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