New home owner in need of budget revamp!

PincessOf3 · December 2015

I have budgeted in the past and it was easy. I paid off debt and managed my money well. But with my new house I am depleting my savings and spending more than I EVER had. Here is a little background:

Net $2,400 a month

Mortage 1060

HOA 190

Elcetric: Not sure yet haven't received first bill

Gas:Not sure yet haven't received first bill

Car: 315

Insurance 275 (I know!!!)

Credit card 15 a month (I owe 1,500)---again I know? My oven broke and I bought new furniture.

Gas-20 bucks a week- 80 a month

Savings: 2,000

I have 3 kids

I am a single mom so I need to be realistic.

I can already tell you that I eat out too much. And I am working on that. I will also look into refinancing my car. I would like to use my tax money on my car, so it would be great to pay down my debt before I get my taxes or at least get it way down.

Thank you all for your help in advance!

PincessOf3 · December 2015

Okay. I just "found" money in an old savings account with another bank I forgot about. My new credit card balance is now 407.60

brij2006 · December 2015

Okay, so from what I'm figuring, you have $465 left over after all of your expenses you have listed. However, how much do you spend on groceries, eating out, cell phone, any cable bills?, clothing, entertainment, gifts? Do your kids go to daycare while you work? If so, how much is that?

PincessOf3 · December 2015

My kids stay with their dad during the day (he works nights) so no Day Care

Internet 75.00

Cable 0

Groceries: 200 a month (less if I can)

Eating out (lets not even go there) I stopped cold turkey on Monday.

Cell 100.00

Gifts-I don't spend much but with Christmas I spent a lot (most of my credit card)

Entertainment I would say 80-100 a month. Movies for the kids and I cost be about 60+

Netflix 9

Hulu 9

PincessOf3 · December 2015

What I am really looking for in a budget is to have a nice safety net (savings) and also some spending cash.

Soon my Fiance will be moving in with me and putting in $500 a month. But I want to budget without having that $500 since we are not sure when he is relocating.

hoffse · December 2015

Can you do any side-gigs? Your mortgage+HOA is about 50% of your take-home. And you can't really get out of it because it's a mortgage, not a lease.

Do you get any child support?

Cut the entertainment, go to a dumb phone for your cell phone. Sorry, but you might need to get a little drastic here because you have very little wiggle room.

short+sassy · December 2015

From your totals...I have you left with $465/month. But that doesn't include your electricity, gas for house, food, clothing, entertaining, or cable/internet. And possibly other categories. So I can see why you are struggling.

There are two sides to personal finances...income and expenses. You can either cut your expenses or get a p/t job. And a p/t job doesn't have to be something rigid. Look through prior posts on this board. There are dozens of ways the ladies here make side income with flexible, independent contracting gigs.

For example, I've been a mystery shopper for over 15 years. I bring in $200-$300/month extra doing very part-time work. But in times of trouble, I can bump it up substantially by devoting more time (ie completing more assignments). If that peaks your interest, check out volition.com. It's a free website with a huge forum about the industry. They also have a list of MS companies you can sign up for, for free. And/or check out the other posts on the MM board for other side income ideas.

For expenses, from what you've listed and what I can assume, the only places I can see cutting are on food/eating out and possibly your car and/or insurance payments. That is extremely high insurance, have you shopped it around? I even live in NOLA, that has some of the highest car insurance rates in the country because of the number of uninsured motorists, but my comp./collision is still only $200/month...and I don't even have the minimums.

brij2006 · December 2015

Okay, so I'm coming up with negative $28 including all of those other expenses, and that's not including anything for eating out nor your utilities on the house. Since you're going to really cut eating out, then your grocery budget may increase a bit as well.

Looking at your numbers, income is where you're going to make the biggest difference. Maybe take a 2nd job to increase that, take on some overtime or work extra shifts if it's available. I would also recommend to cut up the credit card since it sounds like things are being charged to it.

What is the value of your vehicle and how much is still owed on it? A $315 car payment on a $38k/year income (assuming here), is quite a bit. Especially when being in the negative each month and having no wiggle room to put extra toward the credit card and get it finished.

