trimming the fat - our budget

[KTP]

I finally got down to writing out our budget. We have trimmed the fat quite a bit (recently got rid of phone and cut cable plan by $90 for one thing) but there are still plenty of little areas to work on. I think we are doing pretty well saving about 50% of gross, but as has been pointed out on other threads, it is easier to do for middle incomes than lower incomes. I don't see a lot of areas where we could trim a large amount but am open to suggestions. I know charity is a little low (hangs head in shame) but it does get matched by company.

Monthly Budget

Deposit: $10,900
Mortgage: -$1500
Extra Principal: -$600.00
Car Insur.: -$100
Motorcycle Insur.: -$30
Water: -$75
Electricity: -$200
Propane: -$25
Cable/Internt: -$80
Commute Gas: -$300
Car Maint.: -$100
Home Maint.: -$200
Netflix: -$30
Gifts: -$100
Charity: -$100
Basic Food: -$600
Weekend Gas: -$200
_________________________________
Residual: $6660
Pay yourself first: $6000
Excess to Spend: $660

Yearly into investments:
401K $20000
IRAs $10000
Taxable Saving $62000
Mortgage Principal Extra $7200
__________________________________
Total Yearly Saving: $99,200
% of Gross = 50.6%

[disneysteve]

If you are saving 50% of your gross annual income, I'm not sure I see any reason to try and tweak your budget. You are clearly living very far below your means. I'm jealous.

That said, the one thing that jumped out at me was $30 for Netflix. Their plans range from $4.99 to $27.99. I'm guessing you have the latter and are just rounding off. Do you really need 4 discs out at a time? You could cut back to 3 or 2 discs and save $10-15/month. Of course, that's nothing in the grand scheme of things given your overall numbers but since you asked....

[KTP]

Originally Posted by disneysteve

That said, the one thing that jumped out at me was $30 for Netflix. Their plans range from $4.99 to $27.99. I'm guessing you have the latter and are just rounding off. Do you really need 4 discs out at a time? You could cut back to 3 or 2 discs and save $10-15/month. Of course, that's nothing in the grand scheme of things given your overall numbers but since you asked....

No no, the Netflix number is really $10 (we get 1 disc at a time). For my mom's birthday we got her a 2 disc at a time subscription and pay it for her each month. Thus the total for the 2 is $30. I guess I should have put that under gifts instead. Oh well, nobody is perfect.

I feel like others on here make do with a lot less though and I admire them more. Our gasoline useage for example is excessive. Can't do much about the commute, but we could cut down weekend trips and bike more. Something to think about.

[disneysteve]

Originally Posted by KTP

I feel like others on here make do with a lot less though and I admire them more.

There is nothing wrong with being successful and there is nothing wrong with enjoying the fruits of that success within reason and with responsibility. I'd say saving half of what you earn would certainly fit that description.

You can drive yourself crazy and make everyone around you miserable trying to cut every expense to the bone when there is no need to do so.

Keep doing what you're doing. Enjoy what you have while you are building wealth by living far below your means.

[dczech09]

I agree with DS. It is okay to spend a little on yourself as you are already saving more than 50% of your income. Be sure to build your nest egg, but don't be afraid to have a couple omelets along the way.

I think you have done well cutting your expenses, so keep up the good work!

[Robert742]

I like to think of my budget as a spending plan -- it helps me focus on spending for things which are important to me -- whether it is best for me to purchase a product or service, or save the money instead. This helps me strike the appropriate balance of saving and spending for me, and keeps me from wasting money.

Watching movies is one of my favorite things to do, and Netflix gives me a good bang for my buck.

I dropped most of my cable service, and upgraded to the 5 movies at a time plan. I can watch a movie at the end of the day, and if I get a bad disc or a shipping delay, the 5 at a time plan has me covered.

But I'm not sure I want to pay $35 bucks a month for it, since Netflix raised their price. I called Netflix to negotiate a lower price, which you used to be able to do, but could not get a better price.

