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Introduction/May Budget
Hi guys, my name is Jess. I was using BabyCenter.com, but since it's just me and hubby, I felt like it wasn't as helpful as maybe this site might be.
Anyway, we were wanting to try to have a baby soon, but realized our debt was terrible. I do not want to bring a baby into our world like this.
Background story: Hubby just started a new state job and is in his third week. While it's $5 more an hour than the previous job, it's about 30 extra minutes with a total of 50 minute one way drive. We got him a new car a few weeks ago thinking it was a good idea to have a reliable car (however, after the purchase is when I realized that we were in debt and now no way hubby will give up his car.)
I have already started a EF (With a balance of $245 right now - I just started budgeting and saving the past 2 weeks), however within that EF, I seperate it out into categories (sinking funds) 45% of the EF goes towards our heating fuel for the house. I am aiming at about $800 by October (6 months to go!), 25% for Car/House Repairs (Only true emergencies, nothing related to upgrades or modifications) 15% Medical (for co-pays, hubby eventually needs new contacts), 10% for hubby's family party that we have to host this year in July. I am hoping to get about $150 for my goal and will shop very wisely when it comes to the food/soda (we are also asking other members to bring additional food), and finally 5% towards my mother's (second) wedding. I'm a bridesmaid and so I am hoping to only spend about $75 on a dress max, plus contribute a little towards the bridal shower. I already had a discussion with my mother that we are budgeting and I can't get her gifts for her wedding since I am in the wedding. I cannot wait until after August so 15% of the sinking funds can go towards something else more useful!
So with all that aside, I am going to post my budget to see what you guys think.
Net income: $3,236.92 (Health and life insurance comes out)
Bills:
Mortgage: $511 (local, county, school taxes, and insurances comes out of that payment) (Balance is $49,966.52 @ 4.95%)
Car Insurance: $150 (for 2 cars on full coverage)
Electricity: $85
Garbage: $31.50
Sewage/Water: $67
Cellphones: $162 (in a contract until September, then changing to VirginMobile. Will save about $92 a month)
(We do not have internet or cable. I shut them all off in order to budget)
Total Bills: $1006.50
Debt:
My Car Payment: $193.22 (Balance $7,184.30 left @ 4.99%)
Hubby's Car Payment: $266.27 (Balance $18,229.75 left @ 5.99%)
My Personal Loan: $100 (Balance $1,321.96 @ 10.9%)
Hubby's Personal Loan: $200 (Balance $8,627.15 @ 10.9%)
My Visa Credit Card: $20 min (Balance $855.18 @ 9.9%)
Hubby's Visa Credit Card: $20 min (Balance $949.89 % 9.9%)
Lowes Credit Card: $40 min (Balance $2,396.24 - 1 promo is over, due $569.10 @ 24.99%; the other 2 promos are at 0%)
Chase Credit card: $110 min (Balance $4,578.34 @ 15.24%)
Citi Credit Card: $20 Min (Balance $1,151.88 @ 0%)
Total Debt: $969.49
Total Bills: $1006.50 + Total Debt: $969.49 = $1975.99
Net income: $3,236.92
Left: $1,260.93
Budgeting:
Grocery/Household: $200 (already have this as low as I can get it)
Gas: $520 (can't decrease this as hubby has a 50 minute one way commute)
Hubby's Blow Money: $40 (I told him he can use it on whatever, movies, eating out, video games, festivals, etc)
My Blow Money: $40 (I will use this on new clothing or haircuts, makeup etc)
Restaurant: 0 (Restricting to no eating out. Maybe we will treat ourselves to a small restaurant meal every time we pay something off?)
Prescriptions: $14
Pet food/Litter: $20
Total Budget Items: $834
Left over to use for savings: $426.93
When I make my weekly spreadsheets for budgeting (We get staggered pays each week), I put how much we have left after paying bills, then I put my budgets of each category (Grocery, Gas, Prescriptions, Savings, etc) I keep track of what we've used in each category and what we have left. Last week we had an emergency food shortage and had to take a little bit from the gas fund. Tomorrow is the last day of our 2 week budget (We will start getting paid each week) and it's been pretty good! I am doing a zero budget, but with the blow money it's not so bad. I am going to buy a roasting chicken this weekend and use that for meals this week to cut down on grocery costs 
Please tell me if you can see any improvements. Also, just want to mention that I am still in school and have school loans in deferment. I'm thinking I will have to start repaying around June 2014.
Re: Introduction/May Budget
First of all, good job on staring a budget and starting to get some savings and debt paid down.
I would recommend checking out www.whatsthecost.com it has a great debt snowball calculator that you can put in all your debts, put in the total $ you can pay to them all each month, and it will break it down and show you how long it will take. You can do it by interest order, or balance order, but interest order will save you the most $.
Also, it looks like your efund is not a true efund....an emergency fund its strictly for emergencies, like a job loss, a car breaks down ect. Savings for other things is just that, savings. Just a thought that you might want to consider.
Good luck! I'm sure the ladies on this board will have some great advice for you.
I have to agree with PP. Your emergency fund is not really an emergency fund. An emergency is something you DO NOT know is coming- a wedding, car repairs, all that sort of stuff you listed were not emergencies, they should be planned for and a part of your monthly budget. You need a real emergency fund of $1000.
Second, your cars- I know you said your husband does not want to get rid of his car, but those payments are rediculous. If you got beaters- cars that got you from point A to point B and yet were reliable, think about how much money that would free up to get you out of debt. Consider selling your car, paying off the loan and buying you something for a grand or two until you have this cleaned up. Then all the money from your car payment gets to go towards your debt snowball. If you have never heard of Dave Ramsey, pick up his book The Total Money Makeover- he gives great advice on how to clean up your debts- or listen to him on the radio, he is on every afternoon and has his own Iheart Radio station. He would say that your cars are too expensive for your income. I believe his rule of thumb is that your 'toys' (things like cars that go down in value) should never be above 25-50% of your income. Yours are much higher than that, and that may be part of the reason things are so tight.
