New Budget

[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

[crabbypatty]

Wow, that's a big phone bill. Can you reduce that? And your cable seems high. Can you drop a movie channel?

What are the sources of the income? One would be your job, the biweekly one right? I don't think I've seen you mention a husband. Is one of those sources of income child support? If so, I would look at your situation a little differently. Child support is not intended to pay off your debts. It is for your child. I would feel confident in putting money towards your daughter's education even while maintaining personal debt if you are using child support money for it. (but maybe I'm way off and it's not child support income at all)

[Aleta]

You would have to list your other debts outstanding, amounts and %financing in order to know what to pay off. There are a lot of variables there.

[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.

Thanks.

G

[tinapbeana]

wow timetosave, that was fast getting the budget up! way to go!!!

while i agree w/ crabbypatty that there appear (not 'are' but 'appear') to be places that could be trimmed in the budget, i realize that you asked only what to do with the $569.09 excess per month so that's where i will focus.

BTW, $569.09 extra per month is a GREAT problem to have

i think it's been posted somewhere else but i don't remember: what is the interest rate on your car, and how many months are left on it? also, have you confirmed with the finance company that any extra money you send in will actually bring the principal down rather than pre-paying next months bill? if it's only prepaying, then you're not saving any interest money. see the problem?

if it were me, i'd set up a short list of money goals (i.e. DD college, pay off debt, create emergency fund, etc.). then, decide on percentages. easiest way is to divide it evenly but it doesn't have to be that way. could be 15% for college, 15% towards to EF, and 70% towards paying off the 'debt de jour' (and right now you've decided that's the car). using these example percentages, you'd stash $85.36 per month for college, ditto for an emergency fund, and the rest for the car payment. again, these are just examples, b/c only you know what would make and keep you comfortable.

if it were me, though, i'd rather save up a small EF first then focus on the car. with 1700 (rounded) in expenses per month, you could have about a month of expenses covered by saving $500/month for 3 months and saving the rest for the college fund. after that, you could revert back to using your percentages...

[timetosave]

Originally Posted by Aleta

You would have to list your other debts outstanding, amounts and %financing in order to know what to pay off. There are a lot of variables there.

My other debts are credit cards that have been written off/3 judgments (about 7,000.00 worth)

Student loan is 36,000.00
Car is 24,000.00

These are the only two that are current. I want to get rid of these first.


g

[timetosave]

Tina, I am taking 1,000.00 of my 6,591.00 Tax refund (that is the acutal amount returned for state/federal) and putting 5,591.00 towards my car.

I have no problem using 1,700.00 to emergency fund and sending 4,891 to GMAC. That would cover the emergency fund immediately and I still have the 569.06 to use for debt/dd.

Now, if they tell me this does not go towards the interest what should I do? I have 24 months left on my car (a smart buy).



My priorities are as follows:

emergency fund
DD's education
Debt
Retirement

I would also like to be able to put alittle aside for dd's riding/skiing lessons yearly...that way I have the money and don't have to panic when the bill is due...also Christmas...but I've learned that does not have to be a large amount.

Thanks
G

[tinapbeana]

timetosave, you've got a lot of options available to you which is always a good place to be.

the only thing i can tell you is what would make me comfortable in your situation.

first off, contact the finance company for your car and specifically ask "if i send more than the minimum payment, will that be applied towards principal or is it simply treated as a pre-payment of the next bill?" if it goes towards principal, then you save yourself money (by saving the amount of interest you pay) by paying early. if it's treated as a pre-payment, then you're not saving yourself any money by paying early.

next, i would set aside 2 months of expense for an nice EF from the tax return. based on the numbers you've posted, that wouldn't adversely affect you b/c the return is large. also, if you're comfortable w/ just 2 months in an EF, then you can mark that goal as done from your list and you're already 25% of the way there! woohoo!!!

then, what to do with the rest of the return will be based on what the finance company tells you. if they treat extra money as just a pre-payment, i personally would only pay what is due when it's due and no more, and place my focus on the college fund, retirement, and student loan and split the remainder of the tax return and the monthly extra accordingly. if extra money goes towards the principal, then it is in your interest to pay as much towards the car as you're comfortable with.

my only confusion is this: you pay about $500/month on the car, right? and you say you have 24 months left, right? that adds up to paying $12,000 on the car over 2 years, but you stated you owe 24k on the car...

[timetosave]

I'ts called a "Smart buy" a lease under a cute name...I only have 2 years left on it.

Thank you so much for the info. I am calling the finance company now.

G

[creditcardfree]

Besides the other areas you could trim, I think your idea is great!! You are putting a large amount towards debt and still saving some for your daughter. Do you think the car will be paid off in just over a year?

I have a daughter that just turned 10 and we only save $90 a month for her and we just started her fund last year. As our income rises, we will increase our contribution. We also pay an extra $422 on our mortgage. So I feel I can relate to how you have divided your extra money!!

We have our daughters accounts at Vanguard in the Windsor II fund. They did have a $2000 minimum to start. The account is an ESA (Eduational Savings Account) where the max you can invest each year is $2000. The money grows tax free and when used for education expenses can be withdrawn tax free.

I might suggest you find a good yielding money market account until you could get to a minimum investment and then move the money...others might have better ideas on that part.

It's nice to see you making progress. I do apologize for one of my comments on the other thread. I really only want the best for you!

