Category Archives: Budget

Paying a Fair Share a.k.a The Buffett Rule

Yesterday Congress voted on the Paying a Fair Share Act of 2012.  Just as many have predicted, it was shot down.  The President and the Democratic Party are trying to get this passed.  Basically saying that people earning more than $1 million are not paying enough taxes or at a lesser tax rate than lower-income taxpayers.  How can this be?  Well, there is a crap-ton of loopholes for one, also there is this thing called Long Term Capital Gains, which are taxed at a lower rate.  The reason for this is to encourage people to make long-term investments, therefore encouraging economic growth and stability. 

Why am I against this “Law”?  Plain and simple, this law penalizes those that are successful.    Some people have the belief that all millionaires are just trust-fund babies, ones that were just given money and never had a hard day in their life.  That statement is completely false.  Are there some that had wealth handed to them?  Yup.  Do the majority of millionaires fall into this category?  The answer would be no.  Most millionaires have worked very hard to get where they are.  They were normal people (not that they aren’t normal now), the average Joe on the street working a 9-5 like most people.  The only difference between them and the average person, is that after their 9-5 was done, they worked a couple more hours, or attended some college courses, giving up their free time, sacrificing one thing for another.  They didn’t expect anything to be handed to them, they went out and took it (not literally) by putting themselves in a situation to succeed.  This is one of the great things about the United States, everybody does have a chance to succeed.  Yah sometimes it is harder for some people, but the chance is always there, the choices just need to be made. 

A solution that I think would work:  A flat tax.  I think everybody should pay taxes.  This goes for the lowest earning individuals and also for rich peeps like Mr. Warren Buffett.  Should Mr. Buffett pay a higher tax rate because he earns more than his secretary?  I don’t think so.  I think everybody should pay the exact same rate.   Hypothetically, starting at an annual income of say $10k, everybody, and I mean everybody should pay an income tax, lets just say 15%.  That means that a person making $10k would pay $1500 in taxes for the year, and a person making $100k would pay $15k in taxes for the year.  This system, in my opinion, is fair for everybody.  The same rate is applied to all, nothing else.  No deductions for energy-efficient windows, no deductions for having a child, nothing.  This includes businesses as well.  We all know GE didn’t pay a single penny in taxes last year, which is ridiculous.  Get rid of all the loopholes, everyone lives here, so all should pay taxes.  Get rid of the IRS, because there should be no need for any refunds.  If you make $1k this week, $150 gets taken out in taxes, if you make $2k the next week, $300 gets taken out.  Simple math.   

I am not even close to earning enough money to be effected by the Buffett Rule even if it was passed.  My whole point of this post is equality.  Everybody wants equality for the most part, taxing the rich because they are successful is not equality, its class warfare.  It is discrimination against the rich.  I am definitely not rich, and I do not expect any help from the rich either (although if they wanted to throw me a couple G’s I wouldn’t be against that).   I made a choice to do what I do, to earn what I earn, and pay the bills that I agreed to pay.  I am responsible for myself and the decisions I made, nobody else is and should be.   The government sucks at money management as it is, taxing the rich to get more money isn’t going to change the governments spending habits.  How about making, and actually following, a frickin budget.


March Spending Recap……

We kept track of all our monthly expenses for the first time ever.  It was actually pretty easy, just ask for receipts on every purchase and put em in an envelope.  Add em all up at the end of the month and see what the total is.  Our total money out this month was $3,659.  Barely below our normal monthly take-home pay although this was one of my 3 paycheck months. 

We had our normal fixed expenses like our home, camper and student loans, cell phone, cable/internet, and car insurance.  Some of our other expenses went over our budgeted amount, and also some stuff that we haven’t budgeted, like miscellaneous expenses and recreational money.  I didn’t break down exact receipts, if we bought stuff at a grocery store I put it in the food budget, just generalizing. 

Food:  $354  Pretty much spot on the budgeted amount for the month.  This doesn’t include money we spent eating out though.

Auto Gas:  $287  This would have been closer to our budgeted amount, but I pay $25/paycheck to my carpool, and unfortunately it doesn’t discriminate against 3 paycheck months.   Hopefully I will teach the wife how to drive my car soon (manual transmission) so we can save on gas.  Although it really won’t be saving too much because MX season is coming up and we will need use the SUV to pull our camper, negating the savings. 

Utilities:  $174  Includes heat, garbage and electric.  Our natgas bill comes in mid-month, so seeing that February was freezing, our heat bill was a little higher than normal.  I can’t wait until it’s summertime. 

