Coffee heat rising

Getting back on budget

[sorry: this is an old post from iWeb. i neglected to change the date on it]

I am broke, broke, y-broke!

The $1,012.53 the vets charged for Anna’s care over the past month and a half ran my budget into the red last month and did it again this month. Every week this month has ended in red ink. For the current week, which began the day before yesterday and runs through the 20th, I’m already $3.09 in the red. And I need groceries, dog food, gasoline, repairs on the irrigation system, and repairs on the pool cleaner. Getting back on budget before my financial structure implodes calls for some serious fiscal strategizing!

Here’s where we are now:

The first step in getting back on track with a budget is to figure out what you absolutely must purchase before the end of the limping budget cycle. Luckily, I have plenty of food in the freezer to carry me over for a week. I’m out of orange juice, but I won’t die without it, and besides, M’hijito has neglected to harvest the Arizona sweets on the tree in his back yard; before the hour is over, whatever fruit is still usable will be in my refrigerator. The repairs can wait-whether they can or not, they’ll have to. One is a minor fix that I tried to do this morning but found my hands were not strong enough to perform; with any luck I can get a male to do this for free. If not, the plants will have to live for a few days without water, or I’ll have to haul a hose around the yard.

So, this leaves us with only two genuinely imminent purchases:

With the van down a third of a tank of gas, there’s no chance I can make five round-trip commutes to the Great Desert University without refilling. A fill-up now exceeds $55, and so if I have to buy more gas between now and the 21st, I’ll be deep in the red. The little dog turns up her nose at Science Diet (which, despite the hype and the vigorous marketing to veterinary practices, really isn’t all that great for dogs-it’s full of meat “meal” [you don’t even want to know what that is!], corn, and brewer’s rice, baleful ingredients one and all). I found a canned food that contains real meat, brown rice, and vegetables, exactly what I would feed if I cooked her food myself, but as you can imagine, it ain’t cheap. Luckily, she doesn’t eat much. She’ll have to make do with the Science Diet I picked up when I got her, which I’ll use to stretch a can or two of fancy dog food. If I run out of quality canned dog food, she can eat cottage cheese with veggies and rice, which I have on hand. So, $55 for gas plus about $7 to $10 for dog food will put me about $68 in the hole at the end of this month.

That’s the best-case scenario. But there’s only five more days to go, and so it COULD happen. I might not even have to spend that much on gas-half a tank purchased on Wednesday or Thursday would take the car back and forth to campus for the rest of the billing cycle and cost about $30. So there’s an outside chance the budget may be only $38 in the red. Only. Argh.

ther expenses are pending. This situation requires me to list upcoming expenses, distinguish what is urgent and what can be put off, and how I will do without them.

So, let’s suppose that between now and next Saturday I manage to restrict spending to two or three cans of dog food and some gasoline. Where exactly will the missing $38 to $68 come from?

One source is the emergency fund. As I’ve remarked before, I keep $500 of my emergency fund in checking, to serve as a “cushion.” So in fact, even if I overspend my $1,500 budget, the cash will be there to prevent a check to American Express from bouncing. I could simply end the month in the red, put it behind me, and try to stay in the black next month.

But I’d rather not eat into the emergency fund unless absolutely necessary. Even though the breathtaking veterinary bills for Anna amount to a budgetary “emergency,” I’m close enough to the black that my regular diddle-it-away savings could cover the budget overrun. In fact, my “play money” savings account contains about $1,400, so I could easily convert the red ink to black right now. I could transfer the $368.53 deficit that ran this week’s apportioned budget into the hole from savings to checking. That would put this week in the black and cause me to stop grinding my teeth about this matter.

However, I’d rather use my diddle-it-away savings for something fun, not to cover the cost of my pet dog’s death. This is particularly so since GDU’s dratted biweekly pay schedule has reduced the monthly play-money savings from $200 a month to $87.50 a paycheck, meaning it took a long time to accrue $1,400.

