My newbie budget

Keeptruckin · March 2014

Hi! I have been lurking a bit. I am hoping to get some ideas on my budget.

Savings are built in, automatically deducted. I still hate the paycheque to paycheque feeling

and right now there is usually less than 100 left over. My number one goal is to build a emergency fund.

So here it goes lol!

Net income : 3560 a month

DH has 375 taken off monthly that goes directly into RRSP.

Monthly Expenses :

Mortgage - 1120

Utilities, gas, water, sewage, garbage, recycling all on one bill - 350

Internet and home phone - 99.90

Cell - 26.20

Netflix - 7.95

Property taxes - 200.00

HOA - 22.00

Home insurance - 57.90

Life insurance - 41.55

Mutual fund for me (DH has his taken off from paycheque 375)- 200

RESP - 100 college savings for DD

Car payment - 288.12

Gas - 175

Food - 600

So that leaves less than 200 for misc, like clothing, gifts, and dining out.

A few notes. In addition to the 575 we save monthly for retirement (my 200 and DH 375) DH also gets a 2800 flex spending amount which he is allowed to put towards RRSPs so we do. So about 9700 a year is going towards retirement.

DDs college saving get top offs with money from birthdays and Christmas. There is 16,000 in there now.

We ask for annual passes for birthday and Christmas gifts too. So entertainment for us as a family is zoo, local amusement park, and the science center. We always pack a lunch. DD has severe food allergies, eating out is a no go for us. Once in awhile DH and I go out to eat for date nights but not often. DH brings his lunch everyday, etc. the food allergy issue is so severe we would have to be paranoid bout what is on our hands, breath etc after dining out nd being around her we just stick with packing safe foods lol. Probably saves us a fortune.

DD goes to a free montessori charter preschool and we won a spot with their lottery for elementary, hooray!

So with that in mind where can I cut back to build that EF?

Oh yeah, we are one car and low gas as DH has a work car and his employer pays all commuting costs like maintenance and gas.

Groceries are a big area we need to work on. But again, DDs allergies make it hard to cut here.

Thanks in advance for reading this novel lol!

Keeptruckin · March 2014

Realized I forgot paper good, personal hygiene stuff. That comes out of the 600 a month. We have been using our tax returns, I know not good to get a refund lol, for vacations. I will be going back to work full time in September, but with DDs medical issues I have been working shifts around my DH. Tried child are and ended up in hospital after she had exposure to soy on first day at daycare.

Keeptruckin · March 2014

Forgot more, no credit card debt or student loans. Just car loan and mortgage.

Wulfgar · March 2014

Taking a "quick" look at this, the biggest thing I see is that you are leaning towards the "house poor" crowd. MW and I's mortgage is closer to 15% of our take home. Other than that, your budget looks good.

Xstatic3333 · March 2014

Wulfgar said:
Taking a "quick" look at this, the biggest thing I see is that you are leaning towards the "house poor" crowd. MW and I's mortgage is closer to 15% of our take home. Other than that, your budget looks good.

That was my reaction as well. The only other place to cut back for me would be food. I know your DD's allergies may make it much harder, but could you look more into trading deals and coupons with the online allergy community? Coupon like crazy and stock up on sales?

The other option is DD's college fund. Some would suggest not funding it at all. I won't go that far, but I might pause contributions until you have, say, a three month e-fund. That will benefit her, too.

If I were you, I'd put the college fund contribution+$100+anything you can save on groceries into savings until I had three months' expenses (more if your H is in an insecure field). I'd also look into at-home work for you. Could you babysit? I think you'd be in demand as someone who understands severe allergy safety. Start an etsy shop? Work retail in the evenings at the store where you grocery shop for the discount? A little extra funds will help build your e-fund, get rid of the car payment, and then you'll be out of the paycheck to paycheck cycle in no time.

P.S. Good job on the retirement contributions!

