Here's my budget, have at it!

[midjd]

I have considered (and dreaded) doing this for quite a while, so here goes...

We are a single-income HH until August 2012. DH works during school breaks, but most of his $ goes toward books and other miscellaneous expenses. I expect he'll be able to find a job paying $25-$30K/year by early 2013, which will give us much more breathing room.

With that said...

Income (biweekly) - $2,114.25
Fed - $117.31 (4 exemptions)
FICA - $117.59
State - $61.07 (2 exemptions)
County - $24.79

Health insurance/HSA - $41.34
Deferred Comp - $208.12
State Employee retirement plan - $211.43 (10% match, but I don’t vest until 07/2015)

Net biweekly pay $1,332.60 (or about $2,888/month)

Monthly expenses:
Mortgage - $1,018
Student loan - $583 (until 03/2020)
Food - $400
Gas - $300
Auto maintenance and insurance - $200
Misc (gifts, household repairs) - $200
Utilities - $150
Cable/internet - $120
Phone - $60

Total spending $3,031

So as you can see, even on the months where we stay within budget, we’re in the hole by $143. I could reduce my retirement contributions to 10% and we'd be fine, but I really hate to do that - especially when we have the money in savings to cover us well beyond when I expect DH to be working again. BUT, I’d like us to be able to live on my income alone – that way if it takes DH longer than anticipated to find work, I won’t be in this constant state of low-grade panic.

I’m also not sure I’ve done my withholdings correctly – I thought I had last year, and ended up getting almost a $2K federal refund.

So… any advice? Questions? Swift kicks in the butt?

[Plain Old Petunia]

Your budget doesn't have much fat. I think you're doing a good job of keeping expenses low while dh is finishing school. Will dh have student loans to repay?

How big is your savings account? If it starts getting low, then you may have to cut retirement savings for now, with the plan to hit it hard once dh is working.

You could cut that cable in favor of Netflix. (I always say this, because I LOVE Netflix! I would choose it over cable even if it cost more than cable.)

In the months you don't stay on budget, what is it that is causing you to go over? Irregular expenses or overspending?

[haapai]

First karma for bravery.

[8 Bit WWBG]

Here are my initial reactions after a high level review.

1) Utilities, food, gas, and "misc" are all candidates to fluctuate, and as such, should be monitored and trimmed wherever possible. Being careful with utilities (unplugging unused appliances, shorter showers, clipping/printing coupons, and driving as sensibly as possible) might yield some savings.

2) The "misc." category in general is far too vague. You've listed ideas of where that goes, but you would do well to have some actual data. Knowing exactly what you are spending in that category can help you determine just how worthwhile it is, and how likely it is to come up again. Home repairs for example could go either way. That could be $30 for some new light bulbs, or $6k+ for a new HVAC. Ah homeownership...

3) I don't see an "entertainment" category. Is that listed under misc.? If not, where does it go, and how much?

4) Cable/internet... well that is your choice. I'd cut everything else before I cut internet, but I ditched cable TV years ago. What would be the "internet only" price?

5) Do you have cell phones? Is that what "phone" means? Otherwise, does your provider offer a bundle for cable, internet, and phone? Maybe that would trim some money off.

6) Are there any "little things" you didn't include? A netflix subsciption? Magazines? Home insurance (is that included as part of the mortgage payment?)

You also know that when your DH returns to work, your income will go up. Its not like you are both working maxed out hours and getting nowhere. What will his earning potential be when he returns to work? You have one year to go until he is (hopefully) bringing in money.

You mention his school expenses. Are there any ways those can be trimmed? Can he get books from the library for example? I know I "retail rented" a few books for English class when I was in college.

Kudos on not having a car payment. You also budget for maintenance which is good. Does $200/month for those items cover your needs? Do you ever need more, or less?

[brdsl]

remove cable/internet. Save 120.
cut the phone. Save 60.

You are now in the black.

Other options:

have someone look at your taxes, to make sure you have the correct number of exemptions.

shop around for auto ins....you can almost always get a better rate.

Those should shore up your problems in the temp. Also, have DH work part-time year round. There is always something he can do to help, online, late hours, etc.

This is temporary, and that should be the focus.

Good luck.

[midjd]

DH's student loans are pretty small - we mostly took them out because the interest rates on Stafford loans were so good He will end up with around $6K total. I doubt his payments will be much more than the minimum ($50/month)

We have about $5K in savings and a little more in a taxable investment account, but I try to pretend it's not there.

I track the budget through Mint but you're right, WWBG... I don't have much detail for "misc" (and it does include entertainment... what can I say, we're easily entertained ). I will get on there and see if I can drill down a little more.

