financial planning for hidden expenses

Copyright 1999 by Michael Ham

Maldaianu
florinn81@gmail.com
23/05/2011

Introduction
All summer long the ant steadily accumulates a food storeseed by seed, leaf by leaf. The
grasshopper spends the summer without a thought for the future, to perish miserably when
winter comes.
Being an ant means that you steadily put aside money that you know you will need in the future.
The individual amounts are small, but they accumulate over time. And when winter arrivesin terms,
say, of a month when the auto insurance, auto registration, and house insurance all come due
and the hot water tank and dishwasher fail completelyyour daily living expenses are totally
unaffected because you are financially ready.
This workbook helps you plan your spending and see the effects of that spending on your income,
both immediately (as when you spend the money) and long-term (as you set aside the money to
maintain and replace your purchasesfor example, money set aside to replace the tires and
battery for your car, the roof and carpeting for your house). By seeing exactly where your money
must go, you have a better sense of the amount of money you actually have for discretionary use:
you get a better sense of your current financial limitsyour means. Your happiness depends on
on your living within those limits. As one of Dickens's characters put it:

Annual income twenty pounds, annual expenditure nineteen nineteen six, result
happiness. Annual income twenty pounds, annual expenditure twenty pounds
ought and six, result misery.
Many people are unaware of the implicit expenses they have committed to pay, and so they think
they have more discretionary income than they in fact doand they spend it. They don't see the
hidden part of the iceberg, which wrecks their financial ship just as it was coming in. When the time
comes to pay the piper to replace some vital appliance or make an annual payment, they find
themselves short. And miserable.
This workbook will let you know just exactly how much you are free to spend. One benefit is that
you don't have to record exactly where they money goes: you're perfectly free to spend it as you
wantup to the limit that you've set. So long as you stay within that limit, you can be sure that
you'll have the money you need for the future: to pay expenses and to buy those big-ticket items
you have planned for.

Instructions for use

1. To move within the workbook, use Ctrl-PgDn (to next page) and Ctrl-PgUp (to previous page).
Or you can click on the appropriate tab at the bottom of the worksheet.
2. Review the Frequently Asked Questions (next page)
3. Go through the pages in order, filling in the blanks. You can make entries wherever you see a
blue font. If you don't know exact amounts, use your best guess. Some entries are labeled to
remind you of possible entries; you can overwrite irrelevant labels. Calculations are done for you.
4. When you get to the summary page, look at where you stand. You will probably make several
passes through the workbook, refining and adjusting your entries, before you're satisfied.
5. In the initial few months, you will probably get some periodic bills that you've overlooked. Add
them to the workbook in the appropriate location and adjust figures as needed.

Contents of the workbook

FAQs
Your income
Cash reserve
Savings
317186292.ods

Frequently asked questions, and their answers. Review this before you start.
Just your take-home pay, which is what you control and spend.
A reserve equal to 3-6 months of take-home pay.
A portion of your income set aside to fund your retirement.
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Fixed expenses
Replacements
Weekly allowance
Periodic purchases
Future purchases
Summary
QuickForm
Tips
Your worksheet
WYM License

Expenses that you must pay over the course of a year.

You also must pay to replace things that eventually wear out.
Partly discretionary, partly not; paid by cash from your pocket.
Discretionary purchases paid by check periodically.
Big-ticket discretionary purchases that you must save for.
A summary of your income and where it goesand where you are.
You can switch to this format once you're familiar with the method.
Ideas to help pare your expenses.
An unprotected worksheet for your own use; you can add others.
You agreed to the terms of this license agreement.

Go on to the next page (press Ctrl-PgDn).

