Another budget

[resolution]

Since we have been seeing a lot of different budgets lately, I am going to post mine for feedback as well. I have been married for a bit over one year, so this is a relatively new budget. I took what we spent over the last 12 months and divided by 12 for some of the more irregular expenses.

4456 net income
833 roth ira (we also invest the same amount pretax)
650 mortgage
350 extra principle payment (hubby’s budget priority)
100 electric
125 heat
20 water
100 internet/phone (need for work)
10 cell phone
100 gas for cars
120 auto insurance
30 car expenses
400 groceries/household
200 dining/entertainment
60 video games
10 netflix
500 giving
3608 net expenses


If any category goes over it is usually compensated from another category being under or we use the slack in the budget. I just doubled entertainment to $200 and signed up for netflix because I thought we should get out more, but now I am second guessing it. I am also thinking about joining a gym, which seems wasteful when I can walk outside for free. I am concerned that I am escalating spending too much and may be better off if I designated some of the slack to specific items. I was wondering if others had more success not spending frivolously if it were all designated to specific places rather than just sitting in general savings.

Last year we had about 10k extra left over in our savings and we split it between remodeling the house 3k, principle payment on house 2k and increasing our savings 5k. Some of the extra is going to go toward a vacation this year. We have also been discussing hiring one of those fee only financial planners to tell us what to do with our money, but I don’t know if we have enough income to make it worthwhile.

So I guess my main questions are: Is it better to designate every dollar in the budget instead of just having leftover sit in savings? Is it worth hiring a financial planner at our income level? Am I spending too much on fun stuff and being wasteful wanting to join a gym?

[Mrs. Dinero]

Join the gym! You can afford it and it'll be great for your health. That's my 2 cents. My gym comes right out of my paycheck. DH & I use it 5 to 6 times a week. So many more options at the gym than walking.

Can't help on the rest. You know I'm in the same boat. What to do?

[Deleted]

Question: How did you get a 650 mortgage?

I will be paying close to double that $1,275 next june for a 1 bedroom apartment and now paying even more for a 2 bedroom $1,670


Besides that budget looks good and awesome job on the $500/month giving.

[resolution]

Our house was a foreclosure that was bought for 100k with a 20k downpayment, so the $650 is PITI for an 80k mortgage. That is part of why we have some remodeling expenses, the 3k last year was spent mostly on drywall and trim. The year before was electric and plumbing.

[Deleted]

May 5, 2011 8:30:13 GMT -5 resolution said:

Our house was a foreclosure that was bought for 100k with a 20k downpayment, so the $650 is PITI for an 80k mortgage. That is part of why we have some remodeling expenses, the 3k last year was spent mostly on drywall and trim. The year before was electric and plumbing.

Ok sounds good!
I also would say
a) I don't think you "need" to hire a financial planner but you can go see a Fee Based one just to get a feedback on what are you doing, and get another pair of eyes.
b) Is the current layout/budget working for you? If yes, no need to change it and start counting every penny

[dancinmama]

It's just the two of you, right? Do you plan to have kids?

In regards to joining the gym: How convenient is it to go there on a daily basis? How dedicated are you to really going? Statistically, people who join gyms are enthusiastic for a period of time and then stop going. It's just something to think about. I'd go the walking route myself.

Retirement: What are the balances in your accounts? Have you used any retirement calculators to see if you're on the right track? That would be the thing in my mind that would determine whether or not you need to visit a financial planner.

How much do you have in an EF? Is your savings your EF? If so, is the current balance $5K?

[resolution]

It is just the two of us and we don't plan to have kids. I do worry about my commitment to show up at the gym because i work from home and it is much easier to stay home than to get the car out of the garage and go somewhere. However since I started staying home I feel weaker and less fit since I am not getting the activity that I used to, even with a daily walk. My weight is ok since i have been eating less but I just feel less strong overall.

Retirement accounts are low and that is something we are working on. DH didn't have any retirement to speak of, so we are just getting started with his. We are contributing 15k into retirement accounts and 5k into a pension fund (the 5k is matched). The calculators say this will be enough when you add in the pension and either rental income or sale of the rental. One of the reasons we are considering the financial planner is we are trying to decide if we should refinance the rental and buy another one with the equity, open a taxable brokerage account, or just let the tenants finish paying it off and start using the income stream.

roths 25k
pretax 65k
pension fund 200k
savings account 20k
checking 3k
rental house value 115k, owe 40k (didn't count the income or expenses in household budget)
residence value 100k, owe 70k

[phil5185]

I feel weaker and less fit since I am not getting the activity that I used to, even with a daily walk.

