It’s that time of year, when I tally up the numbers for this years' budget and see how I did compared to my budget.
Then I use the results to create next years' budget. Here is a shortened list of the primary items with my monthly proposed, actual and difference calculations.
2008 Budget Reflections
Annual $ Difference
ELECTRIC & GAS (heat)
CAR & INSURANCE
PRESENTS / GIFTS
KIDS & school
MEDICAL & Fitness
Food – According to my family, food inflation was 13% this year with respect to my projected budget. But, with respect to my actual 2007 monthly food expense of $413, food has increased 23% this year. With respect to our family of five (including the baby), this is still a pretty low number. Our food cost is $510/30.3 days per month = $16.8/5 people (including the baby) = $3.36 per person per day.
That's cheaper than one meal at McDonalds. So, what exactly do we eat? Actually, we eat pretty well. The reason our food expenses are low is because we have a large garden, which I have estimates to be worth $3300/year. If we didn’t’ garden, our monthly food expense would be $785/month. We are also not afraid to eat left overs.
Car Gas – With gas prices spiking this summer and then dropping back down, it has been about a wash. The reason our car gas bill is down about 5% this year is primarily because we had a baby in July and my wife didn’t get to run around as much as she would have liked to. Next year, we will probably increase our driving but with low gas prices, I’m not sure what to project in next years budget.
Electric & Gas (Heat) – According to our budget, energy increased by 18%. That is a major increase in one year. I can only hope that goes down now with gas prices, but I’m not sure that will be the case. Coal and Natural Gas are will in high demand around the world.
Water, Garbage, Sewer – According to our budget, our water utility bill has increased by 17%. That is also a major increase over last year. I’m not exactly sure why. We have consumed about the same about of water and produced the same garbage. I think a majority of the increase has been from city tax that has been added on to our utility bill because they are getting less and less money from property taxes as the value of homes continues to drop.
Car & Insurance – Not much change in this category. We didn’t purchase any newer vehicles this year and don’t plan on it next year.
Mortgage – Little change here. Our mortgage went down a bit because our property insurance went down a bit, which is escrowed into our mortgage payment. Our city lowered the value of our house by 0.8% just to show good faith that they are willing to lower our home value. But, the national average drop in home value is 16%, a far cry from 0.8%. If our city lowered everyone’s house values by this number, the tax revenue would drop too much lower than the budgeted expenses. There hope is that most people just go with the 0.8% and don’t have time to complain. This strategy worked this year, but next year is another story. They are going to have to drop home values by a much larger amount and cut the budget way back.
Presents & Gifts – My wife handles most of the gifts and presents in our family. I was surprised to see this number drop. Most of the time this number increases as our extended family continues to grow. The number of gifts we by for each other is also dependent on the stability of everyone’s jobs. As soon as one family member gets laid off and cuts back on gifts, everyone else is sure to follow.
Miscellaneous – I was surprised to see our misc column decrease with the new baby and all this year. The only reason I can think of is that the new baby has keep my wife from shopping as much as previous years.
Kids & School – Again, I’m surprised to see this column decrease and I’m not sure why. We usually spend about $1800 on homeschool supplies for our two oldest kids.
Medical & Fitness – Ok, so I under estimated by $3800 dollars. I changed health insurance companies last year with the intention of reducing our total health care cost. Our total health care cost was $5100 (insurance) + $5200 (medical bills) = $10,300. That’s almost as much as our mortgage (13K). Of course our new baby was the contributing factor to the increase, so next year we should see a return to ‘normal’ in this category. Part of the reason that my projection was so far off was because I looked at the costs we had seven years ago with the birth of our last child. Apparently, medical costs have drastically increased over the last seven years and now I see what everyone is complaining about.
All in all, we had a good year. In total, we were only off our budget by a small amount. The uncertainty in the economy right now is going to make it much harder to estimate next years budget. I may have to create a plan A and a plan B. Plan A will be my standard budget with respect to this years changes. Plan B will be if I were to get laid off and we ended up with only half our income. I hope we never have to use Plan B, but it never hurts to have a backup plan. I hope your budget went well this year and good luck budgeting next year.
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