New Budget

[sweeps]

No, you can contribute to a 2006 ESA until Tax Day 2007, just like IRAs.

In fact I just made my 2007 ESA contribution at Vanguard. They currently have the 2006 and 2007 side by side so you can contribute to either one or both.

[creditcardfree]

Originally Posted by sweeps

No, you can contribute to a 2006 ESA until Tax Day 2007, just like IRAs.

In fact I just made my 2007 ESA contribution at Vanguard. They currently have the 2006 and 2007 side by side so you can contribute to either one or both.

Thanks for the correction! That is good news!

[timetosave]

Originally Posted by autoxer

Absolutely, that is my magic pill. I set up direct deposit to a separate checking account that automatically pays my bills to keep that separate from my daily spending. That way, I never 'see' that money and I only have to worry about the small amount I need for food and gas till next payday. And my savings has increased dramatically without much sacrifice or work.

This will work for me. This is how I am going to do it...direct pay, that way I don't see the money...in a seperate account that is only for this purpose...very smart...thanks!

Originally Posted by creditcardfree

Time to Save, it will feel great to get that car paid off. You may even be able to get it paid off earlier...especially if you get another large refund next year.

If I remember correctly ESA's are a calendar year type of contribution. So for 2006, one had to have contributed by Dec 31 2006. When we started our girls funds we did put $2000 each into their ESA's and then waited a year to start monthly contributions. It feels great to get that started for them.

Your right, and I will get a big refund each year (it was the same last year) I will have this car paid off in no time!

Originally Posted by sweeps

No, you can contribute to a 2006 ESA until Tax Day 2007, just like IRAs.

In fact I just made my 2007 ESA contribution at Vanguard. They currently have the 2006 and 2007 side by side so you can contribute to either one or both.

I am looking at Vanguard now.


Thank you so much everybody...the future looks better and better, I am able to pay down debt AND save for dd. I won't feel as if I'm letting her down.

G

[DebbieL]

I don't think your daughter will feel let down by you even if she has to get student loans. You are a good mother, and that's what your daughter will see. The financial responsibility you are learning and paying down your debts will also serve her well in later life. Children learn by example.

[sweeps]

And to add to what Debbie said... If you do end up greatly improving your financial situation by the time she leaves college, you can always help her pay back the student loans.

[timetosave]

I would feel as if I let her down...that is just as bad in my book. Her dream school is Cornell University. She has been working VERY hard to achieve this goal...I have every intention of getting her there.

[jIM_Ohio]

Originally Posted by timetosave

Ok, for now I am going to focus ONLY on the current debt and the old stuff can wait.

Incoming:

715.00 biweekly
539.00 monthly
288.00 monthly

2257.00 monthly income


Outgoing: (monthly)

Phone (cell and landline) 187.00
Cable 77.00
Automobile 489.91
Groceries 200.00
Movies/dining out 100.00
Church 20.00
Student loan 186.00
Riding Lessons/Supplies 140.00
Orthodontist 288.00

Outgoing: 1687.91

Leaves 569.09

Best way to use that money?

I'm thinking

489.91 to car payment (making two payments monthly instead of one (I've already figured in my student loan...all other debt is VERY OLD)

79.00 dd's education fund

Discuss.

Thanks
G

Budget looks good. Consider that if you pay off car early, you may want to reduce insurance on it? I did not see insurance in budget above.

Cell, phone and cable look expensive. Is internet thru phone or cable? We pay $45 for satellite and about $80 for landline/internet and $80 for cell phones (2 of them). I think if you wanted to "squeeze" you could. Most phone companies will give you a good deal if you combine everything thru them, same with cable.

I think the amount you save for education should depend on what kind of school you would consider. 80k now gets someone into many reputable schools, 40k right now would cover tuition at many state schools, and community colleges are much cheaper than that. Do you know what you want?

if 40k, I suggest putting close to 400-500/month into college fund (based on your comments in other thread).

If you think your daughter will be eligible for financial aid, DO NOT invest the money in her name (hurts chance for aid). Also know there might be ways to "hide" the asset from the financial aid forms... you need to consider this when she is a freshman to implement before you file taxes at end of her Junior year.


Best bang for the buck is pay off debt, then save.
However if you want 40k saved for college, you may have to pay car "on schedule" and to generate higher initial savings.

[disneysteve]

Originally Posted by timetosave

I have a husband and this is not child support.

As you can see I do not pay much. Mortgage, electric, water/sewer, trash removal, gas, maintenance/repairs, Insurance home/auto/life, and copays are all paid by my husband. What I've listed is what I'm responsible for.

