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Tales from the Wallet: Setting (and Sticking to) a Budget

How to Set a #Budget | CorporetteiconReaders got into this discussion a bit in the comments to Monday’s resolution post, but I thought I’d continue the discussion here, because I think it’s a worthwhile one.  So let’s talk budgets… (Pictured: Comme des Garcons Polka Dot Leather Walleticon, available at Saks for $235.)

First, I would say that not everyone needs a budget.  Your goal should be to spend less than you earn, and sometimes you can accomplish this — easily — without really keeping track of expenses. For example, if you’re making more money than you know what to do with (lucky you!), setting a general monthly goal (such as moving the second paycheck of every month into savings) should be fine, after maxing out your 401K and taking a close look at your debts.  But maybe you’ve recently switched to a lower-paying job and want to keep a closer eye on your finances — or perhaps you’re setting new goals for yourself this year, such as paying off debts, saving a greater amount, or saving towards a goal like a house or car.  Or maybe that goal of “spend less than you earn” has been eluding you for quite some time.

How to determine your budget? Everyone has slightly different methods of this, as you’ll note from the reader comments on Monday.  Personally, while I use Mint.com to generally keep an eye on our accounts and to track trends, I have always just used plain old Excel to keep track of a budget.  My own tip for budgeting is that I like to get ahead of the ball, so last month’s income goes to pay for this month’s expenses. If the end of the month draws near and the money starts to dwindle, we do our best to stop spending (and, for example, opt to eat in rather than head to a restaurant, or I don’t buy that pair of shoes I see online, or I bring a can of soup for lunch instead of going out for soup).  (Disclosure here:  My husband and I have totally combined our finances, I’m in charge of the money, and I’m also the primary spender — so this may be easier for me.)

More specifics:  On my chart, I first have the total combined income from last month (after taxes and whatever else is taken out).   Then I have different lines for fixed expenses — and for me these are only non-negotiables:  mortgage payment, common charges payment, debt payment, various insurances (amortized over 12 months if it’s something we pay yearly).  Then, I have our goals for the month — usually it’s a set amount of savings for retirement, but it might also be savings to pay off  a particular student loan, or something like that.  And then I subtract — income minus debts minus savings.  And whatever’s left is the budget for the month.  I generally just keep track of cash withdrawals rather than cash expenditures (so if we get $100 out of the ATM I’ll track that rather than whatever we spend the $100 on), and in general I use Mint to keep track of what money is spent when.  (Then I just have to log into Mint and copy the latest expenditures to the chart.)  I don’t include things like credit card payments on the “budget” (as the expenses should have been individually included when they were incurred).  As far as extra income goes, I’ll keep track of some of it — money received after returning a purchase, for example, a Christmas check from my grandmother, or interest from our savings account — but other stuff (e.g., paychecks) don’t get counted. As the month goes on I’ll bold things that are deductible — business dinners, charity contributions, etc. — and copy them into a separate column, which makes taxes a breeze at the end of the year.  When the month ends, I start a new sheet in Excel.

If you adopt a system like mine, I’d suggest giving yourself a few months just to get used to tracking your expenses and seeing where the money goes.  (And Mint can be great to keep track of spending in categories — it’ll even let you set budgets for the category and track them.) After a few months, take a look at things and try to get a better sense of where it’s “too much,” either because you’re spending beyond your means or you’re spending more than you really care to. For example, you may have a souped up internet/phone/cable TV package, but a) never watch 95% of the channels you receive, and b) never use your landline.  You may be able to significantly reduce your monthly bill every month without feeling any pain with the cuts.  You may also realize that you have leftover savings every month that should be allocated elsewhere — instead of leaving it to chance it might be time to put that $200 or $300 towards a student loan, or in a fund for a savings goal.

Personally I prefer to just have a general “bucket” budget rather than a category-by-category budget, but that’s just me.  Readers, how do you do your budgets?  Have you always had one, or were there times in your life that you haven’t kept track of money?

Comments

  1. I’m sure this has been discussed before. Bear with me if it’s an old topic. But after 5 years of marriage, I’m no longer happy with my husband handling our finances. All our assets and liabilities go into joint accounts. Husband pays all the bills. I never gave it a second thought. I recently found some questionable expenditures that were never approved by me. (cough… gambling… cough. We’re going thru counseling, but that’s an entirely different topic.) So, I’m wondering how the rest of America split the finances in the home? Separate accounts where your paychecks get deposited, plus a joint account for community spending? Who makes investment decisions (we day trade)? Are credit cards in your name only or a joint credit card? I’m a government attorney so I make in the low six figures. Husband makes mid-high six figures. Should he have to deposit more into the joint account since he makes more? Thanks for any advice ladies. I appreciate it.

    • Anon in NC :

      Do you have children?

      • Yes, 2 kids

        • Anon in NC :

          Assuming you are maxing out savings etc. for retirement, college, etc. I think he should contribute significanlty more to the joint acct for the household/community expenses. Yes I would have a credit card in your own name. However if there has been an issue with gambling/trust that could be sticky – not sure what the counselor has suggested?

      • I think Suze Orman’s advice is to always split the finances by percentage — so 80% of each person’s income goes to the community, and 20% goes to a personal account. (This is also a great way to do it if you have vastly different incomes.) That was our initial plan, to do things that way — but it just started to be difficult to determine what was community versus what was personal. (E.g., if I buy my husband a sweater as a gift, does that come out of community or personal?) So now we just have the bucket theory.

    • We combine everything, no separate accounts (other than retirement, which have to be individually owned). Everything (direct deposit paychecks and any other checks/income we get) gets deposited into our one checking account. We have a bunch of accounts at schwab that handle all our rollover iras (401ks from previous jobs) plus our taxable investment account, and we have a savings acct at ING for taxes/home renovations. We have 2 credit cards, both joint (I also have a couple of store cards). Husband makes the investment decisions/trading, and I do all of the bill paying and shopping.

    • We have a joint where both paychecks go and all regular and joint expenses come out of and personal accounts where a set equal amount for each of us goes monthly as “disposable income”. No questions get asked about those personal accounts. Everything re the joint savings expenses etc. gets talked about.

      To me everything going into a joint pot and any personal coming out of that makes more sense than the other way around because I have a hard time picturing sharing a life with someone while having to count which of us has more money. But of course the only important part is that you and your husband agree and are happy with an arrangement that works for you – everything else is noise.

      • Anonymous :

        This is exactly the way we do it — all paychecks go to joint account and that joint accounts sends our personal account a set dollar amount each pay period. No questions asked for personal account expenditures — no questions asked for purchases under $50 in joint account (of course items like groceries etc. does not need approval). We have the same thinking — it is all our money but we want to have the ability to spend without questioning some of the time.

    • I know this is not what you asked, but please consider starting a side account of your own as a safety net if his gambling problem even has a possibility of being serious.

      Hope for the best, plan for the worse.

      • I agree with this advice. A friend of mine had a similar situation with her husband and they were in counseling as well. Unfortunately things did not work out, his gambling became much worse, and the safety net she had set up turned out to be vital when she decided to move out. I sincerely hope things work out better for you and your husband, but it is probably a good idea to be prepared.

        • Co-sign. Especially since you say that he has handled your finances. You asked about “investments (we day trade).” Do WE day trade, or does he have the lead on that too. There’s not a great deal of difference (IMHO) between gambling and day-trading.

          Good luck to you!

      • Anonymous for this :

        Yes, absolutely.

        My father has a gambling problem. He ran through $25,000 of my parent’s retirement money in 6 months before my mom caught him. (Fortunately, they are well-off and had it to “spare,” although my opinion is that every dollar spent on gambling might as well be flushed down the toilet…but anyway.) She immediately went to see a lawyer who recommended she separate every bit of their finances – credit cards, retirement accounts, everything – to give her some degree of protection in case he couldn’t stop gambling. He recommended she divorce him but they’ve been married for almost 40 years, so that was easier said than done. Separate finances won’t completely protect her from being financially decimated but it may help. Fortunately, my dad has been going to Gamblers Anonymous for two years and has not had any relapses thus far. One thing I will say, that I totally did not understand until I dealt with it in my own family, is that gambling really is an addiction. I would liken my dad’s problem more to a heroin addiction than anything else. He told me a few months ago that there are times when it is physically painful for him to not think about gambling and tha the temptation is always, always there. But he values my mom and their marriage and so he’s trying. Whether or not he’ll succeed, I don’t know. But the OP might consider asking her husband to see a therapist for the gambling problem (and if he’s concealing considerable expenditures on gambling from her, it’s a problem) or going to GA.

    • This is going to be interesting to see everyone’s responses. I have some controlling tendencies when it comes to money and did not want to fully combine our finances, which I thought would bring out the Crazy in me. The hubs eventually came around to my way of thinking. So we have joint savings, joint checking, and then individual accounts. We also max out our 401Ks. We have joint and individual credit cards. We put the same percentage of our salary into the first two, and the remainder goes to our individual accounts. We use the individual funds to pay for anything personal: gifts (including to each other), student loans (DH wanted to keep this seperate, since his are higher), bachelor parties, clothing, meals with friends when the other isn’t there, etc. Gambling would definitely go there, too. This system works really well for us and we both feel free to spend our personal money without the other’s input. The day trading question is harder…I think you’ll just have to negotiate what works for the two of you. If you aren’t happy with him handling, maybe he will let you handle for a while? Or you will have to sign off on trades? Maybe hire a third party to help? Good luck. Every marriage is different — don’t be afraid to work out something that works for you.

