Posts tagged with "budget"
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Budget 2024 And How It Affects Me
Budget 2024 announcements concluded and like every year I have to check if it affects me. This budget was a major headache for my calculations. It doesn’t affect how I invest but making the tax calculations will take a lot of time. There were some bad surprises but that is how budget works. You just have to work with it. For one, the short term capital gains tax was increased from 15% to 20%. Indexation benefits have been removed. A big blow for real estate and long term debt mutual funds (in certain cases). There was some good news in the way of changing tax slabs for new regime and increasing standard deductions, but neither of them apply to me.
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Changes To Extraordinary Items Reporting
Recently I made some changes to how I report my extraordinary items. These items could be expenses or income. An extraordinary item is an unusual expense or income that is not accounted for in budget. Generally, I have planned expenses and have a budget for them, but in some rare cases, I had either unexpected income or expense that was not planned. Earlier, I used to consider all extraordinary income as growth in corpus and all extraordinary expenses as growth in expenses. But lately I have changed the reporting. Now, both extraordinary expense and income are considered as growth or drop in corpus. I applied the changes retroactively to all old expenses too. Read on to understand why I made this change.
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Year In Review - 2023 Annual Expenses
In the previous post I wrote about my monthly expenses. This is the continuation of that post and I will be covering my annual expenses in 2023. While monthly expenses are those kind of expenses that occur more frequently, yearly expenses occur rarely, perhaps once every few years like house repairs or buying a new car etc. I will explain where we are spending the most and why. Remember that for all the expenses, whether monthly or annual, the money is coming out of my retirement corpus which consists of a bunch of debt and equity mutual funds. There are no other incomes or special savings for annual expenses. Last year’s annual expenses were low because thankfully we did not have any big ticket item like buying a car.
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Year In Review - 2023 Monthly Expenses
It is about time I reviewed my monthly expenses for the past year. I do this activity at the start of every year. There are two kinds of expenses I track. One is monthly expenses which sort of appear most months like food expenses, internet etc. Then there are those expenses that occur once a year or once every few years. Those are considered as annual expenses. In today’s post I will go over the monthly expenses of last year and how it compares with the budget I made at the start of 2023. Lets also look at inflation since my retirement. Later in the post I will inflate my monthly expenses and set a budget for 2024. Lets dig in then.
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Budget 2023 And How It Affects Me
Every year after the union budget I publish a post on how it affects me. I am doing the same again now. Usually the budget does not affect my financial planning much except for that one time when the finance minister introduced the tax on long term capital gains on equities. This budget was pretty mild and simple. No nasty surprises (at least for me). The only announcements that needed any financial planing were –
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Year In Review - 2022 Annual Expenses
In the previous post I wrote about my monthly expenses. This is the continuation of that post and I will be covering my annual expenses in 2022. While monthly expenses are those kind of expenses that occur more frequently, yearly expenses occur rarely, perhaps once every few years like house repairs or buying a new car etc. I will explain where we are spending the most and why. Remember that for all the expenses, whether monthly or annual, the money is coming out of my retirement corpus which consists of a bunch of debt and equity mutual funds. There are no other incomes or special savings for annual expenses. Every year since retirement we have seen different kinds of expenses and last year wasn’t any different either.
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Year In Review - 2022 Monthly Expenses
You already know about the two kinds of expenses that I track – monthly and annual expenses. You probably also know that I publish my expense report for the past year and mull over it a bit. Then I create a new budget for the expenses for current year. Following the tradition, here is a post about my monthly expenses in 2022 and the budget for 2023.
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Expenses Revisited: 2022 Edition
Hopefully you understood how I funded the purchase of a new car. The summary of it is that I already anticipated all kinds of expenses I might encounter in retirement and then some (called as miscellaneous). Based on those expenses I figured out a corpus big enough to handle not just our living expenses (called as monthly expenses), but the major expenses such as buying a car or laptop or new furniture etc called as annual expenses. I will get to that number in a minute. So using my investments, I was able to fund my car. Basically, I sold a few units of my debt mutual funds and paid for the car in full. In this post I would like to revisit our cumulative expenses and corpus as on date after the major car purchase expense.
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How I Funded Purchase Of A New Car
If you have been following my past few posts, you already know that I purchased a new car. You might also recall that the budget I set for the new car was Rs. 6 lakhs. In this post I want to answer some of the questions that might be popping in your mind including why I have a specific budget and how I funded it. I have just one portfolio which is my retirement corpus. I don’t maintain different portfolios for different goals, because I only have one goal which is to stay retired for ever :). The retirement corpus is supposed to fund all expenses in my retirement. It could be any monthly expenses like food, petrol, electricity, kids expenses etc. Or it could be some big annual expenses such as buying a car or painting the house etc. If you want more details, I suggest you follow the links above and read about my expenses first. I explained everything in detail.
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Buying Stuff
In the past, my buying pattern used to be like this – Hmm, it has been a couple of years since I purchased my last laptop / phone / insert some tech gadget here, I think it is time to upgrade. Let me see what the latest and greatest available technology is today in the market. Core i7 with 4 cores and nVidia graphics card is the latest. What is a good laptop brand? Ok, let me buy it. Done! Do you see any issues with this kind of thinking? Well there are a lot of things that are wrong with what I just said there.
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