I think I'm going back to the 3 at a time program to save $15 bucks a month. There are several Redbox locations near me, in case I don't get a dvd in the mail, or I get a damaged disc, and I really want to watch a movie.

$15 a month is not much in the scheme of things. But why waste any money, when spending it creates little extra value?

I think Andrew Carnegie said something like, "If you watch the pennies, the dollars take care of themselves." I like that type of thinking.

50% gross of your income is a GREAT savings rate, and I congratulate you on your money management skills. Many Americans could learn a lot from your example.

But taken to the extreme, you could sell your home, live in a cardboard box, eat Top Ramen every night, and have a 90% savings rate, but who would want to live like that?

Plus, our economy is driven, to a large extent, by consumer spending. My stocks are not going to go up if everybody stops spending.

Finding the right balance of spending and saving for you is the key, as long as you live below your means.

[disneysteve]

Originally Posted by Robert742

I dropped most of my cable service, and upgraded to the 5 movies at a time plan. I can watch a movie at the end of the day, and if I get a bad disc or a shipping delay, the 5 at a time plan has me covered.

I think I'm going back to the 3 at a time program to save $15 bucks a month. There are several Redbox locations near me, in case I don't get a dvd in the mail, or I get a damaged disc, and I really want to watch a movie.

Don't forget you can stream movies and tv show episodes with Netflix so if you don't have a disc you want to watch, you can always find something in the instant library. It is mostly older stuff but bound to be things there you haven't seen, or have seen in the past but wouldn't mind watching again.

But taken to the extreme, you could sell your home, live in a cardboard box, eat Top Ramen every night, and have a 90% savings rate, but who would want to live like that?

Exactly. You make a spending plan that works for you and your family, one where you are saving adequately for the future but still enjoying your lifestyle today.

Plus, our economy is driven, to a large extent, by consumer spending. My stocks are not going to go up if everybody stops spending.

Sorry but I'm not going to spend money just because it is good for the economy.

[KTP]

Originally Posted by Robert742

But taken to the extreme, you could sell your home, live in a cardboard box, eat Top Ramen every night, and have a 90% savings rate, but who would want to live like that?

Actually the government prevents us from having a 90% savings rate as we paid $36,000 in federal taxes, $6600 in SS, and $2900 in Medicare. So even before we get our greedy little hands on our money, our good Uncle has taken his 23% of our gross pay.

If we lived in a van near work, took showers in the bathroom at the local library, and made great use of the free samples at Costco, we still could probably only save 75% of gross max. The wife would kill me (although I think for awhile it would be a fun challenge until we started to smell).

Our early retirement plans actually are not too far from this scenario, at least for 3 or 4 years. Boondocking around the country with a lot of camping and hiking thrown in...might only need 2 to 3% SWR for those years which should help the bottom line when we tire of that life.

[MonkeyMama]

Actually, I think it is a fine idea to trim the fat. Big incomes don't last forever, and I recall your goal is to retire as soon as possible.

That said, I think you are doing fine. Once your mortgage is paid off, you are looking at a lifestyle of about $3000 per month (well, less). I think when you have no debts, and ample savings, you can live pretty well on that. For reference, is about what my parents live on, though my dad has been putting 1/3 of his income to retirement/savings and 1/3 to taxes in recent years. Leaves about $3k/month to live on, and social security will cover that once they hit 65. They live fine. Frugal, but they don't want for anything. IT amazes me how much more disposable income they have compared to us (mortgage paid, have better benefits, and no kids to support). Exactly where you will be, eventually!

I think you have a good balance of some fun money, and so I wouldn't upset that balance.

[disneysteve]

Originally Posted by KTP

took showers in the bathroom at the local library

Why does your library have showers?

[My English Castle]

Too funny. DH and I were just saying how Netflix has changed our lives. No more rental movies, no return hassles; it's cheap and easy and fabulous.
I'm trying to imagine taking a shower at the library.