    • We have a joint account and always have. We each have credit cards in our name, with the other as an authroized user. But we make all money decisions together. My husband does the day to day management–like paying the bills. The only thing that we really consider separate are things like a gift card or a check from a family member for Christmas or something. But most of the time that money goes towards something for our family. I make more than he does, but we still consider everything our money.

    • My BF (live-in) and I also do the yours/mine/ours method. We have a joint checking account, out of which we pay rent, utilities, and car payments/insurance. We both have direct deposit set up so that a certain dollar amount from each paycheck goes into this account (I contribute 55% since I make slightly more right now). We also direct deposit a particular amount into our joint savings account monthly, since we are saving for a down payment.

      The remainder of our paychecks go into our personal accounts, out of which we pay for everything else. Groceries/household needs come out of the personal accounts, but it ends up being pretty equal because we trade off weeks. (Both of us are paid every two weeks, but he gets paid the week I don’t and vice versa, so whoever got paid that week buys the groceries that week.) I also pay my student loans, gym membership, cell phone, etc. out of my personal account.

      We have one shared investment account, but separate retirement accounts.

    • I’m sure I’m going to get flamed for this, but my husband and I have (gasp!) separate checking and savings accounts. We have one joint credit card and we equally split the bills on it (used for home improvements and travel, mainly). We had both worked prior to getting married and this just works for us. I keep reading that we’re more likely to get divorced, blah blah blah, but I don’t buy it. We’re on the same page with our spending and savings goals and 99% transparent with our accounts (i.e., don’t share gift info). We have different spending habits and combining them has always seemed too difficult. I can’t see ever eating lunch out; he does every day. I shop like it’s my job; he replaces shirts and khakis when they wear out and that’s it. We’ve been happily married 5 years, paid down $50K+ in debt (student loans, car loans and credit cards) and own a home. I’m not endorsing this for everyone, but it totally works for us. I’m just putting it out there because everyone seems to think this is a breeding ground for dishonesty, and I’m just saying “not always.”

      • My husband and I have separate bank accounts, credit cards, and investments, but we share a mint.com account where we can each see all the transactions. For us, it has brought all the benefits of a joint account (budgeting, transparency) without the headache of closing accounts we’ve been using for years. Big payments, gifts, and charitable donations come out of whatever account has the cash to handle it at the moment, and we each pay off our own credit cards each month. This works surprisingly well for us, but it helps that we each have an income and are generally in synch financially.

        • Single Anon :

          Thanks to the above 2 Anons. I’m single and hadn’t really considered the idea of having joint checking/credit cards with my future husband. I’m pretty independent financially and have traditionally made more money than my past bfs, and I think I would have a hard time giving up control over my own finances. A joint mint.com account sounds like a great idea, which I will file away for the future. Thanks!

          • I’m actually more surprised that so many people have joint accounts where everything goes. My Mum once said her father told her that when she got married, they should maintain a separate account each even while paying for household expenses together. I have also noticed that alot of personal finance advisers suggest that each person should have a separate account. They can then contribute to the joint account from their own accounts. The truth is most people have different spending habits even those as close as spouses. There is always the chance that one person’s mistakes or bad habits like gambling could bring the whole family down! I think the joint mint.com account is a great tool to ensure transparency. But I still root for separate accounts. Also even though, one person generally does the bill paying, investing etc. The other person should be up to speed on the whole financial picture.

      • I don’t think seperate finances are bad at all. Nor does it reflect on the relationship. My ex husband, ruined my credit, spent all my money and had I not had a secret stash, not telling where i’d be. We fought about money all the time, I realized there was an issue early enough. So combining finances the second time around was a little scary for me, I had worked hard to build my credit back up and get through law school. My new husband is also an attorney with a finance background. He handles my 401k and all my other investments, so I totally trust him to pay bills. We have a joint checking and savings account. We know exactly how much to budget for groceries based on previous months and our expenses, so we each contribute to that account accordingly. We make changes accordingly (more in winter for heat etc). Everything else is seperate. We contribute remaining money each month (like our monthly surplus) to our savings and anything else we feel like doing. We set a goal for our savings plan and name the account online to match. It’s usually to splurge on something we both want. It’s worked fine for 4 years and while we live fairly seperate financial lives, our relationship couldn’t be better.

      • We also do this, although I will add the caveat that we are each the joint owners on each other’s “separate” accounts, so I can see my husband’s account and he can see mine, and then we can obviously see our joint accounts as well. Our incomes are wildly disparate – he makes four times what I do – but we chose to divide up bills, rather than dividing up money. He pays almost all the household bills, buys most of the groceries or gives me the money to do it, pays his own credit card (which he barely uses) and he handles his 401K at work. I pay for more incidental-type stuff – our housekeeper, my own car insurance and cell phone. I handle my credit card and retirement account, but I also handle our investments – stocks, bonds, and Treasury securities. I also nag him about contributing more to his 401K and IRAs when I need to. :)

        We have total transparency with each other – I can look at his account any time and he can look at mine any time, and we go over our investment statements quarterly (he also has the passwords to access our investment accounts whenever he wants). We have an agreement about credit cards – i.e., we don’t use them – since we got into some trouble with that a few years ago. When there’s a major car repair or household expense, we have a separate joint savings account we both put money into monthly, and that’s specifically what it’s for – repairs and emergencies (it’s separate from our “six month” emergency fund we would use if he was laid off and we needed to cover household expenses).

        I dunno. It works for us. We hardly ever fight about money. I don’t hide things from him and he doesn’t hide them from me, but on the other hand, we aren’t in each other’s business all the time about spending. The bills get paid on time, our credit is good, and we don’t have to have huge fights about “how dare you spent X on Y” the way some couples do. I know exactly what we spend on bills and exactly how to pay them if I need to, like if something happened to him. It’s not one of those 1950s arrangements where the wife has no clue about the finances.

        In the end, I think attitudes about money are very deeply-felt and complex and couples have to do what works for their individual situation. There is no “one-size-fits-all” solution for handling family finances.

      • Yeah, that’s pretty similar to the way we do it, for very similar reasons (already had jobs/income/accounts when we met and married, too much trouble to rearrange all that). We just added each other as joint owners on the accounts, in part for emergency access and survivorship reasons.

    • This is a little off topic, but you might want to reconsider your husband’s role in the day trading if he has a real gambling problem. Day trading has many elements in common with gambling.

      • another anon :

        This. Day trading in general is a high risk enterprise. I’m all for separate accounts if that works for you. (My husband and I pool almost everything except some savings and gifts from family he had before we married, but you need to find what works for you.) But if a husband “handles all the investments” that’s worriesome, and doubly so if it’s day trading. Not suggesting the typical husband is hiding anything. But there’s nothing to suggest the Y chromosome gives anyone an inherently superior personal investment ability (and plenty of studies suggesting women- when they educate themselves- do better). I think most couples would be better off if both people really understood their investments and could offer input. And of course, if heaven forbid something happened to him, you don’t want to be left without a clue. It may make sense for one person to handle day to day stuff (though, to my mind, if you’re investing long term there’s not a lot of day to day activity which just runs up trading fees. But that’s a different post, and opinions vary.) But I’m troubled when I hear of a situation where bright, highly-educated women think they can’t figure it out or don’t have anything to add.

        On the separate accounts point: again, we pool. But I wouldn’t be surprised if people who pool have a lower divorce rate for BAD reasons. It’s harder for a partner who is completely dependent to leave even an abusive situation.

    • anon for this too. :

      My hubs is terrible with money. I mean, terrible. It has caused us a lot of stress over the last three years and just recently, we (I) changed things up: I pay all the bills except for his truck payment. Every time he gets paid, he goes to the bank, cashes his paycheck, and brings home all the cash. We have a spreadsheet that says how much of the cash has to go into certain envelopes each pay period and he distributes accordingly. I deposit it all into my bill-paying account on a certain date and pay the bills for the month at that time. Anything he has leftover is discretionary. In a year, when we are relatively “bad” debt-free, we will start our savings account and his and hers retirement funds and operate that the same way.
      Since neither of us has a lot of discretionary income, we can do it this way, but for anyone with an SO that cannot handle the bills, I think this works well because I’ve finally stopped losing sleep over it.

    • I, too, follow Suze Orman’s method of putting in a percentage. I make significantly more than my husband, but we still each put in 75%. I am a more organized/control-freak person who loves paying attention to details so I handle all joint accounts, savings, investments and retirement accounts (it helps that I work at a brokerage firm, so I’m literally able to pull up all our accounts in a second!). From the joint account we pay rent, utilities, insurance, gas, groceries, dinners out (together), joint entertainment, and vacations. Any gifts to each other, or other discretionary spending, come our of our personal accounts. I make sure to always update my husband on the status of things, even if his eyes glaze over a bit. I never want to be in a position where one of us feels that the other has hidden something.

      Good luck!

      • This is what we do, too, for pretty much exactly the same reasons. And my husband’s eyes glaze over when I give him status updates, even when it’s something ***I*** certainly would want to know!

        We used to make significantly different amounts, and we each put in 50% of our paychecks to the joint account. Now we make about the same, but we’re still using the percentage system because it works very well for us (and who knows whether that will always be the case). It’s really, really nice not to have any of those, “You spent how much on those shirts/that Vegas weekend/that massage??!” conversations.

        • I should note, though, that since we are in a community property state, all this is sort of moot on the legal front. Emotionally it works, but since we didn’t do a prenup all income is legally “our” money, whether it’s in the joint account, his solo account or my solo account. Since I am definitely a control freak about money (and just a few other things . . . ), I keep separate my separate investment accounts from before we got married and don’t commingle (and he knows this and is fine with it).

