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08/19/2009

The Best Way To Budget…EVER

People often ask me, “Haven’t I ever seen your picture in the post office?”

But people also often ask me, “What is the best way to do my budget?”  “How do you budget Pete?”

First let me answer the last question.  I like to keep my budget simple.  Budgeting for me is more difficult than most since, as a self employed person I get paid in various amounts.  Sometimes payments can be MONTHS overdue so I really need to plan ahead. 

Basically I like to take the old “eat that frog” strategy and do the tough stuff first.  So once I had $10,000 saved up in an emergency account, I begin every year by maxing out my retirement accounts as quick as I can.  Then I think about large purchases that I might HAVE to buy that year.  (For instance, a few years ago, Old Pete, never the diligent flosser, spent a bit too much time with his dentist.  About $1500 too much time.  My dentist told me in advance of the beating, so I had time to plan ahead.) 

Also in this economy I have a rental property that falls about $100 a month short of its mortgage.  While I could budget to pay the $100 every month I prefer at the start of the year to pay the full $1200 into the operating account and not have to worry about it the rest of the year. 

I do this because come say…April-ish I’ve wiped out almost all my big expenses so for the most part I can spend money like a drunken sailor.  Not a “wild turkey” drunken sailor (because I still have bills to pay) but kinda like an Amstel light drunken sailor.  It’s easy for me to have fun since the big stuff is already out of the way.  If speeches/book sales/go go dancing doesn’t bring in the money I hoped well I have less fun for the year but I have paid myself first. 

So that’s how I do it.  Now onto the other question (not the post office question, the other question.)  What is the best way?  Quickbooks?  Mint.com (shame on me I have YET to check these dudes out.  Write back and tell me what you think of them.)  Excel?  The old yellow paper and pencil (typically also yellow?) 

The short answer is, and I mean this, do what works for you.  That is the BEST way to budget whatever your system is.  I like to get all my big problems out of the way.  Not only is it easy for me it relieves a lot of stress throughout the year.  But others especially when money is tight, really need to do something month to month or even week to week.  Whether that is a software program an online program or just on paper, create a system that works for you and STICK TO IT! 

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