June 19th, 2008 - Budget for a recession
Gather Little by Little talks today about increasing budget categories beyond what’s actually needed. I’ve just done this with Auto: Fuel. His reasoning and mine are the same: If you are pushing up against the amount you’ve budgeted and you’ve already taken steps to reduce your usage but prices are rising, you have to increase the amount you put in that category. But if you put in only a little bit, in another few months, you’ll have to adjust the budget again. And again. On the other hand, if you pad it by increasing it by 25% right away, you have more time before you have to adjust again. And having money set aside makes it easier to keep paying all the bills.
We’ve been doing quite well on Auto: Fuel. I was so proud of myself. And then, in the last three months, including one in which we took a 2-week trip and all gas was paid out of the travel budget, we went over budget. I was surprised, until I read that gas prices had DOUBLED since I last adjusted the Fuel category. We had definitely decreased our driving; for instance we used to take weekly trips to Neenah and probably 1-2x up to Appleton (not counting church). Now we go less than once/month (not counting church). (And due to illness and bad weather, we didn’t attend church much this winter, either.)
Since we are losing the car loan category, I decided to put the amount previously used for service into the fuel category, which increased it 50%. We’ll use the car payment to save for another car AND to pay for service. Tightens that category a bit, but I still think we can save enough for a major down payment on a new car in 5 years, even if we have something major go wrong with the current car.
I probably don’t even need to say that we will not be increasing out car usage simply because there’s more money in the account. We’ll continue to be careful. If there’s more than we need at the end of the year, it will be used to counterbalance other categories that weren’t properly budgeted.
Leave a Reply
You must be logged in to post a comment.