    • We have one joint checking account, out of which all joint expenses (mortgage, utilities, furniture, groceries, eating out together, entertainment together, etc.) are paid. I physically pay the bills, and he records them in the money software (we just use excel) so we both know where everything is going. We have two joint credit cards, and joint expenses go on those cards and are paid off (in full, every month) from the same joint account. We have a set amount each month that is automatically pulled from that joint account to go to individual joint savings accounts (we use ING for this) for charity, travel, house expenses, and the “slush fund” for infrequent things outside of the regular budget like wedding gifts and the occasional large indulgence or small emergency. As we incur those expenses we use the money in those accounts. We also have joint long term emergency savings and brokerage accounts, and a set amount is automatically pulled from the joint checking for those as well. This automates our savings, charitable giving, and other infrequent expenses.

      In addition, we each have personal checking accounts that are only in our own names. We each have at least one credit card in our names only. Personal expenses, like clothes, “toys,” and eating out at lunch if we choose not to pack a lunch from home, go on those personal cards and are paid out of our personal accounts. We each get an equal dollar amount per month in those accounts, but I don’t think there’s any “should” or “right” way to allocate that kind of money. I don’t work harder than my husband, but I do make three times more than he does. He would actually prefer it if I had a larger “allowance,” since my clothes cost a lot more, but given that he’s the one who would find it financially difficult to leave me in the event that our relationship didn’t work out, I’m more than happy to have an equal amount of money allocated in each of our names every month that the other can’t touch. I never see his statements, and he never sees mine. We’re okay with that because neither one of us is the type to run up debt.

      I think it’s important to jointly share joint expenses and joint decisions, but that doesn’t mean that you have to have a joint account, as long as everyone understands where the money is coming from and going, and agrees on where it should be going.

      Investment decisions should be made jointly, or at least agreed to by both parties before any money is invested. Day trading is a bad idea in general, but if you’re goiung to do it, I suggest allocating a specific dollar amount above which requires additional spousal approval.

      Above all, remember that money is an emotional thing that resonates differebtly with differehnt people. One spouse may want to leverage the money that could be going towards paying down a low rate mortgage by investing in the market, and the other spouse may not be able to sleep at night until the house is paid off. Neither of those feelings is “right” or “wrong,” they’re just different beliefs about where the money is best used. It’s important to talk not just about the money, but about the feelings behind the money, and try to come to some sort of an agreement that you can both live with.

      Oh, and one more thing: lying about money is never, ever, EVER acceptable in my book. Either you agree to a certain amount of discretion when it comes to money, or you don’t, but you should NEVER lie to your spouse about what you’re spending and on what when that moeny is joint. Hiding expenses, same thing.

      That’s my advcice. I hope it’s helpful.

    • Divaliscious11 :

      So DH and I have our direct deposit split 10% into personal account, 90% into joint. From the joint, we auto fund individual retirement accounts, individual investment accounts, college funds, a joint investment account, and then pay all household expenses, credit cards etc…. Because we each get 10% in our individual accounts, we rarely need to tap into the joint account for personal spending, and by the time everything hits the savings etc…. There isn’t much left there anyway. Before DH changed jobs, he made about twice as much as I do now, and we did it that way then. Now I make twice as much (although he will surpass me in a few years again) and it still works.

      He used to handle our money, and was horrible at it. Bills were paid on time, but lots of waste. I, like you, wasn’t paying attention and because I was a biglaw, and he made more than I, we had the luxury of his carelessness. One day, I asked one question, which turned into several more, which turned into me taking over out finances. He’s great at making money, not great at managing it. Now, I keep him in the loop, but do the planning…..

    • We have joint saving/checking/investment, except he has one separate investment account with some inherited monies. But I balance the accounts and handle ALL the bills – including paying his credit card, which is an individual cc – so there’s no problem with transparency. Occasionally, he’ll look at the bank statement, and he’ll hit the roof because then he’ll see the new shoes/bag/suit/dress/coat that I bought, but that’s about the extent of his involvement. He makes the investment decisions.

    • Silicon Valley In House :

      Well, we seem to be the oddity here, but we allocate according to our strengths. DH is great at long term planning, horrible at day to day stuff. So, we pay most of our expenses out of my paycheck (utilities, mortgage, groceries, etc.) and put most of his towards savings. We have our own credit cards and bank accounts, but our LT savings are managed by a financial advisor and are held in joint accounts.

    • superanonforthis :

      Regular commenter here – superanon for this. Honey – RUN, don’t walk away from this – don’t worry about how you should ‘honestly’ approach joint finances b/c you are not dealing with an honest person and your kids’ welfare is at stake.

      My first hub (father of my 3 kids) did this and more (and I put up with it for ~ 3 years b/c we had little kids and he was unemployed and I was the breadwinner) – saving grace (and I do mean saving grace) was that we never ‘combined’ finances (in retrospect, in large part, b/c he didn’t want me to know or see the bs – the gambling, the daytrading, the waste of it all – ultimately at the expense of our kids). Luckily, b/c we never did combine, it only cost me a few hundred thousand (yup, you got that right) to buy him off alimony and marital property…and that would be the same ‘him’ who has paid not.one.thin.dime in child support but who regularly takes the kids on disney/shoppi ng extravaganza weekends (which I now tolerate under the heading of “I don’t want to alienate them from their dad”).

      Your financial sitch sounds *slightly* more favorable (he’s the big earner) but in reality, you are the RESPONSIBLE one – get clean, get out, do it before he takes you down with him. You can always take care of yourself and do the right thing by your kids as long as you are not trying to swim with an albatross around your neck…and he is an albatross.

      hope this is not *too harsh* – intended to be from the heart and from similar experience. Good luck to you and to your children.

  2. My husband and I each have accounts where our income is deposited and that we primarily use, but we are both named on both accounts. We each have our own credit card, just for ease. In the end, everything we have is “our” money. We each have access to it, and we each can manage or view transactions online. My husband handles some bills and I handle others, more by habit than by design. We trust each other. If we can’t do that, it’s not a finance issue–it’s, as you say, a marriage issue.

    It’s not perfect. There are times I would like to give myself some kind of small “allowance” that I can spend each month however I like, with no accountability (I get defensive about selfish purchases because my husband is pretty anti-materialistic and quite content to live on a shoe string). I’ve found a partial solution to this called “cash,” but it doesn’t work very well online. In the end though, it’s not like my husband would be upset about me spending anything on myself–it’s just me being defensive against my imaginary critic.

  3. Long time lurker here.

    I have always kept close track of my spending but my actual budget has evolved a lot over time. Now I take out the money we want to save, based on our savings goals, at the beginning of the month and have the rest to spend, knowing that we have enough to cover our month to month expense.

    I am in charge of our finances and I too keep track of everything in a spreadsheet, but I use google docs. I love google docs because I can share the sheet with my husband and he can look at it when he wants.

    If I ever start to feel like we are squandering our money, or that I would like to save more, I track our expenses item by item for a month or two and make adjustments as necessary. For this I also use google docs which works great because I can catch up over my lunch hour, and my husband can add things to the sheet.

    Elizabeth Warren has a great book called All Your Worth. http://www.amazon.com/All-Your-Worth-Ultimate-Lifetime/dp/0743269888/ref=sr_1_1?ie=UTF8&qid=1294254655&sr=8-1

    In it she talks about a balanced budget of 50% going to needs, 30% to needs, and 20% to savings. I read it a few years ago and it really helped me gain confidence in how I was spending and saving our money. If anyone is feeling financially lost I highly recommend it!

  4. Oh, and to Kat’s point, I use Quicken. It’s well-worth the $20 or so. I can download all my transactions from all my accounts, and it automatically sorts them by category. I try to look at a pie chart of my expenditures by category periodically to get a reality check on how much I spend in each category. Sometimes the amounts surprise me. It’s not hard to rack up in coffee and dining out! If my spending is too high in a category, I pay better attention to it–make lunches, brew coffee at home or drink the office stuff, block shopping websites, stay out of Target (why is Target such a trap?). I buy a lot of household items online now to avoid wandering through department stores risking impulse buys.

    • Mint.com does pretty much the exact same thing as quicken (I’ve used both), except it’s free. Also, the smartphone app is a handy way to check finances on the go.

      • My problem with Mint is giving my bank account info to an online site. Does anyone else get worried about that?

        • SF Bay Associate :

          I use Mint. I’m not worried about it because you can’t do anything on Mint – you can’t pay bills, transfer funds or do anything at all. You can only see where you’re at. So if somehow Mint was breached, the account numbers, log-ins, and passwords are all dots (as in, they aren’t visible numbers), so I’m not sure how much harm can be done. And Mint is owned by Intuit, which makes TurboTax and knows a thing or two about security, I hope.

          As for my bank logins/pws, those I change regularly and guard carefully.

        • I’m also worried about sharing my bank passwords with Mint, and that’s kept me from using it. You’re not alone. But it seems a lot of people use it with no concern?

      • I gave up on Mint b/c it doesn’t let you track home mortgage loans, or actually loans in general (it doesn’t acknolwedge my student loan either). That’s a big chunk of my monthly payment and investments and so, I’ve found it basically useless for my purposes.

        • Weird, my mortgage and student loans all show up. I don’t love Mint, though, because I’d like to be able to amass all of my standard monthly payments (utilities, loans, insurance, mortgage) in one spot so that I could easily visualize my necessary expenses and my income. I find it easy for tracking spending, but not for proactive budgeting.

