WWMMD- Budget Help

abrewer5 · May 2015

So now that I have my car paid off I've been looking at my budget and would like to get some insight from the group. I know that people have different levels of debt aversion on here, but I'm still curious to see what everyone thinks I should do with my left overs. I'm loosely following DR TMM. H and I do not combine finances so some things might look like they're missing (he pays for groceries and the other half of the mortgage).

My current situation is:

Take Home Pay: $2778 (after taxes, life insurance, retirement 10% w/ 5% employer match)

Mortgage: $630

Car Insurance: $80

School: $300 (Balance $9935.44-- $5725 @ 3.15%; $4200 @6.55%)

Water: $60 (paid quarterly, usually less but I put extra for a buffer)

HOA: $60 (paid quarterly, technically $105/quarter but I put extra for a buffer)

Gas for Car: $130

Electric/Gas: $85 (flucuates but this is the average)

Cell Phone: $175

Cable/Internet: $155

Allowance: $300 (covers eating out, entertainment, clothes, house stuff, small grocery trips, etc.)

Left Over: $803

Currently I have the left over amount earmarked for cash flowing/savings. Once summer is over and the few trips I have planned pass I was thinking I would put the left overs towards my student loans (total payment $903 per month) and put $200 in savings a month. H & I have a small e-fund right now, but I'd like to build it up a bit more.

The cell phone bill is crazy high, I know. H has this obsession with data usage, especially when he works nights/weekends, and it drives me INSANE. It's cheaper to have a plan this high than to pay for his overages... I'm working on him, it's a slow process. Cable/internet is also high, I'm open to cancelling it, but the only issue we have is we live in a rural area and high speed internet is not offered so we can't really use netflix/hulu and get good results.

Any help would be appreciated! and let me know if I'm missing anything!

hoffse · May 2015

If you're doing a soft TMM, I think your plan is a good one. You'll be done with your student loans in no time (though I would personally drag out the low interest ones a bit).

blondie42107 · May 2015

That would be great to have your student loans paid off faster! I think it looks good. If something comes up, you can always reduce the "extra" payment.

AprilZ81 · May 2015

It looks like you can afford your cell phone and cable/internet so I wouldn't stress about trimming or eliminating those unless you just want to.

Since you already contribute 15% (with employer match) for retirement I would probably add more to your student loan payments until those are gone.

Good job on paying off your car!

simplyelise · May 2015

This post contains some Dave Ramsey tough love...

I think it's really hard to only do DR half-way. You've got just under 20k in debt right now making 33k takehome after retirement. If I were in your situation (and I basically am just joint finances - joint take home 64k, SL debt 39k), I would not be spending $300/month on entertainment and luxuries.

The whole point of DR is that you severely restrict your spending because you know it is for a short period of time while you pay off debt. When you go half-way, you feel a limited without feeling the enthusiasm from paying the debt down quickly.

How much of an efund do you guys have and how how much do you need in your situation (ie do you have kids, do you have job instability)? Figure that out and see if you and DH can spend a couple months getting it up to where you feel good with it and then don't touch it again.

Then, I'd drop down my entertainment budget to $100/month at most. Put the extra 200, your 803 leftover and your current 300 SL payment together and start knocking out those SLs. If you want to do the high interest one first, that's fine. You will be out of debt in less than 18 months. Then you'll have $1300 a month to re-prioritize towards other goals like a bigger efund or investments or home upgrades or vacation.

simplyelise · May 2015

Another question... your side of bills (hoa, utilities, phone, internet/cable) add up to over $500 a month. Is your H's grocery bill really more than $500 a month? Maybe he could work on cutting that down a bit, assuming it's just you two and there are no kiddos to provide for. Then he could contribute the difference towards efund so that it slowly gets bigger.

abrewer5 · May 2015

Thanks for your feedback everyone!! I'll stick to my original plan and get the SL paid off early.

@hoffse I would love to pay off the low interest one slowly, but they're federal loans so they're combined and I'm not able (that I know of) to put money towards one specific group. They're subsidized and unsubsidized.

@simplyelise thanks for DR tough love. I do appreciate it! Other than my mortgage I only have $9900 (and some change) in debt for my student loans It's just broken out on my OP because of the two interest rates. Right now our e-fund is at $4500. Our jobs are pretty stable, but I'm not willing to reduce that amount.