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FAQs

Frequently Asked Questions

Licensed to:
Maldaianu
florinn81@gmail.com
23.05.2011

1. Can you briefly summarize what this workbook is based on?

In a nutshell, the method consists of 4 steps:
a. Recognize that you have a limited amount of money that you can spend. Not only that, the limit is specific.
It is very important for you to discover the exact amount that is your limit.
b. Realize that some decisions and some possessions imply future expenditures. For example, if you decide
to buy a house, you not only have taken on monthly mortgage and property tax payments, you have taken
on: insurance, costs associated with upkeep (lawn equipment purchase, repair, replacement; replacement
of appliances (furnace, washer, dryer, refrigerator, dishwasher, hot water tank, etc.) and of parts of the house
(roof, exterior paint, interior paint, carpeting, draperies, etc.)), and so on. This is not to say that the house
and the intangibles of owning a house (privacy, security, comfort, etc.) are not worth these expenses, but
it is important to recognize your commitments to pay for these things when they fall due.
c. Your paycheck arrives with some amounts deducted to cover some expenses: federal and state taxes,
social security payments, medical insurance, perhaps a 401(k) plan. But additional deductions must be
be made to cover lifestyle commitments that youve already made: auto insurance, auto registration, auto
maintenance, auto parts (e.g., replacing tires, battery, brakes, etc.), and so on. Your employer won't make
deductions for these, which are the result of your choices, but you know you must pay when the time comes.
You must be the one to make these deductions so that you have the money ready when it is needed.
d. Finally, balance and refine the list of deductions so that everything is covered and you know exactly
how much you can spend without dipping into money thats already been committed to pay future
expensesthat is, until you know exactly what you can spend and stay within your means.
Note that using this spreadsheet lets you explore the implications of new purchaseswhether you can in
fact afford the purchase and all the expenses that it implies. This method lets you clearly see the financial
implications of your lifestyle and your desired lifestyle, the income you have compared to what you've
already committed yourself to pay and what you want in the future. When you're able to look at the whole
picture, you may decide that some planned purchases are not worth the change in your lifestyle that would
be required to fund them and their implied expenses.
2. This workbook often asks me to provide monthly or annual amounts, and I simply don't know those
amounts. What do I do? Wait to collect the information?
Definitely not. Enter your best guessa glance through your checkbook and credit card bills will give you
some idea. Start with that, and then you can refine the figures over time. Note that the weekly allowance does
not require detailed itemization: you can spend that amount (but not more) each week with a free conscience.
The things that will probably require some on-going work are the monthly and periodic billsin your first cut,
you're likely to overlook some. But as the bills arrive and you pay them, add them to the appropriate category
and adjust the overall budget accordingly. Within six months, your plan should be very solid.
An example of estimation: Suppose you drive your car around 17,000 miles a year, and you get service every
7,500 miles. The service typically costs:
7,500 mile service: $90
15,000 mile service: $230
30,000 mile service: $400
So every 30,000 miles you have two 7,500 mile services, one 15,000 mile service, and one 30,000 mile service.
The average cost for the 4 services is $202.50: two at $90, one at $230, and one at $400, a total of $810, which,
divided by 4, gives the average service cost of $202.50.
The average monthly mileage is 17,000 divided by 12: 1,417 miles. So you will expect to have a service every
5.3 months (7,500 mile service interval divided by 1,417 miles per month). You would enter the (average) cost
of $202.50 and the number of months as 5.3 in the Fixed Expenses chart.
If your first service happens to be the $400 30,000-mile service, you just go ahead and pay it. You will almost
always have enough in that account, since you are accumulating money for many fixed expenses. This will
in effect "borrow" the money from the other accounts, but you pay it back the next time your car is serviced
(since you will have saved up $202.50 for the $90 7,500-mile service). It will all come out even in the long run.
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FAQs

