Sticking to a Budget, Part 4 (Fixed Expenses)

First a word on fixed versus variable expenses.  I'll try not to get all technical, because it's really not necessary.  For our purposes, I look at Fixed Expenses as the bills.  I have less control over these expenses.  I don't have control over how much the company charges for those services.  I can chose to reduce or increase the services, but even that involves fees that I have no control over.  Variable Expenses are where I think the budget is met or blown.  These are things that you have more control over, like food.  You decide whether to go out and eat 3 times a week or not.  But more about Variable Expenses later.  

If you remember yesterday, the income for "His Check 1" and "His Check 2" were overestimated.  For the next month, we want to fix that.  So, I've changed the "Budgeted" amounts from $1200 to $1000.  Since we are reducing the amount of expected income, we'll also try to have to reduce the expenses to compensate.  Here's how we do that...


Most of these things are the bills that you pay each month.  I fill in the "Month" column as I pay for these bills.  This also serves as a good reminder so I don't forget to pay my bills.  At the end of the month, there shouldn't be any blank cells in the "Month" column.  Don't worry about the cell that has "#DIV/O!" in it.  The total amount will fill in automatically.  

The "Allowance" row is for the allowance that you give yourself.  This is to help prevent overspending of the Variable Expense "Miscellaneous" (more about Misc. later).  Use your allowance to buy all personal items to include clothing, hobby supplies and books.  Anything that you and only you will use is subject to be bought with your allowance.  There are more detailed rules that you'll have to set up yourself.  For example, we put shampoo and soap bought at Target under "Miscellaneous", but we pay for any Kiehls products (expensive toiletries) with our Allowance money because it's a luxury.  This goes for makeup for me also.  The Allowance works better if you each have your own personal checking account.  This way you can save up for something really big.  For example, last year I tried to not spend all my money on yarn and now I have $850 to put towards a serger.  I'll talk more about how the Allowance works if anyone wants me to.  

Here I've looked at all the Fixed Expenses and decided where to make some cuts.  I try not to touch the Allowance portion.  I think it's similar to when someone goes on a diet and they deprive themselves of any kind of sweets and chocolate.  Eventually, they will go crazy and eat 10 Snickers bars.  Anyway, when trying to cut Fixed Expenses, ask yourself things like "Do I really need a cell phone AND a landline?", "Do I really NEED Showtime and HBO?", "Does it make sense to increase the deductible on the car insurance, since we haven't been in an accident for the past five years?"  So, in this example, I've reduced the Cable/Internet bill to reflect a reduction in the cable subscription and also crossed out the $30 Landline.  We just saved ourselves $55!



And then during the month you will fill in the "Month" column with the actual expenses.  This is important, so pay attention!  For certain bills you will need to change the "Budgeted" amount.  For example, "Electricity" was budgeted at $100, because that is usually how much you pay.  But, it won't be that exact amount and that isn't your fault.  So, you change the "Budgeted" amount to reflect the actual amount, which was $96.  But now take a look at the cell phone row.  I didn't change the "Budgeted" amount.  Why?  Because in this example there were extra charges for going over on minutes and too many text messages.  This is your fault, so you have to be honest with yourself and keep track of the overspending. 

Next up:  Variable Expenses