It’s that budget time again! I’m back from the DRCongo and it is decidedly time to take a look at my monthly spending and work out a revised budget for 2009.
The good news is that things are looking pretty good. In fact, when looking at it I realized that I had more extra money to go towards goals. That was even after adding a bit of padding to various parts of my budget.
Here is a visual of what things look like:
The breakdown shows that looking at an overall savings of 43%, officially, and bit higher counting the principle pay down on the mortgage. Overall this beats any normally acceptable budgeting guidelines.
Also, while 25% shows that it is being taken out for taxes, we tend to manage to get a fair bit of that back. Our effective tax rate in 2007 was .6% (yes, that is less than a percent) for the feds and 5% for state (thanks to foreign earned income). This year we are expecting to get $8k back from our return shortly and this will go right back into our 2009 savings goals, so this bumps up that savings rate well over 50%.
I also have only 15% towards discretionary spending, which I think works out pretty good. While I only have $35 per month on clothing and $20 towards shoes, on average I probably don’t even spend that much since I tend to buy clothes as needed and then not for some time. I got a number of good suits for starting back to work at the beginning of this year and I’m pretty set for most work clothing, so summer may call for a little reinforcement.
One area that is a bit tight is airfare. Since this pays for both myself and James this may be a bit slim with the higher fares these days. I do have quite a few frequent flyer miles, so I guess I’ll work at using those and my stellar discount finding skills to make it work.
Here are the details of my budget:
As you can see, at the end of the day I even still have a bit of wiggle room! (Yes, that is the technical term.) Looking at this it makes me think of times when I didn’t have such luxuries. Five years ago I was making half of what I am now, so there is always room for progress.
For those of you interested in the official word, we have it from the Motley Fool’s Money Guide the basics parameters for budgeting should fall within these ranges:
Housing/Utilities: 25-30%
Food: 10-15%
Vehicles: 10-15%
Insurance: 5%
Saving/Investing: 10-15%
Entertainment: 5%
Clothing: 5%
Medical: 5%
Childcare/Education: 1-8%
Gifts & Charity: Up to you
Now, I’m considering that many are wondering why on earth we would want to save 50% of our income. Once upon a time I would have never, ever dreamed of such a time – and that wasn’t that long ago.
As it is though, it seems reasonable since the basic principle is still living within my means. At the end of the day my expenses haven’t changed a great deal, so why should I spend more just because I have it? Sure replacing our Target furniture might be appealing, but I can likely save up for that with the extra that remains from my discretionary spending.
When it comes down to it I would prefer to save a bit more now and have the flexibility later in life. Going the extra mile and living frugally instead of squandering my income should have drastic effects on my future wealth. Today I have more than enough as it is, so I with thank my blessings.
Good luck budgeting!
Cheers,
Miel
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