  5. We have an excel spreadsheet for the budget. I think we are really good at estimating, because whenever I add up what we are buying, it ends up being just about the same as the budget.

    I do put myself on periodic shopping bans (am starting one right now, actually!) when I feel like I have been getting too much stuff (I bought all my own Xmas presents this year since my husband doesn’t, and he wrapped them for me, and then I got a new bag and a few things on sale right after Xmas). I have found that unsubscribing from promotional emails helps a lot with impulse shopping.

    • Oh, and I didn’t always have a budget. I have always spent pretty prudently, I guess. I only started budgeting after law school when I moved in with DH (then BF), and that was only bc he created the excel spreadsheet. :) I have always been lucky to make enough money, save and spend not too much, such that I don’t *have* to watch how much I am spending. If one of us were to lose our jobs, that would change pretty quickly, though.

    • Question for L:
      Was it hard to come to the decision to buy your own gifts? Do you agree on a budget, or just get what you want? This struck a cord with me since we just finished up the holidays. My husband and I are so boring when it comes to gifts for each other, and we end up ordering everything online from lists the other one gives us (I guess we’re picky about what we get). I’d honestly rather pick out my own gifts from him so I can take advantages of sales he might not know about. Do you find this to be disappointing or unromantic?

      • Not L, but it doesn’t sound like it would be less romantic than what you’re already doing. Maybe move to buying your own gifts and then picking out one small thing as a true surprise/low $-price gift for the other.

        I wish I could do this with a certain relative of mine! She always asks what I want or what my significant other wants, and then immediately buys it full price and has it shipped to us. E.g., recently told her he wanted new black dress shoes of a certain brand that’s all over websites like Zappos, 6pm, etc. and she went and bought them a 100% of retail plus some absurd shipping rate when something very similar could have been found for half the price. That’s a much touchier situation though, and we’re certainly not about to suggest buying our own gifts with her (especially since we tend to give her less generous gifts like photo and food items).

        • somewherecold :

          Reminds me of when my grandma was getting me a watch as a gift, and I showed her one that I liked on Overstock. She said, great, just print it out and I’ll take it to my jeweler to see if he can get it. :)

      • (Different L)
        My husband and I only get gifts for one another if we know of something the other would really like. Some years only one of us gets a gift or our gifts are disproportionate in expense. But, to us at least, it just seem more sincere. I realize this wouldn’t work for some, but if you pay attention throughout the year to comments your spouse makes, its usually not that hard to come up with something. At the same time, though, it takes the pressure off.

      • Well, last year for Xmas I didn’t get *any* gifts from my husband, so this year I bought them and gave them to him and said, “give these to me for Xmas.” He does like to get things for me, but he likes to get them *with* me, so last year my gifts came after Xmas. (I think he has been overwhelmed lately bc he has like 10 jobs, regular jobs plus entrepreneurship type things.) It’s funny – my parents have the same type of relationship w/r/t holiday gifts. I do like to get things that are a surprise, but it’s fine with me if it only happens once in a great while. I do love shopping so it is okay with me to get my own stuff. :) I guess in an ideal world my husband would get me flowers once in a while, etc., but oh well.

        • I buy my own Christmas presents, too. That way I do have some material things to feel excited about, rather than feeling bitter about how much I did for everyone else while I got left out in the cold. Merry Christmas to me! :)

  6. I posted a lot about how my fiance and I organize our budget in the other thread, so I don’t want to be repetitive. But, there were definitely a few years where my fiance and I didn’t budget, didn’t keep track of our money, and spent like crazy (money we didn’t have, I might add). We were young and just not financially smart. We were getting it under control and paying off debt when I decided to go to law school. My decision to go to law school (after several years working) really forced us to be open about our finances and budgeting because he was going to be the breadwinner for those 3 years.

    Having mini-goals every month – meeting savings targets, coming in under our monthly “allowances,” etc. – is a small victory that gives us a huge sense of accomplishment and control over our financial future.

    We’re new to the “combining money” though, and it’s definitely taking some getting used to!

  7. My husband and I have different spending habits, but we’ve managed to peacefully merge finances by depositing most of our joint income into a joint checking account that pays all fixed expenses (mortgage, daycare, utilities) and items that we agree are joint – groceries, meals out together, household purchases, pet expenses, etc. We each get to keep a fixed amount of our salaries; originally we set those amounts to be the same, but are considering whether we should add our salary increases and/or bonuses to the individual amounts, rather than the joint account (largely because my husband has twice the student loans I do and a car loan, which doesn’t leave much left for fun in his personal account).

    As far as budgeting – we have been good about spending significantly less than we earn, so this has been easy. We are able to pay the upcoming bills off the last paycheck, so when the next paycheck hits, I transfer all the excess to the joint savings account. We probably could be more aggressive in tightening our belts and building up our savings, but we’ve got a year’s worth of emergency funds and we’re maxing out our 401(k)s, so we’re both happy with our savings rates.

  8. Totally unrelated, but wanted to repond to Eponine’s question the other day about Shabby Apple.

    Eponine – I’ve ordered two dresses (one on my own and one through a gift certificate) and remain unimpressed. Save your money!

    I ordered this one (http://www.shabbyapple.com/p-791-syncopation.aspx) – it fits nicely, but isn’t lined and every bit of fabric/ lint/ dust you may come in contact with will stick to it. I have to take it to a tailor to hem it a couple inches so it hits mid or right above my knee (I’m 5’7″).

    I also ordered this one (http://www.shabbyapple.com/p-506-west-coast-swing.aspx) – again, fits nicely but will have to take it to a tailor because it flares out too much. Also unlined.

    I’ll stick to stores where I can try items on and inspect the quality before ordering online. Hope this helps.

    • Thanks! Shame because some of their stuff is so cute, but almost everything I’ve read has said the dresses are low quality. Oh well. My $40 Target dresses are lined; I’d expect an $80 dress to be lined as well.

      • Yes, this is exactly what I was thinking when I tried them. I have a number of Merona and Mossimo dresses which I wear a lot and they are better sewn and designed than the Shabby Apple ones for a much lower price point. I don’t expect all dresses to be lined, but every sheath dress I’ve owned has a lining which I’ve found helps keep it’s shape.

    • Thanks for this review – disappointing to hear about the quality though as some of the styles appear really lovely.

  9. My bf and I have talked about getting married, but I can see that our different financial statuses and money management styles may be an issue. We are both attorneys and make similar amounts, however I have law school debt and he does not. I feel pretty strongly that I (and not WE) should be responsible to pay off that debt, and I am very aggressively paying off my loans (approx. 50% of gross income). I don’t want to disturb that percentage once I’m married, since it will be in our collective best interest to have the loans paid off sooner rather than later. On the other hand, I feel bad that though we both make about the same amount, I would only be able to contribute half of what he does to our joint expenses. Anyone else out there have a good marriage/budgeting scheme for people in similar situations?
    Also, any advise on dealing with bf’s superiority complex re: not having any student debt? I mean, good for him for having family and scholarship support … but some (most) of us aren’t so lucky.

    • You both need to be okay with him marrying you and your loans. Yes, you will be responsible for paying them off, but this means you will have less discretionary income. Either he needs to be okay with contributing more to your expenses, fun and mandatory, or he needs to be okay with living ‘down’ to what you can afford to contribute half to. If he chooses the latter, maybe he can save his cash for a long term goal like a house, wedding, etc. If he resents any of these prospects, you may have more serious issues.

      Which leads to this comment…
      “Also, any advise on dealing with bf’s superiority complex re: not having any student debt? I mean, good for him for having family and scholarship support … but some (most) of us aren’t so lucky.” Uh, he shouldn’t make you feel like less of a person for not having a rich family or going to the best school you got into, not the one that gave you a scholarship. I am in a very similar relationship, (i.e. I have sig. more law loans than my bf bc I had no help and he did) but I am paying them down, and make lifestyle choices that allow me to do so. My bf has NEVER commented disparagingly on our different debt amounts.

      • somewherecold :

        This response puts it really well. He needs to understand that you are (rightfully) proud of your accomplishments and want to keep your debt independent of your joint finances. But are you ok with him contributing more than half–although not so you’re living beyond your means as a couple? If not, why not? Enabling you to pay off your loans by paying more than his share of rent/food/etc. is helping your relationship because you as a couple will be able to take on more, bigger debt in the future together if your loans get taken care of, so he might be happy to do it.

        I can’t really imagine how your bf could have a “superiority complex” (I mean, I get it, but I don’t get it in the framework of a good relationship). It sounds terrible. Does he gloat about it? Hold things over you somehow (e.g. I pay rent, so you need to clean the house by yourself)?

    • Re: the superiority complex: Be proud of yourself for making it on your own. A lot of my friends don’t have student loans because their parents paid for their undergrad and/or professional schools. If you had to take on loans to pay your way through school and he got help from his parents, you should be proud of yourself for paying your own way. He shouldn’t have a superiority complex about not having student loans. Maybe his parents should be proud of themselves instead. =)

    • I earn about half what my husband does, so I’m effectively in your boat (though owing to having science degrees that we got paid for and scholarship + family support for u-grad, we don’t have debt). Our personal situation may be different, but we pool all of our money and treat it as joint income. We have fixed monthly savings set-asides (in addition to 401K and 403B), and we also have monthly “mad money” spending limits. Our monthly savings also includes money for annual spending on things like travel and holiday gifts for our families. We keep this money in separate accounts to spend however we want. We also analyzed about half a year’s spending and realized our monthly spending on necessities like food, bills, and rent was pretty consistent and very manageable with our income, so we don’t really have a budget for it. It may sound counterintuitive, but we actually try not to drop below a certain amount for date/entertainment spending because that’s important IMHO.

