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Help with creating budget and sticking to it
Hi all, so it's been a few months since I posted. Since then though, I haven't been watching my money very carefully. I haven't gone into any further debt though or gone negative in my bank account at all. I have just been living paycheck to paycheck without putting any money in savings for a car and/or emergencies. All my extra money has been going towards paying for a trip to North Carolina, which I just got back from.
Now that I'm back from NC and no longer need to save money for a trip, I'd like to turn my attention to saving up for a newer but used car as well as an emergency fund. The car is first priority though because last week, my car broke down and it looks like it needs a new transmission. So I thought I would post my bills here and see if y'all can help me with my budget.
Rent: $375 plus electric. Total usually costs anywhere between $400 to $430 per month, depending on how often we adjust the thermostat. I have lived with one other girl as my roommate and our apartment has individual leases so the electric bill is split between us. But we just had another girl move in so I'm hoping that since our electric bill will now be split between three people, my portion of the electric bill will hopefully be cheaper. All other utilities like water, trash, internet is included in rent.
Cell phone: $86
Charter TV: $22.54
Car insurance: $42 (I'm on my parents' insurance and my car was completely paid for, so I haven't had to deal with a car payment.)
Hulu: $7.99
YMCA: $67 (My boyfriend and I split this bill though, which usually costs about $33. However, we plan on going to the Y this weekend to see if we can do anything to lower our monthly bill)
Capital One credit card: $50 (This card went into collections and then sent to the lawyers. A few years ago, they put a judgment against me. I am finally paying them off by sending them a money order for $50 every month. As of February 1st, 2013, I owed them $1,859.72 but interest accrues daily so I'm not sure how much it is now. I would need to contact their office to find out the exact amount. And I don't know the interest rate, either. I'm afraid to contact them because I don't want them to garnish my wages. So I just send them $50 per month and try not to rock the boat.)
School loan: $65 (I'm on the income based plan, thank goodness)
Groceries: $200? (I am terrible at figuring out a grocery budget. It's just me that I need to budget for since my BF and I do not live together and I don't share groceries with my roommates. Any suggestions would be greatly appreciated.)
My salary is $22,000 before taxes. I get two paychecks per month. I get paid on the 15th and again on the last day of the month. After taxes, I bring home $1,462.38 each month.
So what should I do? I've been toying with the idea of cutting out Charter TV completely but it's hard to do that since I love having a DVR. Sigh. And my BF and I are trying to lower our YMCA bill. Other than that, what can I cut out or what can I do to lower costs?
Re: Help with creating budget and sticking to it
First, you need to start with a written monthly budget. I did the math and your expenses listed above amount to about $940 a month. So somehow about $520 is disappearing every month, and you don't know how or where. That is a HUGE problem because that is a 1/3 of your income! You do have several things missing from your budget: gas for the car for instance was not listed.
We follow the Dave Ramsey plan, we use the envelope system and put our money in there at the beginning of the month. If we decide I have $100 to spend on clothing that month, it is cash, and if it's out, I or my husband can't buy whatever it is we 'need/want' unless we move money from elsewhere, or we wait until the next month. Getting paid 2 times a month, you would probably want to do this with each paycheck- put 1/2 the money into the envelop on the 15th and the other half on the 30th. Once it's gone, it's gone.
One bill you can easily cut is Hulu- why do you need it and cable? Or cut cable, that would save you even more.
Capital one: sticking your head in the sand is NOT a good idea. $50 a month is not much of a payment, your debt may be going up every month depending upon your interest rate, and you wouldn't even know it. Call them immediately. I doubt that they would start harassing you now that you are paying, they would start harassing you if you quit paying probably.
Another option of course is to get your income up. What do you do? Are there ways in your industry to raise your income/work overtime/ work a second job? That could quickly help you save for a newer car and an emergency fund. Did you finish your degree? Still working on it?
I'm assuming the trip to NC was something that 'had to be done'- otherwise you shouldn't have gone- but that is done, so you can't change that decision. At least you were able to pay cash for it, but seriously no more trips!
Hopefully giving you some things to think about!
Edit: the motivation for sticking to the budget has to be something in the future. When I've bought my car, paid off my loans, and gotten my emergency fund complete, I'm going to save and treat myself with X.
According to my calculations, on the most expensive month, you have $491 left over. Here's what I would do.
1. Try to lower the gym expense, or cut it out entirely. Also lose internet on your cell phone.
2. Save up $1,000 for an e-fund (this will take you approximately 2 months).
3. Pay to fix your current car. It may seem stupid, but once you get a car loan, then you will have to carry full coverage insurance. Which will make your insurance payment higher, and add to your debt for a car payment.
4. Make paying off the Capital One credit card a #1 priority. Apply the extra $491 and any money you save from splitting the utilities 3 ways and lowering the gym membership. This should take you a little over 3 months (after you have $1,000 in savings). The longer you have this debt, the more it can affect your credit score.