As far as the uneven split, I make double what H makes, so it's really only fair that I pay more (since we don't combine finances). Unfortunately, in his feild (water treatment) they don't pay much, but he has great benefits! He probably spends around $250-300 in groceries a month, but that's only a guess. We don't grocery shop together, so I'm really not sure. I will definitely look at reducing the allowance down, I just find it hard to stick to the current number sometimes, so I want to make sure whatever I do is realistic/sustainable for me.

simplyelise · May 2015

Gotcha! I read it as a 9935 loan, a 5725 loan AND a $4200 loan. It's been a long week...

I'm doubling down on my advice then, you could be out of debt by the end of the year!

brij2006 · May 2015

We're fellow DR followers, but we're doing his plan hard core. We did his plan "modified" before, and got nowhere and lost steam while feeling like we were doing nothing. There's a reason why his plan works, but you have to do it 100%.

I'm going to give you an even stricter recommendation than @simplyelise. Stop the retirement contributions, buckle down on the entertainment (down to $100/month), cut tv, cut internet (especially if you have such a high cell phone data plan), and get rid of those darn student loans. You're so close!

Even without stopping your retirement contribution (it would only be for a few months), you will have an extra $1,158 to put toward the loans. Add that to your $300 payment you're currently making and you have $1,458 to put toward them each month. That puts you at having them finished off in 7 months (without stopping retirement).

Your current modified plan puts you at having it done in 11 months. That's almost 1 year vs half a year. So half the time! That is why the modified versions of his plan just don't work. It's easy to lose motivation or have "one bad month."

Now scenario of getting Dave Ramsey strict (what he recommends doing, stopping retirement contributions), you would have an extra $1,685 (actually more since I'm only taking 10% of your take home pay) to put toward the loans. That gets you down to having them finished off in less than 6 months.

Only 6 months to be 100% debt free! How crazy is that? Then it gets you that much closer to being able to save up a fully funded e-fund. If you kept the things the same after paying off debt (no retirement, living on the strict budget), you would have 6 months of expenses ($7,320 total) saved up within 4 months after having everything paid off. If you felt more comfortable, you could do the 3 month emergency fund instead and have it saved up in 2 months.

So debt free and a fully funded emergency fund by the start of 2016. That's why his plan works when you do it 100%.

cbee817 · May 2015

abrewer5 said:
Thanks for your feedback everyone!! I'll stick to my original plan and get the SL paid off early.
@hoffse I would love to pay off the low interest one slowly, but they're federal loans so they're combined and I'm not able (that I know of) to put money towards one specific group. They're subsidized and unsubsidized.
@simplyelise thanks for DR tough love. I do appreciate it! Other than my mortgage I only have $9900 (and some change) in debt for my student loans It's just broken out on my OP because of the two interest rates. Right now our e-fund is at $4500. Our jobs are pretty stable, but I'm not willing to reduce that amount.
As far as the uneven split, I make double what H makes, so it's really only fair that I pay more (since we don't combine finances). Unfortunately, in his feild (water treatment) they don't pay much, but he has great benefits! He probably spends around $250-300 in groceries a month, but that's only a guess. We don't grocery shop together, so I'm really not sure. I will definitely look at reducing the allowance down, I just find it hard to stick to the current number sometimes, so I want to make sure whatever I do is realistic/sustainable for me.

You're doing great- DH and I are in the same boat. I make about 2x what he does, but he's a state employee (high school teacher) with a great pension that's very secure. Right now, he pays for our day care bill, 1/2 of utilities/auto/life insurance, and what he charges on his credit card every month (usually gas, a few things at the grocery store mid-week, small items). I cover everything else including carrying the medical/dental insurance. The uneven split has never bothered us- things will shift as expenses change and it works fine for our family.

I would put extra on your SL, continue to add to your e-fund, and your retirement. $9,900 isn't much at all- you could have it paid off in a year or so and then use that money toward a new goal.

vlagrl29 · May 2015

If your comfortable with your e fund the way it is I would stop putting money in that. I would put the extra $$ towards your SL until its paid off since its really not that much anyways IMO. I would still contribute to retirement while you are doing this. Whatever is most comfortable for you.

WWMMD- Budget Help

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