      I can’t help with the BF’s superior attitude other than to say that you should let him know it’s very hurtful to you that he is essentially cutting you down for deciding to invest in your future. Especially since it sounds like it’s allowed you to get a great job. He may not realize that what he’s saying is hurtful. But definitely talk about this with him because that kind of attitude difference can come back to bite you after marriage. W.R.T. budget, though, if he’s on board with you contributing about half what he does to your budget until you pay off your loans, I think it’s not unreasonable to do it that way. My husband says that he took a higher paying job to allow me flexibility in my career. Sometimes I feel guilty for contributing less, but we talk about this a lot and in general I appreciate the flexibility his decision has given me. Not every couple will work like us, but whatever you both decide, it should work for both of you.

    • I want to concur with the other posters re: superiority complex. I too am putting myself through school (college AND law) although with some merit scholarships. I’m proud of myself for it. I have friends whose parents help them to various degrees and most of them are a little embarrassed about it; ie, they would rather be able to say they are making it on their own. Not that I have ever tried to make anyone feel that way… I’d take help if I could get it! but for example, I have a friend whose parents form of help is to pay for her apartment which is a super nice, large apartment in a ritzy part of town. She only has people over after she gets to know them really well because she its so obvious that she could never pay for it herself and she doesn’t want people to think of her as being spoiled.

    • Mm, I have a similar situation insofar as I have law school debt and he doesn’t and we both make the same right now – but I don’t have a problem with him helping pay off the debt now we’re married and he doesn’t have a problem with it either. I wouldn’t have married him if I felt otherwise (this is just me – no judgment where others differ) because to me one of the very main things about marriage is the legal aspect – joint money. If I didn’t want to pool our finances from now on – no marriage for me. We took each other with all the debt and family members that we have. I might well earn more than him one day – it will still all be our money.

      Though I did spontaneously promise him one day that the next really big purchase we make will be something he wants since we’ll have spent so much on my loans.

    • I think if you’re going to combine finances, you should combine all of your finances–including agreeing to pay off school loans together. I could see if it were some other kind of (less responsible) debt, wanting to get your financial house in order before combining. But student loans are a long, ongoing, and commendable expense that ultimately contribute to your combined financial well-being.

      • My husband and I considered this, but both of us were unmarried when we incurred our student debt, which means it should stay individual debt in the case of a divorce or death. Several lawyer friends warned us that using joint funds to pay individual debts could make them joint debts, so we made the decision to pay ours out of our individual bank accounts (rather than joint bank accounts). I’m not sure if this is legally accurate, but it made sense to us.

        • Your lawyer friends are 100% wrong. Debt is incurred in whatever name or names it is originally incurred in. If my mother helps me pay my mortgage one month, she is not suddenly legally liable for the rest of my mortgage. Who pays the debt has no bearing on who owes and is liable for the debt.

          Your friends may have been referring to the standard (and good) advice not to refinance individual student debt into anything that’s joint, because in the case of the death of the original debtor, your student loans are forgiven. If you roll that debt into, say, your mortgage, and the original student gets hit by a bus, then the debt needs to be paid by the other debtholder on the mortgage, or by your estate.

          • I thought that student debt was only forgiven on the debtor’s death for federal loans? It was always my impression that your remaining private loans would have to be paid out of your estate.

    • Legally Brunette :

      When my husband and I got married, I had about $25K in debt from college. It was important to both of us that I pay it off (as opposed to we paying it off). I did within two years. I certainly agree that when you marry someone you in turn marry their finances as well, but I would feel really weird about my husband paying something for me that was exclusively my own debt. You’re definitely making the right decision.

    • I want to jump in here, ak, and offer that sometimes the bf with a superiority complex re: student loans turns right around. My husband (now happily married 8 years) is a blue-collar guy who had been on his own and making good money since he was 17. I, on the other hand, did the private-college path with student loans totalling about $22K. When we got married at 25, I had about $16K left to pay down, which I paid for with my money. He didn’t understand why I would have ever “bought something that big that you couldn’t pay for.” I just couldn’t get him to understand that buying a college education was was different than buying a brand new car. And he did the, “Well, I bought us this house (his down payment)…” implying that I didn’t help as much because I had loans to pay rather than a pile of savings to contribute to New House. Anyway, after many honest conversations of how his words made me feel, and a couple years of consistant pay raises and promotions that showed him how my degree was benefitting us, he was on board. It was a slow process, but I knew it would work out between us, so I was patient with that issue as the rest of our relationship was great. About three years in, he wrote me a check to pay off the remainder of the loans (nothing I asked for). He presented it very sincerely, in a “I know your education has helped us achieve more as a couple, and I’d like to help you pay off the debt so we can keep moving forward.”

      Not everyone will have the same experience, but your story sounds so similar, I had just had to share that mine turned out well in the end because we both wanted it to. It just took a little time.

      We are in our second home now, and again he made a larger down payment, but he’s also able to save that money because he makes more than I do, and because we work together on all the other expenses and other goals.

      As for the original question…we have separate checking accounts, and we put 50% of our take home pay into a joint account for all household expenses including mortgage, insurance, bills, groceries, fun, etc. Big purchases like home improvements or trips are discussed and are sometimes paid for jointly, sometimes by the person who wants it more (e.g., I paid to have the wood floors redone, he paid to pave an additional parking spot). We have joint and separate savings, and we have joint investments and separately owned retirement accounts. It works for us.

    • Okay, so … my husband and I both have similar incomes (he makes just slightly more), but when we got married a few years out of law school, I had significant educational debt and he had significant savings (thanks Trust Fund!). We wanted to purchase a home at the time we married, and he had plenty of money for “his half” of the down payment, but I would be stretching for “my half.” He had a … complex about these issues. So here’s some support for you. In long form:

      To be clear, his attitude was not that he was better, but that it would be “unfair” when we got married that we weren’t starting on equal ground. (Of course, he realized that a lot of marriages aren’t totally equal, but our financial situations were pretty starkly different. ) He grew up in an environment that placed a lot of value on having money, and was worried about how he would feel to completely “tie” his finances to mine and proportionally “diminish his net worth.” Again, it was not a judgment on me or my worth or choice to debt-finance my education, just his honest assessment of his issues with money. That doesn’t mean it didn’t hurt, though!

      Anyway … after a lot of talks and soul searching, his attitude has changed a lot. We are now happily married and have completely joint finances with and little/no financial strife. Here were the keys: First, I had to understand his attitude was not about superiority but an emotional concern about the meaning of money and give him some understanding about his feelings, even if I didn’t agree with them. And I think that’s really important. Unless your BF is an *ssh*ole, there’s something deeper going on that you should try to understand.

      Second, we have similar priorities and spending/saving habits, so that was not an ongoing day-to-day concern.

      Third, he finally realized (with my coaching :) that, at the end of the day, by thinking of me as “poorer” and expenses as “my expenses,” he was only going to be creating a situation where we would end up at retirement with different individual net worths. If “his” net worth was higher than “mine” at retirement age, that was meaningless. Was he going to travel without me and live in a fancier nursing home? No. And no matter “whose” money, it all ends up going to the kids anyway. (Well, that simplistic, but you get the idea.) Once he saw that we were effectively tied through our life, these ideas began to seem silly to him.

      Fourth, we made the decision that I would stretch to pay a full 50% of the down payment on our home, and we bought a slightly smaller home than we would have liked so I could do so. This was important for my self-esteem, and also was a key way to help him feel more comfortable. In the end, we both knew it was symbolic. But it was a symbolism that we agreed was important, talked about carefully, and it really worked for us. It meant I entered marriage with a little less of my debt paid down than I otherwise could have, but he has been completely fine with that now. We make the decisions about how quickly to pay off the debt jointly and he no longer says anything about its being “my” debt.

  10. Makeup Junkie :

    I’ve never really kept a budget. Between direct deposit to savings, investments, and my 401k, I save about 50% of my income
    The rest is spent on student loans, rent, and my credit card ( I put absolutely everything on the credit card for rewards, but I pay it off every month)
    I am living on my pre-law salary this way, but with a little cushion should I get laid off again

    • My strategy is very similiar to yours. Since I direct deposit into my savings and other investments, I never really “see” the money. I know it is there for my protection but as far as my day to day activities, I act as if I make probably 60% less than I actually do.

  11. I don’t budget or formally track my spending. I am very frugal by nature and don’t part with my money easily. Every single purchase I make, I ask myself if it is necessary. If it is not necessary but it is something I want very much, I wait for a great deal (and I am very strict about what constitutes a deal – unlike my mother in law who buys something 20% off and exclaims “they were giving it away!”). I value travel, but will scour tripadvisor and other sites for clean/comfortable no frills accommodations at very reasonable prices, and often book trips to interesting locations based on airfare deals. I’ll see Broadway shows, but only if I’ve scored rush tickets or found someone dumping tickets last minute on craigslist. There is no money “just for fun,” where if it’s still sitting in some account at the end of the week or the month or the quarter, it means I’ve earned some sort of shopping spree. I don’t feel deprived and take a great deal of comfort in knowing I will be able to retire on the early side.

    I know not everyone can adhere to something like this (I certainly can’t when it comes to food, for instance. I know it’s theoretically possible to look at a brownie and think “this is bad for me so I won’t eat it” but I simply don’t have that sort of self control in that realm), but to the extent one can, I think it’s a great system.

