Given the fact that we had such a great cash month for what were then unknown reasons, I decided to get underway analyzing our spending situation for the month of March. Once I started, the reason for the large cash increase became obvious – I received 3 paychecks last month! I can expect another good [...]
Given the fact that we had such a great cash month for what were then unknown reasons, I decided to get underway analyzing our spending situation for the month of March. Once I started, the reason for the large cash increase became obvious – I received 3 paychecks last month! I can expect another good (not as good as this one) month of April because my wife will be the one getting 3 paychecks. Nevertheless, the numbers:
Some people may notice that it appears as though I made money on daycare last month. Seems improbable (it is), and that’s because that row is actually conveying a different message. It’s positive because my childcare flex spending reimbursements are coming in. Since I fund a childcare spending account from my paycheck (income tax free!), that spending account money doesn’t show up in my take-home pay. Therefore, when we get reimbursed from that account for actual childcare expenditures, I’ve decided to apply it towards the Daycare spending row. Since the number is positive, that means we requested and received more reimbursements from prior weeks of daycare than we physically paid for in March. Eventually this will catch up, and most, if not all, future months should show a negative number in this row again. Maybe I should track the reimbursements as part of my income instead?
I have also had to reduce my guidance for my monthly General Savings. That’s because the prior guidance was unrealistic due to the daycare spending, so I dropped it to compensate. However, all daycare reimbursements are put right into savings, so in the end savings should be nearly as high as it was before. The problem is that I’m not funding the flex spending account as much as the daycare will charge for this year. This is a hedge against my wife deciding to stay at home and not work, and also because the daycare charges more than the government will allow you to fund in a flex spending account.
Other things I noticed while compiling this chart: groceries are still staggeringly large, dining out was significantly reduced (yay!), and paying two electric and gas bills this month hurt me a bit. I mentioned last month that I delayed paying a bill to wait for a paycheck to come in, so I ended up paying two in March.
Lastly, reconciling this with my Net Worth statement for the month, you’ll note that the Net Cash Flow added to the Scheduled Savings total approximates the gain in cash for the month that was shown in my Net Worth post. It’s not exact, mostly because I don’t want to spend the time checking every transaction to make sure it’s categorized appropriately . The fact that they’re close makes me pretty confident that I’m understanding where the bulk of my income/spending comes from/goes to.
Anyone who has spent any time at all reading this blog knows that Paul is a lot better at this stuff than I am. Not only does he have a comfortable lead on me, but he spends more time and effort managing his personal finances. However, that just gives me more room to grow! This [...]
Anyone who has spent any time at all reading this blog knows that Paul is a lot better at this stuff than I am. Not only does he have a comfortable lead on me, but he spends more time and effort managing his personal finances. However, that just gives me more room to grow! This is the latest trick I’ve discovered to help manage cash flow:
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As I mentioned in my last Net Worth report, I felt like we were bleeding cash even though our net worth was up a substantial amount for the month. Turns out I was right. I sat down and did the analysis, and most telling is that my wife’s pay was about half of what it [...]
As I mentioned in my last Net Worth report, I felt like we were bleeding cash even though our net worth was up a substantial amount for the month. Turns out I was right. I sat down and did the analysis, and most telling is that my wife’s pay was about half of what it should have been for the month. She had some minor surgery and missed some time at work, and boy did we feel it.
A few other things stand out:
- The amount we overspent matched my wife’s lost pay. We would have come much closer to breaking even for the month had she been able to work more.
- Groceries are killing us. Baby formula isn’t helping the issue…. That should end soon though.
- No utility bills in the month of February. I waited until a payday to pay my gas & electric bill, which pushed it off into March. This should mean I’ll have twice as much Utility bills as guidance in March.
Check out the summary below. Guidance is based on recent past averages. I’ll plan on updating the guidance once per month with a rolling 6 month average for non-constant cash flows.
Every few years I decide to sit down and analyze all of the money coming in and flowing out of my household on a monthly basis. I typically don’t track my spending very carefully because I try to “pay myself first” by only spending the money we have left over after all of our targeted [...]
Every few years I decide to sit down and analyze all of the money coming in and flowing out of my household on a monthly basis. I typically don’t track my spending very carefully because I try to “pay myself first” by only spending the money we have left over after all of our targeted savings and bills. However, if we spend too much in a given month we end up transferring money out of savings to keep my checking account funded until the next pay check. This has been happening a bit too much in the past few months, so I’ve decided to reacquaint myself with where our money is going, and produced the following table:
Let’s go through some of the more interesting items:
- Paul and Ann’s Paychecks- this is our after-tax income calculated monthly. Ann’s paycheck is a bit of an estimate/average due to her slightly inconsistent hours combined with her hourly wage.
- Mortgage – We pay a bit extra on the mortgage each month, and this amount includes the extra.
- Student Loans – Again, we pay a bit extra on our student loans each month, and this amount reflects that extra portion as well.
- Gasoline – This is an average taken over the last 12 months. I would expect this to go up a bit in the coming months due to our new vehicle, which gets slightly worse gas mileage than our last.
- Groceries – Again, an average over the last 12 months. Hopefully this drops a bit in the near future due to transitioning our young son off of baby formula. Holy crap that stuff is expensive!
- Long Term Bills – This line reflects a multitude of items, like garbage collection, car insurance, home insurance, property taxes, etc…. These bills are bills that we pay either annually or semi-annually. The amount listed here is what we transfer into a targeted savings account each month to cover these future bills. We do this so it’s never a shock when one comes due.
- Daycare – We get 50% off, and this is still a huge amount!
- General Savings – this is the amount that we transfer into our emergency fund savings account every month. Like I said, in “bad spending months” we will withdraw from this account when needed. Anytime this account goes above $10,000 we transfer the balance into another account for a down payment on a future house.
Wow, after all of this activity we only have $138 left each month! No wonder I need to transfer money out of savings to pay CC bills every once in a while. Granted, this chart includes some significant dollars put into savings, but I still didn’t expect the leftover amount to be so small. A normal cash flow statement wouldn’t break out the amount put into savings, but we look at savings as bills paid to us, so I think it still belongs.
I seems to me there a few things we can do to improve the look of this chart:
- Reduce the amount put into General Savings each month. This will leave more in our checking account for discretionary spending, but will obviously reduce the amount going into savings each month. But is it really going into savings if we just need to transfer it out again, like we currently sometimes have to do?
- Reduce our spending by getting rid of some services we pay for, like TV service or reducing cell phone service. I feel like we don’t get a lot of bang for our buck here.
- Reduce spending by going out to eat less. I was surprised to see this number was so high. We definitely should look into this.
However, I think for the time being we’re going to continue with the status quo . From here on out I want to do a monthly cash flow statement with actual spending per month to see where we are actually at. We’ve had a lot of change over the last year with the new baby and the new car, so my guess is the averages in the above sheet aren’t entirely accurate.
Expect updates around this time each month!
Edit 2/13/12 – I’ve decided to mitigate the situation a bit by changing my ‘pay myself first’ parameters a bit. I will now be removing the cost of daycare from my automatic savings, and instead have it go into checking. Since we use a childcare reimbursement account for tax savings, I can then take the reimbursements and automatically put them into savings. This should reduce the amount of transferring from savings to checking we need to do by giving us more spending cash up front that will be reimbursed at the back end later.
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