Available for Elixir Consulting.
Mike Zornek

Budget Revisit 2022

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The last time I wrote about my budgeting habits was back in September 2018, and the last time I looked over my numbers was in 2020 when I had just lost my active contract due to the beginning of the COVID pandemic. Today as I look ahead to the summer and the future completion of my current contract gig, it was a good time to revisit my numbers.

Like last time I’ll share how I collect and organize my numbers, and hopefully, it will inspire you to revisit or improve your budgeting solution.

First, I collect a categorized list of expenses. I tend to use my credit cards, bank statements, and my recently completed taxes as a source of truth. Over time you can even use your historical budgets.

For my personal and business expenses, I create a list of monthly and yearly costs. Inside each of those, I break things down as hard costs and soft costs. Hard costs are those expenses that would be difficult or dangerous to change, such as apartment rent or health insurance. Soft costs are those expenses that I could sacrifice if needed, such as Netflix or charitable donations. I’ll share some examples of my categories at the bottom of the post.

To organize these, I use an app called Soulver. It is an impressively clean but powerful way to collect line items and generate totals without the heaviness of a spreadsheet. I also appreciate how I can use programming-like comments starting with // to document my thoughts.

My goal is to generate an overall monthly total for both hard and soft costs (averaging the yearly as a generic monthly cost). I can then use that against my expected monthly income and available savings to help generate burndown charts and scenarios like:

  • If I were to completely pause consulting and focus on a personal project how long could I last comfortably on my available savings.
  • If I wanted to work the absolute minimum number of hours to pay for my unadjusted monthly costs (remember to consider taxes and savings goals), what hour total would I need?
    • What if I raised my hourly rate by X percent?.
    • What if I was willing to remove some of those soft costs?
  • If I wanted to have X amount in cash available for a house or car down payment in X years, how much extra would I have to work?

Keep in mind that you won’t work full time every week/month. Make sure to account for expected vacation time off and some sick days.

Budgeting like this is a great way to get clarity on your spending and hopefully nudge you to cancel or otherwise lessen the spending on things that are not a fair exchange for the level of enjoyment you get or just plain forgot about. Furthermore, learning to build up that savings pot can be incredibly empowering, allowing you to be much more selective when deciding what’s next.

Sample Expenses and Categories

Personal Hard Costs Monthly

  • Rent
  • Renter’s Insurance
  • Electric Bill
  • Gas Bill
  • Car Payment
  • Car Insurance
  • Car Maintenance
  • Car Fuel
  • Health Insurance
  • Vision Insurance
  • Dental Insurance
  • Prescriptions & Copays
  • Life Insurance
  • Grocery Store Food
  • Haircut

Personal Hard Costs Yearly

  • Sleep Apnea Equipment
  • Bank and Credit Card Fee
  • Healthcare Lab Fees

Personal Soft Costs Monthly

  • Eat Out Food
  • Netflix
  • Hulu
  • YMCA/Gym
  • Video Games
  • Music Subscriptions
  • Charitable Donations

Personal Soft Costs Yearly

  • Vacation
  • Clothes
  • Shoes
  • Gifts (Christmas and Birthdays)

Zorn Labs LLC Hard Monthly

  • GitHub Membership
  • Linode Hosting
  • Google Apps
  • CircleCI
  • Backblaze
  • 1Password
  • Bank Fees
  • Amazon Hosting
  • Verizon Phone
  • Verizon FIOS
  • Zoom
  • Dropbox
  • SBA Loan Payment

Zorn Labs LLC Hard Yearly

  • Tax Preparation
  • Hover / Web Domains
  • Network Security Software

Zorn Labs LLC Soft Monthly

  • Coworking Membership + Parking
  • Various Software
  • Various Podcast/Books/Education (This is one of my biggest categories!)

Zorn Labs LLC Soft Yearly

  • Various Software
  • Professional Memberships
  • Office Supplies
  • Professional Conference Budget
  • Content Licenses
  • New computer every other year: $4000 × 0.5
  • New iPad every other year: $1100 × 0.5
  • New iPhone every other year: $1000 × 0.5

I tend not to budget for new hardware purchases like computers or phones every year, but it is great to keep those purchases in mind.