  12. I’m single so it’s super easy for me but I follow a similar pattern. I use excel and start with my monthly income, then minus pretax expense then minus taxes, then minus savings and that’s my budget. Then I put in bills – mortgage, rent (yes I have both, just moved for a job), car payments, insurance, etc. After all that is subtracted out I get a total for discretionary income. That’s what I can spend on groceries, personal care, shopping, eating out. It works for me because I’m in control, one month I do a lot of shopping well then I just don’t go out as much and vice versa.

    Also because I format it into chunks in excel and sub total on the way down I can easily change numbers and see how it would effect my budget. For example, selling my car will get rid of the car payment and insurance and free up money for occasional Zipcar use. It looks basically like this:

    Total
    (Pretax expense)
    – Subtotal
    (Taxes)
    – Subtotal
    (Set in stone bills – student loans, mortgage, rent, car payments)
    (Variable bills – energy estimates, gym memberships, netflix, etc)
    – Subtotal / discretionary income

    Each section could have multiple lines so I can easily see it all. I use quicken for managing it ongoing, making sure I have cash and my expenses aren’t going over my discretionary income number.

    Great discussion topic! Thanks!

  13. I have a question about deciding how to allocate savings. I have several different savings goals, including a down payment for a house, 6 months emergency fund, wedding fund, and vacation savings. I feel like the emergency fund is most important, followed by the down payment fund, but does that mean I should only put money in the emergency fund until it’s where I want it? And then after that, how do you decide what percentage of savings goes to what area?

    I guess it might be important to know that my boyfriend and I are saving for the down payment together.

    TIA!

    • I would say rank your goals in order of importance. Then figure out a time frame for each one. Then figure out what percentage of your savings you need to allocate to each goal in order to achieve your first goal first.
      Ex: You want an emergency fund asap, so put 100% of savings until you achieve that. When that happens, allocate 50% to the house (since bf is also helping), 40% to wedding, and 10% to vacation. That way you’re working towards many goals at once. Does that make sense?

    • I think all these things are fungible and there’s no reason to have different accounts for each of these things (they’re all relatively short term goals and the funds should be exposed to very limited risk – e.g., a money market savings account). Just save as much as you can. Then look at those savings and determine what you can afford. If you won’t have a comfortable emergency fund leftover, don’t use it to go on a vacation. If you do have enough to cover emergencies and a vacation, then you need to decide on your own (with your future husband) whether you should access that vacation money or if it should be more appropriately earmarked for the wedding or the house.

      • I agree that you should fund your emergency fund 100% and then work on the other goals in order of their importance to you. There’s a great feature at ING direct that I recently discovered whereby you can have several sub accounts and give them nicknames. It’s great because you can separate different savings goals, such as emergency fund, down payment fund, and keep everything separate. Before this I’ve always kept all our different savings in one account in a lump sum, but I’m starting to divide them out.

        • Makeup Junkie :

          I have a few ING savings accounts too. I love that feature of ING

        • Thanks for sharing. I did not know of this feature and will be looking into this for my ING savings.

        • That’s really interesting – I had no idea ING had that feature. How do you set that up?

          Does anyone have a personal savings account from American Express? Do you know if they have that feature too?

          • To set up subaccounts, just go to Open an Account on the left, select Orange Savings Account, and follow the prompts. There are no fees or minimums, so multiple accounts are no problem. I have five (!) and -love- this feature.

            To give an account a nickname, open the account in question and select Account Maintenance at the top.

          • Anon for this :

            Thanks! Are you able to transfer back and forth within those sub-accounts or the parent account?

          • Oops – that was me! Responded anon to another question elsewhere.

          • Yes, you can easily transfer between accounts. Transfers take effect instantly (as opposed to transfers to/from another bank, which take a few days). “Subaccount” is really a misnomer; all the savings accounts are of equal status.

            There’s a limit to the number of transactions you can make per month (six, I think), and transfers between ING accounts count toward the limit, but I’ve never had problems with this. You get six transactions per subaccount, and since I’m only making monthly deposits and occasional withdrawals or transfers, I never get close to the limit. YMMV, of course.

  14. I have the opposite situation of many of you. After leaving BigLaw for gov’t, we experienced a series of rainy days — more like monsoon season, including massive house expenses, husband’s depression (therapy $$$) plus 2 kids being diagnosed special needs (more therapy). Rainy day fund is now gone. Monsoon is not yet over; we’ve had to use credit cards since the rainy day fund ran out. So we’re adjusting to a significantly lower salary while also dealing with huge unexpected expenses.

    Honestly, I have no clue where to start in rebuilding. I’m checking out Mint.com now, since up until now, I haven’t really had to have a strict budget; my general ideas of what could go where worked out fine. Anyone been there? Any advice?

    Obviously, I’m on Corporette dreaming and playing, not really shopping.

    • govvie girl :

      Sorry to hear about your family’s situation. Can your husband’s illness and children’s issues be covered by your insurance? Sometimes I almost have to go back to the Maslow’s Hierarchy of Needs myself for an exercise in budgeting simplification or prioritization.

      • Ugh, don’t get me started. Yes, insurance helps. It pays roughly $60 for each $175 counselling session for my husband. Rest is on us. Sliding scale won’t help because of our overall income (plus challenge of finding a counselor who will do that).

        One of our sons is on the autism spectrum, Asperger’s to be specific. Ins doesn’t cover autism-specific treatment, only covers if you can find some way to dance around it and then in some pathetic amount. E.g., $800 high-level hearing screening (possible auditory processing disorder + hearing screen fail) == $175 from insurance, rest from us. Other son does not have a specific diagnosis, but there is serious stuff (he’s int’l adopted — LOTS and lots going on). Flexible spending helps too, but we blew through that well before year-end.

        • *rant*

          How absurd is flexible spending!? If the idea is that these expenses should be tax deductible/exempt, then just make them that way! The guessing game is not helpful.

        • Try and cut as many supposedly ‘fixed’ expenses as possible. Gym (get some free weights/run on your own), Cable (over the air is free and there are tons of channels now in major cities), anything that drains your account monthly that is not putting a roof over your head…try and find a substitute. Use your library for books/videos for the kids.

          Slash your food bill – buy in bulk on sales. There are tons of websites on how to eat well, cheaply. Pasta, frozen vegetables, canned beans, eggs, all great places to start.

          See if any of your friends/family have hand-me downs for the kids.

          Make sure any gov student loans are on IBR. If you keep working for the gov they will be forgiven in 10 yrs of on time payment.

          You really need to do everything possible before you put expenses you can’t pay now on a credit card.

        • Preggo Angie :

          I understand, I left a corporate job for one in academia, immediately became pregnant (oops), and am now wondering how the heck we’re going to fit everything in our budget! But I will not regret switching careers to spend more time with my growing family. I will, however, insist on an IUD as soon as womanly possible.

    • I worked for a while in government and had to keep a close eye on my budget – I started by looking at bank statements and credit card bills for the last three months, to reconstruct where my money historically went. Then I put together a budget like this:

      1. “Fixed” necessary expenses: mortgage, loan payments, insurance, taxes, utilities, etc.
      2. “Varying” necessary expenses: groceries, toiletries, transportation, etc.
      3. Emergency expenses: I built in a slush fund of $200-$300 a month for emergency expenses (vet care, medical care, etc), and then rolled this into my emergency fund if I didn’t use it
      4. “Fun” money: going out money, clothes, household goods, music, movies, gifts, etc. I rolled any excess to the next month so I could splurge once in a while.

      I had to track my spending weekly, but it was really helpful and made me feel like I was in control of my money, instead of vice versa. I have no connection to this site, but http://www.getrichslowly.org/blog/ really helped me keep going.

  15. Ballerina girl :

    I posted the original question about budgeting yesterday and appreciate all the advice I got. I’ll offer up my current plan as an example, but I’m really going to change things up in the new year and keep better track of my spending.

    Right now, I have about 35% of my paycheck automatically directed to a high yield savings account. I have another 5% directed to my Roth 401K automatically (am switching this to traditional 401K, no matching from firm, and this number used to be higher but I wanted to have more liquidity with upcoming job change–will up this number soon). I pay 6% of my income to my rent and another 22% to my loan payments. The rest is flying out the window. Not all of it, but more of it than I’d like. It’s largely going to clothes, meals out, groceries, and household items. I often manage to save a bit extra but not enough. Getting serious now–better late than never.

  16. lawyergrrl :

    I second the use of Mint.com! I’ve been using mint.com since the fall of 2008. It’s not perfect, but if you are comfortable with the internet and make a significant amount of transactions using some kind of plastic (90% of my non-bill paying expenditures are on one debit & one credit card), mint is excellent for tracking the day-to-day expenses that may otherwise elude a budget-tracking system. I love that mint is a “smart” program so I can create rules to ensure that specific types of transactions are consistently landed into the right budget bucket / “line”. I also love that I can slice my budget categories quite specifically, so for instance in the Food category, I have budgets for “breakfast at work”; “lunch at work”; “coffee”; “groceries”; “restaurants”; & “order-in” (fortunately, with all that food, I also have a gym budget!). I find it incredibly helpful. One more point of agreement with Kat: I also found it good at the outset of using mint not to worry about tough $$ goals for my individual budgets, but instead waited to watch how my actual spending looked after a few months of using the platform. I had always felt incredibly guilty taking cabs & it turned out I didn’t need to feel nearly as bad from a monthly, bottom-line dollar amount. I can go back and trim that (or any) budget line if I want (and there were surely categories that needed reining in), but there was no need to be tough about cabs in particular up front. Anyway, hope this is helpful. Thanks Kat for a really good & important thread.

