Budgeting

So along comes the AMEX bill. Thought it might be a little high…but I didn’t have in mind twice the monthly freaking budget!!!! Yesh: $2200, payable forthwith. Luckily, there’s plenty of money in the bank, so I’m not flat broke. But I surely will be, if these shenanigans continue.

Except for the swimming pool filter fiasco (four trips by guys from two pool companies), no serious unexpected expenditures have happened — for the first time since the beginning of January. I figured the puppy would run up the bills, since she has to have a seemingly interminable series of puppy shots, plus the dog food’s not cheap. And there was the run on Nordstrom’s Rack: spending money to save money, uh huh. Figured to run over budget: maybe fifteen, sixteen hundred bucks. But twenty-two hundred dollah? Whaaa?

An analysis reveals the following guilty parties:

Costco: $567
Dogs: $195 (in addition to Pup, Cassie conveniently had an eye infection)
Clothing: $287
Pool: $388

Total overrun: $1437

Hm. The Costco runs would have included some normal living expenses, mostly food. But that’s about $270 more than I’d normally spend there in a month. Mostly the reason for that is meat for the dogs.

When Pup discovered that Cassie gets real food, she launched a full-out rebellion against her fancy, ludicrously expensive kibble. To persuade her to abandon the hunger strike, I added a little of Cassie’s food (real meat, real veggies, real starch such as sweet potato or oatmeal) to her radically pricey kibble. She ate the food and ptoooied the kibble out onto the floor.

{sigh}

At this age, pups need to eat as much food as a grown dog, or more. Her caloric needs are vast compared to Cassie’s And while she was refusing to eat, she was losing weight. So I took to giving her a substantial amount of real food mixed with about 1/3 cup per meal of the kibble. That disguises the fake stuff well enough that she’ll eat it — and presumably gives her a dose of whatever vitamins are in the fake food. At noon, she gets 1/8 pound of this rolled dog food from Whole Foods (available at Fry’s and Petco, I’m told) that contains nothing but real meat, real veggies, and real starch plus a long list of vitamins.

So the upshot of this is that I’m buying about twice as much chicken, hamburger, and cheap pork from Costco. Oh well.

The clothing bill of nearly three hundred dollah definitely comes under the heading of “extraordinary cost.” My normal clothing bill is $0. At most, I’ll spend $20 bucks on another pair of Costco jeans or a shirt from My Sister’s Closet.

However, this fills out the wardrobe, which was devoid of clothing that fit. Now I have casual and moderately dressy clothes — some of them very cute, indeed — that do not fall off my body. I shouldn’t have to buy any more clothes for several months, possibly not for the rest of 2014.

Pool?  Grrrrrrr! Who knows? I think I’m being shepherded toward a new, expensive, high-efficiency pump, which I do not wish to buy. The filter thing is weird — I’m dead sure something is out of whack, but the guys claim it’s OK. I call bullshit but there’s nothing I can do if they refuse to come clean … uhm, or to make it come clean. This summer I’ll have to engage an ongoing fight against algae, and in the fall I’ll have to drain the pool and refill it (which, come to think of it, I was supposed to have done last fall). Oh well.

Here’s what I think: a grip must be had on the Costco frolics. Today I purchased a lifetime supply of cheap pork and a lifetime supply of not-very-cheap-but-very-convenient hamburger. Just now they reside in the freezer. I’m going to write down when I open them and write down when the last of the stuff is consumed by the hounds. This will reveal how long two packages of meat persist. From there I should be able to extrapolate how much is needed to feed the dawgs for one month.

With that bit of information in hand, the Plan will be to limit Costco visits to one (1) per month, trying to buy all the absolutely needed Costco items (lifetime supplies of toilet paper, lifetime supplies of paper towels — which I’ve also used in excess, since Ruby is determined to cover the world in dog pee — a package of their wonderful Campari tomatoes, a giant slab of pretty damn good cheese, a giant package of shredded Parmesan, 18 months’ worth of Pantene shampoo…). All other food and household goods, then, will have to come from Sprouts, Target, Ace Hardware, and waypoints.

Clothing bills go away, from now until the after-Christmas sales.

That leaves only two categories that will not and cannot go away: Dog and Pool.

Should be manageable. I hope.

Now here’s something weird: We’re halfway through the third month of 2014 — pushing the end of Q1 — and my bank balance, which should represent the total amount of money available to spend in 2014 — is exactly $2003 less than it was in January, when we started with this experiment.

(The “experiment” being to pull down enough money from savings that, combined with Social Security and teaching income, the total accrued over a year should cover all my 2014 expenses.)

