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Now, what we’re doing; I want to be clear. We’re not trying to push financial reform because we begrudge success that’s fairly earned; I mean, I do think, at a certain point, you’ve made enough money.

What more do you need, people? Has the man not made it crystal clear that you are responsible neither for your actions, nor your success? You have no say in ANYTHING.

You may not decide the best way to care for yourself and your family, you may not determine the limits of your own sucess, you may not reap more rewards from your productivity than the government allows.

YOU ARE MEANT TO SERVE OTHERS.

You, ladies and gentlemen, are slaves. Your life, and the product of it, are not yours to use as you see fit…they belong to “everyone else”. Since things weren’t ‘working for the average American”, it is up to those things WERE working for to take care of them.

You people wanted change. You got it. Enjoy it.

From Ben Franklin’s Poor Richard’s Almanac

As I spent some weeks last winter in visting my old acquaintance in the Jerseys, great complaints I heard for want of money, and that leave to make more paper bills could not be obtained. Friends and countrymen, my advice on this head shall cost you nothing; and if you will not be angry with me for giving it, I promise you not to be offended if you do not take it.

You spend yearly at least two hundred thousand pounds, it is said, in European, East Indian, and West Indian commodities. Suppose one-half of this expense to be in things absolutely necessary, the other half may be called superfluities, or, at best, conveniences, which, however, you might live without for one little year and not suffer exceedingly. Now, to save this half, observe these few directions:

1. When you incline to have new clothes, look first well over the old ones, and see if you cannot shift with them another year, either by scouring, mending, or even patching if necessary. Remember, a patch on your coat and money in your pocket is better and more creditable than a writ on your back and no money to take it off.

2. When you are inclined to buy chinaware, chintzes, India silks, or any other of their flimsy, slight manufactures, I would not be so bad with you as to insist on your absolutely resolving against it; all I advise is to put it off (as you do your repentance) till another year, and this, in some respects, may prevent an occasion of repentance.

3. If you are now a drinker of punch, wine, or tea twice a day, for the ensuing year drink them but once a day. If you now drink them but once a day, do it but every other day. If you do it now but once a week, reduce the practice to once a fortnight. And if you do not exceed in quantity as you lessen the times, half your expense in these articles will be saved.

4. When you incline to drink rum, fill the glass half with water.

Thus at the year’s end there will be a hundred thousand pounds more money in your country.

If paper money in ever so great a quantity could be made, no man could get any of it without giving something for it. But all he saves in this way will be his own for nothing, and his country actually so much richer. Then the merchants’ old and doubtful debts may be honestly paid off, and trading becomes surer thereafter, if not so extensive.

http://www.wimp.com/budgetcuts/

Ya know…that’s a BIG pile of pennies to the right of the blue line….

From Walter E. Williams at The Patriot Post

Here’s the question asked in my September 2000 column titled “It’s Time To Part Company”: “If one group of people prefers government control and management of people’s lives and another prefers liberty and a desire to be left alone, should they be required to fight, antagonize one another, risk bloodshed and loss of life in order to impose their preferences or should they be able to peaceably part company and go their separate ways?”

Complete column

It was brought to my attention today that I had apparently, some time ago, disabled the ability to register, and thus leave comments.

That has been resolved.

A good friend shared her family’s monthly budget spreadsheet with me this afternoon.

Note how it accomplishes all of the basic tasks we’ve talked about before, but in a slightly different mindset. There’s a way to tell at a glance how much money is left to spend in any category, for example.

2nd Monthly Budget Example

Sorry it’s been a while since Part II. Life keeps happening.

So…the first couple of posts have dealt with some budgeting basics, and some general ideas for prioritizing and estimating. This post will begin talking about the mechanics of budgeting, using some spreadsheet screenshots. The spreadsheet being used is also attached to this post. It’s free for you to use, and should work in any current and most previous versions of Excel or Star Office’s Calc.

Nothing says you need to use this spreadsheet…or even a spreadsheet at all. A list of things written down on a napkin will work just fine, so long as you cover the basics of budgeting : Account for everything, give every dollar a job, and stick to it. I know one family…a family who’s been debt free for 2 years now including the house…who’s never had anything more complicated for their budget than a white board in the kitchen.

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We’ll start our budget with income. Why start there? Simple…for most folks, it’s the known in a world of unknowns. Admittedly, you may have a commission based paycheck, which makes life a bit more difficult…but even then, you probably have a fairly good idea of the short term prospects for income.