5. After your CC is paid off, focus on the student loans.
6. After all debts are paid, save up 6 months of expenses as an E-fund (about $5k after loans are paid off).
6. Once all debts are paid and your E-fund is fully funded, then I would save up for a newer car to pay cash for.
It doesn't look like you over spend every month. So you are in descent shape. Just get ahead of yourself now, and it will help in the future to no longer have that CC payment or student loans.
Good luck!
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I know, I do have an excel spreadsheet for my budget but it hasn't been updated in a while. I do need to update it tonight and stick to it. I just thought I'd post my bills and income here first to help me with updating my budget on excel.
It is mind-boggling that about $500 is disappearing every month but I think it's because I eat out a lot at restaurants with my BF and friends. Obviously I need to stop doing that. I plan on severely limiting going out to eat to once a month because I am so tired of seeing my money disappear when it could be put into my savings account.
As for gas for my car, I haven't really thought about it but I would say I have been paying about $100 per month in gas. Luckily, my apartment is less than one mile from my office. When I burn gas, it's mainly to go to the grocery store or social-related reasons like going on dates, visiting friends and family, etc. When my car is low, I usually fill it up and it takes about $35 to $40 to fill it up. And I fill it up about three times a month, I think. However, since my car broke down, I am using my parents' car that they are lending me. It's an old Buick 4-door sedan and I'm sure it will guzzle more gas than my own car did. I will be getting the Buick later this week so I'm not sure yet how much gas it will take.
I have been using Hulu to watch tv shows that my DVR was unable to record. But I agree, I do need to cut Charter. I don't really need it anymore.
I actually read the Dave Ramsey Money Makeover book a few months ago. I got all excited and tried to implement the plan but I wasn't very diligent with it. But I will be trying the envelope system again.
I guess I will try to call Capital One later today. I am hard of hearing so my mom usually handles the phone calls for me and she has been resistant to the idea because she doesn't want to "rock the boat" since they had garnished my wages a few years ago. And they're not garnishing my wages now so my mom thought as long as I just send them payments each month and leave them alone, that they will leave my wages alone. But I don't like not knowing what my interest rate is or how much I currently owe so I guess I will fight my mother on this and have her call them for me.
I am a marketing specialist for a small real estate company. I basically put ads out online advertising new houses that have come on the market. It's a new company which is why I'm not making very much money. But my boss has said that once business starts picking up a lot more and we get more clients, that bonuses will start rolling in for the team. And yep, I finished my degree. I have a BA in English.
As for a second job, I have considered taking on freelance writing part-time. I also applied to a local library to work on the weekends but they weren't hiring. Since I have a severe hearing loss, I prefer jobs where I don't have to interact with a lot of people or if I do interact with them, it needs to be in a somewhat quiet environment like an office or library.
And the trip to NC was for my BF's best friend's wedding in which he was a groomsman so it was definitely a trip we had to take. But we are definitely not planning any more trips anytime soon!
You mentioned that other things were missing from my budget. Other than gas, I can't think of anything else. Can you tell me what else I'm missing?
Restaurant was one of the things I was thinking about. Also toilet paper, tampons, tooth paste (don't know why everything that came to mind started with a T), those type of necessities.
I like the way PP put it. If you can keep your expenses to what you have listed- or slightly more when you include some of those 'forgotten' things- you really can get rid of some of these debts quickly. 2 months and you have your baby emergency fund- 3 more months and Capital One is hopefully gone. That is really motivating when you think about it that way.
Sounds like you do have job growth opportunities, so that will help you out in the future too!
Hi.
I wanted to add in a few points.
Perhaps since your office is less than one mile from your apartment, you could walk there? It would double as exercise (cut the YMCA) and saving on gas for your car. My first job paid me $24k and was about a mile. In warm months on non-rainy days, I walked.
I think you will get unmotivated if you limit your restaurants to one time per month. Perhaps give yourself some leeway there and say 1 restaurant every 2 weeks, but then pack your lunch for work and avoid the extra snacks and coffees. Another idea is to limit what you eat when you go out...drink water, order appetizers instead of full entrees, avoid desserts. Social time is really important and food is a big part of that.
Next, pay yourself first. Open up a savings account at your bank and have your employer direct deposit into that (a set amount you determine) as well as into your checking account. The savings will go there automatically and you won't have to remember or be motivated to put it there. If your employer will not do two direct deposit transfers (some won't), then have your bank set up the auto transfers for the day on which you get paid - choose a set amount. When your direct deposit from work hits your checking, the bank will move that set portion to your savings.
To track that $400-$500 that seems to disappear each month...save all your receipts from all your purchases.
I agree with PP who said to fix the car you have; don't buy yet, you aren't ready and the added costs of a newer car will add stress to your life.
You said you have a BA in English. Have you considered PT tutoring? Also, make a list of the small offices in your vicinity...many might be interested in someone coming in 1-2 times per week to file or do other office maintenance tasks.