Honestly, your house is a very steep payment for your income. Between the house payment and HOA fee, you're at 50% of your takehome pay, just in the house. I know you just bought it, so my next recommendation here would be getting your income up so you can have enough wiggle room to get a hefty emergency fund built up and pay off debts.

A few of us on here follow Dave Ramsey, and his principals may be a good thing for you to look into. He gives straightforward advice on money, and helps give you a gameplan on how to approach and tackle debt.

short+sassy · December 2015

I see more expenses now. You can definitely cut down that cell phone bill. Hopefully you are not still under contract. I pay $40/month with Metro PCS for unlimited calls, texts, and 5GB data at 4G speeds. But there are a ton of companies out there with low cost plans like that.

short+sassy · December 2015

PincessOf3 said:

What I am really looking for in a budget is to have a nice safety net (savings) and also some spending cash.
Soon my Fiance will be moving in with me and putting in $500 a month. But I want to budget without having that $500 since we are not sure when he is relocating.

That's a great idea. You don't have that extra $500 now and, when you do, you can use it to build up your emergency fund/savings.

I know its not my business, but I am going to give my opinion anyway. I think your fiancé should be ponying up more than $500/month. That doesn't seem fair at all. It will probably barely cover just the extra food, water, gas, and electricity he will cause. Unless he will be contributing food and utilities on top of the $500.

I'm not saying he should pay half...after all, there are four of you as compared to one of him...but he should be throwing you a few hundred for rent on top of whatever approximate extra expense it will be to have him living there.

More unsolicited advice. The house you bought is for you and your daughters. You qualified for it. You made the down payment. You pay the mortgage. Do not put him on the title after you all get married. In fact, get a basic pre-nup that outlines the house is not and will not be a marital asset. Nobody likes to think about the negatives in engagement bliss. But, sometimes things don't work out. You don't want to be 10 years from now splitting the equity in the house that should belong to just you and your daughters.

hoffse · December 2015

brij2006 said:

Okay, so I'm coming up with negative $28 including all of those other expenses, and that's not including anything for eating out nor your utilities on the house. Since you're going to really cut eating out, then your grocery budget may increase a bit as well.

Looking at your numbers, income is where you're going to make the biggest difference. Maybe take a 2nd job to increase that, take on some overtime or work extra shifts if it's available. I would also recommend to cut up the credit card since it sounds like things are being charged to it.

What is the value of your vehicle and how much is still owed on it? A $315 car payment on a $38k/year income (assuming here), is quite a bit. Especially when being in the negative each month and having no wiggle room to put extra toward the credit card and get it finished.

Honestly, your house is a very steep payment for your income. Between the house payment and HOA fee, you're at 50% of your takehome pay, just in the house. I know you just bought it, so my next recommendation here would be getting your income up so you can have enough wiggle room to get a hefty emergency fund built up and pay off debts.

A few of us on here follow Dave Ramsey, and his principals may be a good thing for you to look into. He gives straightforward advice on money, and helps give you a gameplan on how to approach and tackle debt.

All of this. I'm not a DR follower myself, but I think you need to read his books and get on the bandwagon. You simply have FAR too much debt for your income. I am one of the most heavily-indebted people on this board, but H and still maintain a total debt-to-income ratio of under 50%, and we have a mortgage, a car loan, and multiple law school and college loans. You're at 50% with just the mortgage/HOA, and the car pushes you above that.

I don't mean to scare you, but you need to take this seriously and figure out something ASAP, because like Brij said you are negative and haven't even gotten a utility bill yet. I don't know what size house you bought or how well-insulated it is, but utilities on a house can be extremely expensive. H and I doubled our living space when we bought our house and tripled our utility expenses from our apartment.

hoffse · December 2015

Another thought - you mentioned a tax refund. I suggest looking at your taxes for next year and seeing if you can reduce your refund so that you see more of your income during the year. When you get a tax refund you are essentially giving the government an interest-free loan. And in your case, you are actually taking on CC debt to do it.

