It’s Always Something

Looking back at our spending for 2011 proves the old saying, “it’s always something” or as my sister and I like to say, “If it ain’t one thing it’s your mother.”

Most of us fail to pay enough attention to our irregular spending when trying to live on a plan. While reviewing our spending for 2011, using Spending by Category Report, I was surprised to find it truly was “always something” for us last year.

January 2011 our first mortgage-free month and everything looked pretty much as expected, this new totally debt free life was going to be easy.

But, in Feb that Auto & Transportation category jumps from $333 to $1465 when I paid the auto insurance.

And in March, that “paid for” house accounted for more than 50% of our spending for the month when we paid our homeowners policy.

April brought a need to write a check to the IRS and in May we needed a new set of tires. In June, the grocery bill doubles with guests in the house and the dog has to have a tooth extracted. July means more guests and lots more food, tons of gas for the boat and a big electric bill. By August, everybody’s back in school so food and gas are back under control and we are starting to look forward to returning to our “normal” spending. Good thinking, except for that vacation and oh yeah, that stupid auto insurance is due again. Oh well certainly October will be good; we can turn off the a/c, not go anywhere, eat ramen. That plan works flawlessly right up until that root canal. November rolls around and again that “paid for” house accounts for well over 50% of our spending for the month as we pay the property taxes and install much needed new gutters. Of course, December requires that gifts be purchased and dinners prepared; this no time for belt tightening (figuratively or literally).

We never once got back to our January spending or even close. Fortunately, for quite some time we have been using Sinking Funds to plan for and pay these irregular expenses. Here is an in depth look at how we Budget for Irregular Expenses .

In addition to Sinking Funds, our other big weapon against irregular expenses is data. I love Mint. It is free, it’s safe and it’s easy.

Mint sucks the data out of all our accounts and displays it in a way that is easy to read and manipulate. I can compare last month’s spending to this month’s or same month last year. Or, I can see where we are on our budget as of today; which categories are over, which are under. The more real spending data you have, the more realistic your budget can be.

You are not just copying the same budget every month – right?

If we are going to win with our finances, it’s important to be honest with ourselves. A great place to start is the difference between an unexpected expense and a unplanned for expense. If you close your eyes to the irregular but  certain expenses of car repair, medical & dental bills, home maintenance, etc., every occurrence will feel like another punch.

Planning for these happenings sets you free from that victim’s mindset.

Do you currently plan or react to the irregular expenses in you life ?