Two grand is substantially less than it should have cost me to live for two and a half months. The combined discretionary and nondiscretionary budgets come to $1,750 a month — and that’s in a good month, where there aren’t a lot of unplanned “extraordinary” expenses. So, in theory, under the best of conditions I should have spent $3,500 so far.

And the conditions have decidedly NOT been “the best.” I’ve spent and spent and spent and spent and spent and spent: car repair, landscape repair, tree pruning, electrician, dentist, puppy purchase, puppy gear, more puppy gear, first vet bill, puppy shots, ER visit, eye exam, glasses, glasses, glasses, contact lenses, contact lenses (bought two sets from two dispensers so as have a bunch stashed by way of delaying having to go back for another nuisance eye exam), findings for rosaries to be donated to next fall’s silent auction, tickets to various amusements, lunches and dinners out…on and on and on. These are things that would normally break my little bank.

But instead, the opposite seems to be happening. And there’s no clear explanation for it. Even though the power bills are much lower than the budget allows (in winter I don’t run the heat), it’s hardly enough to make a difference. Other than the January drawdown, I haven’t exactly been cranking money. The junior college district has dispensed all of two (count’em, 2) paychecks, the largest of which was a munificent $350. The only other source of regular income has been Social Security, hardly what you would call a 1-percenter’s rate of pay.

Adding to the amazement, Wonder-Accountant has extracted $2900 from the feds and $22 from the state in tax refunds. When those come in, the bottom line will come to about $1,000 more than I had when I started this year.

There are only two explanations for this: either it’s costing an awful lot less to live than I think it costs; or SDXB is right in his theory that “money happens.”

The only thing I can figure is that money materializes out of the air, sort of like matter and energy popping out of empty space in Hubble’s continuous-creation model of the universe. That would explain it.

I guess.

Whatever. If this continues — and especially if the constant barrage of extraordinary expenses slacks off — next year I shouldn’t have to draw down much from savings at all.

Wouldn’t that be nice?

Okay, so now that I’m a rich old retiree, instead of doling out a few bucks per month or per quarter from retirement savings to meet day-to-day living expenses, in 2014 I decided to draw down enough to cover the entire year’s living expenses, taxes, and insurance, dump it into checking, and hope it lasts 12 months.

Because a) I’m not very competent with math and b) I tend to overcomplicate things in my desperation not to make a mistake or overlook things, my budgeting spreadsheets have become hideously involved. “Tangled,” actually, is the word we might use. When I look back over them and try to remember why I made this or that decision, I can’t figure out what on earth I was thinking.

So, I decided to start all over.

Step 1 was to pose a series of questions designed to lay out the data needed to create a coherent, uncomplicated, nonstupid, and reasonably accurate budget. Videlicet:

1. What is the total amount that will become available from all sources (savings drawdown, Social Security, teaching) during 2014?
2. What are the routine monthly nondiscretionary costs?
3. What are the routine monthly discretionary costs?
4. How much was in the bank on January 1, 2014?
5. How much do the two spending categories really add up to by the month? (i.e., not how much do I think they add up to…)
6. How can I know how much is left at any given time?
7. Can I create a spreadsheet where I can just plug in monthly discretionary, nondiscretionary, and extraordinary totals (“extraordinary” = unexpected costs) and get a snapshot of where I stand at any given time?
8. How much, realistically, should it cost to live in 2014 (i.e., including extraordinary costs, taxes, and insurance)?
9. What is the difference between projected total 2014 funds available and the projected realistic 2014 cost of living?

Step 2: Fill in the answers:

Step 3: Figure out a relatively simple way to keep track of expenditures so I’ll know whether a) this is right and b) I’m about to run into the red.

In this scheme, the first line of the spreadsheet shows the total amount I believe will come available over 2014. This includes 12 Social security checks and future teaching earnings for three sections. Because there’s a good chance I may teach four sections this year, the $36,342 shown on January may actually be conservative.

Now the idea here is to add up, once a month, all the nondiscretionary expenditures (utilities, long-term health care, yard dude) and enter that total each month; add up all the nondiscretionary costs (these would be the AMEX and Mastercard bills, since I charge almost all nondiscretionary expenses); enter (among “Other”) any extra incoming funds, such as the checks from Medicare and the Medigap insurer; and enter any extraordinary expenses, also among “Other.” Then keep a running balance in column 3.

Thus at the end of any given month, the balance should show how much money remains to cover 2014 living expenses.

