Thoughts on My Budget

[shanendoah]

Bills	Monthly Amount	Notes
Income	$4,625.00	paid bi-weekly, income based on 2 paychecks/mo
Mortgage	$(1,700.00)	actual due $1,675.51, APR 6%
Power	$(150.00)	average for the year, varies from high of $200 to low of $60
Cable/Internet	$(150.00)
Cell Phones	$(80.00)
Water	$(25.00)	billed every 2 months
Sewer	$(46.00)	billed every 2 months
Garbage	$(28.00)	billed every 3 months
Timeshare Dues	$(40.00)	billed every 3 months
Car Insurance	$(100.00)	billed every 6 months, estimate- current is $535/6mo w/ 1 car in "storage"
Gas	$(200.00)	estmiate- current is $140/mo
Student Loan (undergrad)	$(160.00)	actual due $107.1, APR 3.5%
Student Loan (grad)	$(525.00)	actual due $524.19, APR 6.04%
College	$(850.00)	billed every 3 months
Savings/EF	$-	the 2 3rd paychecks each year go directly to savings, for $4700 on the year
Nelnet	$(11.00)
Groceries	$(400.00)	includes household goods & dog food
Eating Out	$(100.00)
My allowance	$(100.00)
DH allowance	$(75.00)
Total Planned Expenses	$(4,740.00)
Remainder	[glow=red,2,300]$(115.00)[/glow]

I'll be honest- I'm not really certain what I'm looking for here.
Its the end of the first quarter and some of our expenses have gone up from what I projected them at at the end of the last year- most notably our monthly bills (power, water) are a little higher than they were last year, and gas has gone up considerably. With the new data, I re-did my projections for when we drop down to a single income in July and DH is back in school full time. (Currently, DH gets $449/wk in UE benefits. He should get his last UE check the week of June 20. His "income" has been going toward paying extra on the grad SL and beefing up our savings/EF.)
Right now, I show a $115 shortfall. I'm not super worried about that, as I could take care of $75 of it by not paying extra on the mortgage or the student loans. The other $40/month could easily be taken care of by keeping $250 from each of the 3rd paychecks instead of putting that in savings.
If I don't stop paying extra on the SLs, though, I do need to move the $50/mo extra to the grad SL.
Also, I am getting a raise that will go into effect on today0. After the increase in my 403(b) contributions that also goes into effect this month, I should be bringing home an extra ~$100/month. I'd kind of like to be able to put that $100 toward savings/EF, though, instead of bills, but if I can't, its not a big deal.
As of today, our savings is at $7,500. I should be adding $750 after paying taxes in second quarter.

Please note, that unless interest rates on liquid savings go up dramtically, we will never have a 6 mo EF while we also have debt. This is a compromise with DH, who feels that if we're losing more in what we pay in interest than we're making in what we gain in interest, money should go toward debt. Getting to a point where we have close to 2 months expenses in savings has been a struggle. Irregular expenses- car repair (oil change every 10k, 60 k service, etc) and vet bills -also come out of the savings. Those have come to about $1300/yr in the last two years. (We lost 2 dogs in the space of 16 months, though, so the vet bills for 2009 and 2010 are not representative- hopefully.)

Anyway, thought, comments, how in the world do we spend that much on groceries, stop eating out, get rid of cable, why the hell do we need an allowance....
What have you got for me?

ETA: The reason car expenses are estimated is that once DH is in school full time, we will need to pull the second car from "storage", getting it fully insured again and then paying for gas for it.

[jd2005]

Looks very tight, but I like that you are overestimating on your items. One suggestion, I would pay more on the Grad SL than the Undergrad (which has a lower Interest rate).

[Savoir Faire-Demogague in NJ]

Shan,
How much liquid assets do you have laying around that you can tap to tide you through.

I notice you indicate paying extra on your mortgage and other loans. I believe(but not 100%) that we had some lively discussions on pre-paying one's mortgage and other similar loans.

[Gardening Grandma]

At 3.5%, I would not pay extra on that SL. If you made only the required amount, your projected shortfall is only $62/mo. And since you are overestimating a number of categories, I don't see that as a problem.
You said you have $7000 for an EF. At current interest rates, I'm with your hubby re making the debt a priority. One thing you could do each month is see what you have left over and put that on the grad SL...

While tight, it seems to be totally doable.

ETA, your mortgage is 6% APY. Is this a long term home? If so,you might look at refinancing at a lower rate... and I'd put the extra $25 on the SL rather than the mortgage.

