Budget advice

Re: Budget advice

• CuriousKiddosMama mod

  

  September 2013

  Do you have any long term goals? Those should be in your budget with your remaining money. I would suggest adding some of it to building up an emergency fund (a couple thousand dollars) and then throw the rest of it at your debt until it is all gone. The Total Money Makeover book will really help you with this. (I haven't read Smart Couples Finish Rich, but it's on my list).
  Does your expenses cover everything? I'm thinking about things like gifts, halloween candy, water bill, etc.
  Also, will you be able to keep your rent about the same when you move, or will that be going up? You may also want to start saving for moving expenses (boxes, u-haul, etc).
  If you can stick to what you have posted and save/ pay off bills with the rest, you will make a lot of headway on those debts very quickly.
  

  

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• leahmarie5 member

  

  September 2013

  Our goals are the following:  Of course work on as much debt as we can.

  1: Moving.  Right now we have it pretty good.  Our area goes for much more and I wish we could stay there but the place literally is too small for us. W/s/g is all included in our rent.. and it is going to end up costing us more per month when we move.  We are looking rent wise.. at least $300 more per month.  In the time that we move, H will have received a raise and I think a signing bonus with the union.

  2: buy a new car.  We have H's car which is great for the mountain but not the best on regular commuting.  Unfortunately, my car is crapping out.  It has low miles considering the age but there are some repairs that would need to be done.. that cost more then the car.  It got to the point where we don't even have me driving it.  H takes it to and from work only for now.

  3: Vacation.  H hasn't really traveled much so we want to take one more vacation for our 1 year anniversary.

  4: baby.

  5. House.

  
  

  Thankfully, right now we don't have any kids come for Halloween.  We live in an area where there are pretty much none.  When we move, I have boxes at work I can bring home and we can borrow the work van from H's dad.

  
  

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• hoffse member

  

  September 2013

  Overall, pretty good but I agree with PP - you should start paying off that debt after saving an e-fund (I would do $5,000 as a baseline, instead of Dave Ramsey's suggestion of $1,000... it's too easy to burn through a $1,000 fund in a true emergency).

  
  

  Then start throwing your money at your debt.  Dave Ramsey has a snowball method that works for a lot of people if the prospect of paying that debt off just seems really hard.  I would say that debt is where Dave Ramsey will be helpful and savings/building wealth is where Smart Couples Finish Rich will help you.

  
  

  Also - what about retirement?  If your employers have a 401(k) that matches you should be contributing at least up to the match (at minimum).  As your debt decreases, I would increase your retirement.  Consider a Roth IRA as well and try to contribute the annual maximum if possible ($5,500/person for 2013 and probably 2014 as well).

  
  

  Some places you can shave your expenses:

  
  

  1) Cell phones. That's a bit high, even if you have two smartphones.  I use the $55 unlimited talk, unlimited text, and like 2 gigs (I think?) of data from Pageplus cellular.  They use the Verizon network so I get great service.  I'm a lawyer, I'm always on my email/smartphone, and I haven't run out of data on that plan yet.  The only thing about them is only certain phones work on that plan, but there's a decent variety (including the iphone 4s), and it's prepaid which I love.  I think Walmart also has a low-priced smartphone that's even cheaper than this one.  As I recall, I didn't go with them because they had minutes (I think?) and I needed unlimited for my job.

  
  

  2) Cable/Internet.  So this isn't for everybody, but H and I invested in a couple of Rokus (about $130 each), one for the living room and one for our bedroom.  We then decided to pay for internet only and watch TV that way.  A friend of ours used to work for AT&T and told us the lowest speed you could reasonably stream video on, so that's the one we pay for.... which, by the way, is about 3 levels down from what AT&T told us we needed.  Our friend was right - the low level internet was fine and AT&T was trying to upsell us. We pay $46/month for internet plus $8/month for huluplus.  We also spent about $40 to get 2 leaf satellites for each TV so we get local stations in HD.  We don't get ESPN with that, but we do get ABC, Fox, and NBC.  Finally, we spent about $110 on an Ooma, which is an internet phone.  I bought ours at Costco and got a deal that way.  The Ooma gives us a "home phone" with a local number, and we pay about $3/month in taxes only.  It uses the internet for phone calls, and I haven't had a call dropped.  It's also free long-distance.  So our total upfront costs were around $410 for the equipment, and then we pay a monthly cost of about $57.  We've had these items for about two years now, and they paid for themselves in the first 6 months.  Just something to think about.

  
  

  Cats.  I have a cat.  She is my baby.  But I can't fathom spending $75/month on her.  Unless your cats have vet care every month, they really just need litter and food and that's it.  May I recommend the costco cat food?  It's excellent quality (I researched this obsessively when I first got her), a great price, and they even sell a diet version... I don't know about your cat, but mine needs the diet version.

  
  

  Dates.  I would suggest embracing the date night in.  While $100 isn't that bad, dinner and a (hulu plus... ahem) movie is a great alternative and a money-saver.  When H and I have date nights in we use some meat we have in our freezer (we buy meat in bulk when it's on sale), and then we use our fancy wedding china to make it special.  We buy the cheapo wine at Whole Foods ($4/bottle), so we usually have some of that as well in our fancy crystal. All put together, we feel pretty swanky, and it usually costs us less than $10 to get extra ingredients we need.  We also take advantage of free activities in our city - for instance, the botanical gardens and art museum are both free for us, and my work pays for a membership to the local zoo.  Those are all fun activities, and they're a great precursor to a romantic evening at home.