[tinapbeana]

Originally Posted by creditcardfree

We have our daughters accounts at Vanguard in the Windsor II fund. They did have a $2000 minimum to start. The account is an ESA (Eduational Savings Account) where the max you can invest each year is $2000. The money grows tax free and when used for education expenses can be withdrawn tax free.

ooooh, i like the sounds of this!!!!! i have no kids, so personally i'm not up on what to do to save for college, but if something like this is available to you, timetosave, you migh consider taking some of your tax return to open the account and met the max contribution for the year, letting you focus other items the rest of the year. going forwards, a max contribution of 2k per year works out to be less than $170 per month. or, if you prefer the big tax refund route, you could make one lump sum addition every year...

i wonder if it's like a roth, where you have till april 15th of this year to make last year's contribution? anyone know?

[timetosave]

creditcardfree - If I really focus I can have the car completely paid off in about 18 months...that is realistic. I really think I want to do that...that way I have a very good automobile for the next 10 years that is paid in full. No 500.00 monthly bill...that would really be nice. Sticking to this is going to be my challenge...but I want to get these to large debts paid down/off ASAP so I can focus on dd's education.

Thank you for the apology...I've already forgiven...one developes a pretty thick skin over here...lol.

I was thinking of doing an ING account (I've been told here that is the best place to go) I will look into what you've just suggested...thanks for the info.

tinapbeana - I just got off the phone with GMAC...everything extra goes to to the principal...so I will do this

out of the tax refund I will put 2400.00 into an EF. that leaves 4191

My actual payoff for the car is 26,590.00 -4191 takes me to 22,399.00 if I send them 980.00 monthly I can have the car completely paid off in 22 months...

I wish there was a magic pill that I could take that would force me to really stick to this...I really want this...

G

[timetosave]

Originally Posted by tinapbeana

ooooh, i like the sounds of this!!!!! i have no kids, so personally i'm not up on what to do to save for college, but if something like this is available to you, timetosave, you migh consider taking some of your tax return to open the account and met the max contribution for the year, letting you focus other items the rest of the year. going forwards, a max contribution of 2k per year works out to be less than $170 per month. or, if you prefer the big tax refund route, you could make one lump sum addition every year...

i wonder if it's like a roth, where you have till april 15th of this year to make last year's contribution? anyone know?

This really sounds great...I wold only have 2191 left to put on the car and it would force my payments out another 2.5 months but I can do that...yep, and then every year I can put the 2k in the account at tax time...this feels right.

thank you so much

G

[tinapbeana]

Originally Posted by timetosave

I wish there was a magic pill that I could take that would force me to really stick to this...I really want this...

i'm pretty sure you had said you did not have a checking account on another thread, right? well, one you get a checking account (and you'll have to have one to open an ING account) your 'magic pill' could be automatic online bill pay. my credit union offers it free of charge, and saves me almost $4 per month just on stamps!

anyways, depending on when your money is coming in you could set up online bill pay to make your regular car payment once a month for you, and then say an extra $100-$200 per week to the car company. POOF! it'll be done automatically, and sending the extra money once a week rather than once a month means your bank account wouldn't be 'feast' one week and 'famine' the next...

[timetosave]

Originally Posted by tinapbeana

i'm pretty sure you had said you did not have a checking account on another thread, right? well, one you get a checking account (and you'll have to have one to open an ING account) your 'magic pill' could be automatic online bill pay. my credit union offers it free of charge, and saves me almost $4 per month just on stamps!

anyways, depending on when your money is coming in you could set up online bill pay to make your regular car payment once a month for you, and then say an extra $100-$200 per week to the car company. POOF! it'll be done automatically, and sending the extra money once a week rather than once a month means your bank account wouldn't be 'feast' one week and 'famine' the next...

My refund should be in my account by the 5th. I can't link the ING/monthly billing to my savings account? Oh well, checking account here we go again.

So you think I should send the 489.91 montly payment on time and then spread the other 489.91 over time instead of making one payment at the beginning of the month? Other than the feast or famine (which I'm totally used to) is there any other benefit for this?

G

[tinapbeana]

when to send the extra money is really a personal preference and will be determined by your account's cash flow.

for instance, of all the money i pay on bills and debt, 80% of my outflow is within a 5 day time period at the end of the month. ACK!!! but, it works out OK for me b/c 1) i automatically deposit my savings (retirement, gift fund, etc) at the beginning of the month and 2) i've conditioned myself to ignore the balance in my checking account and simply stick to the budget i've made. the checking account might say i have 2 grand, but i know that the bulk of that is already slotted to pay bills in 2 weeks so i can't touch it.

some people's minds don't work like that, and this is where the automatic bill pay can come in handy. for instance, my DH likes to believe that whatever is listed as the balance of the checking account is there to be used. i've tried explaining that the balance isn't "real" because there are checks that haven't cleared and a BIG chunk of bills coming up at the end of the month to be paid. his mind doesn't work that way so it doesn't sink in. therefore, instead of holding onto the money until the bill is due, i can opt to have the automatic bill-pay send it in ahead of time, or in smaller increments (like the $100 every week mentioned earlier). that way, there's no big chunk of tempting money just sitting there.

[disneysteve]

Originally Posted by timetosave

My other debts are credit cards that have been written off/3 judgments (about 7,000.00 worth)

Student loan is 36,000.00
Car is 24,000.00

Can you (or anyone) explain to me what the deal is with the written off CCs? Does that mean they don't need to be paid or do you still owe that money? If you still owe it, what is the penalty for not paying it? Is interest still accruing?

As for the car and student loans, what are the rates on those?

[autoxer]

Originally Posted by tinapbeana

your 'magic pill' could be automatic online bill pay.

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.

[disneysteve]

Originally Posted by timetosave

I was thinking of doing an ING account (I've been told here that is the best place to go)

I would vote against ING as their interest rate isn't competitive. There are probably a dozen banks that pay better. There is a list on the Investing and Banking board.

[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.