3. My savings will accumulate not only the money I deposit, but also interest. How is that shown?
Interest amounts are not shown. The interest will vary as amounts are added to and taken from the savings,
but not showing the interest is an error in the conservative direction: the interest amounts will simply move you
to your goals faster, or (equivalently) give you a slightly greater financial cushion. In most cases, the interest
amounts are relatively small compared to your overall cash flow. The exception is when the money gathers
interest (or capital appreciation if it is in stock) over a long periodas for retirement savings. Even here you
might want to ignore the growth due to interest or capital appreciation and focus on the cash amounts you're
saving, since you don't know what impact inflation might have on your long-term savings: you can treat the
accumulated compound interest or the capital appreciation as a hedge against inflation, at least until the time
to use the savings draws near.
4. How can I know how much I can afford to put in the cash reserve or savings when I start filling out
the workbook?
You don't. Just make your best guess, and then at the end, as you review the Summary, you'll probably find
that you need to revisit your earlier worksheets and revise your estimates. This allows you to explore "what if?"
questions as well as trim the amounts to match your income. In your first pass through the worksheets, enter
what you think might work.
You might also want to look at how much you probably should be saving for retirement. Take a look at the
"Ballpark estimator" at http://www.asec.org (note: it is .org, not .com).
5. Some of the amounts turn out to be trivial. For example, a $10 pet license paid once a year comes
out to $0.83 per month. Should I just ignore these expenses?
No, enter all expenses that you can identify, regardless of how small the monthly amounts. Those monthly
amounts add up, and the idea in any case is to identify the amount of money that you have already committed
to future expenses. Saving for a hot-water tank that costs $250 comes out to only $1.04 per month, assuming
a 20-year life. Very easy to save, and very nice to have the $250 in hand when the water heater finally diesas
it will.
This plan attempts to cover all your expenses, and one way of looking at the expenses is that there are two
types: those that you pay from your weekly allowance and all others. If you don't put the annual pet license in
the plan elsewhere, you'll have to pay it from your weekly allowance when the license fee is due. Why take the
hit in your allowance? Move as many expenses as possible to the other categories. For example, if you pay
a gym fee of $30 once a month, you can put it in as a periodic purchase, from which account it will be paid.
Otherwise, once a month you have a $30 expense you have to pay from daily allowance. Unsatisfying.
6. How do I record and track the money I spend from my weekly allowance?
There's no real need to record and track these expenses at all. The weekly allowance is the money you have
to spend after accounting for all foreseeable expenses and prudent savings. You can spend it any way you
want. You will, of course, want to spend some for food (unless you are on a unbelievably strict diet :) and other
personal needs. All the tracking you need is to take the weekly allowance in cash at the beginning of the
weekend (so that you have money for the weekend), go to the supermarket and buy the food you'll need for the
coming week (so you don't go hungry), buy whatever you want from the list you accumulated during the previous
week, and then count and keep track of how much cash you have leftwhich must last you the week. You get
no more cash until the next weekly allowance day. In return, you don't have to record any of those expenses.
In fact, as you work with this plan, you will realize that you don't have to track and record expenses at all,
except for making sure that all regular and predictable expenses, including future purchases, are entered into
the plan. Then, as you limit yourself to spending your allowance on routine weekly things, your money
automatically accumulates to cover the other expenses.
Sometimes, though, it is very helpful to know how much is on hand for replacements, or for fixed expenses,
or in the cash reserve, or for future purchases. As you accumulate a larger total, you may want to open separate
savings accounts by category and transfer the appropriate amount into each account monthly. Then, when one
of those expenses comes due, you can withdraw the money from the appropriate account.
7. I work two jobs, but the workbook assumes that I'm working only one job. How do I handle that?
All the income figures are in fact taken from the annual income, so you can actually enter any amounts you
want in the take-home pay and the number of paychecks a year. The simplest way is to figure out for each
income the total annual take-home pay, add those amounts, and enter that in the "take-home pay from check"
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FAQs
box and then enter just a "1" in the "number of paychecks per year" box. The annual total will then be correct,
and all the other figures follow from that.
Example: in one job you get a weekly paycheck of $425 in take-home, and in the other you are paid twice a
month with take-home of $725 per paycheck. The annual take-home income for the first is 52 (weeks) times
$425, or $22,100, and the annual take-home from the other is 24 (twice a month) times $725, or $17,400. So
enter $39,500 ($22,100 plus $17,400) as your take-home from the paycheck, and 1 as the number of paychecks
per year.
8. My children get an allowance. How do I account for that?
You can do it a couple of ways. One way is to increase your own weekly allowance by the amount of the
children's allowances, and pay them from your weekly allowance. This is probably simplest. The other way is
to include the children's allowance in the Fixed Expenses. Suppose they each get $10 per week. This amounts
to a monthly amount of 2 x $10 x 4.33 (4.33 weeks per month), or $86.60 per month. By setting aside the
$86.60 per month for the Fixed Expense, you'll have enough to cover their allowance from this account.
If you have other questions, email info@withinyourmeans.com.
Go on to the next page (press Ctrl-PgDn).

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FAQs

mit is specific.

, if you decide
ou have taken
t; replacement
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er won't make
the time comes.

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priate category

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000 mile service.

al of $810, which,

a service every
(average) cost

You will almost

in the long run.

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FAQs

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FAQs

hen be correct,

weeks) times
or $17,400. So
mber of paychecks

e other way is
k. This amounts

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Your_income

Your income

Balance available: #NAME?

#NAME?

Licensed to:
Maldaianu
florinn81@gmail.com
23/05.2011

This workbook is aimed at those whose paychecks vary little from check to check. It can also be used by
those (such as people paid on commission or who work paid overtime occasionally) whose pay varies from
check to check; these people will enter their average take-home pay.
Start by entering your take-home pay (or your average take-home pay if the pay varies) from a recent paycheck.
If youre a couple, you may have two incomes; if you have only one income, use only the Income 1 column.
Income 1

Income 2

Take-home amount from check:

$1,700.00

How many paychecks per year?

12

Annual take-home pay

Monthly take-home pay
Available Monthly pay

$20,400.00
$1,700.00
$1,615.00

Income 1

Paid weekly = 52 checks per year

Paid every 2 weeks = 26
Paid twice a month = 24
Paid monthly = 12
Income 2

Only 95% of your take-home will be allocated.

