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(Slate)   If you set money aside for groceries, gas, and rent you are doing your budgeting wrong   (slate.com) divider line 139
    More: PSA, personal budget, The Stock Tip, gas  
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19677 clicks; posted to Main » on 13 Apr 2013 at 2:59 PM (1 year ago)   |  Favorite    |   share:  Share on Twitter share via Email Share on Facebook   more»



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2013-04-13 08:20:22 AM
Did I really just read one long entire article that some guy used to criticize his in laws?
 
2013-04-13 11:25:27 AM

ginandbacon: Did I really just read one long entire article that some guy used to criticize his in laws?


I believe so.
 
2013-04-13 01:07:16 PM

ginandbacon: Did I really just read one long entire article that some guy used to criticize his in laws?


Yep. It also provides no other solutions.

Easiest way to budget: Be born rich.
 
Pud [TotalFark]
2013-04-13 01:13:03 PM
So basically, I've been doing it wrong all of this time. I have been paying the necessities to survive first, then spreading out the remainder with wants, and needs.

I now realize that with the price of gas at $3.35 a gallon, it's cutting into my beer and stripper budget. I'm sure that my boss will be completely understanding when I call to say I can't make it into work today because I don't have enough gas to drive there today, let alone back home at the end of the day. I'm sure he would.
 
2013-04-13 01:22:08 PM

Tr0mBoNe: Be born rich.


How did I screw this up???
 
2013-04-13 01:38:28 PM
Take the budgeting approach congress uses.  Buy all the beer and strippers you want first.  Then complain to your boss that you can't afford food, let alone gas to get to work, and he has to give you a raise.  If he balks, then you cut the baby formula, and take the crying baby to the boss with crocodile tears.  If that doesn't work you tell him what a heartless bastard he is.
 
2013-04-13 02:18:47 PM
This guy just basically spent an entire article critizing Dave Ramsey's system.

If he actually bothered to follow his budgeting system, he know that the budget categories aren't set in stone. If you find mid-month that you're short in one category, you talk to your spouse and adjust that category by taking from another category. When setting the budget for the next month, you look to see what was spent in each category and adjust accordingly.

Also, you wouldn't worry about credit card debt as you wouldn't have credit cards if you follow Ramsey's plan.
 
2013-04-13 03:02:42 PM

dustman81: This guy just basically spent an entire article critizing Dave Ramsey's system.

If he actually bothered to follow his budgeting system, he know that the budget categories aren't set in stone. If you find mid-month that you're short in one category, you talk to your spouse and adjust that category by taking from another category. When setting the budget for the next month, you look to see what was spent in each category and adjust accordingly.

Also, you wouldn't worry about credit card debt as you wouldn't have credit cards if you follow Ramsey's plan.


I know that you're not a real Ramsey disciple because there was nothing about delivering pizzas anywhere in that post.
 
2013-04-13 03:04:31 PM
Well...I just use food stamps, collect unemployment, and live in section 8 housing.  I have plenty of money left over from my for-cash roofing job.  Am I doing it wrong?
 
2013-04-13 03:06:54 PM
How odd, my system involves knowing roughly what I need at each approximate time interval (I need $70-100 mid month when the meter gets read, I need $25 every two weeks for gas, I need my roommate's $340 on the 1st so I can pay the rent), and then spend the rest on food and fun things.

I thought it was called being an adult.
 
2013-04-13 03:06:56 PM

Tr0mBoNe: ginandbacon: Did I really just read one long entire article that some guy used to criticize his in laws?

Yep. It also provides no other solutions.

Easiest way to budget: Be born rich.


That was my takeaway also.
 
2013-04-13 03:07:37 PM
The envelope system works out for most people because they don't know what they're spending their money on.   So despite the criticism from this article, people are better off with this system than without it.
 
2013-04-13 03:12:09 PM

another cultural observer: Well...I just use food stamps, collect unemployment, and live in section 8 housing.  I have plenty of money left over from my for-cash roofing job.  Am I doing it wrong?


