Budget 3.5 – my revised 2015 budget

Before I update my July results, it’s time to update my monthly budget which I tweaked slightly last month. I last revised my budget at the end of last year, so here’s Budget 3.5; a shiny new version of Budget 3.0 for the remainder of the year!

Revised 2015 budget

Budget V2.0 V3.0 V3.5
Mandatory Expenses $3,270 $3,335 $3,285
Discretionary Expenses $690 $565 $565
Monthly Living Expenses $3,960 $3,900 $3,850

Starting in July, I’m reducing monthly Living Expenses by $50 a month which is a 1.3% reduction. Not a huge reduction by any means but it should be fairly realistic.

The great thing about a lower budget is that it makes my 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 (needs) – will decrease next year by about 1.6%.

Discretionary expenses – those I could do without (wants) – remained the same.

Budgeting in a nut shell

The categories below represent every anticipated expense that I can think of. I put the budgeted amount of money into a high-interest checking account every month. Expenses are paid for with check or credit cards linked to that account and categorized in an Excel file. Each month the surplus or deficit for each category rolls over to the next month and I keep about 3 months’ worth of monthly expenses in that account as a buffer. This works for annual expenses such as auto insurance too – I’ll be saving money for 11 out of 12 months then there will be a big expense in the 12th month when the payment is made.

Note – Ms. DivLife and I keep separate finances. This budget covers the all of our joint expenses including all groceries, insurance and utilities, but there are a couple of areas that she still pays separately for – her medical, clothing, auto expenses and gym membership.

Mandatory Expenses

Mandatory Expenses V2.0 V3.0 V3.5
Utilities: Electricity 125 120 120
Utilities: Water 40 40 40
Utilities: Gas 85 80 75
Utilities: Phone 136 131 130
Utilities: Internet 115 80 81
Medical 25 25 35
House: Repair 57 50 50
House: Improvements 20
House: Insurance 186 186 132
House: Mortgage 1,608 1,724 1,695
House: Security 50 52 54
Groceries 520 525 525
Auto: Gas 5 3 2
Auto: Insurance 205 205 216
Auto: License 20 20 20
Auto: Repair 20 20 20
Auto: Assistance 0 5 5
Tax Withholding 61 57 55
Miscellaneous 12 12 10
Total 3,270 3,335 3,285

Mandatory expenses have decreased for this half of the year, largely due to the lower insurance and mortgage payments.

Utilities: Electricity, Water, Gas, Phone

No major changes here. I was over-saving for gas bills which are high in the winter and low in the summer, so I adjusted that down a little.

Utilities: Internet

I’m still fairly happy with my current provider which includes cable and internet. The extra dollar increase is to cover the final monthly amount which was $80.30 or so after taxes and fees.

Medical

My health insurance is high-deductible so I have to pay out of pocket for each doctor’s visit.

I added $10 which is $120 over the year as my medical expenses are starting to increase now that I’m actually getting annual checkups. I’m probably a little in denial here as my medical expenses will likely be more this year so I may need to increase this amount even more in December. We’ll see.

House Repair

I’m keeping this category unchanged which reserves $600 a year for miscellaneous house repairs. So far this year we’ve had some unexpected plumbing costs due to city regulations but we should be more or less on track with this amount.

House Insurance

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. The reduction this year is a correction now that I only have one house to pay insurance on.

House Mortgage

The mortgage payment decreases later this year but there’s still an escrow shortfall for property taxes so I’m still paying more than I was hoping to. Hopefully as time goes on the mortgage company will be able to budget more accurately as they seem pretty bad at the moment.

House Security

Home security increased thanks to ADT increasing their prices by nearly 10%. The last time I checked, inflation in the US was a lot less. I’m still under contract with them for a couple more months but I’ll be investigating other companies in order to switch to a cheaper service.

Groceries

Ms. DivLife manages the grocery budget and does a great job at saving money. No changes here and things are looking good.

Auto: Gas

I spent $22 on gas in February and I should be good for the rest of the year. My gas tank is still two-thirds full. In total I’ve driven 10,000 miles for $55 of gas.

Auto: License, Repair, Assistance

My car’s covered by warranty so no major worries there although it’ll be out of warranty towards the end of year so I’ll have to revisit this budget in December.

Tax Withholding

This is for tax preparation fees – expenses are coming down now that I’ve not had to file in two states and I’ve also reduced the number of investment accounts I’ve been actively using.