The most sensible strategy, I think, will be to wait until the billing cycle ends, on the 20th, and then transfer the amount of the overrun from play-money savings to checking. If I manage to keep the red ink to no more than $70, that’s a lot better than a $368 bite. In fact, all I’d have to do is not make one of this month’s biweekly deposits to savings: the $87.50 would more than cover it.

So, to summarize: What are the strategies to deal with budget overruns?

  1. Establish and maintain an emergency fund!
  2. As the budget nears zero, list pending expenditures.
  3. Separate out absolutely necessary spending from purchases that can be put off.
  4. Describe in writing which spending to put off, and write down what exactly you will do to cope without these items or services.
  5. Calculate the amount of your shortfall, after necessary expenditures.
  6. Use discretionary savings to cover the shortfall, to the extent possible.
  7. Fall back on your emergency savings when you have to.

Month of extreme frugality (NOT!)

Wow! If there’s any question about whether Karma is mad at me, the laughable effort at a month of extreme frugality answers it! Not only did I fail to save extra money to apply toward the Renovation Loan Payoff Fund, for the first time since I started the weekly budgeting system, I ended the month-long cycle in the red!

I was $23.57 in the black on May 16 and thought I might make it to the end of the billing cycle, but just couldn’t do it. The main reasons were the dog and the astronomical cost of gas.

The dog went off her feed, causing her to barf up the meds. So I had to go by Sprouts to pick up some ground lamb and lamb neck bones to persuade her to eat; while I was there I got some hamburger for myself (totaling $15.89). Then I had to buy a new prescription antibiotic for her, relatively cheap at $26.80 but still more than I had left in the budget, even without the cost of food. These two trips consumed just enough gas that I wasn’t sure I could make the 36-mile round trip to the office on what remained in the gas tank, plus I had to come home the long way to go by a client’s office and deliver a completed project. My van gets 18 miles to the gallon, so I bought about 2 1/3 gallons at Costco: 13 cents a gallon under the going rate, but still $3.47 a gallon. These expenses put me in the red.

This compares abysmally with the first three months of this year:

Before this disastrous month, the worst I did when I wasn’t trying to save had me $151 in the black!

What did the job on my budget was the cost of veterinary care: $379.75 to my old vet and $278.08 to the new vet, plus assorted extra meds. Plus special food. The cost of gas didn’t help-really, if gas were not exorbitant, I might have ended in the black despite the dog headaches.

Luckily, I kept $500 of the previous months’ savings in the money market checking account used to pay these costs as an emergency “cushion.” So when the American Express bill arrives, there will be enough to pay it. But it frosts my cookies.

At this point, it looks like the only hope of getting the vet bills under control is to put the dog down. The vaginal infection is better, but the nose thing just keeps getting worse. She can barely breathe through her nose. Just the cost of diagnosing what ails her starts at $300, to X-ray her skull. If she has a tumor, then she should be put to sleep right away, because it’s terminal and there’s nothing effective that can be done: $300 + $379.75 + $278.08 = $957.83 that I might as well have run through the shredder. If she doesn’t have a tumor but probably has something stuck in her nose, they have to thread a lighted tool into her nasal cavity, which in a dog is an extremely complex maze, to try to fish it out. The vet said this would be “expensive.” When a veterinarian calls something “expensive,” you can be sure the term an ordinary mortal would use is “ruinous.”

So, it may be better just to put her to sleep now. She’s had a long run: she’s almost 13 years old, two years past the normal life span of a German shepherd. I hate to contemplate it: a stuffy nose shouldn’t be a capital offense. On the other hand, heavy panting and rapid breathing are signs of doggy pain, and with the vaginal infection pretty much healed, we know the pain isn’t coming from that. The fact that her nose doesn’t appear to be congested while she’s sleeping (i.e., unconscious) suggests the noisy breathing isn’t caused by a nasal blockage but indicates discomfort or pain. She keeps me awake half the night every night, and I have to get up and get out of the house by 7:30. I’m running on fumes myself at this point-this has gone on for a couple of months-and I’m starting to get sick from the stress and fatigue. If she’s in pain, at her age chances are the cause is cancer. It may just be time to say good-bye.