Cutting out restaurants entirely is hard, especially when it is a big part of your social life. Here are a few things that my H and I did while I was in grad school and we were flat broke. Don't order any alcohol. Just drink water. We would snack before we went then just split an appetizer as our meal. This allowed us to go to many more events than if we had done separate meals and drinks. If I was by myself I would just get soup or a side salad. Sometimes I would ask to order off the kids menu.
Tips for grocery savings when you are single. One thing is to portion out meat right away. If you buy hamburger or anything like that divide it up into one (or two if you want to take leftovers) person portions before you put it in the freezer. Also divide any left overs into lunch portions right away. This reduces wasted food. Meal planning helps as well. Try to limit trips to the grocery store to avoid impulse buys. Try to cut back to 2x/mo.
As far as whether you should save for a different car or not really depends on the car. Without knowing anything about it I would say just fix it. If you do I would avoid borrowing and just pay cash for something very inexpensive. Are your parents interested in selling you the Buick they are currently loaning you?
As PP have said cut the cable and the gym. Throw every penny you have at the CC debt. It isn't that much - you need to just get rid of it. As far as the student loans. I think you should focus on saving an e fund first. If you lose your job you can defer your student loan payments. You can't defer your rent. Once you get your CC paid off, have a few months worth of expenses in savings, contributing something to a retirement fund then consider doubling up on your SL payments and throw any extra money you run into at them.
I agree with PPs to cut cable and the gym. You can watch most TV shows on the networks' sites for a few weeks after they air. It's like a free DVR/cable combo. Or, if the networks don't have them, you have Hulu. You can even hook up the computer to a TV if you like the experience of watching on TV. I used to have a remote for watching stuff on my computer, even. It was probably cheaper than one of your cable bills. Instead of going to the gym, go walking/running/biking, play tennis at a local park, check out workout DVDs from your local library, or buy a few free weights to use at home.
Also cut back your cell phone plan. You probably have data you don't need and may have more minutes than you really need.
As far as eating out, PPs are right: don't try to cut back all at once. Check your bank statement for how much you spent last month eating out (better yet, average the last few months), and see if you can cut that in half - both by cooking in more often, and by choosing less expensive options and drinking water when you do go out. Once you've done that, try to take it down a notch further, until you're spending an amount you can feel good about.
Same goes for your grocery budget - find out how much you spend, then start paying attention to what kinds of foods take up most of that budget, and decide where/how much you can reasonably cut back. Are you buying store brand when possible? Clipping coupons for items you buy regularly? Over time, you'll get better at it and be able to cut back a little more.
As a general plan, I'd save an E-fund of $1000-$2000 to start, and use some of that to fix your current car. Also Capital One and get the details of your debt to them - tomorrow. Once you have $1000 and a working car, throw all your extra money at that credit card debt until it's gone - hopefully just a few months. So by the end of the year, you should be able to get serious about repaying your student loans. Unless you owe relatively little (around $15k or less, I think), you're probably not even covering interest accrued each month - that is, your debt is actually growing as you make payments. Start making significant payments on this debt as soon as you get the Capital One card out of the way. During this time, I'd also be putting a little bit towards your E-fund - say, $100 or so, until you have something you're more comfortable with. That's not the Dave Ramsey way that this board tends to recommend, but I don't like the idea of walking on such thin ice for the entire time it takes to pay off such a large loan.
"You know you're in love when you don't want to fall asleep because reality is finally better than your dreams." - Dr. SeussThanks guys, for all of your suggestions! I definitely plan on implementing them.
I wanted to post a little bit of an update. Last night, I pulled free credit reports from all three of the main bureaus. And on all of them, it states that my Capital One debt has gone down to $1,636! So it appears that I have been making a dent in what I owe them
. I still have not called Capital One yet but I will try to do that later on this week. My credit score has also gone up 58 points since last year. Making progress, yay! 
I'm not sure how I can reduce my cell phone bill because BF just added me to his cell phone plan and we both upgraded to smartphones. We got a two-year contract and we are on the Everything Data Share 1500 Plan for Sprint. BF wanted unlimited data because he uses the Internet a lot on his phone to watch Netflix and play games. And I do love my smartphone so I am not willing to drop down to a basic phone just yet.
As for the car situation. If I can't get my current car fixed, my parents are willing to sell me their 1996 Buick LaSabre. So that's good. I wouldn't have to make monthly payments since they are willing to let me drive it until I save up enough money to buy the car outright. And I wouldn't have to get full coverage insurance, I think. Gas mileage is about the same as my current car so I wouldn't have to spend more on gas.
Once I get my Capital One card paid off and my car taken care of, I will start to attack my student loan debt. I really want to be making payments on the principal and not just the interest only. Sigh. I keep looking for part-time jobs or full-time jobs that pay higher than my current job so hopefully something will happen to significantly raise my income.
Anyway, thanks for all your advice, ladies! I can't wait to start putting some money in savings and to get rid of all my debt!