I've updated last year's budget to plan for 2013's expected income and expenses. Most expenses are reasonably predictable on an annual basis, but may vary considerably from month-to-month (such as annual care registration and insurance payments, quarterly utilites bills and so forth). The category 'Food etc.' is subject to the most uncertainty, and could either 'blow out' or (far less likely) come in 'under budget', as it includes many miscellaneous items such as household cleansers, medicines and eating out, and the weekly grocery shopping currently includes a substantial amount of unplanned discretionary spending on snack and junk foods, softdrinks and so on.
The planned budget just matches overall expenditure to my employment income, and assumes I can avoid unplanned spending on discretionary items such as electronics, holidays and so forth. Based on my track record for 'spur-of-the-moment' purchases of electronic gadgets, books and stuff for the kids, this may be an unrealistic plan. The budget may also come under pressure from above-CPI increase in petrol costs and utility bills, as any pay rise next July is likely to be only a CPI-adjustment.
The 'Housing' budget item only reflects my cashflow into our Joint account. It doesn't include DWs matching contributions into the Joint account, and the Joint account funds both our home loan payments, investment property loan payments, and childcare payments.
The budget doesn't include any investment income streams or other investment loan interest payments. Our rental income (assuming we get a new tenant early in 2013!) flows into the Joint account and helps fund the combined interest payments on our home and investment property loans. And my share and mutual fund dividends are either re-invested automatically, or is deposited into a bank account that is used to help fund the interest payments on my investment margin loans. If there is insufficient funds available to meet the margin loan interest payments I 'capitalise' the interest using funds from my 'portfolio loan' account. Over the next few years some of my capital guaranteed hedge fund investments (that don't pay dividends) will mature, and I will use to proceeds of their liquidation to reduce the balance of my margin loans. The medium-term goal is for the non-reinvested dividend income to be sufficient to fund the interest charged on my margin loans.
I'll start tracking actual income and expenses each week against the budget forecast from January onwards, either using a spreadsheet I've prepared, or possibly using the old version of Quicken I already have. If I have the time (and inclination) over the holiday break I will setup the budget categories and projections in Quicken, and also setup records for my current shareholdings. If I can get the purchase history of all my remaining stocks recorded in Quicken it will make capital gains calculations much easier for my future tax returns. Unfortunately there will be a fair amount of work involved, as many of my share holdings were built up over time through multiple purchases, dividend reinvestments and stock splits, and have been reduced at various times through sales of part of my holdings. Working out the true 'cost basis' of my current share holding for each stock therefore requires checking through all my past tax returns to see what lots were nominated as having been sold in previous capital gains calculations. The process is also complicated by a few instances where a company was 'taken over' by another company, and I was issued with a mixture of shares and cash (and sometimes in 'odd lots' of shares in several differnt 'spun off' companies!).
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1 comment:
Creating a budget can be hard. Sticking to one sometimes seems impossible.
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