Netflix is a good idea. I could definitely live without cable, but not internet. Our internet-only price is about $70... we live out in the boondocks so we're pretty limited on our high-speed providers. I think HS internet is one of our sacred cows!

Phone is cell phone (DH's only - work pays for mine). His contract is up in September and I think we're going to switch to Virgin Mobile - it's about half the price.

Insurance is included in the mortgage payment. It is bundled with our car insurance... the HO insurance is very low, but the car insurance is a little high. I may see if I can at least scale it back to liability-only on all vehicles (they are hoopties, so a minor paint scrape would total either one).

DH's earning potential - probably in the $25K range to start. He quit a job making $32K but with horrible hours and conditions (steel mill). He is training to be an auto mechanic, so this will eventually go up... but I don't expect him to ever be a huge earner. Just $25K would go far in a LCOLA like this one.

Thanks for the responses! I have to run out and grab lunch/donate blood, but I'll be back this afternoon.

[alabamagal]

Yes you are being brave!

Biggest issue is what you are spending on maortgage. I assume that you do not want to deal with that expense, since you anticipate having more income after your husband gets out of school. Other than that you look pretty good.

If your husband is paying anything for school tuition, fees, books, you get that back as a tax credit of op to $2500. That is probably why you got a refund. I would consider adding deductions to lower your taxes by $200-$300 per month. That will help a little. Also maybe see about temporarily reducing student loan payments based on your income, depending on what type of loans they are.

[Deleted]

What is the interest rate and balance on your student loans?

[8 Bit WWBG]

...:::"Netflix is a good idea. I could definitely live without cable, but not internet. Our internet-only price is about $70... we live out in the boondocks so we're pretty limited on our high-speed providers. I think HS internet is one of our sacred cows!":::...

So if you did that, then $70 for internet and another $10 or so for netflix already gives you a $40 savings. If you don't care about cable (and I bet you won't miss it like you think you will) get rid of that today.

...:::"His contract is up in September and I think we're going to switch to Virgin Mobile - it's about half the price.":::...

That means in September, another $30 comes available.

...:::"but the car insurance is a little high":::...

Any idea why? Check to see if the "good student" discount is available (if you aren't already getting it). Your DH after all is a student.

[Pants]

mjd: Your budget may be tight, but it's not impossible atm. I agree with georgiagal that you're a little bit housepoor, but that will be fixed once DH gets a job. Karma!

[haapai]

Do you have any savings? Are they being drawn on?

There are lots of things that you can do to reduce the panic and/or improve the difference between your income and outgo. It's going to be a PITA, though, to skull through them all. There's lots of computation, fact-checking, and thinking involved. The process can be maddening and nauseating. But if you chip away at it one step at a time, you eventually start making decisions that you are proud of and gain a lot of useful knowledge.

[trytofindbalance]

Wow - kudos to you for keeping your expenses so low during this time period. I did notice that there wasn't much room in your budget for any extra expenses. Your misc. category seemed to be an "everything else" category (I have one of those too). I'm not sure that I could get by on $200 a month for gifts, clothes, house repairs, car repairs, entertainment and other misc. expenses. Something always seems to pop up. What about medical/dental co-pays/expenses?

As far as your taxes go. I take care of the payroll at my company. I have a very good idea of what my annual federal and state tax burdens are (due to previous years returns at a similar income with similar deductions), so I actually pay a flat tax amount every pay period. I still get some money back at the end of the year, since my deductions to vary depending on medical expenses and investment gains/losses, but I get it in the ballpark. I used to get a huge return every year and when things were different I would just throw it into an investment account, but now I need the money to live every month. I'm hoping that in the near future I'll be adding to that post-tax account again.

I do understand the feeling of being an a low grade state of panic 24/7...I live it every day under our current financial situation...it can really take it's toll. Try to relax and stick to your budget as best you can. If you feel more comfortable adjusting your retirement contributions to meet your monthly obligations, then I say do it temporarily and once your DH gets his job, you can readjust. I refuse to do it, because I am in a very different situation than you and I know that this is the only way I'll save anything at this point. I'm intent on protecting our future and keeping the pressure on DH to bring in a reasonable income.

Good luck. Looks like you've got things under control.

[8 Bit WWBG]

...:::"So as you can see, even on the months where we stay within budget, we’re in the hole by $143.":::...

So what happens when you don't stay in budget? Are you ever over by like, $300+?

Reading it over again, although you don't have a lot of "fat", you are still running in the red every month, which you say is being covered by savings. $143 is by no means an insurmountable amount, but red is red.