Miscellaneous

Covers none of the above, and conveniently makes the total amount a nice number. What are the odds of that?

Discretionary Expenses

Discretionary V2.0 V3.0 V3.5
Ent: Books 5 5 5
Ent: Music 10 10 15
Ent: Games 10 10 10
Ent: Movies 10 5 5
Clothing 10 10 10
Subscription: Credit Cards 45 23 23
Travel 325 225 230
Cash 20 15 10
Computing 140 145 160
Dining 30 30 30
Fitness 2 2 2
Gifts 78 60 60
Spare 5 5 5
Home: Improvements 0 20 0
Total 690 565 565

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 increased the amount as we went to a concert, but in hindsight I should have increased it more since there are some more concerts coming up later this year. I’ll be adjusting this amount in December.

Clothing

I spend almost nothing on clothes too as I have enough to wear and they haven’t fallen apart yet.

Subscription: Credit Cards

I still keep two premium cards for their rewards: the Amex Delta Platinum card and a Marriot Rewards card which gives a free night’s stay each year. I also added a free Chase Slate card this year as it provides a free monthly credit score report.

Travel

I increased the travel budget a little – I may use airmiles again to travel next year but I haven’t decided so I thought I’d hedge and put a little extra aside.

Cash, Dining, Fitness

I spend cash once in a blue moon when I have my hair cut and I think that’s about it. I cut the amount $5 as part of my ongoing anti-cash campaign.

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.

Computing

This category is towards replacing any computer equipment that might break and saving towards a new laptop. I increased this category since it’s now including office subscriptions and website fees.

Gifts

This category covers any spending on presents or charity. Unchanged from the last budget.

Spare

This is just a small amount that can be used for any purpose.

Home Improvements

I’ve moved this category into the mandatory section as we continue to spend money on maintaining the yard – mulch, fertilizer etc. Any large home improvement cost that requires more than a year’s worth of saving would come out of my Savings.

Summary

The following chart shows each expense category in order of size.

Expense categories for my Budget 3.5 in 2015, listed in decreasing size.
Expense categories for my Budget 3.5 in 2015, listed in decreasing 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.

 

Quote of the day

Many men go fishing all of their lives without knowing that it is not fish they are after.

0 thoughts on “Budget 3.5 – my revised 2015 budget”

  1. What a fantastically thorough budget! I think you’re right giving yourself a modest new budget target. Especially as it seems you have already got to the stage where the easy “fat” in your expenses has been cut out!

    Good luck with 3.5!

  2. Man I wish I had your utility bills…can’t talk the wife into a front load washer yet. Afraid of the mold thing. I think if we did that I could slash the water/sewer by 3/4. Glad to see you could reduce. Your update reminded me I am about due for a review of my budget as well. Take care,
    DFG

  3. Way to keep track of expense! I need to do this ASAP. Still on vacation though :).

    One thought, cellphone plan is too high. Are you stuck in a contract? Or this cover a family of 4?

  4. Looks like every dollar has a name. Love the tables and charts…your expense chart sort of looks like our as our mortgage takes up a big chunk of our expenses as well. 🙂 Continue to trim that budget where possible.

    Best wishes and continued success on your journey. AFFJ

  5. DL,

    I’m as amazed as ever by the depth of your budget – don’t think I’ve seen anyone else use a budget this detailed. I’m glad it seems to work out great for you.

    Quick question with regards to the mortgage payment; do you have any idea how much of the payment is interests and how much goes toward capital payments?

    I hope budget 3.5 serves you well for the foreseeable future, buddy!

    Cheers,
    NMW

  6. Hi DL,

    Just noticed how high your grocery budget is. Was wondering if there’s anything you can do to trim that one, as I think it’s just you and Ms. DL, correct?

    Recently, I’ve been following meal plans by ThriftyLesley.com (as well as a few extras I buy). This has got our weekly shopping down to roughly $40-45 per week for myself (pregnant, so am eating extra calories), husband, and 2yr old (eats like a teenager sometimes). Previously, we were spending more like $80 per week.

    I have also found tips from saving the crumbs (http://www.savingthecrumbs.com/eat-for-less-than-60-a-month-food-budget/) – although I don’t think this plan will suit most people, but I am sure it can help slash grocery costs to some degree.

    Cheers

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