[shanendoah]

I'm amused by it seeming tight to people. I have eating out and allowances built in to the budget for both of us. Not in huge amounts, but when he first lost his job, I was making $20k/yr less, we still had credit card debt and an $800/month car payment. So we've lived on a light tighter.

SF: We currently have $7,500 liquid. $1k in a savings account linked to our checking and the other $6.5k in a high yield (high being 1.25%) account elsewhere. It takes a couple days for money to transfer from the account to checking.
As for the paying extra on mortage, that's another compromise with DH. His belief is the most solid retirement fund comes from a paid for house. So, I pay about $25 extra a month right now.
I should also note that the mortgage payment includes taxes and insurance at $265/mo. That's down $90/mo from last year thanks to switching insurance companies. I dropped the mortgage payment $75/month when that happened.

jd & gg: I know I should switch any extra off the undergrad SL to the grad SL. I know this. Emotionally, I don't want to until October. You see, I graduated with my BA in May 2000, and I still owe more than I actually borrowed. If I keep paying the extra $50/mo, then is September, 11 yrs and 4 months after I graduated, I will finally owe less than I borrowed. However, I know that I have a great interest rate there (yay for consolidating in 2003/4), so I really should take advantage.
I'm on graduated repayment on the USL, so the minimum will go up in Feb 2012. However, it shouldn't go up more than $25.

[phil5185]

$4,625.00

If you are paid bi-weekly, your monthly income is $5010, not $4625. It might be easier to use an annual budget, rather than trying to account for two extra checks per yr that go into savings.

A time share? Who thought that was a good idea?

As for DH going to school rather than getting a job for the next few years - will that actually pencil out over the next 30 yrs? Seems like giving up $40,000/yr now for a few yrs with the hope of getting $60,000/yr for 25 yrs after that, is not such a good trade?

[Tiny]

Maybe it seems tight to some people because even though you have a pool of $750 a month (groceries/eating out/allowances) you don't account for things like clothes, gifts, personal care items, stickers/plates for the car(s), any hobby type stuff, copays or glasses/contacts or dentist visists, pet stuff and stuff I can't think of right now ...
These things are variable and maybe your $750 a month pool absorbs them.

Don't forget you may need to pull groceries/gas/and allowances out of your 2 'extra' checks - if you are accustomed to having those 'budget buckets' refill every two weeks.... versus once a month.

[shanendoah]

Phil: I like budgeting based on the 2 paychecks because thats what we have most months. I know we actually have more for the year, but if I see money, I'll spend it. So, I hide those two extra paychecks from myself.

The timeshare, oh the timeshre It was an absolutely terrible financial decision when we bought it. Neither of us will argue that with you. However, its paid for, and I really don't want to give it up. (It would go if it had to.) We own points (instead of a week) that we mostly use for random weekend getaways in our local area. DH loves to cook, so having the full kitchen available while on vacation isn't just about saving money, it actually helps him enjoy his vacation more. We also are able to gift friends and family weekends (or weeks) here and there, and we used it to spend a week in England. So bad financial decision that I'm glad we made.

As for DH being in school, DH has been out of work since May 2009. He's had 2 interviews in that time. He did work for the census last summer, and they kept him on longer than most people, but other than that, things are really dry up here for sales administrators with backgrounds as accounting assistants who only have an AA. He was making about 36k/yr before, and now, that's what they're offering folks with BAs in most jobs. In all honesty, we'd be happy with 40k/yr once he graduates.
However, if I hadn't gotten my big promotion last year, you can bet he'd be working for 15-20k/yr right now.
We are looking at him graduating in Spring of 2012. He had a number of credits beyond his AA, and almost all were accepted.

The thing is, we don't even know if he'll enter the workforce after completing his degree. There's a good chance that's when we'll start a family and he'll be a SAHD or only work part time in that case.

Please know that education is important to both of us for education's sake. And he's working his ass off in the night classes he's currently in, so I don't have any resentment there.

I feel all of my resentment at 6:30am when the alarm goes off and I get up, and DH and the puppy don't even have a break in their snoring.

[Plain Old Petunia]

I suggest you cut out cable and get a Netflix subscription. I love mine, much better than cable. If they cost the same, I would still choose Netflix. The fact that I pay only $10.83 per month is just a bonus.

[azphx1972]

I can't really find much to nitpick about your expenses. They're pretty much in line with what I've got going, and I know Seattle can be more expensive compared to Phoenix. I think things will be just fine once your husband goes back to work and starts bringing in income. I don't think having outgo = inbound is too bad if it's just a temporary situation. It's not like this is your budget for the rest of your life.

