Wednesday, January 02, 2008

Plotting Fiscal Year 2008

THE EXCITEMENT IN MY LIFE continues at a rip-roaring pace with my creating, for the first time, a budget for the year. I've kept track of my spending for about a year and half, just to detect any leaks in my spending, but I want to anticipate my financial ups and downs a little more closely this year. I was lucky enough to know, last year at this time, that I would be laid off, but the next one might not offer so much warning.

I already know how much I plan to devote both to my IRA and 401(k) this year (max on both), so those expenses were already controlled while setting up the grid. I made a list during my time off of all the recurrent expenses I could fathom, adjusting some of them (like the vampires at my local utility) upwards. I have a fair guess on how much more rent I'll pay this year. Others I just left alone and figured my overestimates in some areas would cover for them. If I really wanted to be sharp, I'd refer back to this chart each time I paid a bill and decrement from my estimate the outgoing amount, just to see how wrong I was, in whichever direction, this time next year.

My financial way of being also anticipates an automatic withdrawal from my checking account into a money market fund, painlessly occurring every month, which queues up next year's IRA funds without my having to scramble to scratch them up. Although that money isn't truly "spent," I'm including it to reflect the true flow of cash through my checking account, as that money, once it gets into the money market, I consider untouchable except for emergencies.

I consider myself to have been exceptionally lucky with last year's layoff. My new job started just as the severance money ceased to arrive. I wasn't asked by New York State as to how my job hunt was going, so I didn't have to fear for the disruption of my unemployment money. Everything I didn't use from those two sources, I stashed in CDs. Should I have to find another job for whatever reason this year — and especially if I have to pay COBRA — I've got a cushion built up. (The severance given to those laid off a month ago was less generous than what I got at the salt mine, so hoarding as many nuts as possible is the key.)

I'm going to try and pay cash for as much as I can this year. I withdraw a set allowance each week. I'm bumping this to every two weeks but twice the amount, and using that, versus plastic, to pay for daily and weekly needs. (Gasoline, which is a less escapable evil than some of the impulse items I fight to avoid purchasing, I put on a rewards card. Short of stealing shit from Exxon, it's the only way I'm getting a kickback from those petro-bastards.) For a long time, I've been adding to an emergency fund with allowance leftovers and found money, so I have a system for saving anything that remains at the end of an allowance period. It will be interesting to see how being entirely open with my purchasing habits, rather than putting any of them on plastic and worrying about them later (uncommon for me, but still a temptation), is reflected in the amount of allowance that remains at the end of each fortnight.

Once I'm fairly certain I've got an accurate estimate of my yearly expenditures, I'll begin tracking how I eat into those budget items. No issuing supplemental funding bills for me, unlike the whores in Washington. The next step, coming in the very near future, is to decide the division of my IRA money across investment options, and whether I want to roll my old company 401(k) into a new IRA to give me total control over its allotment. All of this will require documentation in Excel so I can track things. After that — and not entirely unrelated — it's off to the resume to update it with the past 6 months of skills and achievements. You never know when it might be needed.


Amy said...

Oh my. With you socking away maximums and Ai yelling at me to save more for retirement, I feel like we're way behind!!! All our money is constantly reinvested in CDs, waiting to be blown on a house. I think though that we will increase R's 401k input by at lease double this year. What the heck.

Schizohedron said...

Hey, if you're saving for a house with safe, interest-bearing instruments, you're doing a lot more than many Americans, who simply dove into the housing market and are now looking at foreclosure. And many sources recommend funding 401(k)s up to the minimum required for the company match as a great compromise if you otherwise need the money to pay down debt or plan for a big purchase. Retirement-plan participation in this country is so scattershot that many companies are making plans opt-out in nature: When you begin working, you're automatically enrolled unless you direct HR not to do so. So you're way ahead no matter how much you're devoting to the 401(k).

Besides, you haven't seen the results of my budget projection. I've got trimmin' to do!!