I have kind of an awkward question. Feel free to answer only to the extent that you are comfortable sharing. Where does your husband fit into all of this? Do the two of you lead totally separate lives, at least financially speaking? I know some couples do this but I honestly have trouble understanding how that works. For example, you have debt. Does he also have debt that is considered his or does he have savings and financial assets that could, theoretically, be used to repay your debt? What about college? Is he saving for your daughter's education in any way or is that totally up to you for some reason?

And I would still like someone to explain what the written off credit card balances mean because I'm not understanding where they fit in the big picture.

[timetosave]

Originally Posted by disneysteve

I have kind of an awkward question. Feel free to answer only to the extent that you are comfortable sharing. Where does your husband fit into all of this? Do the two of you lead totally separate lives, at least financially speaking? I know some couples do this but I honestly have trouble understanding how that works. For example, you have debt. Does he also have debt that is considered his or does he have savings and financial assets that could, theoretically, be used to repay your debt? What about college? Is he saving for your daughter's education in any way or is that totally up to you for some reason?

And I would still like someone to explain what the written off credit card balances mean because I'm not understanding where they fit in the big picture.

My husband has the mortgage, and his car payment. I created my debt and it is my responsibility. We have never actually had 'shared finances' never. I do not look to him for anymore than he already does. He is disabled. DD receives SSI and after I chewed him out that money is now going into an account for her use (savings). He does more than his share financially around the house...more than his share. An example of dh...he received a settlement for over 100,000.00 a few years ago and spent in in 3 months (the rest of the story can be read in my previous posts).

I wish he would take our daughter's future seriously.

The credit cards are on my credit report...they have been written off. That means I no longer get the annoying calls and they just sit there (I still owe the money) and they hurt my credit but I do not make any payments on the amounts and they just sit there. Right now I want to get the car/education loans paid off then I will concentrate on them.

[myself]

Originally Posted by timetosave

I would feel as if I let her down...that is just as bad in my book. Her dream school is Cornell University. She has been working VERY hard to achieve this goal...I have every intention of getting her there.

Regarding the "Cornell University" degree, I know someone who has 1 BS degree, and 2 Masters degrees (and a paid for house). He is sending his 2 sons to a local community college for the first 2 years, and then on to the Wharton school of business. Notice that I emphasize this man is highly educated, and is sending his sons to a lower level school for the first 2 years to save the expense of sending them for 4 years to the same expensive school.

[timetosave]

Originally Posted by myself

Regarding the "Cornell University" degree, I know someone who has 1 BS degree, and 2 Masters degrees (and a paid for house). He is sending his 2 sons to a local community college for the first 2 years, and then on to the Wharton school of business. Notice that I emphasize this man is highly educated, and is sending his sons to a lower level school for the first 2 years to save the expense of sending them for 4 years to the same expensive school.

Thanks for the input. I'm glad that works for your friend...it simply does not work for me.

G

[myself]

Originally Posted by timetosave

My husband has the mortgage, and his car payment. I created my debt and it is my responsibility. We have never actually had 'shared finances' never. I do not look to him for anymore than he already does. He is disabled. DD receives SSI and after I chewed him out that money is now going into an account for her use (savings). He does more than his share financially around the house...more than his share. An example of dh...he received a settlement for over 100,000.00 a few years ago and spent in in 3 months (the rest of the story can be read in my previous posts).

I wish he would take our daughter's future seriously.

The credit cards are on my credit report...they have been written off. That means I no longer get the annoying calls and they just sit there (I still owe the money) and they hurt my credit but I do not make any payments on the amounts and they just sit there. Right now I want to get the car/education loans paid off then I will concentrate on them.

I'd have to say you should take your finances seriously (much like you want your husband to take your DD's education seriously).
You've stated the following:
Income: $2,257
Outgo: $1,688
Left over: $569
Tax return (this year from another thread $6,595): $549
So, in reality you have $1,118/month left over every month.

Now, add in the fact that you chose to lease (which means a vehicle payment forever if you keep leasing). Right now, that's a $500/month car payment. You may want to consider the following:
1) Change W-4 withholdings to give you more back throughout the year
2) Have $569/month plus whatever extra you get after adjusting your W-4 withholdings automatically sent to an ING Direct account.
3) After the lease on your current vehicle is up, pay cash for a vehicle from the ING Direct account, or for that matter if you want to keep the leased vehicle, pay for it in cash.
4) This will leave you with about $1,600/month leftover (extra amount shown above, plus the vehicle payment). Send $333/month into a Roth IRA for both you and your husband, and another $300/month aside for your DD's college education. That still leaves you with $600+ every month, since you no longer have a vehicle payment.

[timetosave]

Thanks again for the input. I have no intention of changing my deductions but I will be working very hard to get the car paid off.

G

[creditcardfree]

Timetosave, is your car leased? You mentioned something about a SmartBuy somewhere and that you will pay off car and then keep for the next 10 years. Is that correct? If so, that doesn't sound like a lease. Could you clarify...probably again...for everyone?

