Newbie here..need help with budget!

[Cheapskate79]

Hi everyone, I am fairly new here but have learned a great deal already by lerking around. Let me tell you a little about my situation, I am 27 and hubby is 46, we have 2 small children at home and rent our house. Due to divorce on both sides our credit is not the best! We have just relocated to another state and just got the income rolling in again but I really want to start saving for an emergency fund as we have none. It really worries me at night. Here is our income and budget...

Total Income a month:
Hubby- $1500.00
Son SSI- $560.00
Mine---$650.00
Total= $2710.00

Budget:

Rent: $990.00
Car $311.00
Electric $93.00
Gas for house $35.00
Car insur $110.00
Cable and Internet $75.00
Home Phone $30.00
Cell Phones $75.00
Gas for cars $160.00
Groceries $350.00
Savings $40.00
My personal fund (hair, makeup) $20.00

I just got my first paycheck on Saturday but the bad thing is, once I start reporting my income (I work out of the house) to Social Security, my son's disability check might go down but we won't know for a month or so. We have been living in the red for the past month and so I am just totally overwhelmed right now and hate living paycheck to paycheck. I would like to be able to pay all my bills once a month but unsure how to do it. We just opened a savings account with ING and put $10.00 in it, then every two weeks there will be another $20.00 put into it so I figured that was a start. I can't go any lower on the cable or internet as I have to have high speed for my job. The cell phones bill is for a family plan, with 2 phones. I have the lowest amount of minutes I can get on them and we are still wasting minutes every month which I hate! I just don't know if I am going about saving money the right way or anything. We hope to be able to buy a house in 3 yrs. Any help or suggestons would be greatly appreciated!

[parafly]

Cancel the home phone, drop the personal fund for hair and makeup, and lower the budget for groceries to $200. This will give you an additional $200 a month in savings and will make a big difference.

Is it possible for you to find another part time job?

[Cheapskate79]

Thanks for the reply, I can't cancel the home phone because I have to have it in order to be able to work from home. I can drop the personal fund but how can I feed 4 people on $200.00 a month, I have been struggling with $300.00 and that is grocery shopping at Save-A-Lot and Food Lion for the meat. I am going to contact Sprint today and find out if I can put my phone on hold right now, and just pay for DH on a single plan although he doesn't really need one either but refuses to give it up. I am working 5 hrs a day with my part time job at home but I can't do any more just because I have a little toddler at home.

[parafly]

Originally Posted by Cheapskate79

Thanks for the reply, I can't cancel the home phone because I have to have it in order to be able to work from home. I can drop the personal fund but how can I feed 4 people on $200.00 a month, I have been struggling with $300.00 and that is grocery shopping at Save-A-Lot and Food Lion for the meat. I am going to contact Sprint today and find out if I can put my phone on hold right now, and just pay for DH on a single plan although he doesn't really need one either but refuses to give it up. I am working 5 hrs a day with my part time job at home but I can't do any more just because I have a little toddler at home.

A food budget of $200 a month for 4 people is certainly doable, but you would most likely have to change your diet to accommodate. Stick to the basics: milk, eggs, cereal, cold cuts, pasta, buy meat in bulk, etc. $50 to $60 per week should be manageable.

Another idea would be to sell your car and get something with a lower monthly payment. Also, you can try to cut down your electric bill and either cut out cable completely or get the most basic plan possible.

[sweeps]

Assuming groceries includes things like toiletries, diapers, etc. $350/month is not unreasonable.

See if you can get a better deal on your communications: cable, home phone, cell phone, internet. Or possibly cancel one or more of them as previously mentioned.

Car costs are killing you. Between the car payment, the insurance and the gas (plus maintenance which i don't see listed), you really can't afford it. Are there any other options available, such as downgrading the car, finding a car that gets better gas mileage, public transportation, etc.

[disneysteve]

You've listed income of $2,710 and expenses of $2,289. That is a surplus of $421/month. So where is the problem, or are there expenses you haven't included on your list?

[Cheapskate79]

I feel like I could be saving more money than what we actually are, so I am trying to trim down the unneccessary things. I have listed all of our expenses, so we will have a surplus of $421.00 starting this month. I just wanted to get some advice as to whether or not I could be budgeting better. What would the suggestions be on what to do with the surplus money? I have set up a savings with ING, but we have no retirement, car maintance or anything else. Help!