Poor old lady.

3 Comments left on iWeb site

Jennifer

What a tough call on the dog.We were in this boat a few years ago and you are right about when a vet says “expensive” that means it is ridiculously expensive.our dog had a thyroid tumor, i.e. cancer, that spread to her heart.Well once that happens there is no hope.It is sad either way, but it is important that the dog not suffer.And it is hard to tell if a dog is suffering because they can’t talk.Good luck with the dog, that is hard to deal with.

Tuesday, May 27, 200806:03 PM

Allergies

I went through the same thing with 2 family dogs.It sounds like allergies.I got a lot of help by going to the online medical sites for dogs and humans too.What the vet doesn’t tell you is that dogs can tolerate most of the same medications people do, just in lower doses for their body weight.I would try a childs brand and dosage. Todays dog foods are not very good for your dog.You are better off feeding them meats and oatmeal with fruits and vegetables.or meat and potatoes.An allergy may be to meat also because of the amounts of chemicals they treat foods with today.Have a little patience and you will find the right combination to make your dog feel better.

Friday, May 30, 200807:11 AM

vh

Alas, this dog isn’t given to allergies. When the Great Dog Food Scare arose, though, I started feeding her and the greyhound real food. They indeed do perform a great deal better on human food: dog food is substandard and provides substandard nutrition.

However, turning out 28 pounds of dog food a week is no joke. Unfortunately, I have a job and I have no partner to help me with shopping, food preparation, and cleanup, and so even if I could afford the cost of buying huge quantities of better food than I eat myself, converting my kitchen into a dog-food factory is not a practical option.

Subsequent trips to the vet show that what’s causing the manifestations of pain is pressure sores. She refuses to lay on her soft blankets–about the middle of last winter, she developed an aversion to dog beds, of which she has a half-dozen scattered around the house and back yard. Washing them did not help. Buying new ones did not help. She is so averse to a soft place to lie down that she will not even walk on them–she walks around them. Lay one down in the hall, and she treats it like a roadblock. As a result she lies on the tile flooring, which is throughout the house. The yard is desert-landscaped, and so there’s no grass to lie on out there.

Pressure sores are extremely difficult to treat, even in humans who can understand instructions not to lie on them. Eventually, they eat through to the bone. They are very painful. They get infected, and such an infection can and will kill the victim. Old folks in poorly maintained nursing homes routinely die of the effects of pressure sores.

There’s evidently nothing I can do about this. I tried tying an object to her torso so that it would force her to lie on her side. This worked for about 30 minutes, after which she just lay down on top of it.

Friday, May 30, 200807:28 AM

The miracle of penny-pinching

OMG! In spite of $708 worth of vet bills, I’m still in the black this month!

How did this marvel happen?

Because I was frugal and stayed out of Costco, I ended up $75 in the black for the first week of this month’s billing cycle.

The following week I was $283 in the hole against that week’s $375 budget, leaving $92 to live on in the cycle’s third week. However, when I carried the first week’s $75 forward into the third week, it gave me $167 for that week. By keeping a grip on spending and returning a couple of items to Costco, I came out $33 in the black at the end of the third week. Carrying forward again meant I started the fourth week with $408.

The second giant vet bill struck in the fourth week, which is this week-it ends on the 20th. However, so far this week I’ve only had two expenditures above and beyond the second vet bill. So I have $23.57 to last for four days: until Wednesday morning.

The car still has a third of a tank of gas. One trip to the office takes a quarter of a tank. If I telecommute on Tuesday and leave my car in the garage today, Saturday, Sunday, and next Tuesday, I shouldn’t need to buy more gas.

I’ve got plenty of groceries to last for four days.