I thought "roofer" when cited as an occupation by white people was slang for drug dealer.

/friend was a social worker in rural indiana
 
2013-04-13 03:12:13 PM
I don't budget, but I do start lots of small savings accounts for fun stuff.  So if I stay in on a night I would have spent $100, I put $50 in savings.  I also reward myself for saving money.  If I put X amount into savings, I get to spend Y amount on something unnecessary.  I basically bribe myself to save.  That's how I got my hot tub and pool table.  Random savings accounts for fun stuff.
 
2013-04-13 03:12:36 PM

Snarcoleptic_Hoosier: How odd, my system involves knowing roughly what I need at each approximate time interval (I need $70-100 mid month when the meter gets read, I need $25 every two weeks for gas, I need my roommate's $340 on the 1st so I can pay the rent), and then spend the rest on food and fun things.

I thought it was called being an adult.


Not really.
Most adults don't have roomates, or budgets of $465 a month.

/sorry for the snark
//'s true
 
2013-04-13 03:14:11 PM
I always argue with Mrs. Fool about paying down debt versus having money in savings. The .15% APR we get in savings is more than eaten up by the 10% APR on credit cards. Not that we carry huge balances, but paying off the Christmas gifts in January rather than February and March leaves us with more in the end.
 
2013-04-13 03:14:31 PM
Ok, I read that, and I still don't understand if the envelope thing is a metaphor or to be taken literally.

If it's a metaphor, they make way too big a fuss of "moving money" around the envelopes when it's really just your bank account.

If it's literal, who the hell keeps thousands of dollars cash in their home? That's a damn fine way to get robbed.
 
2013-04-13 03:14:44 PM

ginandbacon: Tr0mBoNe: Be born rich.

How did I screw this up???


I made the same mistake. But in my late forties I happened to marry rich. Happiness is not having to keep track of ATM receipts.
 
2013-04-13 03:15:04 PM
Example: You go to the store and milk is more expensive than usual (something about the sequester?) Because you have your limited grocery envelope, you have to respond to this by buying less of some grocery. You could buy less milk, or fewer veggies, or less pasta. However: It may very well be that you'd rather keep with your normal grocery purchase and cut back somewhere else-say, two fewer lattes this week. But because the "coffee" budget is separate from the grocery budget, you end up with the same number of lattes and fewer bananas.

If your budget is tight enough that a fluctuation in the cost of a gallon of milk forces you to make budgetary changes then you are simply too poor to be buying lattes *ever* let alone multiple times a week.
 
2013-04-13 03:15:43 PM
My grandmother-in-law used an "envelope system" from the Great Depression until her death in the late 90's (both her age and the year).

It worked for her, which the key to any budgeting system.
 
2013-04-13 03:15:56 PM

another cultural observer: Well...I just use food stamps, collect unemployment, and live in section 8 housing.  I have plenty of money left over from my for-cash roofing job.  Am I doing it wrong?


Win.   Rest of America, not so much.
 
2013-04-13 03:16:16 PM
Case in point: A few months ago my in-laws were shopping for flights to visit us. They found flights, but wanted to wait a few days to buy them because my mother-in-law adheres to the policy of keeping her monthly credit card bill under a certain amount. They had to wait until the month rolled over-even though they were going to spend the money anyway.And when they went back, tickets were significantly more expensive

Case in point: your in-laws are low grade morons.
Adding is pretty simple.
 
2013-04-13 03:16:36 PM

dustman81: This guy just basically spent an entire article critizing Dave Ramsey's system.

If he actually bothered to follow his budgeting system, he know that the budget categories aren't set in stone. If you find mid-month that you're short in one category, you talk to your spouse and adjust that category by taking from another category. When setting the budget for the next month, you look to see what was spent in each category and adjust accordingly.

Also, you wouldn't worry about credit card debt as you wouldn't have credit cards if you follow Ramsey's plan.


Came here to say all these things.
 
2013-04-13 03:17:17 PM
What's the logical fallacy where you take a basic idea, run it to ridiculous extremes, and then point out how silly your ridiculous example is?