Total Annual take-home pay:

$20,400.00

Total Available Monthly Pay:

$1,615.00

You must not allocate every penny of whats coming in, especially at first. There will be surprises, unforeseen or
forgotten expenses, variations from the average, etc. Base your planning on 95% of your take-home pay; the 5%
remaining is a safety net.
This plan focuses on monthly amounts because many payments (rent/mortgage, utilities, credit cards, auto
loans, etc.) are made monthly. But the plan will also take care of your daily expenses. Wait and see.
Go on to the next page (press Ctrl-PgDn).

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Your_income

ecent paycheck.

, unforeseen or
ome pay; the 5%

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Cash_reserve

Cash Reserve

Balance available: #NAME?

Licensed to:
#NAME? Maldaianu
florinn81@gmail.com
23.05.2011

The first step in allocating your income is to figure out how much you need in your cash reserve. The cash reserve
is increasingly important as employers become more accustomed to downsizings and layoffs as a way of
protecting their profit line. Dont be scared, be prepared.
The expense categories are in order of importance, from most imperative to most discretionary. The Cash Reserve
is first because it preserves your independence and gives you a choice. Humphrey Bogart called his cash reserve
the FY Fund because with it he had the choice of refusing roles he didnt want.
Without a cash reserve, your company may force you to do things with which you have profound moral and ethical
disagreements simply in order to keep your job. Such actions do terrible damage to your self-respect and your
comfort with who you are. In extreme cases, ones distaste with what he has done can result in shutting down
feelings and self-knowledge simply to avoid the pain of knowing. With a cash reserve, you can walk if you feel
you should.
A common rule of thumb is to have ready at least 3 months take-home pay in an account from which you can
withdraw money with no prior noticefor example, a passbook savings account (which unfortunately pays low
interest) or a money-market account (better interest). Depending on your situation, you might want 4, 5, or even 6
months of take-home in reserve.
Your degree of caution will be influenced by the economy, the demand for people in your line of work, the volatility
of your industry, your level (those at a higher level usually must look longer to find a new job), whether you would
likely have to move, etc.
To give you an idea of the range:
Three-month reserve =
Six-month reserve =
How big a cash reserve do you want?

$5,100.00
$10,200.00
$100.00

How much cash reserve do you now have?

Difference
How soon do you want to reach your goal? In
You'll take

$33.33 each month from your

$100.00Okay, we'll work on this

3
$1,615.00

months
leaving exactly

$1,581.67

for everything else.

Obviously, once you have achieved your cash reserve goal, you no longer include this monthly payment in
your plan, which frees up money for other purposes, such as retirement savings, savings for a house, etc.
Go on to the next page (press Ctrl-PgDn).

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Cash_reserve

Cash Reserve

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CASHFLOW

CASH FLOW

07.05.2016

CASHFLOW
SALARIU
ALTE VENITURI
DEP. CALC.
ASIGURARI
WEB DESIGN
INSTALATII

SPENDING
1,800.00 lei CATERING
INTRETINERE
400.00 lei SALUBRITATE
APA RECE
CURENT
TELEFON
INTERNET
CABLU TV
CARD
CARBURANT
FOOD
TAC
PET
WIRELESS
polin
boxe
masina
bicicleta
purcei
gresie

DISPONIBIL

658.00 lei

RETR. ATM

TOTAL

2,200.00 lei
CASHFLOW

ASSETS

658.00 lei

LIABILITIES

CASH ON HAND
ALBINE
7 COLONII

317186292.ods

TOTAL

658.00 lei
TAC
IMPOZIT
400.00 lei INTRETINERE
SALUBRITATE
CARD BCR
CARD BRD
CUNA MARINEL
APA SERV

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CASHFLOW

TOTAL

1,058.00 lei TOTAL

WORTH NET =

IMPOZIT MANDRA
Masina
Cladiri
Intravilan
Extravilan
Salubritate
PSI

TOTAL

317186292.ods

-7,892.00 lei

233
233
511
738
130
70

1915

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CASHFLOW

planificat
cheltuit
130.00 lei
130.00 lei
50.00 lei
10.00 lei
20.00 lei
110.00 lei
100.00 lei
35.00 lei
37.00 lei
16.00 lei
13.00 lei
60.00 lei
80.00 lei
200.00 lei
100.00 lei
50.00 lei
50.00 lei
30.00 lei
15.00 lei
15.00 lei

