Wednesday, January 16, 2008

2007 Cash Flow

Still slicing and dicing my 2007 analysis... "Cash Flow" may be a bit of a misnomer, but since part of my budgeting strategy is to ignore money that goes straight into savings and worry about the rest, I always like to look at how the net cash from my paycheck compares to my spending.

Gross pay: $101,528
Deductions: -$2,076
Taxes: -$29,068
401k: -$15,500
Net take-home pay: $54,881
Expenses not counting taxes, business expenses, etc: -$54,356
Net take-home pay saved: $525

Ugh! The budget I originally drew up for myself had me saving more like $3,000 from my take-home pay. But again, I can't beat myself up about it too much-- it was really the household stuff that set me back this year. My original budget for furnishings just wasn't enough. Other than that, my spending was pretty well under control.

There were 5 months during the year when I spent more than I made and my take-home pay savings were negative. Towards the end of the year, after my 401k deductions had ended, I had months where I saved as much as $1,184 out of my paycheck. Ideally, I wouldn't want to go into the red during any month, but it's hard to avoid when occasional big ticket expenses come up.

Anyway, I like tracking my spending and savings this way. Even if I really saved more like $16,000 when you factor in the 401k, I like to just pretend that isn't even there, and set a goal for saving more money outside of those automatic deductions. Once I finalize my budget for 2008, I will set up an automatic transfer to my online savings account of whatever goal I set for take-home pay savings-- it will be a good way to keep my local savings account balance low, which will remind me when I am overspending!

1 comment:

Anonymous said...


Definitely don't beat yourself up about it...remember, you're doing great financially. Some years just end up being a learning lesson...take it for that. Just remember to treat after-tax savings from "take home pay" (after retirement contributions) just as you do with retirement yourself first, put some aside somewhere and forget about it. Then spend what's left over.

Also, I've noticed with your income/tax burden and the investments you have...its time to at least consider (if you haven't already) a tax-exempt place for your excess emergency savings. I've noticed you have quite a bit in laddered CDs/regular savings...this all generates taxable interest income. Since you have a high income in a high tax state (NY) you should really think about ditching the laddered CDs for a good federal & state tax free money market fund. Vanguard has some good ones that invest in state/local munis for those of us in high tax states (I use the one for CA, a very high tax state). After taxes, your yield will likely be higher than what you get now. Here's a link: If you read through the prospectus, it gives you an idea of what tax brackets should be in tax-exempt vs regular. Vanguard even has a calculator to help you decide (you have to know your federal & state tax brackets): You just select your state, tell it your tax brackets and it will tell you what after-tax yield you need to beat their tax-exempt yield. Check it out, I have a feeling it may be good for you!

JT in SoCal