Sunday, March 26, 2006

Budgeting calculator spreadsheet

Source: Alchemic Spot

Quite a few friends are looking to purchase a first home or upgrade to a larger home sometime in the next year or so. Helpful friend that I am, I put together a quick spreadsheet that people can use to see what their fixed cost budgets may look like.

A few things to keep in mind:
  • The cells in blue are the assumption cells. These are the only ones that should be modified. The cells in black are all calculations based off the blue input cells.
  • The spreadsheet is focused primarily on cash flow, not income or savings. Again, it's to help you budget approximately how much cash you have coming in, and how much you have left over (if any) after you've paid all your fixed expenses. I would suggest using some of that leftover discretionary cash to contribute to Jack's Totally Awesome and Earnest But Underfunded Savings Fund (that's the technical name for my personal charity, whose primary mission is to enrich my personal savings account, and whose secondary mission is to buy me $12 movie tickets- it's expensive living in L.A.).
  • This spreadsheet is only meant to be a quick snapshot to see if a certain house payment load is a "no brainer" decision in either direction (easily can afford/definitely cannot afford), or if it looks like the budget will be tight. It won't be accurate to the dollar. If you are one of my investment banker, private equity, finance, accounting friends, etc. before you email me about how i need to add several excel sheets, modules, and data tables to the file: I have not been a financial analyst with my butt parked in an aeron and my face parked in front of excel for about a decade now. i don't care if this thing doesn't reflect every little detail and nuance of an individual's personal finances. my sense of self-worth is not in any way affected by the complexity or exacting accuracy -or lack thereof- of this quick-and-dirty estimator. take off your $20,000 watch, your hermes tie, and crackberry and put them in your drawer, leave the office, get in your m3 convertible, and get some fresh air. then go to yoshinoya for a beef bowl (my treat). just kidding. you guys are still cool.
  • the annual mortgage interest deduction formula assumes that the loan's principal has not been paid down. should be fairly accurate for the first few years- after several years, you'll have paid down some of the mortgage principal so this deduction amount will be higher than the actual figure.
  • I have the bottom section in monthly form because most people think about their budgets that way. However, certain tax deductions and expenses are large sums that occur only once or twice a year. The actual cash flow every month may vary widely from what the spreadsheet says, depending on how much you withhold from your monthly paycheck, what items and how much you deduct at the end of the year, when large bills come due, etc. But it should be a pretty decent gauge of the total cash in and out for the year, presented in monthly format for your analyzing pleasure.
  • This spreadsheet assumes that you are itemizing your tax deductions and are not subject to AMT or take the standard deduction. Also a lot of the current assumptions and maybe some of the formulas are based on living and working in California. I have no idea what property and state income tax rates are in other states.

If you use it and have questions, or need me to modify it for your specific situation, please feel free to email or call. i'm always happy to help. but only if you are a friend, relative, a friend's friend, a family friend, or a friend's family member (say that 10 times fast and you get a special prize. i won't say what it is but it comes w/ batteries) - if you don't personally know me or any of my family & friends, definitely don't email me about this spreadsheet!!! haha. well, haha but I mean it. If you have suggestions on how to enhance it or catch errors in the formulas, please let me know.

I am constantly revising the spreadsheet when I think of new things to add to it or new ways to enhance it. So when you need to use it, check back to this page to see the date and time of the latest update to be sure you are using the latest version. This is especially important because if I discover an error, I won't be emailing everybody- I'll just correct it and post the new version here.

Latest version of this file saved on:
26 March 2006, 9:00PM

To download the latest version, click here
(Microsoft Excel xls file)

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Anonymous jason said...

does the spreadsheet take into account movie ticket inflation?

renting forever,

11:59 AM  

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