Critique my Budget

[Deleted]

Grocery $3,010
mortgage $3,029.76
house insurance $435.00 lowest rate
car insurance $440.00
taxes of house $2,300
car $1,250 will increase this ($500) come next pay raise
gas $1,560
utilities $2,000
internet $450.00
house repair $1,200
retirement $600.00 will increase this come May using rental
fun money $1,040 will increase ($260) with next pay raise
debt $360 will increase this with next pay raise
medical $200.00
misc. $600.00
school cost $1,620
cell phone $350.00
cat $800.00 will increase ($150) come next pay raise
hockey $160.00
X-mas $200.00
replacements/clothes $200 increase with next pay raise
life/disability add in May from rental income
savings $1,870 increase ($500) at next pay raise
$23,675

Total net income 23677.35
In May I will start putting $700 into life/disability insurance, $2000 in retirement and the rest into tuition.
This budget is for both my fiance and myself but he will be the only one earning income for the next 2/3 years.

[suzwantstobefree]

I think that it would be helpful if you tell us what your goals are and what your overall debt is. Your age range would be helpful too. It sounds like a good budget so far, but the remainder of this information would be helpful.

[mtntigger]

Gin - Didn't you get a duplex? Is the other side rented? (Never mind, I saw mention of the rental. I would use the rent to budget for home repairs, mortgage and taxes instead of retirement, but that's just me.)
A couple things that I saw:
* Is the gas likely to go down?
* I'm questioning your idea of fun money. That category in and of itself is great... you are spending 4% of your income there. Then, you add in misc. and hockey... that's now 7%. Oh wait, there is the cat and Christmas... 12% and school (not exactly fun all the time, but it is above the basics). Ugggh! That category is now at 19%. Those items are what I think you should concentrate on else you aren't going to make your other savings and retirement goals.
Oh, one good thing to add.. 2011, the social security tax is going to be cut 2%. Hopefully, that'll help you somewhere.

[moneywhisperer]

Super that you have a budget & are looking at what you are doing!

Is the car account monthly payments, savings towards repairs/maintenance, or savings for a future purchase?

How much do you have in debt or credit cards? Why would you be saving for your cat instead of aggressively paying down debt?

[Deleted]

I am 26 and my fiance is turning 29 this month. I have one student loan at $5,385.25, I am on a graduated repayment plan paying $30/month for the next 3 years and then it will increase to $80/month, it has a 5.75% rate. My fiance has $17,000 student loan with no interest or payment for 3 1/2 years and then $195.64/month and a $5500 student loan with 5.75%, we will put that on graduated payment so $30/month for four years and then $80.
Misc is a catchall for things like haircuts and other requirements that as a young person I am still trying to figure out where to place in the budget, it is not for fun. The fun money is $5/person/week and 10/week to put aside for going out to eat once a month.
The cat part of the budget is for his food, he has a medical condition that requires special food and his doctors visits as well flea medicine.
School is what is earning the income as my fiance is a PhD student therefore I see the school cost necessary, not fun.
Given that the income, my fiance earns is a student during the school year is except from social security and medicare therefore the 2% only affects us during the summer so we will only save $100 from the social security cut.
The car account is for current repairs, maintenance and hopefully future purchases but I need to increase it, at some point to actually be able to afford another car without a car payment. We are unwilling to ever have a car payment. We do not have credit card debt, moneywhisperer, and my cat needs to eat and that goes above any debt payment.

[mizbear]

Depending on how often and expensive your car repairs are, it is more financially sound to purchase a vehicle- either outright or financed. I had a truck, that I adored- it was my grandfather's, low mileage, well kept. And it was paid for- but after I hit a deer with it- it started costing me money. It was less expensive for me to purchase a vehicle- which is also helping my credit because it is showing the good payment history and will show the early payoff.

[mtntigger]

Gin - What do you want me to say? I follow the 60% solution because it helped me control my spending money. No, I don't think that school and the cat are "fun", but they are a heck of a lot more fun than the mortgage payment.
IMHO, you should realize that you are young and you won't have everything you want now. Maybe having a house and paying off school debt at your age is all you can do on one income. Let's say that you have to get a replacement car 3 months from now and you need to get a loan... so what? It won't kill you to have a loan. I do see danger in your budget, though, if you are going to increase your car savings, retirement savings, regular savings, and allowance on a small income for 3 more years. I think you should focus on maybe one of these things instead of stretching yourself.
As for the regular fun money, I think it is too much IF you want to do everything else. I would say to decrease your car and regular savings, accept having to get a car loan in the future, and either get rid of your debt or put more toward retirement.

[DVM gone riding]

You are living two people on just a grad student Phd program income? Is there a reason you aren't working at all-not even work study

When in school the budget needs to be bare bones? I am assuming this budget is for the year-which works well if you are paid 2x a year-as in Student loan disbursements. If however you are getting monthly I would also do one for a month-it will help you stick to it better.

[Knee Deep in Water Chloe]

Hi!
One of the challenging aspects of owning house that I've run into is the theory of budgeting a minimum of 2% of the value of the house per year for repairs and upkeep. Does your $1200 for repairs meet that 2%; does it include upkeep, especially if you're renting out the other half of a duplex?
Is the internet essential at home? That's $450 you could put towards the house repairs/upkeep, your car savings, or unexpected vet bills? Do you have internet on your phones, because I've survived with just the internet on the phone and cut it at the house. I know it's not desirable, and can be inconvenient, but it is possible when a budget is as tight as yours.
Are you still taking out student loans? I had a financial advisor once tell me it was not good financial sense to borrow money to put into retirement accounts?