Getting rid of cable today, and making immediate and hard efforts to reduce grocery and gas costs are probably the areas you will see immediate progress in, so long as there are no "unaccounted for extras" that you didn't track/consider.

[Sum Dum Gai]

There's no way your husband can pick up part time work during semesters? You're only in the hole by a little bit, so just something that's 5 hours a week with no benefits or anything would be a HUGE help.

[haapai]

FWIW, a lot of the uncertainty regarding the adequacy of your withholding can be fixed by changing your husband's withholding. If he changes his withholding to get a set percentage equal to your marginal tax rate taken out of every check, you'll be able to adjust your own withholding with far greater accuracy.

Basically, he'd have to submit a new w-4 with zero exemptions claimed plus a pretty eye-popping extra dollar amount. It will make his paychecks quite ugly and won't work perfectly if doesn't earn much, but it can reduce uncertainty.

[kiskis]

I agree with the suggestions to shop around for auto insurance. DH and I were paying about $600 per 6-month period for our two cars with Progressive, but that dropped to $275 for the same coverage with 21st Century, which is insane. Also look at what is covered and remove unnecessary items and raise deductibles if it's worth it.

Oh, and $400/month for food for two people also seems a little high to me, especially if you are in a LCOLA. Just buying meat in bulk on sale and freezing will save you a lot. Don't know what you are already doing, but at first glance this line item might be able to stand a little trimming.

Good luck! You can do it.

[midjd]

Thanks again for the responses. Let me see if I can answer everything.

Biggest issue is what you are spending on maortgage.

I agree, and this was higher than I expected. It turns out that the sellers reported the annual taxes as semiannual - so the mortgage company is putting $242/month in escrow instead of the $160 it should be. I'm hopeful that this will be knocked down next year after a reassessment - as it is, we've lived there since February, homeowner's insurance and taxes are paid up until 1/2012, and there is almost $2K in the escrow account.

What is the interest rate and balance on your student loans?

Get your flamethrowers ready. I have a Direct Loan (federal) for $124K and change, interest rate 6.8%. I'm on the income-based repayment plan of about $414/month. (I've run the numbers - if DH gets a job making $25K, my payment will go up to roughly $550/month). The other loan is private, $14K, 5% interest rate, paying $170ish per month.

If I stay with my current job for another 8 years, the Direct Loan will be forgiven under the CCRAA. If I change jobs, I'll stay on the IBR plan but my payment period will be extended to 25 years, after which point the balance will be forgiven and I'll get a hefty tax bill for the cancellation of debt income, unless the current law changes.

I know my SLs are outrageous... they are probably my biggest regret.

Any idea why? Check to see if the "good student" discount is available (if you aren't already getting it). Your DH after all is a student.

Thank you! I never even thought of the good student discount.

So what happens when you don't stay in budget? Are you ever over by like, $300+?

Yes. That comes out of savings. (In the interest of full disclosure, I received a medical settlement last year - about 1/3 went to the house DP, and the rest is in index funds or in my online savings account. I pretend it's not there, but you can see it on my NetworthIQ profile.) We have about $5 in the bank, and somehow - despite going over budget every month - the amount doesn't seem to fluctuate much. It is baffling to me.

What about medical/dental co-pays/expenses?

We have about $2K in the HSA, and my employer adds $50 per paycheck - so I think we're good for a while, barring something catastrophic.

There's no way your husband can pick up part time work during semesters?

He works for a landscape contractor 1 day/week, if it's not raining - this has helped us tread water for the last couple of months, but I don't want to depend on it. During the fall semester, he'll have 2 days/week off - so I'm hoping he can pick up a little more work. I will have to phrase this suggestion carefully, though... he often mentions that he wishes he had a "real" job and was contributing more I have to pull out my Mr. T voice and tell him "don't be a fool, stay in school!"

[qofcc]

It turns out that the sellers reported the annual taxes as semiannual - so the mortgage company is putting $242/month in escrow instead of the $160 it should be. I'm hopeful that this will be knocked down next year after a reassessment - as it is, we've lived there since February, homeowner's insurance and taxes are paid up until 1/2012, and there is almost $2K in the escrow account.


I would write them a letter and show them the documentation that a mistake has been made and they need to adjust your escrow account. Is an escrow account actually required? I had a bank mess my escrow up one too many times and then I found out that it wasn't even required, so I've been doing it myself for the past 3 mortgages.

[midjd]

I'm not sure if it's required or not... I think it is, but that whole counteroffering-closing-moving time period is a blur I checked on the lender's website about a month ago and apparently they reassess the escrow annually... so worst-case scenario, things should be worked out in Feb-March of next year.

[swasat]

midwesternjd, may I ask what do you do for a living? From your screen name I gather you are a junior doctor?