I would check out the website PP said to help you create your debt snowball, because paying minimum payments you will have these debts around forever, you need to free up some money to help pay them off, or figure out a way to make more (deliver pizzas on the weekend??) Finally, restaurants are an excellent thing to cut from your budget, but you also need to be of the mindset that if we are really serious about this, there will be no 'treats' until we are finished. When you are finished plan yourselves a trip somewhere or go to an amazine restaurant- that you pay for in CASH!!!
Congrats on deciding that you need to get out of debt. It can be a struggle, but well worth it if you and your husband can work together to get there. you will be better than a majority of Americans who assume debt is okay and normal.
Hi, good job on starting a budget. I am also glad you realize you guys would have some serious financial difficulties adding a child to the mix, so hopefully you can get ahead of this to get moving on that!
A few things I noticed:
Car Insurance - you should be able to shop around and get cheaper. Especially relative to the apparent COL in your area, that seems like a lot (unless there is bad driving history or high crime area, then maybe not, but worth looking into)
I know it is getting warmer out and almost summer, but what happens to this budget in winter? (I'm purposely ignoring the idea of using an efund for heating fuel) how much does that normally run you per month in winter? This could easily blow your budget depending on type of fuel and home efficiency.
I won't comment on the amount you spend on cars because honestly, if all the other debt didn't exist, I don't think the cars would be a big problem. I get the point of having something newer, under warranty, and reliable for a long commute, I do the same thing. However, the rate on your DH's new car is ridiculously high for this point in time. It should easily be 2.9% or lower. Can you look into refinancing that with a local credit union if you are able to get a lower rate? You could do the same for your car as well, but remember to keep the terms the same. That $50 fee to refinance would be well worth it in the end.
I think you need to look at snow balling your CC and personal loan debt. You have dug quite a hole. I think my first look would be at the remaining money that is now off promo for Lowes. How much are you paying in interest? If it's a typical promotion, you may actually be paying interest on the full amount you charged not just the $569.10 left which is way too much, on top of a ridiculous rate. I would look to get rid of this ASAP. Also, when do the next promotion(s) expire - that needs to get paid off before then. Divide the balance by how many months you have before it expires and pay it off before then!
Gas - you say you can't lower this. I have a 50+ minute commute and spend less than $250 a month in gas. DH and I combined spend less than that (and DH drives a Jeep, which is terrible on gas). How many miles is his commute? I think that would be a better indicator of what gas should be, and also, what kind of cars do you drive? Fuel efficient?
I have to commend you if you are actually keeping a food budget of $200 a month, we never get anywhere near that in our HCOL area, and I agree it would probably be very difficult to go any lower.
When you look to snow ball your debt, take interest rate into consideration, but also take total amount owed, amount of time to pay off and monthly minimum into consideration. I get that one debt might have higher interest than another, but if they are for a similar amount and one has a higher monthly minimum, you will be able to snowball more sooner and that can work to your advantage, and you can make up the difference in interest rate differences in the long run.
I would suggest creating a huge excel spreadsheet with amortization tables and figuring out how to make your money work for you. Get your efund to $1K and don't touch it. Save up for your other obligations separately.
Good luck!
I usually lurk, but thought I would put my 2 cents in.
While your cars are way too high for your budget, I have a feeling you won't get what you owe plus enough to buy something cheaper. I do think you could find a lower interest rate though. I agree w pp, and you should check a local credit union.
Also.. I'd try to get that Lowe's card paid off first before you get stuck w back interest. Check when your other 2 promotions end.
Here is what I'm not sure of, but maybe others can be of help.. I personally would see if they could apply my payment to the 0% promotions, usually you can call or have the employee call if you pay in store to make sure it goes towards those certain balances. I don't know if that is the right thing to do, but I don't think you want to be stuck w that back interest.
Good job taking control of your budget. It will feel so good once you start making a dent.
If you have not stopped using credit cards - well, now is the time to do so. Save ONE card (the one with the longest history) and freeze it in a block of ice, cut the others up.
You talk about DH's job, but not yours. Are YOU working? If not - time to get a job. OR second PT jobs for you both and get that debt paid off and more savings in place. Throw ALL excess money, bonuses, tax refunds, gift money etc to debt.
Sell anything you no longer need or want - put the $ to debt.
Read Dave Ramsey's Total Money Make over and David Bach's Smart Couples Finish Rich.
I have also just found this forum and am working T paying down my debt so I can expand my family. Isn't is nice to feel like there might be a plan and end in site?
From what I have learned so far these are my 2 cents.
The efund needs to be for true unexpect emergencies only. The other expenses you have included in your efund I would call planned spending. I have just set up mason jars for my planned spending. So for example you could have one for your moms wedding and divide the amount you think you will need by the amount of paycheques until you need it. Each week take that amount of money out of the bank and out it in the jar. Then when you need it you can pay cash. I was trying to keep my planned spending in my chequing account but would forget about it and spend it on something else thinking I had the money. I also plan on keeping my efund at a seperTe bank then my usual chequing accts just so it is out of sight out of mind.
With your expenses I think you need to lointo the cost of cancelling your cell plan early. I just went through this and with the cost of cancelling and going to a cheaper plan I saved money overall. Also, the "blow" money seems like a lot of money. If you seriously want to get out of debt you need to put this towards the debt. That is an extra $80/mth or $960 year.