Because that's pretty much this article with the Ramsay system. I don't much cotton to it myself, but jeebus.

This guy makes two points.

1) Don't let 'The Rules' prevent you from doing something smart, or keep you doing something stupid. WP:Ignore covers this, and really is the 0th Law of everything except robotics: When the rules don't cover a situation to keep the rules working properly, step outside of them long enough to resolve the conflict.

(Humanity must not be harmed, nor, through inaction, must humanity come into harm. It's why Olivaw didn't cocoon everyone.)

2) Debt has a higher percentage than Savings. If I had 100 bucks in Savings earning 1%, and 100 bucks of debt costing me 10%... at Month 0 I'd be even.

Month 1, I'd have 101 in savings, and 110 in debt. Just from interest rates, I lost 9 bucks of 'net worth' that month.

While the above example was greatly simplified, and I'd be mobbed to find somewhere that pays 1% interest a month on a savings account, it does illustrate the larger issue.

People in this country don't know how to properly manage their money. They don't understand personal economics except in very basic and flawed terms, and they think personal economics of a household applies to a company or a country. We all know they don't, except some of the lower class of trolls.
 
2013-04-13 03:17:35 PM

Whiskey Dickens: Snarcoleptic_Hoosier: How odd, my system involves knowing roughly what I need at each approximate time interval (I need $70-100 mid month when the meter gets read, I need $25 every two weeks for gas, I need my roommate's $340 on the 1st so I can pay the rent), and then spend the rest on food and fun things.

I thought it was called being an adult.

Not really.
Most adults don't have roomates, or budgets of $465 a month.

/sorry for the snark
//'s true


Snark aside, there are other parts of the budget I didn't mention. Student loan payments (114.75 every 45 days), car insurance ($73 per month - still high risk because I just turned 25 and my plan doesn't adjust until November), and the fact that my rent is $680 per month (we split it and I'm paying his half of the electric bill to buy out his share of the deposit from him) and not $340.

That's a little closer to being an adult.
 
2013-04-13 03:17:58 PM
I use the Dave Ramsey method.  My creditors hate it.  I set up my budget with rent first (most important expense), gas second (yeah it's variable depending on gas prices day to day, but no gas in my car means I'm not working), food third, utilities fourth.  My creditors hate this because when they call asking why I haven't paid them, I point out that on my budget list, they are near the bottom, the area that only gets paid if there is money left over after I have rent paid, cars gassed up, car payments caught up, lights and water kept on, internet bill paid, food in the kitchen, insurance premiums paid, cell phone paid, so on and so on.  But when you're in a bad spot financially, you have to choose and if it's between rent or a student loan payment, pay the rent.  Better to be behind on your student loan bills and have a home than be caught up on your student loans and be homeless.
 
2013-04-13 03:18:30 PM
This just in : no matter what you do, you can usually find a dissenting opinion about it.
Here's better advice - if the envelope method works for you, use it. If it doesn't, switch.
 
2013-04-13 03:19:30 PM

lackadaisicalfreakshow: Ok, I read that, and I still don't understand if the envelope thing is a metaphor or to be taken literally.

If it's a metaphor, they make way too big a fuss of "moving money" around the envelopes when it's really just your bank account.

If it's literal, who the hell keeps thousands of dollars cash in their home? That's a damn fine way to get robbed.


It's a bit of both. And it's an external system meant to impose some sort of fiscal restraint on individuals and households who have a hard time of imposing internal restraints.
 
2013-04-13 03:20:57 PM
I make money, I buy stuff.  What's the problem?
 