So, list every source of income you’ll have for the month. If you’re starting in the middle of a month, you can go about this a couple of ways. Personally, I think it’s easier to simply accomodate the remainder of the month’s income and bills, and then start fresh next month. You can, however, also account for the next 30-31 days, and budget from, for example, the 12th to the 12th. The choice is yours.

Here’s an example:

Note that we’ve included our previous balance. This is income! Since we’re working, for the moment, one month at a time, any money we have left over at the end of last month is money we can spend this month! As we move on, you’ll see that this does NOT include our savings or emergency fund…this is money that we didn’t spend last month. IF we’re doing our jobs right, it’s money we had budgeted, but didn’t spend…such as a misc. category. Remember, there shouldn’t be any “left over money” at the end of the budget, since we’re giving every dollar a job!

Note also the “Total” line at the bottom. This isn’t strictly necessary, but it gives us a handy single cell to reference whenever we need to know the total amount of money we can spend this month. You could, of course, reference the “Sum of B3 thru B7″…but why bother? Just have a single cell do that calculation then reference “B10″ (or whatever cell that is on your sheet) elsewhere.

Once that’s done, let’s move on to expenses:

A couple of things to notice here.

First of all, notice that things like “Savings” (or, emergency fund, or investments, etc) ARE EXPENSES. Savings/Emergency Fund accounts are NOT income. They’re not MEANT to be spent, so we don’t PLAN to spend them. Indeed, most of the fiscally secure folks I know have distinct and seperate accounts for emergency funds, savings, etc…often at different banks. In fact, I know several who even have different types of savings. “Rainy Day” savings, “General Savings”, and “Saving for something I want Savings”. Each of these would be a DISTINCT AND DIFFERENT expense category. it is, after all, important to know A) Do i have any money I CAN save this month? and B) Ok, I can save for the trip, but not the car.

Next, be aware that I’ve “cheated” on this example to show you a couple of different “Dave’s Baby Steps” ideas. Note that I’m showing $200 going into savings, plus several debt payments, including a large ($110) payment to Credit Card 1. In reality, at least by Dave’s method (and hey…you ask me for financial advice, I’m likely to reference Dave…get over it or go elsewhere for your info *heh*) you wouldn’t be doing both of these. You’d be doing one or the other…either amassing a $1000 emergency fund, OR attacking your smallest debt with every penny you can.

So, in reality, you OUGHT to either have $MINUMUM_PAYMENT for Credit Card 1, and the remainder going to “Savings” to build the emergency fund, OR you ought to have “$0″ going to savings (If your emergency fund is built up to $1000) and $310 going to Credit Card 1.

Just wanted this example to demonstrate both concepts at once.

Finally, we’ll work out our totals:

Note that we reference our total income from earlier, and then we have a formula to calculate the total expenses from the section above, and then subtract the latter from the former. Remember…the end result SHOULD be $0. No fair “fudging” by a few bucks to give yourself a coushin, either. The whole POINT here is to stop living beyond your means…don’t try to cheat. The budget WILL catch you.

Notice how changing ANY of the expenses will immediately change the “Total Expenses” below, and thus update the “Remaining” cell. This pair of cells…Expenses and Remaining…are, emotionally at least, the “magic” of a budget. Suddenly, you can see the END RESULT of ANY change you make. Spend a few bucks “here”? RIGHT AWAY, you see how that impacts “there”. Going to be $100 short? take a LITTLE from several different categories, and RIGHT AWAY, you can see when you’ve reached your target.

The spreadsheet attached to this post contains all these sections, along with the appropriate formulas for all the math. There’s also some commentary in a few of the cells, giving examples of the sorts of things that fall in various categories.

Clearly, you may use different categories, or put certain items in other categories…and obviously, your numbers/bills/debts/incomes won’t be the same, and should be changed to reflect your specific situation.

The next post will probably be a more complicated rolling budget, with some discussion of its concepts and features. Stay tuned however, since I’m working on a slight “detour” that could prove VERY insightful!

Sample Budget Spreadhseet

Reposted without permission from Garrison Keillor’s April 7th Op Ed in the New York Times

I think of myself as conservative and that’s why it was so irritating last Sunday in church when we were instructed to cry out gladly on cue, “He is risen indeed, Alleluia,” and so I did not. An invasion of privacy, and when the trumpets blared, trying to goose us into jubilation, I wished we could roll the rock back over the tomb with them inside it.