Misc: $1,104  About 1/3rd of this is the cost of the appraisal ($414) for our home refi.  $161 of it was spent on eating out, which is something we really need to cut back on.  Not only is it unhealthy, but we could be putting that money to better use somewhere else.  Also the wifes cooking is awesome, and I would rather eat her cooking than most restaurant food.  $139 was spent skiing/snowboarding and on a new winter coat for myself.  I think I’ve had the same coat for like 10 years now, it was time for something new.  We went to the movies once this month which totaled $20, so not too bad.  I would like to go more but there isn’t really anything I want to see until the summer.  We finally gave in and bought a paper shredder, which I proceeded to overheat like 4 times in the first day we had it.  The papers were stacked pretty high.  We have our normal $25 gym membership that I never use, (the wife goes all the time) so that needs to be added to our budget in the future.  The rest is medical expenses and random purchases like dog toys and personal hygiene stuff. 

This next month we will try to limit our eating out.  Hoping to keep our discretionary spending under $500, but knowing that I need a new helmet and boots for MX that probably isn’t going to happen.  Also the wife is planning a small weekend trip with two of her friends which will cost a little bit, but it’s totally worth it.  She definitely deserves a little vacation. 

How was your spending this month?  Did you go over on your budget like I did?

March Budget & Net Worth Update

This months budget update is kind of misleading, but I guess all of them are going to be misleading because I have no idea how to incorporate our actual expenditures.   We use our credit card for a lot of our purchases and our bill never comes until mid-month.   Either way I guess the budget corrects itself every month. 

Savings:  +$2481     Although we had another good increase, it is not as much as it could have been.  This month was one of my 3 paycheck months, but we spent a lot more on stuff than we thought during the month.  We finally kept track of everything that was spent this month and by doing this we now see where we are overspending.  We bought some one time purchases like a paper shredder, a winter jacket (75% off), and spent way to much on eating out.   We also spent another $414 on a second appraisal due to our first refinance not working out due to not having enough comparable sales.  Hopefully this bank will approve it.   We also went skiing for the first time in years, and don’t regret spending the money on it. 

Investments:  +$1728.95   I guess I can’t be angry about a gain, but wow did I have a bad month in my 401.  Due to a really dumb trade by me, my account went from being up a little less than 17% on the year, to being up a little under 10%.  Although I can’t be too mad, it would be negative if I didn’t sell when I did.  Still have 9 months to make up for my stupidity. 

Debt Payments:  -$521.94  Still waiting for our refinance to get done.  So no extra payments on any of the debt until that is done.  I can’t wait until we can start throwing extra down on these.  Until then I feel like we aren’t making progress that I know we can make.  Either way, we are supposed to close on our refinance by the end of May at the latest.  If for some reason it doesn’t go through we are done trying and will pay pretty much everything except for the mortgage off. 

Total Asset Increase:  $4210.29

Total Debt Decrease:  $521.94

Net Worth End of Feb:  -$78,335

Net Worth End of March: -$73,613

Total Increase in Net Worth: $4,722

Can’t complain about a positive month.  We also haven’t gotten our taxes back yet.  Once we do it will be going into savings until the refinance is done (we are hoarding cash til then).  Then it will be part of our debt snowball.  Here’s to hoping next month will be productive. 

No Time

This weekend was a busy one, mostly just doing some spring cleaning and getting the house ready for todays appraisal.  So I didn’t have much time to blog.  Hopefully the time we spent will be worth it though and our refinance gets approved. 

I’m really excited about the rest of the year.  Motocross season is coming up and I need to get some new gear.   Hopefully I will be able to work overtime to pay for those things, really just a new helmet (previous one has been through many crashes) and a new pair of boots.  I should be able to get both for under $400.  The boots I will be able to get cheaper online, but I would like to buy the helmet local, kind of important to have a good fit.  It can get expensive but I love it and the wife is my biggest fan. 

The title of the post says “No Time”, which is something I always feel I am lacking.  It doesn’t matter what it is, I still always wish there was more time.  I am horrible at managing my time (the wife reminds me of this a lot), I need to get better at this and kind of start “budgeting” my time.  Allocating a set number of minutes/hours to what I do.  One thing I def have to start budgeting time towards is working out.  Motocross is physically intense and I am not even close to being in shape.  I tell myself every year that I’m going to get into MX shape, but I never do.  Maybe this will be the year.

Do you manage your time well?  Or are you like me and need to start budgeting time?

Feb Update: Budget & Net Worth(less)

Here is our update for the end of Feb.  I added the monthly column this time and got rid of a couple of things.  It’s really a work in progress.  But I’m pretty excited about this months gains.  I’m not going to explain our normal budget part cuz it hasn’t really changed, but if you want to read the explanations of our budget click here.  Also to clarify, the section that says Beginning of 2011, that is actually the End of Jan 2012.  It will be fixed on the next update.

Savings:  We totally rocked our savings goals for the month of Feb.  Increasing it by $2549.99.  Wish we could do this every month.  The wife did awesome with grocery shopping and kept our credit card bill around $600 (groceries,gas, misc).