[shanendoah]

ATS: Clothes come out of our allowance. We both only buy clothes when we need them. Personal care items like toothpaste and deodorant are part of the grocery budget. Car registration comes out of savings. Hobby stuff comes out of allowance.
I work for a health care company and all of our healthcare costs are exceedingly low. While co-pays and the like don't officially come out of our allowances, I usually count them against mine (since my allowance is higher) and simply spend less that month.

We don't currently do gifts to any family other than his mom due to the budget. We wouldn't get his mother gifts either, but she has reduced mental capacity and while claiming to understand, would be very very hurt.
What we do is host Thanksgiving and Christmas dinners for any friends who want to attend, and family often travels to visit us during that time. The expense for that is built in to our grocery budget - we spend an extra $100/month on groceries in Nov and Dec, but thanks to gift cards from family, we spend $200 less in Jan.
Gifts to eachother come out of allowance.

Pet stuff also comes out of allowance. The puppy doesn't need any new toys. If we get a second dog, it will be soon, before DH loses UE, so all the "startup" costs of a new dog (and we won't have many, because we've had 2 dogs for all but 6 weeks of the last 8 years) will come out of his UE checks.

[shanendoah]

Petunia: We do have a Netflix subscription, and we do love it. It's in the budget as $11/month. Cutting cable would sadly not reduce our costs much because of cable internet, and neither of us are willing to switch to DSL. Cable is actually a concession to me- I like mindless TV. It could go if it had to, but concessions to me, the breadwinner, stick around longer than concessions to other people

[Deleted]

Stop prepaying the SL please. Can your DH get a subsidized SL for his tuition? The only reason I ask is that it might be better to use his SL to pay off yours (grad) and only pay .5% interest for this year instead of 6.08% How much do you owe? Could you call around and see about making the car insurance lower, I only pay $440/year for one car. Drop by the grocery hounds and see if you could cut a little bit off your groceries though they are low too. Check if you can use your DH's edu account and get a discount on your cell phones through the school. We did that and save 19% of the first line.

[The J]

Apr 1, 2011 13:25:52 GMT -5 shanendoah said:

Petunia: We do have a Netflix subscription, and we do love it. It's in the budget as $11/month. Cutting cable would sadly not reduce our costs much because of cable internet, and neither of us are willing to switch to DSL. Cable is actually a concession to me- I like mindless TV. It could go if it had to, but concessions to me, the breadwinner, stick around longer than concessions to other people

If by not much, you mean $90/month, then you're right.

[Savoir Faire-Demogague in NJ]

As for the paying extra on mortage, that's another compromise with DH. His belief is the most solid retirement fund comes from a paid for house. So, I pay about $25 extra a month right now.


$200,000 or $300,000(or what ever your home would be worth) tied up in a fixed asset, that you cannot tap, is useless unless you have access to it, which would mean borrowing.

Your DH is living in the 1950s. Rules of personal finance have changed.

[shanendoah]

Not to leave folks hanging on a thread I started, there's a family incident that requires my attention. I don't know if I'll be back online at all today or even this weekend.

[strider]

I have cut cable for 2 months now and I don't miss it! I still have internet but I have Hulu Plus and a netflix subscription. I get all the broadcast shows the next day and most of the cable shows I can find on the internet.

Otherwise don't prepay the undergrad loan, pay a tad more into the grad loan.

Is $400 really needed for groceries as well? A costco run could definitely be used if you buy the same items over and over.

[shanendoah]

gin: Of my graduate student loans, some our at 6.8% and some are at 5.8% APR. Sadly, my lender doesn't let me specify that I only prepay the 6.8% loans, so I'm going to continue to pay more on those. The student loans and our mortgage are our only debt, and I do want those SLs gone.
Right now, our goal is to get him through school without taking on any more debt. We will be doing a FAFSA (once I get taxes done) though, so if things get too tight, we can take out staffords. We're just trying not to.

SF: Except that right now property values are continuing to drop in our neighborhood. While we are not underwater on our house, we are very close to being so. $25 a month isn't much extra, but it keeps us out of trouble. My job is incredibly stable and local, but I don't ever want to be in a situation where we couldn't sell the house if we needed to move.
And, whether or not DH lives in the 50s, marriage is about compromise, and $25/month (that again, I would stop paying if I had to) is a small price to pay for keeping DH happy.