I felt that about 10 yrs ago after retiring. I started riding a bike daily, about 12 miles. And ice skating about once a week. Both work the biggest muscles - and do wonders for your mobility, agility/balance.

10k extra left over in our savings and we split it between remodeling the house 3k, principle payment on house 2k and increasing our savings 5k. Some of the extra is going to go toward a vacation this year.

Savings is really 'savings' if it is just a place to stack the money for a yr until you spend it. IMO, it would serve your far-future way better if you directed some to wealth-building. In particular, I wouldn't lock money into house equity when you could be directing it at making new money.

ETA - "savings in NOT really"

[resolution]

You have me converted on the home equity, I have been paying extra because I made a compromise with DH in exchange to raise our retirement contributions. He agreed to fully fund both roths each year if I would bump up the mortgage payment a bit. He would be ok with pulling the equity out of the rental. It was my old house I had before we got married and I was hesitant to pull out the equity in our first year of marriage. However things are still going great so I think I am ready to make that plunge now.

We have some old bicycles that we got from his parents, they are rusted in place and need new wheels but we could probably get them working again. DH initially recommended that I carry soup cans when I walk, but he backpedaled on that when he saw my reaction.

[Deleted]

Carrying weights while you walk is actually dangerous because it throws off your posture, so you should separate your walking and strength training.

That said, you have enough wiggle room in your budget that you should be able to enjoy some of your money while building wealth and planning for your future. So $20 for some proper hand weights so you don't feel like a dork when you exercise seems like an allowable expense to me.

[Deleted]

Riding a bike will be great. I had a bike but sadly got stolen
Saving to buy a new one.

And while I agree with phil and look up to him, I always felt while you want to take the equity out of your rental homes, your family/personal home should be off limits.

[dancinmama]

May 5, 2011 9:31:07 GMT -5 resolution said:

It is just the two of us and we don't plan to have kids. I do worry about my commitment to show up at the gym because i work from home and it is much easier to stay home than to get the car out of the garage and go somewhere. However since I started staying home I feel weaker and less fit since I am not getting the activity that I used to, even with a daily walk. My weight is ok since i have been eating less but I just feel less strong overall.

Retirement accounts are low and that is something we are working on. DH didn't have any retirement to speak of, so we are just getting started with his. We are contributing 15k into retirement accounts and 5k into a pension fund (the 5k is matched). The calculators say this will be enough when you add in the pension and either rental income or sale of the rental. One of the reasons we are considering the financial planner is we are trying to decide if we should refinance the rental and buy another one with the equity, open a taxable brokerage account, or just let the tenants finish paying it off and start using the income stream.

roths 25k
pretax 65k
pension fund 200k
savings account 20k
checking 3k
rental house value 115k, owe 40k (didn't count the income or expenses in household budget)
residence value 100k, owe 70k

Okay; I thought that was the case based on your contributions to retirement funds, but was not sure. Keep pouring as much into retirement whether it be 401k, Roth, rentals that will provide an income stream, or something else.

We don't have rentals so I can't advise on refinancing and buying another one, but there are some others on here who might.

Based on your own post, I don't know how much you'd really end up going to the gym. I'm thinking that you're thinking that if you PAID for it, you would go because to do otherwise would mean that you wasted your money. Am I on the right track? That's what everyone thinks. I'd go with free weights and walking, but if you should decide otherwise there is no problem as far as your budget is concerned.

[resolution]

You are on the right track with the motivation to use the gym if I paid for it. However I have a good friend that joined two gyms and didn't use either one, which is something I am afraid I might do. I will probably just buy a couple of hand weights and maybe some ankle weights and try to fix up the bicycles so they can be used.

[debtheaven]

I think your budget looks great!

If you're hesitant on the gym but tempted to bike, how about buying two new bikes instead? (I say two assuming that your DH is interested too, one would be enough for just you LOL.) I don't know how old the ones you want to fix up are, but if they're really old, newer bikes are much more lightweight and pleasant to ride. I don't know how far you live from your bank / shops / errands, but if you miss walking, maybe you can do some of those errands by bike?

rental house value 115k, owe 40k (didn't count the income or expenses in household budget)

There is certainly extra cash coming in from here too. What are you doing with it? Have you considered saving it (and perhaps some of the extra from your "regular" budget) and buying another rental?

