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Wealth and Wants

How one-time expenses can blow any budget

Taking a look at your card statements can help fill in the gaps

Summary

Don’t let those one-time expenses torpedo your budget. One way to keep track of the extraneous purchases is through your credit card statements.

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I thought I had a really good handle on my family’s spending, but it turns out I was missing a lot.

My budget included all our obvious recurring expenses (mortgage, groceries, car payment, gas, insurance, etc.). I even included what I thought were all our discretionary purchases (Amazon, restaurants, town pool membership, our daughter’s dance classes and so on).

Everything should have been good, yet I still had this nagging feeling several months in a row that there was a lot less left at the end of the month than I expected.

With the help of my credit card statements, I created a new list of everything my wife Chelsea or I had bought over the past three months that didn’t fit into any of the fixed or fun categories that were already included in our family budget.

Worst “one-time” expense offenders

I was shocked to see how many “one-time” expenses there were. In fact, there were so many that we shouldn’t have considered them “one-time.”

The worst offenders were house projects, which totaled several thousand dollars between new living room furniture, a hot tub repair, fixing a leaky faucet and popping a loose soffit back into place.

I’m still OK with considering the living room refresh as a “one-time” expense, but I was remiss in labeling the home repairs as such. Yes, this was the first time the hot tub needed service in our five years as homeowners and the other two fixes were relatively small, but it’s always something.

Last fall, our boiler died and we spent $11,000 to replace it. That particular item will hopefully last a decade or more, but we should have had a home repairs section on our budget. Spread over an entire year, that “one-time” expense still gobbles up almost $1,000 per month.

Because we used credit cards for almost all these transactions, it was easy to track where our money had gone. Even if you already think you’re doing a good job of budgeting, I urge you to try this.

And the list goes on: The previous spring, the roof needed to be replaced, and that cost $12,500. In 2015, we spent about $8,000 on a new air conditioner. We’ve already had some problems with our aging refrigerator and washing machine, and we know the next time each of them goes on the fritz it will probably be time to buy a new one. After going through this budget X-ray, we have a much better handle on planning for those eventualities.

Travel is a non-recurring expense that keeps recurring

Vacations are another good example of “one-time” expenses that come up again and again. We visit Chelsea’s parents in California at least twice a year and just got back from a week on Cape Cod with my family. Plus, Chelsea attended a middle school reunion in California in June and she has a girls’ trip to Washington, D.C., scheduled for October. In the future, we need to account for these expenses on our monthly forecasts rather than explaining them away as isolated instances.

We should also do a better job of maximizing our travel spending. We have credit cards that give us bonus points at supermarkets, gas stations and department stores, but not airlines or hotels.

I’m thinking of signing up for either the Citi ThankYou Premier Card (3 points per dollar on travel and a 60,000-point sign-up bonus if you spend $4,000 on the card in the first three months), the Wells Fargo Propel American Express® Card (3 points per dollar on travel plus a 30,000-point sign-up bonus after spending $3,000 on the card in the first three months) or the Chase Sapphire Preferred Card (2 points per dollar on travel with a 60,000-point sign-up bonus after spending $4,000 in purchases within the first three months), which I mentioned in my previous column.

Travel and home repairs are also good candidates for 0-percent introductory offers. If we signed up for the U.S. Bank Visa Platinum Card, we could spread big purchases over 20 billing cycles without paying any interest (then 14.74% – 25.74% variable APR).

A final revelation from this budgeting exercise was that we spent a lot more on entertainment than I expected. Even “little” things like meal kits and birthday gifts (when you have a toddler, you get invited to a lot of birthday parties!) were adding up to hundreds of dollars.

Because we used credit cards for almost all these transactions, it was easy to track where our money had gone. Even if you already think you’re doing a good job of budgeting, I urge you to try this. Write down everything you spent over the past three months that didn’t fit into your pre-assigned categories. I think you’ll be surprised how many money leaks you discover.

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Published: August 17, 2018

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