[timetosave]

Ok, these are the details of my Smartbuy:

SmartBuy is a purchase transaction that is like a lease because monthly payments can be lower than with traditional financing. That’s because the monthly payments are based on the portion of the vehicle you expect to use during the SmartBuy term plus a finance charge. However, with SmartBuy you own your vehicle.

At the end of your contract you have several options, including keeping your vehicle by making a final balloon payment or simply returning your vehicle and paying a disposal fee (if applicable).

SmartBuy is available in a limited number of states. Ask your GM dealership/retailer about availability.



I am making two payments a month (starting this month) in order to get the car paid off in the next 18-20 months. The extra paid each month goes to the principle. I will also be using a portion of my tax return to pay this down and more of it next year (2400 of my return is going into my EF to get that funded and crossed off my list of to do's for this year, next year that fund will be already there and I will have more of my refund to put towards the car).

G

[LuxLiving]

Originally Posted by timetosave

Ok, these are the details of my Smartbuy:

SmartBuy is a purchase transaction that is like a lease because monthly payments can be lower than with traditional financing. That’s because the monthly payments are based on the portion of the vehicle you expect to use during the SmartBuy term plus a finance charge. However, with SmartBuy you own your vehicle.

At the end of your contract you have several options, including keeping your vehicle by making a final balloon payment or simply returning your vehicle and paying a disposal fee (if applicable).

SmartBuy is available in a limited number of states. Ask your GM dealership/retailer about availability.



I am making two payments a month (starting this month) in order to get the car paid off in the next 18-20 months. The extra paid each month goes to the principle. I will also be using a portion of my tax return to pay this down and more of it next year (2400 of my return is going into my EF to get that funded and crossed off my list of to do's for this year, next year that fund will be already there and I will have more of my refund to put towards the car).

G

Hi timetosave, Good to see you perservering!!!

Some questions, if I may?

Will you have the money put back for the balloon payment on the car or is that issue being resolved by the extra payments you are planning to make? If you plan to keep the car after the balloon date do you have the balloon money already? Where is that to come from? What would happen if you kept making the regular payments on the car and put the extrapayment amount back in a MMaccount to save for the balloon payment?

You said something about the money in the emergency fund being there next year so you don't have that to worry about it next tax return. Here is where I have a question/comment...

Is there room in your current budget to allow repayment of any monies taken out of the e-fund? I'd say w/apprx. 2400.00 in an e-fund what you have there is what many on this board call a mini-e-fund. Used for UNEXPECTED EXPENSES...like needing a car repair to the tune of say $750 in a month that only has $25 extra in it.

That money will come out to pay the repair bill...do you have room in the monthly budget to put that back in w/o derailing other plans? What I'm trying to imply is that e-fund money is not necessarily static, but can be used but then needs to be put back out of income.

A mini e-fund is to handle the unexpected crop-ups, whereas a true emergency fund is more to handle a layoff, firing or short-term disability.


I'm not sure if it was in this thread or the other one you mentioned that you were planning on taking extra after payments from current income to save for DD education. Is that extra-money coming after you've set aside money for car-repairs, christmas, upcoming band expenses, recurring riding fees or expenses, etc.?

If not, you're going to be having lots more future mini-emergencies that will eat that money up - just wanting to be sure you have plans to return it rather than think it's a one-time deal.

On the tax-deductions (sorry if I appear to be poking the bruise but DH was similar to your thinking in this vein for a number of years)...have you researched the consequences of not being able to pay your tax-bill?

IF you reduced your deductions and got more income and perhaps came up short, WHAT EXACTLY HAPPENS? Will they take your birthday away?

It seems odd that one would be willing to owe other people money and not be able to keep current on certain debts (hopefully all past for you), but not the government?

I'm not sure I follow the logic...but, have you done the research? I haven't -- so not sure I know the exact answer but I'm assuming if you came up a few hundred short, you'd be able to make payments to the government the same way you do to Sears.

If that isn't accurate, then have you followed up on the link that is here in one of these threads on checking the government's own website and their calculations as to what someone making your income could conceivably owe and then coming out a few hundred long where you do get a small refund back, just not such a huge one? (This is what we did. Then I monitor it thru the year to be sure we are on track to meeting the projected tax.)

Have you actually talked to someone in your payroll department or human resources about how to get more dollars in the paycheck and yet not owe any additional taxes?

Good on you for sticking to it!

[kv968]

Originally Posted by LuxLiving

Will you have the money put back for the balloon payment on the car or is that issue being resolved by the extra payments you are planning to make? If you plan to keep the car after the balloon date do you have the balloon money already? Where is that to come from? What would happen if you kept making the regular payments on the car and put the extrapayment amount back in a MMaccount to save for the balloon payment?