ALTE CHELTUIELI PREVAZUTE

DAN IVANCEA
MARINEL CUNA
DRUM BUCURESTI
ALBINE
CURS APICOL
postpone

40.00 lei
50.00 lei

TOTAL
80.00 lei
400.00 lei
200.00 lei
250.00 lei

200.00 lei

NEXT MONTH LIABILITIES

MOTOCICLETA
PERMIS MOTO
REMORCA
CENTRALA TERMICA
MOBILA

800
800
1000
1900
1400

929.00 lei 1,542.00 lei

CHELTUIELI FIXE

950.00 lei
780.00 lei
520.00 lei
200.00 lei
6,000.00 lei
290.00 lei

APA SERV

fact

22

WIRELESS

fact

15

CURENT
TELEFON

fact
fact

110
35

INTERNET
TAC
CATERING

fact
rest
fact

16
50
130

TOTAL

378

210.00 lei

Masina
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CASHFLOW

8,950.00 lei

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bendix
capace
spoiler spate
ambreiaj
cilindru frana
curea alternator
repartitor frana
ulei

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100
45
700
32
55
500
150

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ALBINE
Materiale
4 COLONII
ECHIPAMENT
RAME
faguri 1kg
cuie
sarma
2 cutii
faguri 1,5kg
2 cutii
2 hranitoare
5 cutii
apiinvert
afumator

Valoare investitie
400.00
85.00
27.00
30.00
3.00
12.00
60.00
54.00
60.00
16.00
80.00
160.00
75.00

Valoare actuala
2,800.00 lei

20.00 lei

60.00 lei
60.00 lei
16.00 lei
80.00 lei

Valoare totala estimata

Suma investita

3,036.00 lei
1,062.00 lei

Diferenta

1,974.00 lei

MIERE RECOLTATA lei/kg

TOTAL
2011
0 Kg
8.5
2012
20
8.5
160.00 lei

Infiintat stupii 1 si 2 pe cate 6 rame fiecare + 1 de crescut

STUPUL 1
STUPUL 2
04.06.2011
04.06.2011
Format pe 6+1 rame. Matca tanara Format pe 6+1 rame. Matca
neimperecheata. Am vazut mai
matura. Am vazut doar puiet
multe botci
capacit
Cutiile de la stupii 1 si 2 nu au diafragma.
17.07.2011
17.07.2011
Pus 2 rame la cladit
Pus 2 rame la cladit

STUPUL 3
25.07.2011
Stupul 3 pe 10 rame arata f bine
are miere si abina

29.Jul adus toti stupii acasa la mandra

18.09.2011 - tratamentul cu varachet
12,062,012
Luat rame cu puiet capacit si tanar
si o rama cu miere si infiintat stupul
1bis

12,062,012
12,062,012
Luat rame cu puiet capacit si tanaLuat rame cu puiet capacit si tana
si o rama cu miere si infiintat stupsi o rama cu miere si infiintat stup
2bis
3bis

04.06.2011

STUPUL 4
STUPUL 1bis
25.07.2011
12.06.2012
stupul 4 pe 11 rame arta superb. infiinrat stupul pe 5 rame
are multa miere si puiet capacit are botca
are podisor si diafragma

cutia trebuie reparata

stupii acasa la mandra

schimbat cutie
12,062,012
Luat rame cu puiet capacit si tanar
si o rama cu miere si infiintat stupul
4bis

STUPUL 2bis
12.06.2012
infiintat pe 5 rame fara botca

STUPUL 3bis
12.06.2012
infiinrat stupul pe 5 rame
are botca

STUPUL 4bis
STUPUL 9
12.06.2012
infiinrat stupul pe 5 rame
are botca

CALCUL RENTABILITATE ALBINE

VENIT BRUT
Nr. Stupi

Rapita (kg)
per stup total
5

Cantitate miere recoltata

Salcam (kg)
Valoare per stup total
Valoare
35 262.50 lei
2

TOTAL

CHELTUIELI

35 kg

Unit

Carburant
Cutii
Rame
Familii albine
Medicamente
Hrana albine
Materiale apicole
Materiale de protectie

Lei/Unit

==

Total

30

6.2
100

186 lei

1
1

160
60

160 lei
60 lei

Total

INVENTAR
Familii albine
Cutii
Total inventar

406 lei

Unitati

Lei/Unit
7
7

350
30

Total
2450 lei
210 lei
2660 lei

262.50 lei

Floarea Soarealui (kg)

per stup

ILITATE ALBINE
La data de

###
PRET CURENT MIERE

Floarea Soarealui (kg)

total
Valoare

RAPITA SALCAM
7.50 lei

15.00 lei

PROFIT
Venit
Cheltuieli
CashFlow
Inventar

262.50 lei
406.00 lei
-143.50 lei
2,660.00 lei

TEI

FL.SOARELUI
12.00 lei 10.00 lei