Our tech team has launched updates to The Nest today. As a result of these updates, members of the Nest Community will need to change their password in order to continue participating in the community. In addition, The Nest community member's avatars will be replaced with generic default avatars. If you wish to revert to your original avatar, you will need to re-upload it via The Nest.
If you have questions about this, please email help@theknot.com.
Thank you.
Note: This only affects The Nest's community members and will not affect members on The Bump or The Knot.
beginner budgeter- rent question
Hi Ladies, I am so inspired by how knowledgeable you are about your money, and so embarrassed I am just starting out. Better late than never.
I just started budgeting yesterday. I signed up for mint.com and am also going to start and excel spreadsheet this afternoon.
First, we are trying to figure out if we can afford to stay in our apartment. We knew it was a stretch when we moved in September but our old place had splinters and was by a dangerous park, this one is really nice and in a super safe part of town. My son starting crawling and the chipping paint and splinters were a big issue for me, not to mention the drug use and knife fights in the park.
Total income starting in October is $77,800 excluding bonuses (which could be up to $10,000 but I want to save that for e-fund or future cash car purchase only- or eventual downpayment??).
We pay $1855 per month with no utilities included. gasp. We live in the city in a nice neighborhood.
Utilities run around $275 for water/ sewer/ garbage/ gas/ electric.
Internet is $50 (no phone or cable bill)
Groceries/food/restaurants come to about $1000 per month. I cannot believe how low some of your grocery budgets are. How do you do it? We do try to buy Organic and we buy mainly fresh produce and meat.
We have no credit card debt, car payments, and DH has one student loan that is $250 per month with a low rate. There is about $15,000 left on that.
At first glance, are we crazy to stay in our current apartment? In defense of it, I have been looking for new places for around 3 months. Stuff is in bad shape. expensive for that you get, or in a neighborhood that is not near downtown. But I wonder if I am fooling myself and if my expectations for an acceptable living situation are too high. We really love our current life here.
Bear with me, I am truly a beginner but trying to learn fast before #2 arrives and our lease is up in September. We love being frugal and I think budgeting will be fun. I will breastfeed, but tried cloth diapering with my son and it did not work for us for a number of reasons.
I know there is probably lots of information missing but I am going to start working on the excel sheet.
Funny how emotional money/ finances can be!
Re: beginner budgeter- rent question
@MrNibbles
In my mind, you should be looking at your net income only when trying to figure out a budget that works. Sure, there are lots of suggested percentages that are based on gross income...but it's much easier for me to see what may or may not work when I'm looking at actual cash flow.
Have you tried to cut back your expenses on groceries and eating out? $1000 a month sounds like A LOT for two people and a baby. (or maybe you have other children that just weren't mentioned in the post?)
We do need to live close to downtown but can and will at this point move to a cheaper area. I think if we were super diligent we could do all food/ grocery store purchases be $800 per month.
We definitely need to move. Thanks for the replies.
A few things...
1. I agree that your grocery/food/eating out budget is high. You have 2 adults, a small child at crawling age, and one on the way is my understanding. I am curious to learn more about where this $1k every month is going? Can you provide a food budget break down?
2. I think you made a wise decision to move out of the sketchy apartment with splinters and the nasty park. But, I do think your new abode is still too pricy for you. Your expense for rent, renters insurance, and the apartment utilites should be no more than 25-28% of your take-home/after tax pay in a low or mid cost of living areas and 30% in a high cost of living area.
If the $77,800 income you mentioned is your after tax pay, your housing expenses should be between $1620 (25%), $1815 (28%), or $1945 (30%) - which needs to include your rent, renters insurance, and utilities. If the $77,800 is your before tax pay then reconfigure the above numbers to reflect the change. Either way, your rental cost is high.
3. One thing you did not mention is your e-fund. Does one exist? If so, how many month's worth of living expenses are in it?
If you can cut your food budget and perhaps relocate to a safe yet less expensive apartment, you can toss your extra money into the e-fund, at the debt, and/or into retirement.