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Critique my Budget Plan / Debt Pay-off Schedule?

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    Critique my Budget Plan / Debt Pay-off Schedule?

    As 2018 nears, I'm starting to look over my budget and finance goals over the next 12-24 months. Any advice and critiques for the following would be much appreciated!

    My salary is $33K pre-tax, so about $2,000 every month.
    I have about $18,000 in student and car loans.
    $5,300 (student) at 4.29%
    $8,200 (student) at 5%
    $6,500 (car) at 5.64%

    I live with my parents for now, so rent is $200/mo. I keep my other expenses to about $1,200 every month:

    $500 for bills (Rent, Storage, Car Insurance, Phone, Gym, Spotify, and two other misc. bills).
    $100 for gas.
    $300 for groceries.
    $300 for miscellaneous (going out, trips, car maintenance, clothes, etc).
    I have about over $2,000 in savings.

    So I'm driving about $800 monthly into into my loans, until June - that's when I plan to move out. By then, I can decrease my debt by about $5,000, perhaps more if I can decrease my expenses a bit. I'll use my tax refund for the rent deposit, so not to take away my savings nest.

    At that point, I'm looking at probably an extra $600 in rent + utilities, perhaps more in gas for a longer commute. I'll be looking for a second part-time job at that point (I can't do that until June, for personal reasons). Hypothetically, I can cover the additional expenses with part-time work, ($12 x 80 hours = ~$700 post-tax) - so I can still drive ~ $800 into loans every month.

    Some factors could change - maybe I leave for a better-paying job. Or maybe the economy tanks and I'm fired. But otherwise, I'm looking at fully paying off my debt by the fall of 2019, or about two years from now.
    Anything else I should consider? One regret I have is buying this car over the summer, for $8,000. It's a Kia Soul and runs well so far, but perhaps I should plan to downsize over the next year for a cheaper commuter?

    #2
    I have about $18,000 in student and car loans.
    $5,300 (student) at 4.29%
    $8,200 (student) at 5%
    $6,500 (car) at 5.64%
    That's $20,000 not $18,000. (It might seem like I'm nitpicking, but getting too general with number can skew your plans.)
    1. Do any of them have prepayment (like the student loans) penalties?
    2. How much extra are you paying against the loans?


    Any advice and critiques for the following would be much appreciated!
    These are my suggestions:
    1. Drop the gym payment, if you're not on a contract.
    2. Sell most of the stuff in storage, so as to either cancel it, or move to a smaller/cheaper unit.
    3. See if you can find lower cost car insurance.
    4. Ditto the cell phone.
    5. Trim that food bill. (You should easily be able to knock it down $50, and maybe more.)
    6. Do you know where all your money goes?


    Put all expense reductions (even if only $10 or $20) against debt.

    $300 for miscellaneous (going out, trips, car maintenance, clothes, etc).
    Everything except car maintenance must be squeezed into $100/month. That should leave you with an extra $100/month for debt service.

    Hypothetically, I can cover the additional expenses with part-time work, ($12 x 80 hours = ~$700 post-tax)
    80 hours bi-weekly is full-time.

    One regret I have is buying this car over the summer, for $8,000. It's a Kia Soul and runs well so far, but perhaps I should plan to downsize over the next year for a cheaper commuter?
    I'm not part of the "everyone with debt must drive a beater" school of personal finance.

    I'm driving about $800 monthly into into my loans


    until June - that's when I plan to move out. By then, I can decrease my debt by about $5,000
    That's December thru May: 6 months at $800/month = $4,800. Less interest and that's a $4,700 reduction in the balances.

    Any reasonable possibility of staying at your parents house for a while longer, while getting a PT job, and putting all the proceeds towards debt?

    Comment


      #3
      i'm with Nutria on most of what they said. I can see why you might want your own place, but if it is feasible to stay with your parents for longer, it would help so much to get that debt down, and $20K is a lot to be paying off. You only have one month's worth of emergency savings. Not knowing where you are living, I think your grocery budget and miscellaneous amounts seem high for a single person just starting out. My son who is living on about what you do, has only a car payment at this point, lives in his own place, etc. But finances are always tight for him and so he has several ways of making extra plus he is signed up some temp agencies. He just moved to a new place within walking distance of his full time job so saving a lot in gas. He had to give up the PT job he had since it was within walking distance at his old place and it didn't pay enough to drive to it. Just trying to say, it is always easier to make the budget on paper, but much harder to make it work. You move into an apartment, do you have furniture, kitchen stuff right down to some measuring spoons? Perhaps that is in your storage place, but there can be all sorts of extra little expenses. He needed a new shower curtain, which I provided for him. Other things as well. Now a shower curtain isn't expensive as such, but you get a bunch of those expenses adding up, it makes that first and second months if not more in a new apartment much more than you may have expected. Some utilities make you pay a deposit when getting utilities with them for the first time. Lots of things to look into and save up for.

