Budgeting

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An interesting part of my sabbatical has been doing the budgeting for it. Till now, I have never done any kind of serious budgeting, I never kept track of how much I spent each month or had any targets for saving x amount of money. Taking a break from a job meant being much more clear about the financial position and how much was being spent each month etc. It has been very useful experience to try to do this kind of planning and that's one of the positive outcomes of the sabba. I have been quite ...perhaps 'reckless' in the planning actually -- I set things up so that if the sabbatical continued through Dec 2007, I would have completely exhausted all my savings. I intended to wind up before that though, but set end 2007 as a 'drop dead' date.

Here are some of the calculations I did: 25,000/- per month for the monthly payment on my houseloan, 4000/- p.m. for the basic household expenses (kitchen and other stuff, stuff that mostly falls in Priya's plate). 16,000/- for all other expenses. Besides that there were a number of 'capital expenses' items that I estimated would be required. And an emergency fund and some buffer. Among the capital expenses was a decent amount (2 Lakh) set aside for travel.

So here's what happened in the past few months of implementing. The first thing that caused a problem was the travel budget. I was very keen on doing the Europe trip, but in some subconscious denial of the expense that it would actually involve, I didn't do an realistic calculation. All counted, the Europe trip took close to 3L so that sent that portion of the budget for a toss. The other part was that I had underestimated quite badly in putting just 16,000/- for other monthly stuff. Partly because I/we continued to do a fair bit of travelling which we are very keen on doing and I didn't want to compromise on that. Also we had got used to a particular lifestyle earlier and didn't want to start getting miserly. So I recently redid the budget and upped the monthly expenses by a third. During the course of the past few months it has also become clear that it makes sense to keep the sabba. to around a year. So the earlier budget underestimate doesn't hurt too badly.

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I'm leaving tomorrow to Timbaktu and will go to Hyderabad from there. Be back in about a week.