I've been thinking the same thing. I've read over the past posts and to me no matter how pleasantly GMAC puts it, you don't "own" the vehicle. Sure you'll own the vehicle after you pay off the final balloon payment but to me it's still pretty much a lease. With that, I don't feel you'd really benefit from paying it off early. I don't think there's any interest being accrued by the monthly payments you're currently making, so paying it off early wouldn't save any money. I know you want to pay it off totally and get it over with (within 22 months you said), which I can understand. However you might be better off putting the extra payments in a MMA, as LuxLiving suggested, and getting some interest of your own off of that money for remaining 2 years of the Smartbuy. Then when the end of the "lease" is up, take that money and pay off the balloon payment. By my math, if you put those extra payments in a decent paying (~5%) MMA, you would have an extra $400-500 by the time the balloon payment is due. Just my $.02

[timetosave]

Originally Posted by LuxLiving

Hi timetosave, Good to see you perservering!!!

Some questions, if I may?

Will you have the money put back for the balloon payment on the car or is that issue being resolved by the extra payments you are planning to make? If you plan to keep the car after the balloon date do you have the balloon money already? Where is that to come from? What would happen if you kept making the regular payments on the car and put the extrapayment amount back in a MMaccount to save for the balloon payment?!

I will actually be paying off the car before the balloon payment is due. I did not consider putting the extra monies into the bank and making regular payments, I was told that because the extra money goes to the principle that it would be wise to pay it off early.

Originally Posted by LuxLiving

You said something about the money in the emergency fund being there next year so you don't have that to worry about it next tax return. Here is where I have a question/comment...

Is there room in your current budget to allow repayment of any monies taken out of the e-fund? I'd say w/apprx. 2400.00 in an e-fund what you have there is what many on this board call a mini-e-fund. Used for UNEXPECTED EXPENSES...like needing a car repair to the tune of say $750 in a month that only has $25 extra in it.

That money will come out to pay the repair bill...do you have room in the monthly budget to put that back in w/o derailing other plans? What I'm trying to imply is that e-fund money is not necessarily static, but can be used but then needs to be put back out of income.

A mini e-fund is to handle the unexpected crop-ups, whereas a true emergency fund is more to handle a layoff, firing or short-term disability.


I'm not sure if it was in this thread or the other one you mentioned that you were planning on taking extra after payments from current income to save for DD education. Is that extra-money coming after you've set aside money for car-repairs, christmas, upcoming band expenses, recurring riding fees or expenses, etc.?

If not, you're going to be having lots more future mini-emergencies that will eat that money up - just wanting to be sure you have plans to return it rather than think it's a one-time deal.!

Thank you so much for saying this. I had not thought ahead that far. Right now I am setting the foundation (that's the way I'm looking at it). Get the EF (or mini EF) set up and leave it alone (this tax refund is not expected for anything but my use)...that is an important part of my being able to get sleep at night. This is probably emotional saving but it is money put away that I'd not even considered before. This is the first step for me. Thank you though I need to go back and re-think the 'budget'

Originally Posted by LuxLiving

On the tax-deductions (sorry if I appear to be poking the bruise but DH was similar to your thinking in this vein for a number of years)...have you researched the consequences of not being able to pay your tax-bill?

IF you reduced your deductions and got more income and perhaps came up short, WHAT EXACTLY HAPPENS? Will they take your birthday away?

It seems odd that one would be willing to owe other people money and not be able to keep current on certain debts (hopefully all past for you), but not the government?

I'm not sure I follow the logic...but, have you done the research? I haven't -- so not sure I know the exact answer but I'm assuming if you came up a few hundred short, you'd be able to make payments to the government the same way you do to Sears.

If that isn't accurate, then have you followed up on the link that is here in one of these threads on checking the government's own website and their calculations as to what someone making your income could conceivably owe and then coming out a few hundred long where you do get a small refund back, just not such a huge one? (This is what we did. Then I monitor it thru the year to be sure we are on track to meeting the projected tax.)

Have you actually talked to someone in your payroll department or human resources about how to get more dollars in the paycheck and yet not owe any additional taxes?

Good on you for sticking to it!

As much as I understand that this will give me more money during the year I'm afraid of a couple of things:

1) that the extra money in my paycheck will be spent foolishly
2) that I will owe money to the government at the end of the year and not be able to pay...thus putting me in financial problems with the government which is far more reaching than any creditor

Once I feel more financially savy, once I have money in the bank and feel a little more secure, once I have some of my debt paid down and have more room to breathe (I'm getting there, much better now than when I was approx. 6 months behind on my car payment) I will re-think this. Right now I'm simply not comfortable with this option. I will work around it for now. I'm sure this will be a thorn in everybodies sides and it will continue to come up so I can't ignore it forever. But right now I'm not comfortable with the idea of not getting that refund back.