The reason I ask is the huge student loans you have. If you are a doctor/resident/intern then you have income potential and you can cover them as your income increases.

[haapai]

We have about $5 in the bank, and somehow - despite going over budget every month - the amount doesn't seem to fluctuate much. It is baffling to me.

26 paychecks a year. Your actual monthly income is about 8.3% higher than the sum of two checks.

ETA: I think you meant $5K, not $5, right?

[haapai]

jd=lawyer.

[swasat]

Jun 16, 2011 14:25:53 GMT -5 haapai said:

jd=lawyer.

Ah. Got it.

[resolution]

Have you tried calling the escrow company and talking to them about the withholding amount? There was a mistake in ours and we just called the number on the escrow statment and they did the research and straightened it all out for us within about a week. They were charging us an escrow amount that nearly doubled our mortgage payment due to some mowing fees from the previous owner.

[ontrack]

midwesternjd, if it makes you feel any better, I have a crazy amount of loans myself. A direct loan of about 69k (interest rate 4.125%, IBR payment $640/mo) and private loan of about 36k (current interest rate 2.7%, but it's variable so I'm scared to death it will reset, currently paying $500, which is more than minimum payment) I am also hoping my federal loan will be forgiven in 8 more years thanks to PSLFP.

[8 Bit WWBG]

...:::"I checked on the lender's website about a month ago and apparently they reassess the escrow annually... so worst-case scenario, things should be worked out in Feb-March of next year.":::...

I second the idea of DEMANDING that they fix this NOW. They are getting over $80/month extra of YOUR money, that they are only to happy to earn interest on, that you need NOW. If I were you, I would be calling daily, and writing letters and moving up the chain until I got this resolved.

If you can get the $80/month back, cut cable ($40) and get a good student discount (lets say thats $15/month) and trim your groceries and utilities, you'll cover your minimum shortfall.

[midjd]

Haapai, thanks for catching that! If we only had $5 in the bank I'd be in a bit of a panic

I will call the mortgage company tomorrow morning, and Comcast tonight. DH has been itching to get Netflix for YEARS... I think he'll go along with cutting the cable if it means he has Netflix. Also going to email my mom (who doubles as my insurance agent) to see about the good student discount.

I've been working on cutting grocery costs for a few months now... when DH was working, we routinely spent $600-$700 a month. I'm getting better at couponing (thanks to some of you guys ;D) and hopefully will be able to get it down to $350 or lower. We're right at $200 for the month so far and I do our shopping on Saturday, so this might be the first month we're under $400.

Thank you all for your suggestions - I really appreciate it!

[❤ mollymouser ❤]

The other thing that you can do is look around your house for things that you no longer want or need and sell them. These sorts of things can really add up ... and that would help give you a cushion.

Definitely switch phone providers and save $$ there once your contract is up, and check on your insurance options.

In addition to landscaping, does your husband have time to do other occasional or odd jobs like house sitting, dog walking, pet sitting, or dog poop scooping? A local company here called Scoop Doggy Doo charges $25 per month to come scoop backyard poop (1 dog) per month.... 4 such clients would give you guys $100 per month. Also, be sure and have your husband check GIGS (short term, occasional employment) on your local Craigslist for jobs he can do. Around here, people advertise for help cleaning out garages, moving, weeding, etc.

[midjd]

Thanks, Molly! I think we've about exhausted things we could sell... actually, thinking about it, that is probably why our cash hasn't fluctuated that much. The sellers had to move into an apartment across the country, so left a lot behind... we've sold their old wood stove, recycled a ton of copper wire that was lying around, sold a 20' culvert pipe, our two window a/c units, our old grill (they left a way better one ;D), and our old washer and dryer. It's been a while since we sold anything, though... I'll do some recon tonight and see if there's anything else we're not using.

I hadn't thought about the "Gigs" section of Craigslist - that is a great idea. And Scoop Doggy Doo has to be the best company name I've ever heard!

[phil5185]

The average dealership technician pay is closer to $40,000 (unless he plans to work in the lube bay). So hopefully your $25k aspiration will be exceeded. In any case - he can keep the family hoopties running.

Re: your $55,000 salary. Are you staying with that in hopes of getting the SL forgiven? I'd rather earn $80,000 in the private sector and pay the loan myself, an extra $25k/yr will cut thru a $125k SL pretty fast - and then the extra $25k is gravy - just sayin'.

As you say, the $11,000/yr that goes to retirement accounts is a grind - but in the big picture, having to borrow from savings for a yr or two to fund your out-year investing seems like a good trade-off. I wouldn't cut much from the budget - you need to enjoy some nice things as you build your lives.