It’s time to update my monthly budget for 2015. This should run for the first 6 months of 2015 when I’ll review it again unless there’s some significant need to adjust it earlier. I last revised my budget in September after my mortgage payment changed. So here’s Budget 3.0, a shiny new version of Budget 2.0!
New budget for 2015
|Monthly Living Expenses||$3,960||$3,900|
Starting in January, I’m reducing the monthly Living Expenses by $60 a month which is about 1.5% lower than the 2014 value. It’s not as much as I was originally hoping (although assuming 2% inflation it’s nearer to a 3.5% reduction) but I have included the new higher mortgage payment due to increased property taxes which swallowed up most of the reductions I made.
The great thing about a lower budget is that it makes other targets easier to reach as my dividend income goals, Work Freedom Date and Emergency Fund levels are all based on a multiple of the monthly budget value.
Mandatory expenses – those I can’t do without – will increase next year thanks to the mortgage escrow payment, an increase of about 2%.
Discretionary expenses – those I could do without – these will decrease next year to compensate for the higher mandatory spending by about 18%.
Here’s a more detailed look at what’s changed to meet the new lower amount.
Note – Ms. DivLife and I keep separate finances. This budget covers the majority of our expenses, but there are a couple of areas that she still pays directly for – her medical, clothing, auto expenses & gas and gym membership.
Mandatory expenses have increased this year, largely due to the higher mortgage payment.
Utilities: Electricity, Water, Gas, Phone
I’ve been able to budget better as I’ve had a whole year of bills to go through. I’ve not made any real changes here, but assuming usage similar to last year these numbers should hold for next year.
The budgeted amount was $115 but towards the end of the year, this “special rate” expired and the price reverted to $133. I tried to negotiate with the cable company to reduce costs but they only seemed interested in up-selling my existing contract. So this month I switched to another company and got similar tv + internet coverage as before, but for $80 a month.
My health insurance is high-deductible so I have to pay out of pocket for each doctor’s visit. I almost never go to the doctor but I did go for a checkup this year which resulted in a referral to a skin specialist who’s worried about skin cancer. I’m hoping that $300 will cover the costs of the bi-annual checkups that I’ve won as a result, but I really have no idea.
Next year I must visit the dentist too which will be a major expense, not to mention pain, I’m sure. I have some savings put aside for expensive medical fees as I don’t want to dip into my HSA account if I really don’t have to.
I’ve split this category into House Repair and House Improvement which is listed under the Discretionary expenses further below. Repairing my sprinkler system from the cold damage will be the main foreseeable expense here. Anyway, I currently have a surplus in this category so I think $50 should be sufficient for now.
This is paid annually and it’s paid separately than the mortgage since I can charge it on a credit card and earn rewards for doing so.
Did I mention that my mortgage payment increased last year? It reverts to normal in October and I can’t wait as it should be $100 less!
So who knew we have to pay $25 a year to the Police department for having a home security alarm system. Apparently it has to be ‘registered’ with them and clearly registering an address is an expensive task that needs to be redone every year. Added an extra $24 a year for this as I have a surplus in this category anyway, and I’ll be looking for an alternative (cheaper) monitoring company when my current contract expires.
Ms. DivLife manages the grocery budget and does a great job at saving money. We added $5 to this category to help against inflation and I’m also giving her a $5 amazon gift card monthly from my Bing Rewards as she buys some groceries online with Amazon’s subscription service. I’m sure Microsoft are getting fed up with searches such as “search 1”, “search 2” but hey, it all earns points and only takes a couple minutes!
I had to fill my car with gas earlier this year in April and it’s still got a full tank as I’ve not used any since then. So I’ve spent a total of $30 in gas since buying the car over a year ago and driven 6,500 miles which is 216 miles per gallon. I’m wondering if I can go all of 2015 without needing to fill it again but we’ll see. I’ve reserved $36 in case I don’t.
Auto: License, Repair, Assistance
My car’s covered by warranty so no major worries there. I’ve not included any possible expenses for Ms. DivLife’s car in this budget so we’ll have to worry about that if they’re needed – currently she pays for them out of her salary.
I did add a new category for Roadside Assistance as last year we used it twice (I got stuck in snow in our driveway – don’t ask – and Ms. DivLife had a flat tire) but both calls were covered entirely by my Amex Card which includes free roadside assistance. I’m changing cards next year and we will lose that free coverage. I have a free OnStar subscription to cover problems with my car. We decided against a AAA membership for Ms. DivLife and we’ll use the roadside assistance service from her Visa credit card which has a $60 call out fee instead. So we’re self-insuring here as we think it’s unlikely to be needed next year.
This is for the tax preparation fees and any excess go towards any tax payments I made need to make. I’m expecting to owe money because of the higher investment income and I will start additional paycheck deductions next year too.
Covers none of the above, and conveniently makes the total amount a nice number. What are the odds of that?
|Subscription: Credit Cards||45||23|
Entertainment: Books, Music, Games & Movies
I have a minimum spend on entertainment – we borrow movies to watch from the library for the most part, and I have enough video games to play. For music I have a monthly subscription which is covered by the $10 a month, although I may consider increasing this amount in the summer if there’s a concert that we want to go to.
I spend almost nothing on clothes too as I have enough to wear and they haven’t fallen apart yet.
Subscription: Credit Cards
This category covers paying an annual fee for two credit cards that I have. I’m going to be changing cards next year to save money as I’m no longer flying frequently, so I plan to downgrade from the Amex Delta Reserve card to the Delta Platinum card. I also have a Marriot Rewards card which gives a free night’s stay each year.
I’ve reduced my travel budget by $100 – I have some money carried over from last year’s budget and I plan to use airmiles to further reduce the cost of travel next year. I plan at least one trip to the UK again and a weekend getaway somewhere in the US for us both.
Cash, Dining, Fitness
No changes here – I spend cash once in a blue moon when I have my hair cut and I think that’s about it. We eat out maybe once a month so spending here is pretty small. Eating out when on vacation comes from the Travel budget. I might buy a book or video on fitness once a year, so I’m leaving this amount unchanged – I exercise at home (Pilates and bodyweight) so I don’t need any expensive equipment.
This category is towards replacing any computer equipment that might break and saving towards a new laptop. I increased it a little as we’ll be buying Ms. DivLife a new laptop next year.
This category covers any spending on presents or charity. I reduced it by $18 to compensate for the Home Improvement category and otherwise make the numbers even.
The balance for this category is currently negative as I bought my mother a new tablet for Christmas.
This is just a small amount that can be used for any purpose.
This is a new category and I’ve separated it out from the Home Repair category as we’re planning to do some home improvements next year. Not that we’ll be doing much on $20 a month!
I have some money in my Savings as a general fund towards more expensive home repairs / improvements so I’m going to start with $20 a month ($240 a year) and see how it goes.
Expenses from any income-generating activities – currently this is only the domain name and hosting payments but I’m trying to put some extra money aside here for future use.
The following chart shows each expense category in order of size.
The mortgage payment is by far the largest expense. It’s a little embarrassing to see Fitness as the lowest expense as if that’s my lowest priority, but walking and doing Pilates doesn’t cost any money so that’s a good thing. I’m looking forward to getting the new year started and seeing how accurate my budget projection is!
Quote of the day
Never look back unless you are planning to go that way.