Keeptruckin · March 2014

Yes, I worry about the mortgage costs. Our actual mortgage is 1020 but we preselected to do 1120 to get that extra 100 towards principal. Maybe we need to stop that. DH is obsessed with paying off the mortgage as fast as possible. We are in Canada so we can't write off any interest. I am thinking I can swing some extra shifts too. I think I can put 400 a month towards EF if I work I extra shift a week and trim the groceries to 500 a month. Also, the utilities I think we can trim, turning down heat and being careful with water. Thanks!

strickland8052 · March 2014

I agree with PP that mortgage looks high for your income. I'd stop putting the extra $100 towards the principal. If you don't have an emergency fund, then you need that before you start paying off your mortgage faster. If something were to happen, you can't get that money out of your home without selling the house. Your internet/phone is a little high. I have no home phone, but my internet is just $20. (Your cell is really cheap in comparison to mine though). I'm also looking at that life insurance... Does H's employer offer life insurance? If so, you might be able to get it much much cheaper. If he doesn't get it through the employer, that amount sounds reasonable.

KatieCutie05 · March 2014

The mortgage is high but its not your only problem.

You are clearly saving a lot of money- How much do you have in non retirement savings? If i were you i'd just pay off the car and save yourself an extra 288 dollars a month. Its stupid to pay extra on the house when you still have a car payment that can be paid off a lot quicker then the home.

Saving is great but make sure you are doing it smart. I'd get the car paid off first, then make sure you have 3-6 months expenses in an emergency fund (just a basic easily accessible savings account), then worry about saving for retirement and kids college, once you get that done then you can work on paying the home off faster. Your just treading water because your trying to do it backwards and do everything at once.

Erikan73 · March 2014

If you aren't doing it already, watch for sales on food, home & hygine products & if they have coupons in Canada, take advantage of those. Sometimes buying things on sale are better then waiting until you need them, if you have the storage room that is.

ta78 · March 2014

I agree with putting the extra money to pay off the car instead of house. I would also take a break from your DDs college savings until you build your EF up.

From what I know of Canada housing.. at least BC which is closest to us. You probably can't get a much lower mortgage.

Keeptruckin · March 2014

Housing is pretty insane here. We built our home for 350,000 now it goes for 420,000 we did put almost 200,000 down, or else there is no way we could have afforded to buy. My sisters and my parents pay 1600 and 1800 monthly for 2 bedroom apartments. We have decided to postpone all but short day trips until the EF is built up. No Vacations, etc until it's built up.

So should we put our tax refund towards EF or paying off the car? It's about 5600, car loan has 9800 left on it. Or split it up between car and EF?

Xstatic3333 · March 2014

I'd put it in the e-fund personally, especially since you're parents and homeowners.

hoffse · March 2014

I also think the tax refund should go to your e-fund. For me (personally), the order of "optional" financial priorities are:

1) Retirement - really NOT optional, but when it's self-funded you're in the driver's seat

2) Emergency fund - if you are in a precarious job you want 6 months of EXPENSES. If you have good job security, you need to be able to pay all your insurance deductibles simultaneously, plus a buffer for extra "oh damn" moments. For H and me, this is about $10K. I would feel nervous with less than $5K to pull from at any given time.

3) Then college savings for kids

4) Then the car payment (if the interest rate is low, otherwise this comes before college savings).

5) Then your mortgage

6) Then your vacation fund

7) Then your playstation/pony/midlife-crisis-car fund

I am personally much more comfortable with debt than many folks on these boards. They're not wrong, but neither am I. It's simply a personal thing. On the other hand, I almost feel naked if I don't have at least $5K in a bank account somewhere at all times. Others on these boards are comfortable with a $1K e-fund until their debt is gone. It's all about allocating money in the way that you feel most comfortable.

As a person who is comfortable with debt, I'm obviously going to put paying extra on the debt at the bottom (though of course you should ALWAYS pay your monthly minimums). I also put college savings above debt because I really don't believe any 18-year-old is going to understand the ramifications of borrowing a crapton of money for college... and if their parents can afford to help, I think it's important that they do so. But again, that's a personal thing and many people would disagree with me on that.

Regardless of your feelings on whether debt or savings should get the lion's share of your extra money, do realize that when you pay extra on minimums at the expense of savings, you might be setting yourself up for a real problem if something crappy happens. Let's say your heater breaks in the middle of winter and you need to replace an expensive part (or maybe the whole thing). It costs $1200. If you had put $1200 into your e-fund the previous year, you would probably be stressed, but you could manage. If you had put that $1200 toward extra mortgage payments, you now have to charge $1200 to your credit card. Sure, you are saving yourself maybe 4-5% on interest from your mortgage... but suddenly you are paying 25% interest on that $1200 charge.

Just my $0.02.

My newbie budget

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