Investments:  We had a pretty good month for our 401’s.  It was about half contributions and half gains.  For the month total we had a total gain of $2,594.34.  I’m pretty happy about this number also.  Although that could have been a heck of a lot more if I would have held all of one of my trades. (I kept free shares from previous profits and finally sold the free shares for a gain of over 250%)

Debt Payments:  This was another screwup of my budget, our mortgage balance that I posted last time was the actual balance at the end of this month.  Our payment comes out the 1st of every month so next month will see a different number.  Kinda sad to see it the same.  We paid just our normal payments on the camper and student loans because we are waiting for our refinance to get finished. Once it is completed, those numbers should be going down considerably every month due to our planned Debt Snowball.   For the month our debt was only decreased by $235.83.  Not a good number in my book, I guess it’s better than an increase though. Oh well.

Total Assets Increase:  $5,144.33

Total Debt Decrease:     $235.83

Net Worth End of Jan:   -$83,715.20

Net Worth End of Feb:   -$78,335

Total Increase in Net Worth: $5,380

All in all I am pretty happy with this month, although I know I could have done better (half of the gains are from investments), it is still a step in the right direction.  Next month should be better due to one of my two yearly 3 paycheck months and our taxes being done.  Also during March, we are actually going to track outgoing money  (didn’t do this in Feb, oops) so we have a better understanding on where our budget needs to be.

Keeping Track

I haven’t been around the blogosphere for very long, be it reading or writing.  I am also new to the whole budget thing, and therefore will make some mistakes along the way.  I normally read about 10 different blogs a day, as I read the latest post at Give Me Back My Five Bucks I realized I haven’t kept track of any of our expenditures this past month.  Although we didn’t come up with our budget until about two weeks ago, it probably would have been a good idea to keep track even for the partial month.  The real point of the budget is to track your expenses and try not to go over how much you budgeted for a certain item/expense.   I will chalk this up to being new to budgets and will try to keep a better record in the future.

In Making Sense of Cents latest article, She writes about monthly goals.  She has some sweet monthly goals, even small ones that if added up can make a big difference overall to either your savings or debt.  I think this is something I will do in the future, something like work a couple extra days or try to find something in our budget to cut back on.

Do you keep track of all outgoing money no matter what it is?  Do you have weekly, monthly or yearly goals and if so how often do you analyze these goals and change them?

Financial Plans…..Kinda

Our ultimate goal is to become debt free.  In the meantime, we have set some smaller goals to get us to the larger one.  This is all part of our elaborate   simple financial plans.  This is just a rough plan and not everything is set in stone although we would like to stick to it.  

Both my wife and I have read Dave Ramsey’s The Total Money Makeover.  While he has an awesome strategy/plan to financial freedom, we just don’t think it is 100% for us.

One part of his plan includes debt snowballing.  This is a really exciting idea that we are going to follow, although not completely.  Dave recommends to take all of your debts (except the mortgage) and put them in order from smallest to largest.  Basically you pay minimum payments on all but the smallest debt, and use any extra discretionary income to pay off the smallest debt first.  Once you pay the smallest one, you take that payment and all of your discretionary income and pay off the next smallest loan, etc.   This can be a rewarding strategy because you can see the progress.  The only thing with this plan that I can’t or don’t agree with is that he recommends doing it with only a $1000 emergency fund.  I’m pretty sure that we would be a little stressed out not having a larger emergency fund so the plan is to do both at the same time.  Debt snowball and save for the EF. 

Here is our loans other than our mortgage.

  • Camper Loan: $7,588.05
  • Student Loan: $3,971.53

While the student loan is less than the camper, we want to pay the camper off first.  The camper loan is at a higher interest rate, and no tax deduction for the interest like the student loan has.  We haven’t decided yet on how much of our discretionary income will go towards debt vs. the emergency fund.  I’m thinking probably a 60/40 debt to EF ratio. Our goal is to have both of these debts gone by years end, along with at least half of our EF funded. 

We will be taking our tax return and putting that right onto the camper which should take a nice bite out of it.  Another thing that we don’t count on in our budget is overtime income.  We decided not to include it because overtime is never guaranteed and I don’t think it is a good habit to rely on it to pay bills.  So we treat it as we never had it, and mostly it goes towards paying debt.  Most of our overtime that we work will go straight to the debt but it will not be budgeted payments.   Another thing we are waiting on including in our budget is our refinance (which is still in progress 😦 )

Once both of these debts are paid off, we plan on finishing our emergency fund before paying extra on the house.  After the EF is fully funded, we want to attack the mortgage and also save for some fun stuff (vacations, toys).  I want to also increase our contributions to retirement accounts, mainly my Roth IRA and start one for the wife also. 

Do you have a plan to meet your financial goals?  How likely are you to stick to those plans?  Do you think you will stray from them?