Strider: We have a CostCo membership that pretty much pays for itself. We pay $100 for the "executive" membership that gives you a cash reward. This last year, we got $98 back. OUr grocery budget does include dog food, flea treatment, all household cleaners and paper goods, not just food.
However, no, we don't NEED $400/month. $400/month allows us to buy some premium items and to have people over for food. DH loves to cook, and we randomly have people over for a "test kitchen" day when he tries out new recipes.
At the moment, we are also feeding a third person fairly regularly. A friend is staying with us between jobs and is trying to not deplete his savings too much, so we provide much in the way of his groceries. This is temporary, and as of tomorrow (Tues, Apr 5), he'll know whether he has a job in our local area or if he'll be moving to New Zealand. Either way, he's out of our grocery budget before July, when our income drops to what's listed in the above budget.

[raeoflyte]

I am in total awe of your $400 grocery budget!

[Gardening Grandma]

Shenandoah,
I totally get your point about marriage being about compromise and if the $25/mo keeps your DH happy, it's worth it.
We pay a financial planner over 1% to advise us on investing our retirement funds. I'm pretty sure I could do a decent job, but DH is more comfortable with a guy in a suit in an office, so I work with our financial guy and DH feels "comfortable".... It truly is about compromise.

[Deleted]

Apr 4, 2011 13:23:00 GMT -5 shanendoah said:

gin: Of my graduate student loans, some our at 6.8% and some are at 5.8% APR. Sadly, my lender doesn't let me specify that I only prepay the 6.8% loans, so I'm going to continue to pay more on those. The student loans and our mortgage are our only debt, and I do want those SLs gone.
Right now, our goal is to get him through school without taking on any more debt. We will be doing a FAFSA (once I get taxes done) though, so if things get too tight, we can take out staffords. We're just trying not to.

WTF, that seems wrong that you cannot determine where the prepayment goes. I would call and asked to speak to a manager about that.

[shanendoah]

This seems to be a day of budget updates, so I thought I would update mine with my actual new salary (after raise and additional money being sent to retirement savings). I've bolded the things that have changed.

Bills	Monthly Amount	Notes
Income	$4,710.00	take home, paid bi-weekly, income based on 2 paychecks/mo
Mortgage	$(1,700.00)	actual due $1,675.51, APR 6%
Power	$(150.00)	average for the year, varies from high of $200 to low of $60
Cable/Internet	$(150.00)	we are planning on changing this this month, hoping to get it down to $100
Cell Phones	$(80.00)
Water	$(25.00)	billed every 2 months
Sewer	$(46.00)	billed every 2 months
Garbage	$(28.00)	billed every 3 months
Timeshare Dues	$(40.00)	billed every 3 months
Car Insurance	$(90.00)	billed every 6 months
Gas/Car Upkeep	$(225.00)	gas is ~ $140/mo
Student Loan (undergrad)	$(160.00)	actual due $107.1, APR 3.5%
Student Loan (grad)	$(524.19)	actual due $524.19, APR 6.04%
Basement Repair	$(400.00)	1yr SAC financing
College	$(290.00)	billed every 3 months, we have savings specifically set aside to help cover the difference between this and the $850 originally listed
Savings/EF	$(75.00)	before, only the 2 "extra" paychecks ($4800/yr) a year were slotted for savings
Nelnet	$(11.00)
Groceries	$(375.00)	includes household goods & dog food, lowered based on actual ytd spending
Eating Out	$(150.00)	raised based on actual ytd spending
My allowance	$(100.00)
DH allowance	$(75.00)
Total Planned Expenses	$(4,694.19)
Remainder	$15.81

DH has decided what program he wants to be in in school. It will cut his driving by about 30 miles, but he'll be going 5 days a week instead of 2. However, the hours should allow us to remain a 1 car household, so we won't have to re-register and re-insure the 2nd car (we may even sell it). However, I kept the gas/car upkeep $ the same in order to have a built in cushion for the regular upkeep and registration expenses.

[CarolinaKat]

I think it's good that you're saving EVERY MONTH and not just using the extra paychecks for saving. That's a very positive step!

[Small Biz Owner]

Just cutting off the cable turns you budget from red to black.

*edit
I am assuming that $115.00 is in the red since you posted it red?

[shanendoah]

small bix: the $115 was in the red. New budget has us not in the red. However, we are still looking at reducing our internet/cable bill, hopefully by $50/month.

And for people that ask, high speed internet is non-negotiable for both DH and myself. We view it as a neccessity. However, we have cable for ME. DH could live without it without really noticing. I love cable, and as the sole earner in the family, I get to choose to keep my indulgence if we can afford it- though I would like to pay less for it.