So, barring a catastrophe, not only am I not headed for bankruptcy, I actually may make it to the end of this billing cycle in the black! The checking account used to pay these charges has a $500 cushion, so even if I go a few bucks over budget, my credit card payments won’t bounce.

Whew! Thank goodness for penny-pinching habits! No snowflakes this month, but no meltdown, either.

Targeting your emergency savings

J.D. at Get Rich Slowly discusses author Mary Hunt’s idea for the freedom account: an emergency fund in which you subdivide out amounts for specific intermittent expenses, such as car repair, wedding gifts, or expensive clothing purchases like shoes. The way J.D. describes it, you keep the money in a single checking account; then estimate your irregular, intermittent costs and keep a little log showing how much is dedicated to which purpose.

The basic idea is a good one. Trying to keep track of a bunch of different purposes for money accruing in a single account, though, strikes me as a giant pain in the tuchus. Also, even an ING checking account doesn’t earn enough to make it a good place to store money for long-term expenses.

Here’s a slightly different approach to the same goal of targeting your emergency savings:

Establish the categories in which you have intermittent expenses and identify the time intervals in which they occur: totally irregular, yearly, biannual, over several years. Then open separate accounts for these purposes. The length of the interval determines the kind of account you use.

For example, I look to the irregular little surprises that can happen at any time (plumbing or car repairs, vet bills, etc.), annual expenses (car and homeowner’s insurance, property tax, income tax), and long-term expenses (purchase of a new car, about once every ten years; major repairs or renovations on the house, which I hope don’t happen more often than about once every eight or ten years).

For the constant extra gouges, I have a money market account at the credit union. Into it I put $87 per paycheck–down from $200 a month since GDU’s shift to biweekly pay, because of the drop in net income that caused. When I have to cover an expense, I simply transfer the needed amount back to my checking account.

To pay my annual automobile and homeowner’s insurance bill, the annual cost of registering my car, and my annual property tax, I put $300 a month into a separate money market account, also at the credit union. I keep these funds physically separate from the day-to-day emergency funds because I can’t afford to have that money disappear: if I don’t pay my property tax, the house will be confiscated; if I don’t register or insure the car, the state will forbid me to drive it.

For long-term expenses, I use Vanguard funds: the Prime Money Market fund for major house expenses (reroofing, for example) and the Short-term Investment Grade Investment Corporate Bond fund for savings toward my next car. I plan to keep a car for ten years, so if I put even only a thousand bucks a year into that fund, what’s in there after a decade should be enough, combined with the clunk’s trade-in value, to buy another car in cash. Although neither of these is FDIC-insured, they’re both very safe (neither was exposed to subprime mortgage instruments) and they each earn more than I can make in a checking account. AND you can write checks on either of these funds. So it’s easily accessible when I need it.

When savings for specific purposes are collected in separate accounts, to tell how much you have for a given need, all you have to do is look at the bottom line. To my mind that’s a lot easier than trying to keep track of a bunch of separate theoretical subtotals in a spreadsheet.

2 Comments left at iWeb site

hatuman

Some good thoughts.Thanks.It wouldn’t hurt to have more accounts open to help keep track of things.

Monday, May 19, 200807:22 AM

Cordelya

I have a similar thing going on as far as emergency money goes. I have a savings account at ING, and I also have several cash CDs there. I have one CD ($500 for 5 years) to stand as my auto insurance deductible. If I need to pay the deductible, there it is. If I don’t, it earns good interest and I have an incentive to not touch it (early withdrawl loses me 6 months of interest). I have a similar CD that is labeled “New Washing Machine” – our existing machine is rather old and I’d prefer to have money standing by to replace it. I’ll have to get some more CDs set up for car purchases – that’s a perfect candidate for laddering.

By the by, I choose cash CDs over money market specifically because of the withdrawl penalties – it’s that extra incentive I need to keep me out of them!