Unless you are getting the refund because you already 0 out and have some extra credits that you qualify for anyway (which is totally possible), I would re-examine this.

CuriousKiddosMama · December 2015

One thing I would recommend considering because you still can change it, is Christmas. You said Christmas was a lot of your cc debt- your kids may need to be happy with a little less this year because you can't afford it. You needed stuff for the house, that was more important. Going into credit card debt for Christmas is not smart.
I would highly recommend Dave Ramsey's book the total money makeover. You can check it out at your local library, and it will help you with your budgeting. He recommends your house to be about 1/3 of your take home so you aren't house poor, and you are way above that. The mortgage isn't something you can change at this point, but you can change the income part of the equation. Are your kids old enough that you could pick up a part time job one or two nights a week? Maybe nights your ex doesn't work if he would be willing to keep them, or nights your fiancé could watch them. A couple hundred dollars a month makes a big impact to your situation.
I know a pp has said it, but get the cc paid off and cut them up. Don't look back. Use cash from here on out. If you don't have cash, you can't afford it.

brij2006 · December 2015

Also, if you haven't already applied that $1,000 in your savings account that you found, to the credit card. I would recommend keeping that in the account for emergencies only, and having that be your emergency fund for now.

Another recommendation, if most of what is on your credit card are Christmas gifts, then return them to the store and have them credit the card with the return.

I know this is extreme, but Christmas gifts are a luxury. There's absolutely nothing wrong with getting your kids very small and cheap/simple items for Christmas. Or take them to the zoo for the day and pack a sack lunch.

I promise, they won't remember what you bought them for Christmas, but they will remember there not being food on the table.

julieanne912 · December 2015

One question I have... why are you spending $60/mo on movies for you and the kids, when you also have Netflix and Hulu? I see that as a big place where you can save some money. Sure, it's not as fun to watch movies at home as at the theater, but you don't have the income to splurge on movies like that.

I'd also pick Netflix or Hulu, but not both. It's not a big cost, but all those little expenses add up very quickly. Just by cutting out the theater movies and one of the streaming services, you've already saved yourself almost $70.

Also agree that you should take the $470 credit card balance and just pay it off with some of your savings, then work on building your savings back up.

simplyelise · December 2015

Agree with PPs completely - we're on the Dave Ramsey plan right now and have paid off over 33k in the last 13 months using his methods. It definitely works. It's also a great class to take when you're about to get married or newly married because it helps so much with getting a couple on the same page. The class right now costs $99 per couple. The church we took it at provided free childcare, so you might want to keep an eye out for that where you live.

LINK: http://www.daveramsey.com/fpu/home/?snid=classes.fpu-a

I think a big thing for you over this month is needing to track expenses. I'm very suspicious of your $200/month grocery bill for a family of 4. Even with their dad taking on food costs during the day, I expect you're probably spending more on food than you think. And like Brij said, that cost will go up some if you are replacing meals out.

As for entertainment, I would gently say that you cannot afford to go out to movies right now. Tacking on to Julieanne's comment, you can cut or drop entertainment $ significantly and still have good family times. Netflix has a ton of movie options and the library also has great dvd rentals. So buy some kernels of popcorn, pull a mattress in front of the tv, and have a fun movie night. Or depending on the kid's ages, do a board game night. Hoffse and her husband do a homemade pizza night like every friday I think (creepy that I know this?). You could make that a regular event with the kids and it would be very affordable compared to a movie out.

You have $2000 in your savings right now, so I agree with your move to use that extra you just found to pay down the credit card debt. Put everything extra towards the CC for a couple months and then focus on your savings.

You could probably estimate right now at least $300 a month on utilities, so your housing expenses alone are $1550. If you add in insurance and food (I'm putting $300 for groceries) and gas, your additional required expenses are another $655. So each month, your bare bones, required expenses are $2205. Your non-required expenses (cable, internet, hulu, netflix) add up to $193 not including any entertainment money. That gives me only $2 leftover. But with the fiance moving in, you could stick with a strict budget and put the $500 a month into savings.