I don’t do jubilation on command, and I don’t grin just because a photographer tells me to. I am irked at the cancerous spread of flutey mood music in public places and the plague of nannyistic warning signs in America (“Caution: coffee is hot.” “Road may be slippery when wet.”), and I avoid committees of earnest, well-meaning people. I believe in the entrepreneur, the impassioned individual. I’m a conservative.

On the other hand, I don’t like an individual to whistle in a crowded elevator, not even quietly. It is just too creepy.

It’s the conservative in me that wishes we had an old-fashioned government jobs program, such as F.D.R.’s Works Progress Administration, which hired unemployed people to work to build roads, libraries, public toilets, hiking trails, tens of thousands of small useful projects. (When my dad saw the initials W.P.A. on the cornerstone of a building, he said it stood for “We Poke Along,” but he could afford to be disdainful since he’d been hired after high school by his uncle Lew to pump gas at Lew’s Pure Oil station.) My inner conservative thinks unemployment is wasteful and damaging to the spirit — 15 million unemployed, many more underemployed — a disaster, a blight upon the land. Intolerable.

Work is redemptive. When I was hired, right out of high school, to wash pots and pans at a hotel in Minneapolis, I felt real jubilation. After the deaths of James Dean and Buddy Holly, I had adopted a tragic view of life and imagined I’d die in a crash or else become a hobo and wind up destitute, but instead I was paid actual money to run racks of dishes through a machine. It felt princely at the time.

Two years later, I worked the night shift at a morning paper for a cigar-smoking city editor named Walt who liked to bark out my name and see me jump. When he told me to call the hospital and find out if the kid who’d been struck by the hit-and-run driver last night on Selby Avenue was still alive, I called. The kid was alive. I wrote up the facts on a manual typewriter and passed it to a blotchy-faced cadaverous man at the copy desk and it went into the paper that landed on people’s doorsteps the next morning. Page 14, bottom. I felt I had a place in the world. I was easily replaceable but felt exalted anyway.

Back in those days, I used to visit relatives on their farm and they always found jobs for me to do. It was not right or decent that a healthy man should sit and stare out the window, so I was allowed to run the manure spreader. I reached back from the tractor seat and pulled the lever that engaged the drive mechanism and the scrapers moved the wet manure to the rear where the big teeth on the revolving drum flung the clods onto the corn stubble. I did this about as well as a person could.

Years later, I got a job in radio thanks to my willingness to get up at 4 a.m. and sound cheerful on the air. I could’ve gone into manure spreading instead, but it seemed too specialized and didn’t offer enough hours, so I chose radio. Two different career paths but there are similarities. You can’t do radio fast, and you can’t run a manure spreader in high gear: You’re apt to clog up the works and have to stop and clear the mess by hand. Both jobs, done well, contribute to society in some small way and give you, the professional, a crucial sense of well-being.

When you have shoveled tons of wet manure and broadcast it across 40 acres of stubble, you feel you have given a good account of yourself. Sometimes radio is like that too. You talk about your salad days along the Mississippi and a truck driver hears it as he barrels west through Montana and years later you meet him in a café and he tells you what you said. It’s a job. We all need one.

Indeed, sir…indeed.

Think about this the next time you read your paystub, and note how much you’re giving up in taxes…

47% of US households will pay no income taxes this year.

Yep.

Half the people running around in this country will be getting services that the rest of us paid for.

Why?

Simple…

Because they’ve been told or convinced they are entitled to them.

They are excused from having to provide for themselves or their familes. They are exempt from being required to go out, kill something, and drag it home. They are the needy.

They need things, you see. it does not matter that you need things as well. it does not matter that they may not actually need these things, but rather simply want them really badly. It does not matter that they create no value in exchange for the value of the things they need….

For, you see, they need. And because they need, then the things they need are theirs to claim. Because they need them.

This is no longer a philisophical rant…it is reality. It is fact. during the period of the largest deficit and highest spending package in the history of the world, half of our citizens are not obligated to pay for one penny of it. Their sole purpose is to claim the benefits of it.

Why must those who can not afford health care be provided with health care coverage? What is the ONLY claim they have to it?

Have they earned it?
Have they paid for it?
Have they exchanged any goods or services for it?
Have they made uncoerced agreeable arrangements for it?

No.

They need it.

And so…it will be provided for them…by the 50% of us that pay for such things.

As you tell your children to work hard to earn things, remind them of this… Hard work, production, creation…these things earn you the right to pay for the needs of those who do not wish to earn their keep.

Your education will support the uneducated.
Your skills will support the unskilled.
Your resources will provide for those who are unwilling to seek their own.