Monday, May 19, 200808:18 AM

Five budget busters

Oh My Aching Debts has issued a PF Blogger’s challenge to list our five biggest budget breakers. Here are mine:

House

apr13pool1Having trained myself to stay out of Home Depot and Lowe’s except for very targeted purposes, the unending house costs are under control. More or less. But all it takes is one good-sized expense to blow the budget. This month, for example, I had to pay about $250 for the annual HVAC inspection and service contract renewal on the units at my house and the Investment House. It’s not going to break me up in business, but because the first air-conditioning weather will arrive this month, it could put a strain on the budget. Especially since I have a big hit in the next budget-breaking category.

Dog

apr13dogThe aged German shepherd is a constant drain on the budget. Her thyroid meds run $30 a month, one eye med is $60 a pop, the other is about $40 for a tiny vial. Dog food is $30 per bag, plus meat or canned fish to cajole her to eat the stuff. And last week she had such a severe episode of pain I had to put up friends to help lift her into the car and drag her to the vet, who had to interrupt surgery to treat her. The cortisone shot worked. But the vet didn’t even have the heart to tell me how much it cost. I expect to have to dip into the emergency fund to cover that little misadventure.

Hair

Cutting off the low-maintenance mid-back-length hair, donating it to charity, and getting a cute low-maintenance short style was a good thing to do. After a certain age, a woman with long hair starts to look a little strange. You go from getting what-is-she-trying-to-prove stares to fishy poor-white-trash looks. Shop clerks assume (correctly) you can’t afford to get your hair styled and either won’t wait on you or, when forced to do so, look down their noses at you.

I love the snappy hair style and I love the fact that strangers have started treating me politely again. But it’s expensive. You don’t get a no-blow-dry, no-curling-iron style that looks good at just any Supercuts. It takes a killer stylist to do a short style that looks good, stays looking good for some weeks, and doesn’t make you look like you wish you were one of the boys. Such artists don’t come cheap. Day before yesterday I had to get my hair cut. Shane has raised his price again: with tip, I shelled out $75. That’s just for a hair cut: no color, no perm, no nothing else.

Now we’re at $250 for the air conditioner, $75 for the hair, and God only knows what for the vet. At this point we know I’m over budget, but the scary thing is, we don’t know by how much because the vet is scared to tell me. And I’m scared to ask.

Costco

apr13stuffThere’s only one way to survive a Costco run with your budget intact: wear blinders.

As long as I take a list and stick to it, Costco saves me a lot of money. Stocking up on a month’s worth of food and lifetime supplies of staples, personal care, and cleaning goods keeps me out of grocery stores. The result is significant savings in food and household bills.

However, “stick to it” is…well, the sticking point. Costco lines its aisles with things you never imagined you needed so much as you think you need them when you see them. Last time I went to Costco I bought the recent biography of John Adams, five No. 1 Ladies’ Detective Agency novels, a posthumous collection of Kurt Vonnegut’s amazingly minor writings, a floating swim pool chair with built-in cups to hold one’s gin and tonic, and three pairs of swimming goggles (hey! these are things no one should be without!!!). The time before, I bought a $45 dress that doesn’t fit.

Today, whenever I get up from in front of the computer monitor, I will return the dress. Meanwhile, the ninety bucks or so for the other ephemera will come out of this month’s budget. The budget is $325 – $45 + 90 (= $370) in the hole. Plus an unknown veterinary bill.

Plants

apr13mexicanprimroseMy weakness is flowers and herbs. I can’t pass a box of bulbs without buying a fistful of them. I live for the roses to bloom. I justify the oregano, marjoram, tarragon, parsley, basil, thyme, mint, sage, rosemary, lavender, and heaven only knows what else is growing in the yard on the grounds that I use them in cooking. And those inexpensive, wildly colorful glazed Thai pots at Home Depot…to die for!

Trouble with container gardening is that containers require potting soil ($) and fertilizer ($) and, once the heat reaches about 98 degrees (which it will do today, and where it will stay until the end of September), daily watering ($$$). Trouble with ground gardening is that flowerbeds call out to you to fill them with more flowers. Every season.