Most personal finance gurus recommend 3-6 months of expenses in your emergency savings account. Your expenses are about $2400/month, so you would want $7200-14,400 in that fund which only gets used for emergencies (AC breaks suddenly, you lose your job, you have a car accident) and then gets re-funded again. Since you own a home and have children, I'd probably shoot for at least $10k.

OP, do you know when a possible wedding may happen and if you plan to spend money on wedding celebrations?

ETA: I don't think I included the car payment on any of my calculations... How much do you owe and how much is it worth? Since you can't sell the house, I would probably look at selling the car and buying a beater. You cannot afford things right now, so it's going to either need to be something drastic like selling the car or an income increase like others have mentioned.

hoffse · December 2015

@Elise, not creepy - I mention it each week on the weekend thread! Yeah, we do pizza night every Friday. It takes about 30 minutes from start to finish, and it's really cheap. We usually do a movie from Netflix too.

What's kind of sad is H and I make the same kind of pizza each week. We like it so much we've never deviated from it in over a year, lol.

I can recommend an excellent pizza stone if anybody needs one

OP, you are going to need to buckle down here, and not just with nixing the eating out. We can help you find some creative solutions, but if you don't make a big change quickly, this is going to spiral out of control within a few months.

short+sassy · December 2015

@simplyelise, I didn't think that was creepy either. Especially since my own reaction reading that was, "oh yeah, that pizza night they do sounds fun."

@hoffse, try some creative toppings this week. I know you all like NOLA and your H used to live here. I like making muffaletta pizzas. Layer with Italian meats, olive salad, then cheese on top. I usually use Provolone. The olive salad is a bit runny and oily, so it is important to put the cheese on top and it then melts to keep the goodness in.

hoffse · December 2015

short+sassy said:

@simplyelise, I didn't think that was creepy either. Especially since my own reaction reading that was, "oh yeah, that pizza night they do sounds fun."
@hoffse, try some creative toppings this week. I know you all like NOLA and your H used to live here. I like making muffaletta pizzas. Layer with Italian meats, olive salad, then cheese on top. I usually use Provolone. The olive salad is a bit runny and oily, so it is important to put the cheese on top and it then melts to keep the goodness in.

Lol, I'll see if I can talk H into it. We do a pesto base and top with mozzarella, green olives, artichoke hearts, pepperoncini and feta. We also add a little garlic salt and Italian seasonings, and we do red pepper flakes and real parmesan (not the fake stuff) when it comes out of the oven. I do love a good muffaletta though... it's been ages since I've had one! I will discuss this with H

PurpleBookmark · December 2015

hoffse said:

short+sassy said:

@simplyelise, I didn't think that was creepy either. Especially since my own reaction reading that was, "oh yeah, that pizza night they do sounds fun."
@hoffse, try some creative toppings this week. I know you all like NOLA and your H used to live here. I like making muffaletta pizzas. Layer with Italian meats, olive salad, then cheese on top. I usually use Provolone. The olive salad is a bit runny and oily, so it is important to put the cheese on top and it then melts to keep the goodness in.

Lol, I'll see if I can talk H into it. We do a pesto base and top with mozzarella, green olives, artichoke hearts, pepperoncini and feta. We also add a little garlic salt and Italian seasonings, and we do red pepper flakes and real parmesan (not the fake stuff) when it comes out of the oven. I do love a good muffaletta though... it's been ages since I've had one! I will discuss this with H

That pizza sounds amazing! We just do cheese lol, I'm inspired to try something different now!

PurpleBookmark · December 2015

OP, you've gotten a lot of great advice so far. We have 3 kids and the biggest thing that jumps out to me is your grocery budget. We budget $130/week for food, formula, diapers, and toiletries. I have a really hard time making this budget, I can't imagine $200/month. I know that we technically qualify for the WIC program although we don't use it. I would imagine looking at your numbers that you may also qualify for something like that. If things get bad - and I hate to say it but it could since it looks like your expenses outstrip your income - a program like that could help feed your kids.

I hope you are able to get things turned around, a part time job could help immensely.

PincessOf3 · December 2015

No child support. We have 50/50 custody. We each get them every other week.

