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Help me with my budget inside :-)
Net income: $8,300/month (this is combined, includes insurance and 401k loan notes already taken out)
Mortgage: $1,370 (includes homeowners and taxes)
Car insurance: $175
Hubby's truck: paid off
My car: $400 - $15k balance, 3.25%
Electric Bill: $160
Garbage: $25
Alarm Monitoring: $35
Gas Bill: $40
Cell Phones: $110 (for both)
Cable/Internet/Phone: $130
Daycare: $640
Groceries: $400
Pet Food/Cat Litter: $20
Diapers/Formula: $150 (must have special formula)
Gas: $500 (both drive pretty far for work)
Eating Out: $200
Misc: $100 (bday gifts, new clothes, things for the kids, doctor copays, etc)
401k loan 1: 20k balance - $650/mo (comes out of check automatically - see above)
401k loan 2: 8k balance - $340/mo (comes out of check automatically - see above)
These 2 401k loans have something like 1% interest, very low.
We have no credit card debt. I am 34, Hubby is 35. We both put 10% into our 401k each check which comes out automatically.
Savings account: $47,000
Hubby's 401k: $380,000
My 401k: $50,000
Hope I'm not forgetting anything! I would like to be able to save more. I would also love any opinion as to where I should put any extra money I get (toward 401k loan balance, toward mortgage principal, into my savings, etc). Any other advice welcome if you think I should be doing something different :-)
Re: Help me with my budget inside :-)
I would put any extra toward paying off your car loan and increasing your (not necessarily your husbands) retirement savings (either via 401K or IRA/Roth IRA).
According to my calculations, you have an extra $3,845 each month. To me, your savings is fine, but I would focus on paying back the 401k loans. The longer those take to pay back, the longer it will take for them to accrue interest in your 401k account. After that, I would focus on paying off your car loan and beef up your 401k contribution.
Am I assuming correctly that you both are still adding extra to your 401k's on top of paying back the 401k loans? Or is this the only amount going to your 401k until the loans are paid back?
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I would put all of the extra money toward the 401k loan. I'd even be tempted to take the money out of savings to pay it back, so that you're getting a better return on your retirement savings. Do you have to have the money paid back by a certain date anyway? Then, I would put the extra towards paying off your car.
@MrNibbles
That is what my husband keeps wanting to do is pay back the 401k loan. The way I saw it was that since it was nearly no interest that it wasn't hurting to pay the regular note each month. The 20k one has I think 3 years left and the 8k one has maybe 2 years left. When he did them he didn't do them for too long (5 or 6 years each I think).
We considered taking the money from the savings at one time to at least pay off the lower of the 2 loans....but I get too afraid to use all my liquid cash in case one of us were to lose our job.
Correct, we are both contributing 10% into our 401k at our respective employers on top of the loan payments coming out of his check.
While the interest is not very high on the 401k loans, for every day it takes to pay them back you are missing out on compounding interest. This easily totals into the thousands (perhaps more) that you are losing on your retirement savings.
I would suggest paying these back as fast a possible, and in the future, loans from your 401k should be the absolute last resort.
This is my thought as well. It's not about the interest that you're paying on them, it's about the growth they're not making because the money isn't in there.