Fixed Expenses
Your Defense Front Line

Reviewing fixed expenses is the easier of the two expense categories (fixed and variable) to complete. These expenses are those you pay month in, month out and which probably come most readily to mind.

Some of the line items in your fixed category should be:

  • Housing
  • Utilities
  • Insurance
  • Taxes
  • Child Care
  • Recurring Medical
  • Debt Repayment

Housing is likely your largest expense. Keeping the roof over your head makes budgeting for rent or mortgage payments high priority.

If you are a homeowner and have secondary financing such as a second mortgage or home equity loan also include that in your budget.

The term second mortgage is sometimes misunderstood. It does not mean that your first mortgage has been paid off. It refers to the recording date and time. Second or even third mortgages are documents holding real property as collateral for loans recorded by date. So a second mortgage is a collateral instrument recorded after the first mortgage.

Utilities should be next.

If you are renting with the utilities included, you can combine this expense with your rent. Most of us are not so lucky. Many landlords have switched this once common practice to having tenants pay the utilities because of ever rising costs.

Utilities are typically gas, oil, electric, phone, trash collection, cable, and internet.

Insurance may be an easy entry for you if you receive monthly bills for auto, health, life, or homeowners insurance. If you pay quarterly or annually, enter how much you set aside in savings each month to pay the bill.

Make no mistake if you have a tax bill, it must be paid.

Generally, when gathering information for this category you will includes property taxes, quarterly federal and state taxes, etc.

If you need child care, you have already taken the time to find the best and least expensive you can afford for your child. Keep in mind the younger the child, the more expensive the child care, so as your child gets older this expense may go down.

If you have recurring medical expenses such as monthly medications or monthly doctor visits for which you pay co-pays or deductibles don't ignore it. You want your budget to reflect reality.

Debt repayment is a fixed expense. Payments are not optional. All the bills will eventually be due. Do not ignore them, plan for them.

If you need help organizing your debt to calculate what you need to enter here you can find help under Household Debt - Know Your Competition

If debt is major portion of your expenses, you definitely want to focus on completing the budget process because you may be "living beyond your means," or spending more than you make.

Fixed expenses practice and exercise:

  1. Determine your fixed expenses and list them on your spreadsheet.
  2. Combine like expenses. Remember to keep it simple.
  3. Total your expenses for each month.
  4. Start your variable expenses research.

Move on to Variable Expense

Go back to Budgeting Expenses from Fixed Expenses

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