Wednesday, October 5, 2011

Budgeting for Boots or Leather Gear

Some people have commented from time to time about the size of my boot collection and the variety of leather gear that I have. I wear the boots and the leather regularly. I have been asked about the budget required to acquire the boots and gear.

First off, I should note that I have owned some pairs of boots for over 35 years. The boots and gear have been acquired over a long, long time. These items are not something that I went out and purchased entirely at one time.

I operate on one simple philosophy: I only buy what I can afford, and do not extend myself on credit. That's right -- I never carry a balance on a credit card.

How do I do it? I have a budget. Yep, a plain, old-fashioned plan for where my income will be allocated toward expenses.

The first person I pay with each paycheck is myself. I put 20% of my net income into savings. I divide the savings into 75% that I can't touch until retirement, and 25% into my "rainy day" fund. I have figured out how much money I would need to live on to cover costs for my home, vehicles, food, utilities, and other regular expenses. I have 12 months-worth of savings in this "rainy-day" account that, if needed, I can use to cover a major, unplanned expense. That expense may be something like having to pay the deductible on my auto insurance in case I get into a wreck, up to and including losing my job. I have enough money saved that I could withstand -- not to my liking mind you -- losing my primary source of income by losing my job and still survive for at least 12 months without another paycheck. Not that I plan to get laid off or fired, but I have left jobs without another job lined up twice in my life, so I know what it's like to have ongoing expenses without income, and still need to keep a roof over my head and food on the table.

I then allocate the remainder of my net income across expenses. My share of our home's mortgage, utilities, and groceries. I include in my allocations the costs to own, maintain, and operate a cage (4-wheeled vehicle) and a Harley -- not cheap! I also allocate a small amount toward what I call my "boot fund" which is really a small savings account that I tap into when I want to buy boots or leather gear or buy other things that I want -- but do not "need."

Some people have various amounts available after major expenses are paid. But even saving US$10/month can add up.

I also work pretty hard at preventing (or reducing) expenses that can suck my bank account dry in a hurry. I don't, for example, pay for pay channels on television (such as HBO, etc.) I do not subscribe to a data plan for wireless services, so I do not pay the monthly ransom demanded by the wireless "providers" who charge such outrageous monthly fees. I walk at lunchtime and around my neighborhood -- instead of paying for a gym membership. Since I do not carry a balance on credit cards, I do not have to pay what is essentially "debt service" -- that is, paying someone else for your own money. Also, I pack a lunch that I bring to work and prepare our other meals at home, each and every day. Avoiding going out to eat except on rare occasions saves me about US$5,000 each year (I calculated that based on eating lunch out 4 days/week and dinner out 3 days/week, which is about average for my fellow residents here in Snoburbia, and offsetting that with the cost of buying more groceries instead).

You do not have to make it more complicated than it really is. Just employ the lessons that those who lived through The Great Depression learned, and taught me: save money for a rainy day and for your future; be a good steward of your money so you can pay your bills and not get upside down (that is, owe more than you take in); then, and only then, allocate funds toward purchase of "wants" vs. "needs."

This is another reason why my partner and I are so closely synced -- we think about finances exactly the same way. Some may call us "financially stable" while others may call us "cheap." The thing is, we are able to cover our living expenses, reduce expenses that are financially draining, save for retirement and unplanned major expenses, and still have money left over to enjoy things -- like our hobbies, interests, and activities. (One thing that many couples fight about is money. Thankfully, that has never been an issue with us!)

My philosophy on finances was best quoted by a dear friend in an email that I received yesterday: when there is something pricey you really want to do or someone you really want to help, the money is there. And when the economy tanks, you have the funds to ride the tide ... comfortably.

It's all about that "B-word." Budget. Figure out how much it costs to live, see what you can eliminate from reviewing where you are spending your money and don't really have to, and saving for a rainy day.

Life is short: live it well by budgeting.

1 comment:

OBMIT said...

God bless you, man. Very timely words. If only more people GOT the idea that a budget does work!