The glasses, the ER visit, the eye specialist’s ministrations  (much of which were disallowed by Medicare  & Medigap), the contact lenses, a car repair bill, the landscape improvement needed to redirect rainwater away from the back patio and wall, extra pay for Gerardo to fix the landscapers’ screwups, a dental bill, and clothing to replace items that no longer fit after the 30-pound weight loss have already racked up a phenomenal amount of “extraordinary” bills — as much as I had planned on for the entire year. And they don’t include the $800 I’ll have to pay for the puppy a couple of weeks hence, plus the veterinarian’s puppy exam, plus the food and gear for the pup, plus the obedience training class, plus the remaining shots, plus the spay job. Pup may not need to be spayed until 2015. But she probably will come into heat by the end of this year. If so, she’ll have to be “fixed” forthwith.

All that nothwithstanding, though, when the January and February bills are plugged into the  new spreadsheet, things look a great deal brighter than I expected:

So the balance at the end of this month will be $31,164: more than the projected cost of living for all of 2014.

That’s not as cheering as it looks: to get the true picture, we have to subtract the cost of taxes, homeowner’s insurance, car insurance, Medigap insurance, and Part D insurance. That leaves us $25,824 to last from March 1 to December 31. That’s still slightly higher than the $20,664 budgeted for 2014 ordinary living costs.

Assuming unbudgeted “extraordinary” expenses will average out, over the year, to around $300 a month, the total cost of living should come to $23,664 in 2014. Even with taxes and insurance added, that will put me in the black this year. Anything left at the end of December will defray the amount of 2015’s saving’s drawdown. And every dollar that stays in savings now is a dollar that will help support me in my dotage.

That certainly  is a huge improvement over the grim outlook I enjoyed in 2010, 2011, and 2012, when every goddamn month posed the question of how to make ends meet while living like an anchorite. In 2013, things were a little brighter — at least it didn’t look like my house was likely to be condemned for taxes. It may  also just be that the convoluted system I’ve been using obscured the difference between the amount I would need this year and the amount I pulled out of savings. Either way, this year things look pretty good.

Probably it’s because the economy is better — investments have recovered so much that total savings are now almost back to where they were before the Crash of the Bush Economy, meaning that the overgenerous drawdown I seem to have made this year plus the amount that covers my share of the downtown house’s mortgage together do not exceed 4% of total savings. If I’m right that drawdowns can be much more conservative, it looks like things budgetary can continue as they are for the foreseeable future.

Bueno!

God, for an English major I am too, too bizarrely fascinated with playing in Excel sandboxes! Just came up with a new budget scheme: instead of tracking expenditures by the month, why not track them over the course of a year? Since Fidelity will be sending savings drawdowns annually, and since one annual drawdown will, in theory, cover all my living expenses, who cares how much is left at the end of a month? When you’re living on retirement savings, the figure that matters is what’s left at the end of the year.

Annually, my living expenses — exclusive of taxes, insurance, and minor emergencies (which are covered by Social Security and teaching income) — come to $1721/month. That’s based on the maximum costs of air conditioning and water, which occur during the summer months; during the winter, total costs are somewhat less, because I rarely turn the heat on and I don’t have to water the yard or refill the pool much. That works out to $20,652 a year, just to get by.

So here’s a research question: If you tracked your budget by the year, would over-expenditures (such as I’m enjoying right now and expect to continue enjoying through March!) eventually balance out with under-expenditures? Well, in 2014, we’ll find out.

We have the research instrument:

By subtracting $1721 for each month, I can easily see how much is left for the remainder of the year at any given time. This does not reveal the amount that’s actually in hand — or will be — for 2014. The teaching income will cover most of the tax and insurance charges, and Social Security will cover what obviously is likely to be a serious shortfall in the budgeting scheme, plus any major unexpected expenses.

If I subtract a) the balance after a given month’s debits (shown in the column titled “Balance after debits”) from b) the balance that the budget should show at the end of that month, were I managing to stay on budget (shown in the column titled “Budgeted proj. balance”), then I will see c) far how into the red or the black I happen to be at that time (shown in the column titled “Budgeted vs. actual balance”).

Budgeted projected balance – Balance after debits = Budgeted balance compared to current balance

Lovely. I’m already $802 in the hole. This includes the down payment on the four pairs of glasses, an accountant’s bill, a car repair bill, and $680 for the massive tree-pruning job. Plus the $135 to My Sister’s Closet for a little bonanza in second-hand clothing, purchased before I realized I was riding a waterslide into a pool of red ink.

That does not include another $430 owing toward the glasses, God only knows how much for contact lenses, God only knows how much for the visit to the ER, and the $800 still owing for the puppy, an amount I had stashed conveniently away before I got walloped with a new set of medical and vision bills. And of course we’re still faced with the fact that about the only rags in the closet that fit me are a few Costco bluejeans. And a couple of uncomfortable bras.

Welp. It certainly is a good thing Social Security is still operating.

🙄