[anonymous_saver]

(1) Talk to your husband about the finances, try to make him realize that saving $75/month by getting rid of your cell phones, is not an inconvience, it's a necessity at this point.

(2) Does your husbands job have a 401(k) or a 403(b), if they do, he should immediately start contributing up to the employers match. If they do not, he should start a Roth IRA. Once your income rises, he should do both as he is starting very late for saving for retirement. Maybe you should start an IRA as well, even $50/month would be good since you are 27 and have more time than your husband has to save.

(3) I strongly think you need to get rid of your car, getting a beater or using public transit could save you an amazing amount of money. This money could be going towards more important things.

(4) Have you tried to do online tutoring or babysitting on the side? This could help you out quite a bit, even $50/week could help!

(5) I think your husband should seriously start thinking about getting a higher paying job or getting a 2nd job (part-time) to bring home more money.

(6) I think getting 3 months of an emergency fund is the most important thing for you right now. After this, pay off agressively towards all debt (although if you get rid of the car, would you have any other debt?). You didn't mention any other debt.

(7) I don't think you could buy a house in 3 years, unless you increase your income and savings. After you have 3 months worth of an emergency fund, then start saving aggressively for the house (as long as you have all other debt paid off).


Good luck with everything, sorry if I sound too strong in my opinions at points. Sometimes I think we all need a bit of a kick.

[ktmarvels]

Have you looked into prepaid cell phones? That way your hubby (and even you too) could have phones, but it wouldn't cost you as much.

Also to get high speed internet you probably only need a home phone line (DSL) or cable...not both. Look to see if DSL is cheaper, also make sure you are on the cheapest cable plan possible and cut out any extras from the phone.

Hope this helps!

[disneysteve]

Originally Posted by Cheapskate79

I feel like I could be saving more money than what we actually are, so I am trying to trim down the unneccessary things. I have listed all of our expenses, so we will have a surplus of $421.00 starting this month. I just wanted to get some advice as to whether or not I could be budgeting better.

Got it. First, I think you are doing great. $421/month is 15.5% of income currently going to savings. That's a terrific start. There are lots of people out there not saving anywhere near that much.

Could you be budgeting better? Sure. I think everyone could be budgeting better. There is almost always something that can be trimmed or cut. You really need to look at each and every bill and see what can be done. With food, maybe you can change to store brands on more items, clip more coupons, shop more sales, etc. Have you gotten new quotes for auto insurance lately? You are spending $180/month for cable and phones. You may be able to trim that. Do you have the most basic cable service? Around here, that runs $11/month. If you are paying much more than that, you can probably switch to a cheaper plan for tv but still keep your high speed internet service. Call and ask what the options are.

Good luck. Ultimately, even if you don't reduce spending much, that leaves you saving over 15% of income which I think it quite good.

[Aleta]

Is your car your only debt? Does anyone have to pay child support? There are alot of ways that you can cut down. I found one easy one is not to go to the store so often. I definitely am spending less money since I 've been doing that. Coupons from the newspapers. Take the kids to the library. They have videos there. You will have to just see what you have been paying and try to use less electricity. Turning off lights not used. Cooking two meals at the same time and maybe freezing one. Doing your own hair. For right now, you will notice what things are costing more than you did before, so you'll know. Just keep coming here and tune in to the boards and you'll be fine.

[disneysteve]

Originally Posted by Aleta

Take the kids to the library. They have videos there.

Slightly OT, but I must live in the only town in the country where the library charges to rent videos. I always see people recommending using the library for free videos and that just isn't an option for us.

[My English Castle]

Our library has both free and "for-rent" videos and DVDs. All the hot new stuff costs $1 for three days, but older films are free.

I applaud the decision to start an emergency fund. You might also try selling things on ebay or craigslist if you've got extra kids clothes or toys. That $500 cushion can make a big difference.

[jodi]

Some good suggestions above. Here's what we did with DH's cell phone, since he really only needed it for emergencies. I bought him a Trac phone for $15 at the Dollar General (it came with 30 minutes free). When the first free month was up, I bought a year's worth of minutes (400+, a year of service) for $120. For a total of $135, I have a year of service (actually, 13 months). I was spending $45 on his plan before and he used it all the time, since he knew he had the minutes. Since he's been on the Trac phone, he's used less than 10 minutes in 3 months since it now costs money to talk.
If you are spending $38 on DH's plan, switching to a Trac phone would cost $135 up front (3.5 months of his current cost), but then you would have the remainder of the year free from payments (providing he can stay within his minutes - if he can't, you will probably end up spending more in the long run).
If you were to switch both phones, your cost would be $20.76 (average, although up front costs would be higher) per month instead of $75.