  17. I also need to know how to make my dollar go farther. I have a decent job, but at the end of the day, after rent, food and clothing are paid for, I have about $500 / month to save.

    I have saved a total of $13,000 so far and I am 6 years out of law school. How am I supposed to retire in 25 years? I have to find a guy with a lot of money who is interested in marrying me. I hate to have to admit that, but it is true.

    • What is your salary? Are you paying off loans?

    • Another Sarah :

      Assuming you aren’t a friend of our buddy Ellen…

      Do you have a 401k? IRA? Pension? Can you cut back on your clothing expenses and put that money in your savings? Does “food” = “going out to eat” as well as ‘grocery store?” If so, can you cut down on the “going out to eat” and put that into your savings? If you can cut $50 from each of these, you’d put an extra $100/month into savings, or $1200/year. Are you putting all of that $500 into savings every month? If you put the $600 into a savings account every month, you’d save $7200 per year.

      In terms of making your dollar go farther, do you clip coupons? If you think of coupons being free money for the stuff you’re going to get already, then it’s easy to do! I don’t really buy a whole lot that has coupons, so I only clip the coupons I’m def. going to use, or something that will need replacing before the coupon expires. I’ve found that for every $1 I spend buying a Sunday paper, where the coupons are, I save about $7 at the grocery store through those coupons. My rather poor math skills say that that’s a 700% rate of return (if that’s wrong, please don’t tell me so I can continue my blissfully ignorant couponing!)

      • 600% rate of return. The first $1 is just recouping your purchase price. ;-)

      • I think it’s a 600% rate of return since you have to subtract the initial investment :)

        • Another Sarah :

          Thank you both for the correction! 600% rate of return is still super awesome, so wahoo!! :-D

    • I think it was mentioned before, but the “pay yourself first” rule is really important. The money leftover should go to clothing and discretionary income, not savings. Savings should be included in the rent/food categories of needs. It makes a huge difference if you put the savings away first–out of sight out of mind!

    • Anon for this :

      I have a similar difficulty to LB, though over the years I have managed to buy some property (which really means I am paying a mortgage rather than rent) and save up a bit of a rainy day fund as well. But I can’t help feeling I am not saving anywhere near enough, especially given my income.

      I think part of my problem is that I spend too much on clothes. I really don’t need to buy so much, but shopping is so much fun! I have recently started using mint.com and am trying to track expenses, but for the moment my approach is going to be a clothing purchase ban just to see how things go. Debt is not a massive problem (though I am paying down a car loan), it is just that I never seem to have enough left over to save properly. I have got to get things under control or I am never going to be able to retire.

      • I suggest setting a monthly dollar allowance for clothes/accessories. You can save up a few months’ worth and get something nice, or you can spend it in full every month. This has worked wonders in reining in my clothing spending, making me prioritize my clothing purchases and actually buy things I need rather than things that strike my fancy. Plus, this is really easy to keep track of – just keep a piece of paper on your desk. A sample monthly budget could be anywhere form $50 to $500 – depending on what brands you shop, what kind of clothes your job requires, etc. I’m maintaining and nicely expanding an Ann Taylor/Banana Republic-level wardrobe at $200 a month; I’ve occasionally gone over when I’ve suddenly needed a suit or a new coat, but for the most part it’s been a generous amount that I could easily cut in half if I needed to.

        You can do a similar thing for any other categories that are problematic.

  18. Divaliscious11 :

    First-
    I prefer spending plan versus budget. Psychological- yes, but less restrictive, and that works for me!

    I too use Mint, and find it very helpful to see where I spend. I rarely carry cash, so this works. I break my buckets down in more detail than Kat, but that is because I’ve got some aggressive financial goals this year.

    My best advice is to figure out the system that works best for you.

    Ps wallet pop has a link to a free copy of David Bach’s new book, available just for today. Debt Free for Life…. I find his books are very good for learning basic financial planning. He’s the … Finish Rich & Automatic Millionaire guy.

  19. govvie girl :

    I’m single but have gone through my own budgeting messes/nightmares, largely due to binge spending and being mentally overwhelmed by all things financial. Luckily that is in the past, and I have simplified it by having two checking accounts, one for rent & utilities, and the other for discretionary spending, savings and IRA, and small student loan. My pay gets automatically divided by the amount I budgeted and directly deposited into the accounts.

  20. I *love* Mint! I have budgets set up to monitor my recurring monthly expenses, and although I do most of my spending on credit cards, Mint lets you input cash transactions as well, which I find very helpful (sometimes cash just seems to disappear without knowing where it’s gone). In the first few months, I adjusted my budgets a fair bit to accurately reflect what I was spending (always trying to decrease other budgets if I found myself needing to increase another budget so that the total stayed the same), but now they seem to be pretty accurate goals.

  21. I have a high-level budget, where I first pay the must-do items of mortgage, utilities, association fees, and property taxes. I get paid twice a month, and usually pay the mortgage from one check and everything else from another. I include my 401K contribution as one of my must do items.

    Any bonus I earn, or other windfalls like tax returns, I either save or use to pay down my mortgage. My perspective is that this pay is variable, and can’t be counted on, so I shouldn’t get used to spending it. Where my employer allows, I defer some of my bonus to be paid to me when I leave or retire.

    This has changed recently in that we paid the mortgage off in 2010! Be able to do so in the midst of the mortgage crisis was an incredibly good feeling. Now, I still maximize my 401K and save my bonuses, and try to save and/or invest 50% of my take home pay. The savings are for taxes and large purchases, and the investments are for retirement. I primarily use one credit card, which I pay off each month and earn Amazon Rewards.

    DH and I keep our money and accounts separate. The house is in my name (from before we were married), so I pay all the house expenses except he pays the home owners fees. He will also inherit the house if anything happens to me. As I earn significantly more, I pay most of the other expenses–utilities, cable, Internet, in-home entertainment, taxes, insurance, renovations, etc. Along with the homeowner’s association fees, he buys groceries (he cooks!), his own car insurance, and most of our dinners out. Every now and then, when I think he may have spent a lot on “us” items, I just write him a check for $500 or $1000.

    We have agreed together how much “cash” money we want to retire with, and both of us are committed to achieving that.

    Having written all of this, it seems the key items are that we are financially compatible and committed to living below our means.

    • “Where my employer allows, I defer some of my bonus to be paid to me when I leave or retire.”

      Is this for tax planning (pushes income into the future) or is it just a self control mechanism so you don’t spend it? If the latter, I strongly recommend reconsidering as your employer’s financial health shouldn’t be taken for granted, and you never know when you might want to access the money.

  22. Mint — Finally gonna do it! Registered today.

  23. Nice to meet you @lawyergrrl. I think I like you’re “handle” better. Something about the roar of the RRRR’s ;-)

    • Stet: you’re = your. Long day. Lawgirl ’bout to blow this popsicle stand & head home for realz! LOL.

    • lawyergrrl :

      Nice to “meet” you too! and though I may have a few rrrr’s in my corner, you’ve got all the good superheroes (supergirl, superman, catwoman, etc.) going for your handle, so more power to you! Hope mint does good things for you!!

  24. If you only track ATM cash withdrawels, does that mean that you and your husband rarely use your debit cards? My husband and I are the opposite in that we so rarely use cash.

  25. Christine :

    Thanks so much for sharing this!

    I’ve always thought I had to pick either Mint or Excel (I’ve use the latter forever, much in the same way you do), but I like how you combine them.

    Also, I’m curious — how many of the items you feature here do you actually end up buying yourself?

  26. Anon for this :

    So, I keep reading about how important it is to max out your 401k type thing, but… how necessary is it really to max out? Is paying a significant portion good enough?

    Here is my situation.
    1) Hubs and I are very young; I just turned 24, he is 27. I am at my first job out of school.
    2) Hubs is in the military and planning to stay in 20 years (he already has about 11-12 more years left on his commitment so he’s staying in the full time for planning purposes); he will receive, after that, I believe a pension of at least 50% of his salary at retirement. This means we’ll also have access to a form of military health insurance when he retires- not full coverage, but some.
    3) Hubs also has a TSP account opened through the military which is similarish to a 401k. I believe like a Roth IRA, it has a contribution limit of 16k a year. There is no employer matching.
    4) My company offers you the option of contributing to a Roth 401k (16k limit a year). There is no matching. After 2 years with the firm, the firm will give me, every year, 10% of my pay into a retirement account program thing they have, regardless of how much I contribute to my own Roth 401k.

    So, what we are doing- we are contributing each about 10k out of the max 16k to each of our respective retirement accounts per year (him to the TSP and me to my company’s), but obviously this isn’t hitting the max threshold. Maxing out would basically mean an extra 1k per month between the two of us, and I just don’t know how realistically affordable that is. We live in separate cities (I couldn’t get on a project in my husband’s city), and so that means paying 2 rents as well as some pretty steep comuting costs to be able to see each other on weekends (Amtrak passes for 6 weeks are almost $600). We pay $500 a month to a small bit of student debt I have, and he has a car loan he pays to every month. We have no other debt and pay our CCs off in full every month. We also are funneling money into 2 separate savings accounts for things like a house down payment (one account) and then emergency savings/big purchase savings/etc. In total, we are saving about 30% of our take home income in some way, and this is without maxing out the retirement accounts. I would say about 30% of our income goes to each of our rents, maybe 20% goes to bills (possibly a bit more, so this is things like gas/electricity/car gas/cell phone which we already get discounts on/internet/insurances), and we are left with maybe 1-2k in discretionary income per month, depending on various factors.