  

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• hoffse member

  

  September 2013

  Oh I think we posted at the same time.  In response to your goals:

  
  

  1) Hopefully the raise will cover your increase in rent.  If not, it's not a HUGE increase, but it's definitely significant.  Do shop around for rent.

  
  

  2) The car... so is your car the one with the $9000 left or is that your H's car?  I've never financed a car, but I believe that any loan on your old car that still hasn't been paid off gets added to the new one... so that could be a very very very expensive purchase for you.  If possible, keep the car you have financed until you have paid that loan off.  Make that your first priority debt (after credit card debt of course) so that you aren't underwater on it when you sell it.

  
  

  3) When is your first anniversary?  Honestly I think a vacation may not be the best choice.  Save it for your 5 years.  If you insist on going somewhere, see if you can get a deal through travelzoo or groupon - maybe a weekend away instead of an entire week?

  
  

  4) Do yourself, your husband, and your baby a favor and make a serious e-fund a priority before you have a baby.  A serious e-fund is about 6 months of expenses in the bank that you DO NOT TOUCH unless you are in serious trouble (ie: you lose a job or you are injured).  I would also build a separate baby fund before you deliver.  Keep in mind that setting up a nursery can be expensive - expect that to cost you at least a couple thousand dollars (or more) to get the gear, furniture, maternity clothes, etc.  And then as baby is being delivered, recognize that your insurance probably won't cover all of the hospital costs - have about $5,000-$8,000 ready for delivery expenses... assuming your delivery is normal.  If you have complications, it can be a lot more than this.  Finally, after baby is born there will be daycare expenses unless one of you stays at home. This varies a lot by region, but can be upwards of $500-$1,000/month in HCOL areas.  Your overall spending and insurance premiums will also probably go up.  You may also want to start saving for college at birth.  I'm not a mother, but H and I are planning to start a family in a couple years, so this is something we've been researching.  

  
  

  5) My best advice is to save for your downpayment and try to get at least 5-10% down (though 20% is standard) so that you can go through regular financing instead of using an FHA loan.  You may have to pay PMI on that, but if the right house comes up at the right price, it can be worth it.  Also - take whatever number the bank tells you that you can afford and cut it down by 50-75%.  Try your best not to have TOTAL debt in excess of 25-28% of your take-home income.  That will leave plenty to live on and plenty for savings.

  

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• Sisugal member

  

  September 2013

  Instead of moving, why not take a serious look at your furniture arrangement and the "stuff" you are storing.  Do you REALLY need all that stuff?  Can you purchase some storage pieces and look at new ways to store things?  (For small homes - go VERITCAL in your storage).  Look at an IKEA catalogue, small home magazines etc.  There are tons of options available. You can stack Rubbermaid containers in a corner of the bedroom all the way to the ceiling if needed (yes, I know that is not very attractive - but you get the idea - there are ways you have not yet tried.)

  Have you priced out a small storage unit?  That route might be cheaper than moving and paying a higher rent --- that is IF and only IF you cannot find a better way to use your space. 

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• Ducktale member

  

  October 2013

  A few areas we include in our budget that I don't see in yours: Christmas/gifts; car maintenance (oil changes, registration, etc), health insurance, and retirement. Overall looks good, like pp mentioned there are some ways you could cut corners if you wanted to bemore agressive (ex: cable, smartphones, cat, etc) as DR suggests when you have debt. Good first steps though, hope you enjoy those books!

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• cordsniper member

  

  October 2013

  I would get rid of stuff before I took on an extra $300 in housing.  That really adds up and considering your debt load and plans for the future, you should be focusing your attention elsewhere.  You probably don't need all that stuff.  Is it really worth $3600 a year to store more stuff?   
  

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• leahmarie5 member

  

  October 2013

  1: Moving;  It would be ideal if we could stay in our current place but unfortunately we have already got rid of things and live by what's needed in our place.  We went through the past month and donated everything we did not need.  We have really just out grown it.  We have a little one bedroom that really has no space anymore. Our entire storage unit is full of bikes, laundry room has two bikes and so does our dining room.  We looked into a storage unit and that brings you up to another 100$ per month, plus driving cost to get things out of it.  I race 9 months out of the year which doesn't make that ideal having to drive to a storage unit to get my bike out.  We have started looking at places and we're looking about $100 more a month for a two bedroom place.  

  
  

  2: Car. Thankfully the loan is on my husbands car and this month we were able to put more money towards that, while still putting money into savings.

  
  

  3: cats.  I budget more for them just incase something happens.  We buy IAMS cat food with coupons.  It's one of the only foods I have ever fed a pet, for a 31lb bag it's 21$, which isn't bad and that last us two to three months. We buy our cat litter at Costco every two weeks which is about 9$ per trip.  I could really drop it down but that is just in case it is time for a check up with them.

  
  

  4: Cell phone.  Husband works for AT&T so we do get some perks.  Our bill will soon be 50% off the plan plus whatever extra.  I use my phone for business if there isn't wifi, I need to make sure I have data and service.  Many providers around the area don't get service where we live.

  
  

  5: Date nights are spent usually one night going out and the other at home.  We like to get out at least once a month so we aren't going absolutely crazy.

  
  

  
  

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