Overdid it this month

So November isn't quite over yet, and already, I've blown through my monthly budget. My method of budgeting is pretty loose. I earn X dollars. Every month, I put Y dollars into long term savings (and make retirement account contributions). Everything left (let's call it Z dollars) goes into a short term savings account to be spent throughout the month, though the plan is always to have money left over so I'm increasing my savings even more.

November? I spent Z dollars. And then I spent more than Z dollars. Not by a lot, only about $50 or so, and technically, part of that was shipping some bar exam review materials to a friend who who bought the books off of me, and when she pays me, the check will be more than $50. But still. The spending was a little out of control this month. Of course, because I always try to have money left over at the end of the month, the extra money just comes from the money I didn't spend last month, so I didn't go into debt or have to delve into any of my long term savings accounts.

Regardless, it was definitely a wake-up call. Normally, I manage to stay well within my budget. While I put money into short term savings so I can spend over my monthly budget on occasion, that is designed for special expenses, like plane tickets, for example.

So what am I doing to fix this problem? First off, I printed out a categorized list of all my expenses for the month. A quick glance told me that a chunk of my spending came from gift purchases, both Christmas and birthday gifts. Ok, so that was unusual spending. But what else was there? I spent more than normal on groceries, and while a bit of that was purposeful stocking up, some of it was frivolous treats. So that's something to watch for December. I also spent a chunk of money on dining out. While I do budget for meals out with friends, I also noticed a number of meals that I picked up on the run. That's not something my budget or my waistline needs. Of course, it wasn't a large amount of money, but all those little things do add up. And last, but not least, I did some Black Friday shopping. Again, not much (I spent under $100), but it all adds up.

So the goal for December is to spend less than I normally spend, to truly watch what I'm buying and try to make smart choices. After all, my new savings plan starts in January. I need to get ready!

Why Track Net Worth?

If you read personal finance blogs, you have most certainly noticed that some PF bloggers post their net worth every month and track the increases (or occasional decreases) in public for anyone and everyone to see.

While I'm not quite ready to put my numbers out on the internet (I applaud those who do), I have started tracking my net worth in recent months, and I find it very interesting to follow and I also find that it's kind of an additional reminder to keep saving. It's nice to see that percentage increase every month. So at the end of every month, I fill out my little spreadsheet and figure out what has happened with my net worth over the past month.

What do I track? I track more than some people do, and less than others. I don't own a home, but I do own a car. I don't track the value of my car in my net worth though. Would I track a house? I don't know. It's a hard number to pin down, and I like that my net worth is pretty exact. I track all of my bank accounts, of course. I track my stocks and mutual funds. I track my CDs, but only list the value at maturity, not the current value were I to redeem them early. I also track my Roth IRA and my 401(k). Those are all pretty standard categories. But I do track a few other things:

Cash - this keeps me honest
Laundry card - in my building, we use pre-paid cards for laundry. If I didn't track it, I know I would be waiting to reload it until after the 1st of the month
Metro Card - same deal, though my job does most of the reloading for me
Gift Certificates - I found that putting these into the spreadsheet reminded me of what I had and also will help me control spending. Instead of thinking of them as "free money," I think of them as alternatives to using the money in my bank account, and I end up saving rather than "spending" double.

I realize that some people may not agree with my additional tracking categories, but this is what works for me. I find myself getting excited at the end of the month when it's time to update. I just hope that the market does a bit more rebounding before the end of November though, or I'm definitely going to reflect a loss this month.

What is this site about, anyway?

A Dollar a Day is a new saving plan that I have put in place for 2008. The goal is to see just how much money I can save in a year by taking little tiny steps.

There are two components to this plan.

1. As you can probably tell from the title, the first step is to save one dollar a day. That means in 2008, I will save a minimum of $366 with this plan (2008 is a leap year).

2. The second part of the plan is a bit more complicated. I plan to save all the money that I otherwise would have spent. Well, duh, you say. Whatever you don't spend, you save. Obviously. No, here, the plan is to start making good choices. Normally when I go to the mall, for example, I get a bubble tea on my way home. So every time I go to the mall and don't get the bubble tea? The cost of that tea goes into savings. Also, any time I buy something that is cheaper than what I normally buy, I will put whatever I save into savings. To continue with the beverage example, if I go for coffee and I would normally get a large coffee, and instead I get a medium or a small, I also will save the difference between the two costs. Other rules will be added as I go along. Follow along and see!

What am I going to do with all of this money? I don't actually know. I'll see where it is at the end of the year. Maybe it will go into savings or into a vacation fund or maybe it will be part of my Roth IRA contribution for 2008. Who knows!

How will I keep track of everything? That was actually something I struggled with. I'm planning to open a separate ING Direct Savings Account for $1 a day part. For the other savings, I have not decided whether or not this will involve a physical move of money. Once a month, I will transfer the savings from that month into the savings account. I will track everything in a spreadsheet. Why not transfer on a daily basis? Primarily because most savings account have a limit on the number of times you can withdraw from your savings account per month.

So there you have it. The basic plan. Anyone want to join me in this adventure?