    So my ultimate question is, is it really the dumbest thing ever for us to not be maxing out the retirement accounts, given our situation (especially the fact that we are planning on having the income from the military pension)? I feel like we are doing a lot of saving already, paying down the debt we have, and doing our best to live simply while we live apart, but acrue the extra expense of that regardless. Plus, is it really dumb to maybe be wanting to save extra money for a house down payment instead of adding it to the retirement account? Or are our priorities completely wrong? UGH I know saving for retirement is important, but at what cost? Is it really necessary to max out regardless of anything else in your circumstances??

    • Generally, when you are getting free money from your employer, I would say maxing out your 401K is always a good idea. But yours does not match, so the situation is different. Personally, especially because you are apart and don’t know where or when you’ll be living together again next, I would say that contributing to your retirement savings is more important that saving for a house (but that’s me, obviously). also, with the turmoil in the housing market, it’s really hard to predict which way house prices will go and what is going to be “enough” of a down payment, so it’s somewhat of an elusive goal given all of your other uncertainties.

      The fact that your husband is planning to serve through the full vesting period of his military career will probably ease your need for additional retirement savings, but keep in mind he’s not yet halfway through. Many things could happen in the next decade that might make him want to leave the military early. I’m just saying, it’s risky right now to count on something that far away. Especially when the money you save now (if invested wisely) will be the foundation for your retirement savings.

      Also, is your employer’s 10% retirement contribution to a pension-type fund? If so, don’t count on seeing it when you retire (honestly, I have no faith in pensions). Also, given how young you are, there is probably a good chance you will change jobs (especially since you are not currently able to live with your husband). I would not count on this money for retirement.

      Anyway, I hope this isn’t harsh. My husband and I are fairly conservative when it comes to retirement savings and I guess this just relfects that.

      And I definitely feel you on the two city thing. We’ve done that…it’s not fun. But I like to think the fact that we survived it is a good indication of the strength of our relationship :)

    • I think the benefit of maxing out is limited if your employer doesn’t contribute anything to your account. You’re still very young, so putting everything into your retirement account at this point really isn’t necessary.

      I’d continue saving for a house, because mortgages are much harder to get these days than they used to be. You’ll be in much better shape to get a conventional loan if you have the money saved up to make a larger down payment. You’ll also have access to that money in addition to your emergency funds.

  27. Anon for today :

    I also wonder if I am doing enough / if I am allocating my income in the best way possible. I just graduated from law school and have significant student loans — $189K at the high point and currently $172K (I know!). I work in BigLaw so I feel like I can afford to pay it back. My current after tax monthly take home salary is $7.5k. Currently, I spend $2K a month to fund my emergency fund (currently just shy of 9K) and thereafter to save for a car (I don’t currently have one and can make do without for a while, but not permanently) / house down payment, $3.5K towards my loans so that they are paid off in 5 years, and $2k a month to live on (in a major metro area but not New York or LA). (Where I live a 2 bed 2 bath place in a safe but not ritzy neighborhood, accessible by public transit, will cost around $450 – 500K.)

    My worry is that for the next 5 years – the point at which I expect to have paid off my student loans / be ready to buy a home – I have no significant plans to save for retirement. The interest on my student loans is the normal rate, but still high compared to what one seems likely to make on investments in this economy (6.8% and 8.5% minus the 0.25% reduction for auto-debit) and so I feel like paying down loans should be my first priority. Am I nuts not to save for retirement at this point? Should I pay off my loans more slowly or delay buying a house to allow me to start saving for retirement? (My firm does not match or make any contribution to 401K savings).

    I’m sure people will say that I shouldn’t have gone to law school given that I had to take out so many loans. I can’t change that decision now and nor do I regret it. I loved my law school and it got me my dream job.

    • I wish I had your wilpower to live on 2K with that salary. I am in a simialar situation w/ slightly larger savings fund and smaller debt b/c I’ve been out a few years. My current “spending plan” is take home salary is 6K after 10 percent auto contribution to 401K, $900 rent, $2.4K savings, 1K to student loans, $1.7 to live on (Southern metropolitan city). I often wonder if I should pay off loans more quickly or contribute more to savings.

    • Anon for this :

      I have a similar amount of student loans (thank you, law school), with slightly higher expenses. I want to pay off my loans ASAP (well before the 10-20 year timeframe they’re giving me), but I’m willing to take the hit on my paycheck (and pay off my loans slower) by investing in a retirement account. But, those are my priorities. I’m also building an emergency fund slower as well.

      I’ve seen differing information on this website (and others) about the rate of return on investments versus the interest rate expense of student loans (and also as it relates to employer matching – mine doesn’t), but my rationale for coming close to maxing out my 401k has a few components:

      1. The 401k is pre-tax. I contribute more to my retirement account than what is actually deducted from my paycheck.
      2. I make too much (biglaw) to contribute to a Roth IRA
      3. I expect I will be in a lower tax bracket by the time I retire and withdraw this money
      4. The potential growth of money saved now versus money saved later can be significant.
      5. I took a few years between undergrad and law school – while I had a 401k at my previous job I was making far less (and contributing less), and I feel like I have to “catch up”

      None of this really addresses your question of which is a better choice (debt vs. retirement), and I think some (or all) of that is a personal choice. As you can see, my choice is to live with debt for a little while longer (say 6-8 years instead 5) and contribute to my retirement account. I would suggest some of the books by David Bach or Dave Ramsey, if you haven’t read them already.

    • South of Houston :

      I think the amount you’re saving is great, but I would definitely put retirement savings at a higher priority than saving for a home. If you can rent a reasonable place in a safe neighborhood, I’m not sure why there is a rush to become a homeowner (and incur the taxes, maintenance costs, etc. to go with it) unless mortgage payments would be significantly lower than rent in your area.

      The younger you can start saving for retirement the better since the money will have much more time to compound. Pushing off the saving even 5-10 years has a meaningful impact on your eventual retirement nest egg. My take on it is that as soon as you build up a 6 month emergency fund, I would start diverting the $2k per month you are putting there largely into your 401k (or maybe contribute $1000 per month to the 401k rather than max out and put $1000 per month toward the house down payment). Women tend to live longer than men and earn less over their entire careers, so starting to save as much for retirement as possible as young as possible is really important for us! Personally, I would put off the major push toward down payment savings until you are close to paying off your student loans.

      That’s just my two cents… I don’t think you made a bad decision going to law school at all! Sounds like you love being a lawyer and you’re making a great living that will allow you to pay off the loans in a reasonable time frame. I think it just means it might make sense for you to reorganize your savings a bit. Hope this is helpful… good luck!

      • Anon for today :

        Thanks for the thoughts … I think rent versus a mortgage (once I no longer live with roommates as I do now) will be similar in terms of cost so maybe its ok to wait longer to buy a home.

        Regarding the 401K I too think I will be in a comparatively lower tax bracket when I retire but I’m also balancing that against my strong belief taxes will go up between now and then!

        • At that salary, you should definitely max out your 401K for the tax benefits. Agree with the recommendation that after setting up your 6 month emergency funds, you should divert that money to the 401K. I would focus on your private student loans and 401K before thinking about a down payment.

      • I don’t agree with Dave Ramsey – debt is ok, if generally the interest rate is low, i.e., lower than the rate of inflation. If you can invest now for retirement, then you can make lots more money then you would in the long-term by paying off your student loans now.

        • Anon for today :

          Just out of curiosity are there any loans other than a mortgage that would have an interest rate lower than the rate of inflation, at the moment?

          And my loans are federal, not private — the rates on federal loans have gone way up!

  28. Mint.com doesn’t work for me abroad, with no US savings account, but I just wanted to say thanks to whomever posted the link to the Google Docs annual budget in Monday’s discussion.

    I spent some time putting all my estimated data in there (after figuring how to save the template to my Google account), and I started thinking a lot more about what I’m spending money on.

  29. L from Oz :

    Perhaps I’m just hideously old-fashioned, but I keep my budget on paper. I have an account book that lives next to my computer, with pages for monthly budgets, actual spending (done per week, based on cash withdrawn from ATM), and balances in various accounts, both for savings and debts.

    I like being able to see things at a glance, and make quick changes as needed. Also, my finances are very simple, so anything else seems like overkill.

    It certainly works for me – I can say at any given moment I have x saved, owe y, have z left to spend for the week, and hoping to buy a+b in a couple of months!

  30. I would love to use a site like Mint.com, but I use a Credit Union, and it doesn’t work with Mint. Other sites are similar – unless you’re using a large bank, most of those budgeting systems aren’t compatible. I love the idea of having my budget on my phone or accessible by a computer, but I am stuck using Excel or an old version of Microsoft Money.

    Has anyone who uses credit unions been able to manage your budget online, or through a smartphone?

  31. Le Hubb’s paycheck is direct deposited into “our” account that all the bills are payed from, my check is my “mad money”, his royalty checks(or the paychecks from his “for fun” job ) are his “mad money”. His little brother that lives with us & has access to “our” account. We don’t have much of a system other than that – we’ve got a white board with the amount that’s in “our” account every payday (bi-weekly) written on it and we stick post-it’s on the board of what we spent money on then write new total of the account text to the post-it… horrible system but it works.

  32. I have a love and hate relationship with my budget. There are times where I feel that I can do without it, but it always come to bite me in the behind.