I’ve tried, I just don’t suceed at zero based budgeting.

Over the years I’ve tried to budget many, many times.  It just doesn’t work for me.  I guess in the grand scheme of things I don’t want to 1. write down that I spent $1.25 on a pack or gum or 2. Decide at the beginning of the month I will spend $250 on Groceries, $60 on eating out and $215 on clothes.  I’ve even tried a few programs that help me with these two aspects even to the point of linking my credit and debit cards to them so the information could be pulled into the system directly.  I’d plug along for a few weeks to a few months and then I just stop.  I think I just can’t get excited about it because I’ve always managed to overall live below my means.  A budget might make me able to squeeze out a few extra percent of savings but I’ve always managed to Max out my retirement savings and recently my overall savings rate has been above 25%.

So how can I save so much when I don’t budget, I fall into the scarcity camp of “budgeting.”  When I was hired in 2000, the rules on 401k’s were a bit more cumbersome then they are now.  The IRS set limited contributions to 10% of base pay for all contributors along with an overall dollar limit  and most companies did not allow you to start contributing until you had been with the company for 6 months to a year.  I fell into the almost a year stage.  The government allowed you to start based on the date you were hired.  I was hired Mid-July which meant I could not contribute until July 1, 2001.  However, there were these forms all over the place that allowed one to sign up to purchase US EE savings bonds directly from your paycheck.  So I did.  An this began my process of automating my savings off the top and then allowing myself to spend the rest.

It began with the savings bonds and an automatic maybe $50 transfer from my checking to my savings account every paycheck.  Next, when I was eligible I immediately contributed the max I could to my TSP (401k) account which was difficult as rules were different in 2001..   I was only able to contribute 10% of my pay up to $10,000 in 2001.  I made about $50000 that year so only contributed $2,500 starting in July.  Plus once the rules were changing each time I could raise my contributes I also happened to be getting my yearly pay raise with the pay raise being larger than my additional contribution.  Sometime in the mid 2000s, someone told me about this thing called and IRA and I added one of those.

As I noticed my checking account growing I adjust that $50 paycheck transfer to my savings account upward.  Soon someone else talked about how they kept their savings in a Money Market fund that earned them about 4% which was more than my savings account gave me.  And hey my bank offered one.  While I was signing up for my money market I saw that my bank offered these things called mutual funds.  So I started adding those as well.

Now over the years I’ve had to adjust my automatic savings down as well.  I’ve done it for one reason, my housing costs changed, going from renting, to renting and co-owning a vacation condo, to owning a co-op and that condo, and finally to owning that condo, the co-op and a house.  In a similar manner I automatically adjusted my payments on those properties to a higher rate in order to pay off the loans sooner.





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