me to find a way to enjoy life without indulging in unnecessary spending. One of the ways I have done this is to go to a Beautician School to get my hair cut. For the last 25 years I have gone to the same hairdresser. But since a haircut cost me $32 plus a tip, I knew I had to make a change. The Empire School charges $8 for a shampoo, haircut, and blow dry. I am a big tipper but even giving the student a $5 tip, I am looking at a savings of $19 every six weeks. That is an annual savings of over $160. My utilities were the second highest chunk of my monthly income. An estimated expenditure of 21% of my income went to utility companies. I am more mindful of lights being left on and hot water usage. I now wash all laundry using cold water and hang as much as I can on a wash line to dry overnight instead of using the gas dryer. I can do this even in winter in the basement. Food shopping is another place where I can cut costs by buying store brands instead of name brands. Being thoughtful while shopping and only buying what I really need, with a few goodies, is now the rule instead of the exception. I had an unplanned birthday party so I blew my estimates by 6%. I’ll be more careful in my planning from now on. By far the biggest change I made since starting this project was to keep all receipts. I now carry a zip lock bag in my purse. Every receipt goes there until it is entered on my spreadsheet. My bank accounts at PNC are now managed more precisely. I converted it to what they call ‘Virtual Wallet’. I can categorize all of my bills and track spending. There are even charts to visualize my savings, spending, and even a wish list. Now for the actual expenditures I incurred for the month. Although I thought the actual would be worse, I was surprised to find that my actual expenditures were not as bad as I had thought. Chart B illustrates my point. Chart B Actual Spending
16% 11% 0% 1% 0% 7% 13% 2% 3% 0% 3% 7% 37% Catastrophic Food Insurance Utilities Clothing Giving Luxury Discretionary Health Personal Education Home Transportation Adjustments were made for some of my expenditures once I analyzed actual amounts. Catastrophic savings was increased by 3% to make sure money was there in case of an unexpected home repair. I know from past experience these can be costly. The added savings came when I realized my utilities were less than estimated. Previously, I always sent a set amount to utility companies. There was always a credit balance. Now I only send them what the actual cost is. That was a pleasant surprise. My utilities only took up 16% instead of 21% that I had estimated based on my previous habits. Thus the added savings! As I compared the costs for home expenses, the actual was only 2% more than estimated. Not bad. Health expenses where estimates at $150 because I knew how many sessions of Physical Therapy I would need after my shoulder surgery at $15 dollars each time and regular prescriptions. I actually spent less than anticipated. My prescriptions only cost a few dollars for the month. I am not afraid to use generics drugs. My physical therapy has ended so that added expense is gone for now. Next month I’m hoping I can come closer to breaking even without that added healthcare expenditure. You can also see a decrease in transportation/car expenses. I include my car loan, gas, repairs, and parking in my ‘Transportation’ expenditures. My gas usage has gone down as I plan my outings so as not to waste gas. When I’m offered a ride, I take it! Over all, I was pleased with my results. Chart C below illustrates where I went above my budget for the month. 300.00 200.00 100.00 0.00 (100.00) (200.00) (300.00) As you can see, there were only three categories that I went over the estimated amount. One of them is my Catastrophic category. Of course, that is a good overage. The other two categories of food I already know how to curb. And I have already decreased my car insurance by shopping around. So all negatives can be accounted for and resolved. I anticipate that next month I will be well within my income limits. Since I already have payroll deductions for my 401b and will be actually saving $400 per month, I am not concerned that I am not saving enough. My biggest concern is to live well within my current income. As it turns out I am only a bit above $300 short this month. Since I had savings already I was able to get by. I don’t want to have to dip into my savings each month though. Looking for a part time job is still on my agenda but my financial future does not look as bleak as I had thought when I started this exercise. My personality is one that lends itself to frugality. I am not a material person, preferring experiences and opportunity for travel instead. For sure, if I continue this good habit of a spending plan, I will live well and financially secure. I would really enjoy, as Picasso said, living ‘as a poor man (woman) with lots of money’. Sounds like a plan to me. Spending Plan I'd like to live as a poor man with lots of money. ~Pablo Picasso ...
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- Spring '11