[KTP]

Originally Posted by disneysteve

Why does your library have showers?

Mmm, I meant more of a sponge bath in the sink at the library

[Robert742]

Originally Posted by KTP

Actually the government prevents us from having a 90% savings rate as we paid $36,000 in federal taxes, $6600 in SS, and $2900 in Medicare. So even before we get our greedy little hands on our money, our good Uncle has taken his 23% of our gross pay.

If we lived in a van near work, took showers in the bathroom at the local library, and made great use of the free samples at Costco, we still could probably only save 75% of gross max. The wife would kill me (although I think for awhile it would be a fun challenge until we started to smell).

Our early retirement plans actually are not too far from this scenario, at least for 3 or 4 years. Boondocking around the country with a lot of camping and hiking thrown in...might only need 2 to 3% SWR for those years which should help the bottom line when we tire of that life.

Good point about taxes! What type of fantasy world do I live in where I am allowed to keep 90% of my income, either to spend or to save? Certainly not the good old USA.

When you consider you spend only 27% of your gross pay, your achievement looks even more impressive.

DS, thanks for reminding me about streaming video. I imagine in 10 years, that is how we will all be renting movies. Right now, Netflix streaming video does not work with my Linux operating system.

I have thought about getting an xbox or playstation to stream Netflix movies, but if I start gaming, I will never get any work done!

[disneysteve]

Originally Posted by Robert742

DS, thanks for reminding me about streaming video. I imagine in 10 years, that is how we will all be renting movies. Right now, Netflix streaming video does not work with my Linux operating system.

I have thought about getting an xbox or playstation to stream Netflix movies, but if I start gaming, I will never get any work done!

It won't take anywhere near 10 years until steaming is the standard. It is rapidly moving that way. I'd give it 3-5.

If you want to avoid gaming distractions, get a Roku or Apple TV. For $99 you can access all kinds of content including Netflix on your TV.

[thekid]

Originally Posted by KTP

Yearly into investments:
401K $20000
IRAs $10000
Taxable Saving $62000
Mortgage Principal Extra $7200
__________________________________
Total Yearly Saving: $99,200
% of Gross = 50.6%

That is amazing!

Congrats.

[steveaz67]

You seem to be pretty lean. You do have to enjoy life as well.

[KTP]

Originally Posted by steveaz67

You seem to be pretty lean. You do have to enjoy life as well.

There are a lot of people living on less than we spend so I am not going to complain about our semi frugal lifestyle. We also have a lot of accumulated stuff like paid for car, truck, sailboat, motorcycles, camping gear, bikes, etc. etc. from past years when we lived excessively which make the transition into a simpler, cheaper lifestyle much easier to bear. I really really have to get on the ball and sell some things soon actually...sometimes I feel like we are drowning in junk.

[MonkeyMama]

Originally Posted by steveaz67

You seem to be pretty lean. You do have to enjoy life as well.

It's all relative. Somehow I don't get the feeling that KTP is not enjoying life. Likewise, when you save that kind of money, it's not set in stone. He can change his mind tomorrow if he so chooses, and he can go a little hog wild. I just don't see anything bad about his current situation.

[BuckyBadger]

Originally Posted by KTP

Yearly into investments:
401K $20000
IRAs $10000
Taxable Saving $62000
Mortgage Principal Extra $7200
__________________________________
Total Yearly Saving: $99,200
% of Gross = 50.6%

Question:

Since your 401k total is over $16500 per year I'm assuming that two spouses are contributing. If you also have $62k a year going into taxable involvements, why aren't you maxing out both 401k accounts? I would max out tax advantaged accounts before putting more into taxable accounts...

But yes, of course you're doing well!

[couchrobt]

You seem to be doing just fine. You are able to cover all expenses and yet still save. Ain't that just the main purpose of working our ass off? To pay all expenses and yet save. All good.