This is what hard work, dedication, and responsible living will get you.

Maybe…someday…enough of our children will decide this is unfair…and will put a stop to it.

We certainly seem unwilling to do so.

So, remember that the whole point of a budget is that it is, essentially, an NCO in the Army. The officers (you) define the mission (paying our bills, getting out of debt, saving money) and the NonComm (the budget) breaks that mission down into discreet tasks, making sure every foot soldier (dollar) has something to do that contributes to the end result.

In other words…we tell our money where to go instead of wondering where it went! To start, we have to know where our money needs to go.

Begin by simply writing down a list of categories.

Start with the essentials of food, shelter, clothing, transportation, and utilities.

Now…go one room at a time, and look at the “things” in that room…see if they trigger a budget category in your head. For example, maybe the TV triggers “Cable bill”, or the computer reminds you of “Internet”. Do this for each room in the house. Now go outside, and remind yourself of such things as lawn care expenses, trash service, etc.

Next, remember any consumer debt, like credit cards.

Finally, don’t forget the “non-bills”, like the miscelaneous category described in the last post, deposits into savings, etc.

Now the tough part…prioritizing.

The first five…the essentials…should probably be in the order they’re listed above. Simple survival requires food. The next biggest impact to health and safety is shelter, then protective wear (clothing), then the ability to get places (transportation), and then modern convieniences like running water, electricity, etc (Utilities)

After that, priorities are pretty much up to you. And, certainly, they can change. The point here isn’t necessarily to get it “right”, as it is to make you THINK about what you’re spending, and whether value your manicured lawn more or less than having your garbage hauled away.

As an example, I HATE doing yard work, but really don’t mind hauling bags of trash to the dump once a week or so…so I’d probably choose lawn care over trash service. You may, of course, feel differently. neither is right or wrong…we just need to understand what choices we’re making with our money.

Now…for each category, we need to make a monthly estimate. Early on, many of these will be just that…estimates. Some things (A car payment, perhaps) we know. Others (electric bill) we don’t know, and will have to try to make a good guess. One of the biggest tools I have in my budget spreadsheet is one that keeps a history of past variable bills (electric, water, etc) and averages them by month, or season, or whatever. That way, for any given, say, April, I can see that the light bill has averaged $X in April the last 3 years, and have a fairly good guess about this month’s bill.

Obviously you may not have that much history for some bills (though, be sure to check your utility companies’ websites or give them a ring. Our electric company provided me with several years of history to get started), but go ahead and start thinking about how you’ll track that information, so you can be ready starting next month.

Next, total everything up for the month, and then total up your monthly income from all sources. There are now 3 possibilities:

1) You have more money than expenditures. This is, obviously, the best scenerio. For this first month, just put ALL the surplus into a big “miscelaneous” category. No, this doesn’t mean you get to blow it all at the end of the month!! We’re putting it here because EVERYONE forgets or underestimates categories at first…your misc. category will help coushin those blows. If, at the end of the month, you’ve still got some wiggle room in the Misc. category, then treat it as income next month, or start your emergency fund if you’ve drunk Dave’s kool-aid!

2) You have exactly the same amount of expenditures as money. This is what SHOULD happen every month, but if it happens this first month, be very very cautious…again, chances are VERY high that you’ve forgotten a category somewhere.

3) The most common scenerio, of course, is more expenditures than money. If this is you, don’t panic, and don’t feel bad. It happened to nearly all of us….after all, before the first one, we were ALL living without a budget…and guess what, when you live without a budget, you frequently spend more than you make!

If this is you, then the answer is fairly clear…you have to cut spending short term, long term perhaps increase income as well. This is why we prioritized above.

First, see if there’s any controlable costs you might be able to shave some off of. Many people overbudget by 50% or more for food and clothing.

If you’re still short, then some things have to go. This is where you get to grow up and act like an adult, and live within your means. Start at the bottom of your priority list, and make these items go away. Yes, having someone mow the yard for you IS nice…but if you can’t afford it, YOU CAN’T AFFORD IT.

Remember…the end goal here is to wind up with $0 at the end of the month, but have accounted for everything. It’s a balancing act, and can be frustrating the first few months. This is why we haven’t yet introduced anything complicated or freaky like spreadsheets or planning…we’re simply trying to get in the habit of seeing what we spend, why we spend it, and making the CHOICE to live within our means.

Next post will talk about attacking the things that suck money out of your life, planning ahead for things, and translating these ideas into spreadsheets or workbooks.