2013-04-13 03:21:35 PM

Great Janitor: I use the Dave Ramsey method.  My creditors hate it.  I set up my budget with rent first (most important expense), gas second (yeah it's variable depending on gas prices day to day, but no gas in my car means I'm not working), food third, utilities fourth.  My creditors hate this because when they call asking why I haven't paid them, I point out that on my budget list, they are near the bottom, the area that only gets paid if there is money left over after I have rent paid, cars gassed up, car payments caught up, lights and water kept on, internet bill paid, food in the kitchen, insurance premiums paid, cell phone paid, so on and so on.  But when you're in a bad spot financially, you have to choose and if it's between rent or a student loan payment, pay the rent.  Better to be behind on your student loan bills and have a home than be caught up on your student loans and be homeless.


"Now don't bother me or I won't even put your name in the hat next month."
 
2013-04-13 03:21:45 PM

Great Janitor: I use the Dave Ramsey method.  My creditors hate it.  I set up my budget with rent first (most important expense), gas second (yeah it's variable depending on gas prices day to day, but no gas in my car means I'm not working), food third, utilities fourth.  My creditors hate this because when they call asking why I haven't paid them, I point out that on my budget list, they are near the bottom, the area that only gets paid if there is money left over after I have rent paid, cars gassed up, car payments caught up, lights and water kept on, internet bill paid, food in the kitchen, insurance premiums paid, cell phone paid, so on and so on.  But when you're in a bad spot financially, you have to choose and if it's between rent or a student loan payment, pay the rent.  Better to be behind on your student loan bills and have a home than be caught up on your student loans and be homeless.


Yup. As craptastic as student loans are, the government backed ones will work with you if you legitimately cannot pay. The private ones can eat sh** and die.
 
2013-04-13 03:24:47 PM
Basically, he's assuming that people are too stupid to change their budget if shiat changes. If gas/groceries suddenly goes above my cushion, I don't just buy less gas/groceries. I take money from non-vital things to supplement it. It's pretty simple, really.

If you make a budget, then don't ever change it, even if the thing you're trying to get is farkING VITAL and you've got money left in non-vital areas, you deserve to go without food. Or air.
 
2013-04-13 03:24:56 PM
"My mother-in-law is an idiot." -The End.

The rest of that article was stupid. The "envelope" system is just a way to force you to keep track of what you;re spending your money on. No one would not buy gas and not go to work because, "lol, my gas envelope has no money in it!"
 
2013-04-13 03:26:09 PM

dustman81: This guy just basically spent an entire article critizing Dave Ramsey's system.

If he actually bothered to follow his budgeting system, he know that the budget categories aren't set in stone. If you find mid-month that you're short in one category, you talk to your spouse and adjust that category by taking from another category. When setting the budget for the next month, you look to see what was spent in each category and adjust accordingly.

Also, you wouldn't worry about credit card debt as you wouldn't have credit cards if you follow Ramsey's plan.


It's as though the article were written primarily to demonize Ramsey, a guy who's dull as dishwater precisely because his money methods are so obvious. Leftists hate Ramsey though because of his Christian radio-signoff. Nobody's as fascinating as a leftwinger who hates Jesus...I could listen to them bloviate for hours...tell me more about how much you hate the pope or Jerry Falwell or your parents...

The author's reference to people putting regular gas in a vehicle that requires premium is telling...so few people who have to budget carefully drive vehicles that require premium that the reference to fuel might as well be about buying a lesser grade of caviar.
 
2013-04-13 03:27:07 PM

Snarcoleptic_Hoosier: The private ones can eat sh** and die


also known as the "Thanks for the money, now fark you" system of budgeting
 
2013-04-13 03:29:14 PM
I'm actually a really lazy budgeter.  Every two weeks, I log in to the bank account and track our money, separating it out into a few categories so we know where it goes.  Bare essentials (rent, groceries, etc.) are taken care of  within the first two weeks of the month, then we avoid spending too much money on "wants" and end up with a nice chunk to put in the savings by the end of the month.

/Has a spreadsheet with way too many columns
//And charts, oh so many charts
 
2013-04-13 03:30:07 PM
TheSwissNavy:

The author's reference to people putting regular gas in a vehicle that requires premium is telling...so few people who have to budget carefully drive vehicles that require premium that the reference to fuel might as well be about buying a lesser grade of caviar.