ETA: Sorry, just saw your comment about pulling the equity out of your rental. That "extra" from the rental and your regular income must be adding up though.

[debtheaven]

And while I agree with phil and look up to him, I always felt while you want to take the equity out of your rental homes, your family/personal home should be off limits.

Hey, Cawiau, apparently Mrs Phil feels the same way LOL.

Phil, I used to figure skate. There was a rink 15 min away in a VERY posh suburb, the rink burnt down about eight years ago. They raised the money to rebuild it, then at the last minute they decided not to because it "attracted riff-raff" on Fri and Sat nights. I still miss it, the next closest one is 45 min away and I go rarely now.

[resolution]

May 5, 2011 15:25:45 GMT -5 @debtheaven said:

I think your budget looks great!

If you're hesitant on the gym but tempted to bike, how about buying two new bikes instead? (I say two assuming that your DH is interested too, one would be enough for just you LOL.) I don't know how old the ones you want to fix up are, but if they're really old, newer bikes are much more lightweight and pleasant to ride. I don't know how far you live from your bank / shops / errands, but if you miss walking, maybe you can do some of those errands by bike?

rental house value 115k, owe 40k (didn't count the income or expenses in household budget)

There is certainly extra cash coming in from here too. What are you doing with it? Have you considered saving it (and perhaps some of the extra from your "regular" budget) and buying another rental?

ETA: Sorry, just saw your comment about pulling the equity out of your rental. That "extra" from the rental and your regular income must be adding up though.

I would enjoy getting a new bike, but we got the old ones from DH parents and they are very salt of the earth recycle types. They grow their own food and make a lot of stuff by hand. I just took DH's 30 year old feather pillow there for emergency repairs. If I ran out and bought a new bike instead of fixing the old ones they gave me it would be pretty hurtful. I have to at least try to fix them and then buy a new one after I give up in despair.

Right now we are not getting a lot of cash flow out of the rental because it is still on the original 15 year mortgage that I had when I lived there. We just have a small cash flow, cover our expenses and are getting about $500 per month in equity. If we refinance to 30 years and pull out 80% of the value, we should get a higher cash flow and also have the money available to invest in the market or in another rental. I think right now we have too high a percentage of our net worth in real estate and it would be smart to go with the brokerage account, but houses are on sale and I have a hard time resisting a good sale. Thats part of why I am leaning toward getting an advisor even though our income is pretty low. I looked up the Garret Financial Planners to see if there was someone in our town but I think the closest is in DC.

[phil5185]

apparently Mrs Phil feels the same way LOL.

You're right, that one stays paid-for no matter how low/attractive the new mortgages are.

Phil, I used to figure skate.

Back in January we spent a week in Keystone, CO - the resort has a 5-acre lake. Each morning they clear the new snow and condition the ice with two Zambonis, they claim that it is the largest Zamboni-manicured rink in North America.

[debtheaven]

Thanks Phil for the newest addition to my "bucket list" LOL! And one of these days I am going to treat myself to new figure skates (the old ones are still in my basement, but four children later they are way too small LOL.)

Kari, I do understand not wanting to hurt your in-laws feelings. But part of "growing up" means doing what works for you, in as diplomatic fashion as possible.

So maybe you can try to fix one bike this year, rats, it's still wonky, so one of you offers a new bike to the other. Then rinse and repeat next year if you can, or in a worst-case scenario, the year after. Nothing wrong with playing "good cop" "bad cop" although I totally understand making some attempt to spare your in-laws' feelings. But life is too short not to ride a newer, nicer bike if it makes you happy.

ETA: Do you live next door to or across the street or around the corner from your in-laws? Otherwise how on earth would they even know what bike you ride?!

[resolution]

My in-laws live about 90 minutes away in another state. We make an effort to see them once a month but sometimes it works out to be less than that. However knowing me I would somehow forget to hide the bikes or they would see them when they were wandering through the garage. Besides I am not opposed to trying to fix them and at least see how they run. If they don't ride well or if we can't fix them then I could buy new ones without trying to cover things up.

[gsbrq]

May 5, 2011 10:11:39 GMT -5 resolution said:

DH initially recommended that I carry soup cans when I walk, but he backpedaled on that when he saw my reaction.

ROFL!!!