PincessOf3 · December 2015

My kids are too old for WIC and I over qualify for food stamps

PincessOf3 · December 2015

It is a townhouse, and it is very well insulated thank goodness! I am taking this very seriously. Unfortunately I only have my one income to work with. It is hard for me to find a second job when I am only available two weeks a month. I also know that school will help me increase my future income bu that is just more loans and no time for a second job.

PincessOf3 · December 2015

I know that you are so right about the Christmas gifts. A little background: My kids and I were living in a one bedroom apartment (4 people) in the ghetto for years. I did this so I can save up for a house. And when I moved into the house I just felt guilty for all I put them through and went a bit crazy. I am not saying that this is right. It is NOT. But I let my heart take over my brain. Unfortunately I had to learn this lesson the hard way. I will NOT make this mistake again. Thank you for all of your help!

PincessOf3 · December 2015

In listened and I just cut Hulu! I feel good about this decision. I would put the money on my savings but my water heater is going and I will use my savings for that. I will pay my CC as I can. I can put another 100 bucks on it. That will help.

PincessOf3 · December 2015

The wedding is not happening anytime soon. I am thinking 2017/18. I am not in a rush. I know that we can't afford a wedding right now. My car payment is 315 and I owe 15,000. This is why I want to put my tax money on that. Every-single-penny. I am going to refinance with my local credit union. I wont be doing the movie thing anymore. Like everyone said we can watch movies at home and make popcorn and that will save me LOADS of money.

PincessOf3 · December 2015

Thank you all for the advice! I am signing up with the library and I will check out some Dave Ramsey books. Thank you for the links as well!

As for my grocery bill we do a lot of pasts and rice which saves. My kids are not huge meat eaters. They are not vegetarian, but they don't do much meat which helps. My husband and I switch off every other week so that's why I can save so much. Plus they eat only breakfast and dinner during the school year,

I shut off Hulu today, and I am looking to refinance my car. Getting a second job will be hard since I only have two weeks that I can work. But I will still keep looking. I will not even start planning a wedding till I get my car down to 5,000. That wont be for years. I owe about 13,000 on my car. There was a point when I was buying a a "new to me" car every two years. I keot getting beaters. OH! I just thought of something! I can do UBER!

I am taking all of your advice and putting it to heart! I thank every one of you for helping me. The fact that I put myself in this situation and you are all helping me, and not making me feel like complete crap. You are all just bringing me down to reality and letting me know what I can do to fix the problem!

One more question: Should I take from my savings and pay off my CC for good? Or should I not deplete (almost) my savings?

PincessOf3 · December 2015

YIKES! I thought I was replying to everyone individually. But that wasn't the case!

brij2006 · December 2015

Okay, if you owe $15,000 on your car, then you need to sell it. Buy yourself a beater, and use that to get around while you get the rest of the credit card cleared up and get a hefty emergency fund saved up.

Cut up your credit card. Now. Well, return the Christmas gifts first, then cut it up.

If your water heater is going out, then use that little bit of money in your savings to pay for it. Do not put it on the card. Your first step needs to be to get $1,000 in savings at all times. If that hits below $1,000, then you focus on rebuilding that back up to $1,000 before paying extra toward debt.

As for the tax return, change your witholdings at work so less is taken out of your paycheck so you aren't getting a sizeable return. Once you do receive this years' tax return, apply that to the smallest debt first (credit card).

Do you know how much your car is worth vs what is owed on it? You can use KBB.com to calculate the private party value of your vehicle (selling it yourself, rather than selling to a dealership).

PincessOf3 · December 2015

Trade in is only 8,888.00. Can I return gifts via Amazon without having a reason? I am scared of getting a beater because I am buying a new car every two years and that costs me more than having a payment. I pay 5,000 for beaters and pay straight cash and they do not last long. I am not going to cut my credit card in case an emergency happens with my kids or my car. But I did put it in my safe so that I do not have it on me.

Also, my job is salary so there is no room for overtime. A second job is a must!

New home owner in need of budget revamp!

Re: New home owner in need of budget revamp!

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