Where the heck is our money going?

[hausfrau]

We paid off a chunk of debt last year (7k) that was on a car and now we have about 2k in credit card debt and 4.5k in a car loan.
We have NOTHING in savings and my goal is to get a 1k emergency fund a.s.a.p so we can cut up our credit cards.
But looking at the numbers I just don't understand why money is so tight every month. We are pretty frugal people!

After tax income $3400 (I don't work, I am a stay at home mom)
Fixed Expenses: $1500 (Mortgage, real estate taxes, insurance, cell phone, etc.. everything)

Then after that it's just gas, groceries, misc expenses, etc. But I think we must be spending too much because some weeks we have $0 in checking at the end of the week! Yet, HONEST, we don't spend a lot of money on ourselves. I need to plug everything into MINT and see where the money is going!

However, all of our credit card minimums is about $130 combined. Car payment is $185.
So non-mortgage debt payments = 315

So once our car and CC is paid off, that will bring our fixed expenses to: $1185


I just need to setup a strict plan but my head is spinning! Just not sure how much money to alot for groceries/gas, misc spending.
I seem to do better when I come up with a fixed amount to go into savings, and then just "cash flow" everything else.

Given our income details. How much money do you think we should be putting toward debt and savings right now?

[bjl584]

Something isn't adding up. From the numbers you gave there should be around $1900 a month extra after you pay your bills.

As you said, you will have to set up a budget and write down all of your expenses to see exactly where the money is going. I'm sure that there are plenty of places that you can make cuts. Eat out less (or never), plan your trips to use less gas, use coupons when you shop, etc.

If extra money ends up in your pocket and just gets spent without thinking, then it may be a good idea to allocate X amount of spending money per week to both you and your husband. When it's gone, it's gone. No more spending till the next week.

[BuckyBadger]

Originally Posted by bjl584

Something isn't adding up. From the numbers you gave there should be around $1900 a month extra after you pay your bills.

As you said, you will have to set up a budget and write down all of your expenses to see exactly where the money is going. I'm sure that there are plenty of places that you can make cuts. Eat out less (or never), plan your trips to use less gas, use coupons when you shop, etc.

If extra money ends up in your pocket and just gets spent without thinking, then it may be a good idea to allocate X amount of spending money per week to both you and your husband. When it's gone, it's gone. No more spending till the next week.

Yes to all of this. I'm new to this, but I'm realizing how important all of these suggestions are. Figure out how much you SHOULD be spending, then automatically remove the excess from your account right away and put it in your EF. Then, when the rest of your money is gone, it's gone and you're done spending. Your budget should balance to zero and you should pay yourself first.

Mint is a spectacular program. Get started with it ASAP! It'll really open your eyes.

[happygirl]

If you don't know where all your money is going, I'd suggest that every time you spend any money, no matter how little, you write down how much you spent and what you spent it on. Then you can establish categories for your spending. This will make it easier to see where you need to cut spending.

[disneysteve]

Originally Posted by hausfrau

After tax income $3400 (I don't work, I am a stay at home mom)
Fixed Expenses: $1500 (Mortgage, real estate taxes, insurance, cell phone, etc.. everything)

Then after that it's just gas, groceries, misc expenses, etc.

Here is your problem. You know what your fixed expenses are. That's the easy part. But you don't know what your variable/discretionary spending is. That's what you need to nail down.

You need to list (and post if you choose) your entire budget, item by item, both fixed and variable. How much did you spend on cell phone last month? How much on food? How much on clothing? How much on gas?

You are bleeding money and don't even know it - well now you do know it and just have to stop the bleeding. Record all of your spending for the next 30 days. Then sit down with your spouse and go over that spending log item by item and you'll see where you are going off track. That will allow you to set reasonable budget limits for each category.

[littleroc02us]

Your problem is that your not writing up a monthly budget. If you don't know where your money is going that is problem #1. Instead of spending and then writing it down, you need to approximate how much you will spend in each category and then stick to it. You may have to do some small adjustments, but you need to spend each dollar on everything from savings, to expenses. Also, you need a 1k EF fund before you tackle your debt.

[hausfrau]

Ok thanks for the input guys. I am going to plug everything into MINT and I'll see where everything went in February. I'll come back with the results.

[Demeron]

I read All Your Worth by Elizabeth Warren a few years ago and liked the simplicity of it, but kicked at the idea of using cash. Well, I blew through way too much money last fall/winter and saw the light. For a few weeks we've been using cash for groceries and discretionary spending. There's something about the visual aide of seeing the 20s dwindle that has been very helpful for us. When I'm at Costco I spend $100, not $200, because I know I have x amount of cash to last me for the week.

[b4freedom]

It's amazing how fast little purchases that you think you can "afford" add up into something you can't afford. The hardest part of budgeting is what disneysteve says above.

I'd also suggest that you start checking out coupon clipping sites. I stockpile things that I KNOW I will use when I can get them 70%, 80%, 90% off or even free. This frees up money for more important things. For example, I need to shave. I get the newest fanciest razors on the market. Yet, I haven't paid for a razor in years because I combine coupons, sales, and create stockpiles. Let's assume I save $10 a month on 1 item. That frees up $120/year. Now do that for 10 items and you've got $100/month ($1200/year) free to be used for better purposes. Use that to pay off debt and you're now freeing up money that you would otherwise be using to pay interest to the banks.

[disneysteve]

Originally Posted by b4freedom

It's amazing how fast little purchases that you think you can "afford" add up into something you can't afford.

What a great quote! I love that.

[b4freedom]

Originally Posted by disneysteve

What a great quote! I love that.

Thanks. I'm going to make that my new signature.

[LivingAlmostLarge]

But don't stockpile too much. I usually try to do 6 months or 1 year of stuff. I buy toilet papers and paper towels and razors, bodywash, etc. But buying stuff even if free and you have like 3 years worth is a lot of storage space.

[hausfrau]

Originally Posted by b4freedom

Thanks. I'm going to make that my new signature.

I think you hit the nail on the head. We just made too many purchases last month.. on little things.
Starting from now on I am going to have hubby deposit his check and take out a certain amount of cash for the week. No more using debit cards and once the cash is gone, the cash is gone. I think this will help us with budgeting.

I need to cut down driving as well. I am a stay at home mom and I tend to get stir crazy and make random trips to the store.. almost everyday! I may not buy anything but the gas is getting way to expensive to do that.

I am quite optimistic. I've set up some goals. By the end of March we will have our $1000 EF fund. And April's goal is to put $1,000 and knock out two credit cards. That will save us $70/month in minimum payments we can snowball for next month ;-)

Then May we can knock out most of the rest of the CC debt and start hitting the car loan!

Woohoo. I am pretty excited!

[ma45frost]

I agree with Brian especially on the spending part. I do mine a little bit different. I would track my expenses for food and misc for 2 months. Once you have an idea how much to spend for food, allocate a portion of your salary for it (eg. $700 a month). Let's say my pay after tax is $2000. $1000 goes to mortgage, bills and utilities. $700 will be allocated for food and the rest ($300) is for saving. Bottom line is, you really have to be strict on your budget if you don't have extra to spend.

-MFrost