I kind of fell off the budget-tracking wagon just after my summer vacation. My mammoth workbook stopped making sense after making a huge annual payment in early August for something I had planned, so I figured I needed to put the thinking cap back on.
I wasn’t off by thousands but by several hundred dollars. Still, noticing that this was the second time I needed to transfer funds around to bring myself back in sync, I knew I was missing something …but what was it? My theory of virtual or “make believe” jars didn’t get reflected in reality.
I started thinking that perhaps I needed to make my virtual jars more real by moving funds into a savings account when they weren’t needed and bring them back into my current account “just in time.” That way, I would not only not accidently spend those funds but I would also earn a tiny bit of interest which my chequing account doesn’t give. But trying to think about the schedule of transfers between accounts and how much savings I should have at this point gave me head cramps which, in turn, led me to go back to budgeting auto-pilot mode much as I had before last autumn, except this time for only two months.
I finally mustered up the courage last weekend to attack the task at hand. That’s when I immediately noticed that I practically went underground in those two months and, as a result, managed to amass a tidy surplus. But more importantly, I finally found the error in my workbook that had forced me to make those few significant adjustments in the previous year.
Amounts in my base budget changed in the course of the last year. Some line items went up or down; one line item — my landline — disappeared, and my net income decreased enough (due to starting to contribute to the pension plan at work) to throw everything off in my workbook. And that’s when the lightbulb moment came: I had coded stuff to refer to the base-budget line items, so when some changed, they retroactively updated some of the other spreadsheets, effectively rewriting my financial history in difficult-to-trace ways.
So, the solution is not just to have a separate savings account, which certainly helps to make things more concrete, but also to enter actual amounts in cells rather than making a reference to the fluctuating budget line items! At first that seemed counterintuitive for the programmer in me, but I’m seeing now that it’s really a matter of applying the K.I.S.S. principle.
Of course, there’ll be unexpected expenses along the way as there were last year. Take, for instance, that I got my winter tires stolen (I assume by someone in the Charest brood), or that a client I’m having to meet later this month is such a high-profile individual nationally that I can’t possibly show up to the meeting looking like a pauper. But, with a good and realistic budget, it just means it’ll take a few weeks more to reach a zero debt load.
Speaking of debt load: it was at about 60% of my annual take-home pay when I started my budget last year, which I’m given to understand is much less than half of the average Canadian household debt. In one year, I brought that down to about 36%, and I’m still projecting being at or near 0% by the end of 2013 — just as I had calculated a year ago. That’s a pretty damn enviable position to be in, and it means that I know exactly how I will be able to pay for my car’s replacement when that time comes.
Can’t complain about that!