zero budgetting

[GREENBACK]

I'm trying to wrap my head around just what you're asking here. You have $1250 as a surplus. You are looking to increase this surplus, right? You have debt,right? You want a zero balance on your monthly expenditures(no surplus) , right?

I think you need to apply that $1250 to your debt until it's gone to give the "zero balance" you mentioned. There are surpluses that can be created from the overspending in a couple of categories mentioned and that too should go to debt until it's gone. Basically, I think you might want to just get rid of the debt with any and all surplus that you can and apply any future(post debt) surplus towards whatever life goals(retirement and so forth) that you have. Shouldn't be hard to zero things out that way. I hope I'm understanding your question(s) correctly.

[disneysteve]

I'm trying to wrap my head around just what you're asking here.

I must admit I'm confused, too. It sounds like OP may be reading some type of budgeting guide and trying to adhere to those guidelines. Is that correct?

As for what debt means, for budget purposes, it would mean debt servicing, how much money each month is going toward debt payments. But I wouldn't just list it as "debt" but rather break it down by each debt you are paying on, so list the mortgage, car payment, student loan payment, credit card payment as individual budget items.

[Seeker]

Is this a textbook question or does it have any bearing whatsoever to your reality?

Do you have a $1250 surplus? If yes, then allocate it toward paying off debts first.

If you are trying to make the "surplus" = zero.... then pay extra toward debts.

If you are trying to increase your surplus, then curtail expenses in the "flexible" part of your expense items (food, clothing, entertainment, recreation, etc.).

If you really want to increase your surplus, then I'd ignore the suggested % (because IMO they are sorely out of reality -- nobody trying to save money pays 13% of their monthly income on food or automobile, nor 5% toward clothing etc) and calculate the real percentage based on your actual spending.

If the "actual" in your chart is real....

Housing you spend is 24% of your 7750 (assuming 1800 is accurate, inclusive of utilities)
Food you spend is 9%
Auto is 4%
Insurance is 1%
Debts is 6.5%
Ent/Rec is 6.5%
Clothing is 6.5%
Savings is 6.5%
Med/Dental is 1%
Investments is 13%
Misc is 6.5%
Surplus is 15.5%

Percentages above are not exact due to rounding, "surplus" is where I balanced the percentages to 100%.

The ratios or percentages above are the approximate reality of your "actual" per chart spending.

Depending on what you lumped into each category, only you can determine where to move and swap the numbers. But you need to change your budget to reflect your needs, not match some suggested needs that simply do not exist for you.

Again, you are not answering our questions and persist in asking the same questions in a different way. We've already answered... it's your budget, you can swap monies wherever you like depending on your goals.

This thread reminds me of another golfing poster.

[Seeker]

they as in the question. When the question says to balance(or create surplus) in the actual budget, what does it mean when it says create surplus since i already have a surplus of 1250? sorry for the confusion.

You have a surplus of 1250 ; most people do not have this much of a surplus each month. To "create" more surplus, you'd spend less in any of the previous categories. Spending less, creates more surplus automatically.

Again, i was not trying to say what the debt comprised of. sorry for the confusion. what i meant is, when we say debt, what doe that actually mean? does it mean debt reduction or debt expense?

Debt means simply, money owed to someone else. Debt is a promise to pay back in exchange for a service or item. The world revolves around "trade" -- and monies are what makes trade function.
You go into "debt" when you promise to pay in exchange for a living place (be it rent or home), an automobile, education, or for any item you cannot pay for in cash at the time needed. People go into debt to borrow the money for their perceived needs.

Debt reduction is paying off more than the minimum payments. One day the debt will be gone entirely, and that should be everyone's goal.

Debt expense is the minimum payment that you make on each of the debts.

Hopefully that makes sense.

[Seeker]

1) what can i do to balance(or create a surplus)in my actual budget.
what do they really mean by this statement? How can balance my actual budget just by looking at the balance? any inputs?

You cannot balance that budget just by looking at that total balance. Like the below, you'd move money from an underpaid "actual" number, into an overpaid "actual" number. To make every category of expenses = to 0 or greater than zero.

At minimum you'd want to get move the positive dollars, into the debt, clothing, savings, and investment categories (into the negative categories).

If the textbook question is asking to create more surplus, then each and every line should = 0 difference, and the majority of the difference that are in the positive range would be moved to surplus. Every other line or categors difference = 0.

2) For the second, i do have an idea as to how to go about it. Really what they are trying to say what categories can be changed if the budget were in surplus. Does it mean i could distribute the 1250 towards each category until the balance comes to zero. so for example, since i have a -112.50 on my debt, i can reduce my debt by 112.50 and that would leave me with (1250-112.50). in addition, i could reduce my savings by 112.50 and that will leave me with (1250-112.50-112.50) and so on. can you please correct me if i am wrong.

Partially correct... but the original question seems to require each categor to be 0.... and surplus to be the biggest category item.

Or at least that's how I'm interpreting it.

[cptacek]

This has to be a textbook question. Just the sentence structure in #2 (Write a short narrative report on what would need to be done to “zero” balance the budget for each out-of-balance category. What categories could be altered to create a “zero” balance if the budget were in a surplus?) in the original post made me think that.