It tells me he's retarded.

If your car needs premium, IT NEEDS PREMIUM. using regular will at best, get you significantly worse gas mileage to the point where buying premium is actually cheaper, and at worst, ruin your engine through pinging.

oh look! I saved 200 bucks on gas this year. And all it cost me was a $7,000 engine rebuild.
 
2013-04-13 03:31:01 PM
Ah, economists.  The armchair play by play announcers in the corporate lodge.  The titties on the fish of commerce.  Putting the "umph" in harrumph from a lofty perch.  Money is fungible?  Money is access to every damn thing on earth and the people who print it like it that way and when they change sh*t up, your sh*t changes up.  Budgets?  You can "control" a  budget?  At best you're a flow gate that can divert money in one direction or the other, but the notion that you can construct a budget when the people who print it can't, is pure Jonestown cooler.  Can I have my PhD now?
 
2013-04-13 03:32:09 PM
Oh, and if your car takes regular, you are wasting your money on premium. It does absolutely nothing for you. NOTHING. No more MPGs, no better for your engine, it doesn't clean shiat. It's pissing away money unless your car requires it.
 
2013-04-13 03:32:45 PM
if this article is "advice" to you then you are strait retarded.
 
2013-04-13 03:33:36 PM

Somaticasual: This just in : no matter what you do, you can usually find a dissenting opinion about it.
Here's better advice - if the envelope method works for you, use it. If it doesn't, switch.


This. My girlfriend and I do it and it works out very well. The extra from grocery, for instance, stays in the grocery folder. Some weeks we spend under budget, some we go over. The extra in there covers that.

We take a set amount out each week from our paychecks that goes into "budget". It is then divvied up in sections. When a certain bill is due, the money is always there. We round the amounts up so there is always some breathing room.

It took some time get to that point, but now that we're there, we have money for the things we need when we need them.

/ymmw
 
2013-04-13 03:34:41 PM

knowless: if this article is "advice" to you then you are strait retarded.


www.allgoodseats.com
 
2013-04-13 03:35:32 PM
so...hookers and blow

got it.
 
2013-04-13 03:36:37 PM
He makes a good point about debt, I thought.  I am by no means an expert on investing or the handling of money, but everything I've read on the subject stresses that paying off debt is an important first step to making any sort of investments.
 
2013-04-13 03:38:54 PM

miniflea: He makes a good point about debt, I thought.  I am by no means an expert on investing or the handling of money, but everything I've read on the subject stresses that paying off debt is an important first step to making any sort of investments.


Never carry credit card debt.

EVER.

pay. that. shiat. off.
 
2013-04-13 03:39:16 PM

fluffy2097: TheSwissNavy:

The author's reference to people putting regular gas in a vehicle that requires premium is telling...so few people who have to budget carefully drive vehicles that require premium that the reference to fuel might as well be about buying a lesser grade of caviar.

It tells me he's retarded.

If your car needs premium, IT NEEDS PREMIUM. using regular will at best, get you significantly worse gas mileage to the point where buying premium is actually cheaper, and at worst, ruin your engine through pinging.

oh look! I saved 200 bucks on gas this year. And all it cost me was a $7,000 engine rebuild.


Eh, with electronic timing and the fancy engine management computers unless you have some seriously high performance car, using regular won't damage the engine.  The computer will adjust the timing so that you don't get pre-ignition of the fuel, but at the cost of worse gas mileage.  So I still use premium in my premium recommended engine, but regular or mid won't hurt it at all.

Right on with regular recommended engines.  Using premium won't get you anything.  Both have plenty of detergents.
 
2013-04-13 03:40:15 PM

Great Janitor: I use the Dave Ramsey method.  My creditors hate it.  I set up my budget with rent first (most important expense), gas second (yeah it's variable depending on gas prices day to day, but no gas in my car means I'm not working), food third, utilities fourth.  My creditors hate this because when they call asking why I haven't paid them, I point out that on my budget list, they are near the bottom, the area that only gets paid if there is money left over after I have rent paid, cars gassed up, car payments caught up, lights and water kept on, internet bill paid, food in the kitchen, insurance premiums paid, cell phone paid, so on and so on.  But when you're in a bad spot financially, you have to choose and if it's between rent or a student loan payment, pay the rent.  Better to be behind on your student loan bills and have a home than be caught up on your student loans and be homeless.