Luckily we have only two seasons in Arizona: summer and winter. But what grows in the winter dies instantly on a single fricaseeing day in April. And what grows in the summer turns to black Jell-O when the first light freeze comes in.

apr13camomileThese factors make a Home Depot junket an exercise in Herculean will power. This year I’ve managed to keep the gardening impulse under control: I haven’t purchased one new rose (only because I’ve run out of space to plant roses); not one new plant pot; and only a few herbs, two tomatoes, a handful of bulbs, and a couple of packets of wildflower seeds.

But…the year is young, and so is the budget.

Fellow Busted Budgeters (that I’ve spotted so far):

Mrs. Micah

Bible Money Matters

Mommy Gets Paid

categories: budgeting

3 Comments from iWeb site

Pete @ biblemoneymatters

Thanks for the link!I can definitely relate to the one about the dog.We’ve just got through with several expensive visits to the vet.But hey, we love that little pooch, and she’s worth it!

Monday, April 14, 200807:12 AM

Mrs. Micah

I can see how tempting Costco would be…I’ve been there once, but I wasn’t buying anything which helped. There was a lot of exciting looking stuff.

Tuesday, April 15, 200804:14 PM

Aaron Stroud

I really found myself identifying with this post. My wife and I built a house last year, so we’re constantly discovering new things we “need” at home. Our dog is aging as well, but fortunately she doesn’t have any expensive needs at the moment.

A trip to Costco or a Wal-mart is definitely an expensive proposition. The past few weeks we’ve been stocking up on pots, seeds, plants, fertilizer, etc. It can get expensive very quickly.

Stay on top of magazine renewals

“YOUR NEXT ISSUE WILL BE YOUR LAST ISSUE! IT’S ALARMING BUT TRUE…UNLESS YOU RENEW NOW!”

This message comes plastered to the current issue of Consumer Reports, the widely respected (off and on) self-appointed guardian of consumer interests.

Alarming, indeed, but is it true?

Well, no. My bill isn’t due for another three months. I paid for a one-year subscription in March, 2007. For this “alarming” message to reach me on January 5, it would have been mailed in December, four months before the actual renewal date.

Magazine hustlers—the august Consumer Reports included—rely on the twin probabilities that you don’t recall when you paid and that it’s more trouble than it’s worth for you to dig out your records to find out when you did pay. So you’ll pay a few months early. Each year you pay another month or two or even three early, and guess what-after a very few years, you’ll have paid for an extra subscription. An extra ten thousand $20 subscriptions represents a free $200,000 for the magazine. Sweet, eh?

A couple of years ago I realized my magazine subscriptions were coming due within a month or two of each other, after I had deliberately signed up for each at different times of the year so that I could afford to pay for the subscriptions without straining my budget. A Quicken search revealed that, yea verily, renewal demands were coming months ahead of the actual renewal dates.

If you have Quicken or a similar program, here’s an easy way to keep track of when subscriptions are actually due:

When you pay to renew a subscription, enter the amount you paid and then make another entry for the same month and day, one year in the future (or two or three, depending on your subscription’s length), showing when the renewal is due. For example, the account I use to pay subscriptions shows these entries:

1/7/08: Harper’s due
2/10/08: Scientific American due
2/10/08: Atlantic due
3/6/08: New York Review of Books due
3/6/08: Consumer Reports due
9/1/08: CR Money Advisor due
11/20/08: gift sub for Atlantic due

The reason two subscriptions are due in February and two are due in March—when I would never start two subscriptions in one budget cycle—is that I didn’t realize I was being herded into paying earlier and earlier until the due dates had been pushed forward, closer and closer to the beginning of the year, and finally began to coincide.

Just because a publication’s editorial policy seems sound does not exempt its circulation department from sleaze. Keep your eye on the rascals…no matter how venerable or upstanding the journal’s reputation!