[jodi]

I find Netflix to be a great source of cheap entertainment. I'm not suggesting you add it to the budget, but maybe it could serve as a temporary alternative to cable. You can get a plan for $10-20/month.

[jodi]

One more thought - I work in the social services field. Here in NY, the SSI asset limit is $2000. If you are going to start an EF, keep that in mind. If your assets go over that limit, you can lose those SSI benefits until the amount goes below $2000 again. I am constantly having to monitor my clients' funds to make sure they don't accumulate too much money. You can also lose it by earning too much money, as you are already aware of. How backwards is that?

[safari]

Talking prepaid about cell phone plans, I've been very happy with the T-Mobile To-Go plan. Two months ago I bought a $100 refill card at Target, which they had on sale for $88 and they also gave me a free cell phone (worth $50). The cell phone also came with a $10 credit. The $100 refill card gave me instant Gold Reward status, so I am paying only 10 cents a minute on all calls across US. So for a total of $88 dollars I got a free cell phone and 1,100 minutes that don't expire for a year. There are no other charges, like activation fee, roaming, etc. After having this plan for 2 months, I've only used 60 minutes ($6).

[Cheapskate79]

Originally Posted by jodi

One more thought - I work in the social services field. Here in NY, the SSI asset limit is $2000. If you are going to start an EF, keep that in mind. If your assets go over that limit, you can lose those SSI benefits until the amount goes below $2000 again. I am constantly having to monitor my clients' funds to make sure they don't accumulate too much money. You can also lose it by earning too much money, as you are already aware of. How backwards is that?

Thanks for the input about SSI. I know there is a limit to how much funds we can accumulate but I was not sure how much. If I call Social Security will I be able to find that out? I have to be careful with how much we make so we don't lose the SSI because as long as he recieves benefits he gets the Medicaid insurance that pays for all the medical bills. We cannot afford to lost that! It's almost like we are caught in a catch-22.

As far as my cable/phone/internet...I just switched my phone service because I was paying $45.00 for a basic phone line, with call waiting with my landline company and went with Vonage for $30.00 and we get everything! It's a must for my job to have unlimited long distance so that's not an option that I can get rid of. I called the cable company and spoke with them, I have the basic package that is running $49.99 a month. I asked them about going to the bare minimum that they have and she said its 5.99 a month but not compatible with high speed so I can't trim the cable down either as I have to have high speed for my job also.
I spoke to my husband about the cell phones, and Sprint said I could put one of the phones on vacation hold for up to 6 months and only pay a $6.97 a month service fee and put my husband's phone on a $29.99 plan and we could just share the phone. So we would lower our bill by about $25.00 a month, but then I would end up paying Sprint almost $42.00 just to keep the phone on vacation hold, which seems like a waste of money, so I have not figured out if that is something I should do.

[Cheapskate79]

I forgot to mention, yes the car is our only debt. We owe $7811.00 before it's finally paid off. As I said before, we both went thru a divorce so our credit is horrible. The last time I checked our credit scores were like 489 and 510. We spoke to a bankruptcy attorney last year who told us that it was not a good idea to pay off any of the negative things on our credit report because it would only be about 2 yrs. before it started coming off of our credit report. If we paid it, he said that the statue of limitiations could restart and they would stay on there for another 7 yrs. I also spoke with a mortgage broker who recommended the same thing so we have not paid any of the debt that is on our credit report. They just recommended getting something on our credit that is paid on time, the vehicle that we have financed is on there and it has been paid on time everytime each month. We are considering the idea at the first of the year, to get a secured credit card thru our bank, Bank of America and maybe putting $200 or $300 on it so we can get something else positive on our credit report.

[Aleta]

I also reccommend the TracFone as well. I also buy my contract for a year and I don't have to worry about reloading the card because I don't even use those minutes. It's really a great deal. If you don't buy the year's contract, you have to buy minutes every two months or you lose your phone number. I have to say the the tracfone was one of my best buys for me. It serves the purpose without a contract.