That's basically what he says when setting up the budget. Pay the things you need to survive first and the rest of money goes towards paying your debts.

1. Mortgage/rent
2. Food
3. Utilities (lights, water, heat)
4. Transportation (maintenance, insurance, gas and license fees)

Can't pay your bills if you're homeless, starving, cold or have no car to get to work.

He has what he calls "The 7 Baby Steps", which outline how to get rid of your debts and save money:
1. $1,000 "baby" emergency fund. - Set aside $1,000 to cover any emergencies that might come up
2. The Debt Snowball - Lay out off your debts, smallest to largest (excluding the mortgage) and pay the most you can against your smallest debt, paying only the minimums on the rest. Once the smallest debt is pay, "snowball" that money into the next smallest debt and continue until all the debts are gone
3. 3 - 6 month emergency - Take the money that was going towards debt and build up your emergency fund until you have 3 - 6 months of expenses in a savings account or money market fund. It won't take as much as you think it would as you have no debt, except for the mortgage
Steps 4, 5 and 6 are done at the same time
4. - 15% of income into retirement - Save 15% of your household income in retirement, be it in 401(k)s, 403(b)s or Roth IRAs
5. - 15% of income into kids college fund - Save 15% of your income in college fund for your kids in ESAs or 529 plans
6. - Plow the rest of your money into paying off the mortgage - Take the rest of your income and pay off your mortage
7. - The finish line - You did it! House is paid for, no debts, retirement and kid's college is under way. Now you can relax, build wealth and give generously.
 
2013-04-13 03:40:46 PM

TheSwissNavy: dustman81: This guy just basically spent an entire article critizing Dave Ramsey's system.

If he actually bothered to follow his budgeting system, he know that the budget categories aren't set in stone. If you find mid-month that you're short in one category, you talk to your spouse and adjust that category by taking from another category. When setting the budget for the next month, you look to see what was spent in each category and adjust accordingly.

Also, you wouldn't worry about credit card debt as you wouldn't have credit cards if you follow Ramsey's plan.

It's as though the article were written primarily to demonize Ramsey, a guy who's dull as dishwater precisely because his money methods are so obvious. Leftists hate Ramsey though because of his Christian radio-signoff. Nobody's as fascinating as a leftwinger who hates Jesus...I could listen to them bloviate for hours...tell me more about how much you hate the pope or Jerry Falwell or your parents...

The author's reference to people putting regular gas in a vehicle that requires premium is telling...so few people who have to budget carefully drive vehicles that require premium that the reference to fuel might as well be about buying a lesser grade of caviar.


I've heard a variety of criticisms about Ramsey, but the Jesus stuff is not one of them.
 
2013-04-13 03:40:57 PM

wingnut396: Eh, with electronic timing and the fancy engine management computers unless you have some seriously high performance car, using regular won't damage the engine. The computer will adjust the timing so that you don't get pre-ignition of the fuel, but at the cost of worse gas mileage.


Like I sad, at best, you'll ruin your gas mileage.  My fathers BMW is like that. you can put 89 in instead of 93, but the mileage is so much worse, you actually spend less money per mile getting premium.
 
2013-04-13 03:41:30 PM
I keep a mental list of what I have on hand plus cash. That gets divided into subsets. The money in the bank is rent and major bills. The cash is my poker roll, and is used exclusively for poker or related expenses. Small things like eating out come out of the slush fund which is the amount over a certain point that my poker roll reaches. Happens enough in the summer that I can eat out a lot in the summer.

/point of order: economists did see the crash coming, but Joe Average didn't listen to the warnings.
//hell, anyone good at economics was poised to make a killing on the stock market.
 
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