Good luck with school!

[Poppet]

Is this an annual budget?

[moneywhisperer]

debt $360 will increase this with next pay raise

Above entry looked like some sort of debt payment, so I'm confused about what it is it if you have no CC debt.

For your kitty I assumed that what you are paying now covers food etc, so that the increase was a contingency fund. I wasn't suggesting that you not feed the cat!

[Deleted]

Jan 2, 2011 15:31:56 GMT -5 Knee Deep in Water Chloe said:

Hi!
One of the challenging aspects of owning house that I've run into is the theory of budgeting a minimum of 2% of the value of the house per year for repairs and upkeep. Does your $1200 for repairs meet that 2%; does it include upkeep, especially if you're renting out the other half of a duplex?
Is the internet essential at home? That's $450 you could put towards the house repairs/upkeep, your car savings, or unexpected vet bills? Do you have internet on your phones, because I've survived with just the internet on the phone and cut it at the house. I know it's not desirable, and can be inconvenient, but it is possible when a budget is as tight as yours.
Are you still taking out student loans? I had a financial advisor once tell me it was not good financial sense to borrow money to put into retirement accounts?

Good luck with school!

Yes we are putting 2% away for repairs. We do not have internet on our phones, and we are looking for a better deal for internet but have not found one yet. We are not taking out any other loans.

DMV
I was working but I am trying to get in and was recommended to work an internship and take a class, I am trying to only work part-time but I may have to quit my job. The budget is however, based only on his income.

moneywhisper
I am paying down my student loan with the debt repayment.

[suziq38]

Your mortgage of $3K is that per year?

[Deleted]

Jan 3, 2011 1:44:47 GMT -5 suziq38 said:

Your mortgage of $3K is that per year?

Yes, if we do not count property taxes or insurance, both of which we pay separately.

[phil5185]

I had a financial adviser once tell me it was not good financial sense to borrow money to put into retirement accounts?

And how is that working out for the adviser? (I borrowed for 35 yrs to max a 401k & other funds, it worked well for me).

gin - I commend you for putting things in annual terms, so many people use short term thinking. The annual listing is easy to sum - and can be used for a Pareto sort - ie, to separate the significant few from the insignificant many. Looks like transportation at $3250 and shelter at $8965 accouint for over 50%.

Do you need the life/dis insurance? It's main purpose is to insure your income stream to provide for your dependants - and you don't have dependants.

We are unwilling to ever have a car payment

We always finance our cars 100% - and keep our cash invested elsewhere. On a few occasions we have doubled the money that we would have paid for a car within the 5-yr payback period.
But, in general (barring a wreck), it is always cost effective to fix a car rather than replace it. A new car depreciates at over $4000/yr, you can fix most anything for less than that. We keep them about 200,000 miles.

Who is the hockey player?

[Deleted]

Jan 4, 2011 15:05:37 GMT -5 phil5185 said:

I had a financial adviser once tell me it was not good financial sense to borrow money to put into retirement accounts?

And how is that working out for the adviser? (I borrowed for 35 yrs to max a 401k & other funds, it worked well for me).

gin - I commend you for putting things in annual terms, so many people use short term thinking. The annual listing is easy to sum - and can be used for a Pareto sort - ie, to separate the significant few from the insignificant many. Looks like transportation at $3250 and shelter at $8965 accouint for over 50%.

Do you need the life/dis insurance? It's main purpose is to insure your income stream to provide for your dependants - and you don't have dependants.

We are unwilling to ever have a car payment

We always finance our cars 100% - and keep our cash invested elsewhere. On a few occasions we have doubled the money that we would have paid for a car within the 5-yr payback period.
But, in general (barring a wreck), it is always cost effective to fix a car rather than replace it. A new car depreciates at over $4000/yr, you can fix most anything for less than that. We keep them about 200,000 miles.

Who is the hockey player?

My fiance is the hockey player.
Let me rephrase Phil, I am unwilling to need to finance a car. If I could get a better deal by financing aka less than I am earning in investments than maybe I would finance but I do not want to be in a position where we need to.
We are looking at disability/life because if I get into the master's program I will not be working for 2/3 years and we will be relying on his income alone, same reason the budget is based on his income alone.
We plan on keeping the car we have until it is 20 years old or our family outgrows it, we are planning to have 2 or 3 kids. If we have 3 kids we would need to upgrade but that is in oh, 5-9 years away and the car is a 2003 so it would be at youngest 12 years old when we get a new one.

[mizbear]

Gin- The trade in value on the bulk of vehicles becomes nill around 10 years, with some it is earlier than that depending on make, model, year, and mileage- among other factors. When I traded my truck in this year, it was a 2003 with less than 35,000 original miles; the only non-original parts were where the grill had been fixed where the deer got me, and all of the maintenance was kept up. However, because there was no warranty package, it was coming out of my pocket for things like the 35,000 mile transmission service and every oil change and brake service, etc. The car I bought was a 2010 on the used car lot- the man decided he wanted a larger car after he bought it- I got all the new car warranties- all of my services are included in my car payment.

[Deleted]

Mizbear- Do you think the repair costs are worth a car payment, really? Also I sold my 1991 car 2 years ago for $500 and it was 18 years old so I do know what kind of value to expect when I sell it.
Phil- I have thought a lot about the dis/life question and we have decided to add the disability in May/Jun but wait until I get pregnant to add life, thank you for that.