      Sorry for so much history, by my son has been doing some of the things you are in for only we live in a fairly low cost of living place (his rent at his last apartment was $350). Your proposed budget grocery money and spending money seem to be a bit excessive.

      But more than anything, you need to take some time to figure out what you want in life and how you want to get there. You are in a perfect point in life to really start setting some long term goals and deciding where you want your money to be going, including saving for retirement when you are still young. I didn't notice anything about retirement in your first post.
      Gailete
      http://www.MoonwishesSewingandCrafts.com

      Comment


        #4
        1. Do any of them have prepayment (like the student loans) penalties?
        2. How much extra are you paying against the loans?
        No prepayment penalties. The smaller student loan payment is due starting this month, and the first payment against the other student loan is due in April. But I'm paying off the car loan first, since it has the highest interest rate.

        These are my suggestions:
        1. Drop the gym payment, if you're not on a contract.
        2. Sell most of the stuff in storage, so as to either cancel it, or move to a smaller/cheaper unit.
        3. See if you can find lower cost car insurance.
        4. Ditto the cell phone.
        5. Trim that food bill. (You should easily be able to knock it down $50, and maybe more.)
        6. Do you know where all your money goes?


        Put all expense reductions (even if only $10 or $20) against debt.
        I definitely need and can decrease my expenses. Most of these ideas are doable, I'll just need to do some research better options. I use an Excel spreadsheet to track my transactions, so I'm aware of which categories every penny is going towards on a monthly basis.

        80 hours bi-weekly is full-time.
        I meant 80 hours monthly, so 20 hours/week. This is strictly hypothetical - I could earn more or less, just depending on which job I end up taking (likely tutoring, for the flexible hours).

        I'm not part of the "everyone with debt must drive a beater" school of personal finance.
        Nice. Having a solid, reliable vehicle brings a lot of relief, knowing it won't break down on the side of the road.

        Any reasonable possibility of staying at your parents house for a while longer, while getting a PT job, and putting all the proceeds towards debt?
        No. My parents are a financial and emotional trainwreck to live with. I'm waiting for sister to graduate, and then we're getting out.

        Comment


          #5
          Originally posted by Gailete View Post
          if it is feasible to stay with your parents for longer, it would help so much to get that debt down, and $20K is a lot to be paying off.
          I know...As I answered nutria, for personal reasons, it's really time to move out of my parent's place. Otherwise, I would love to continue paying off so much.
          You only have one month's worth of emergency savings.
          Should I save more?? When I first graduated, I had about $5,000 in savings, but put a lot towards my debt. The plan is to use my tax refund as extra savings before I move out.

          Not knowing where you are living, I think your grocery budget and miscellaneous amounts seem high for a single person just starting out.
          Agreed. I can decrease both of those.

          My son
          Sorry to hear your son is struggling a bit! I'm glad he has you to help out and share some budgeting guidance hopefully.

          $350 is fantastic for rent! That's what I paid for rent at college. I live in Atlanta, sooo...definitely won't be getting that deal! But we may find for more roommates or a good deal, so who knows.

          The storage unit actually contains a bunch of new furniture, gifted by dad for graduation. He thought I was getting my own place right away. So I will be all set with that arrangement.

          I didn't notice anything about retirement in your first post.
          I do have some retirement goals, I would absolutely love to start investing and contributing to a retirement plan now It's difficult to set them when so much debt hangs over my head for the next 2 years, and from there I don't know how much I'll be earning. My agency is actually just gearing up a 401(K) program, but I probably shouldn't contribute when I still have loans to pay off.

          Thank you for the advice!

          Comment


            #6
            Originally posted by Nutria View Post
            1. Do any of them have prepayment (like the student loans) penalties?
            2. How much extra are you paying against the loans?
            Definitely no penalties. The first payment is due for the smaller student loan starting this month. The other one will be due April. I'm putting the bulk of my money towards the car loan, since the interest rate is the highest.

            1. Drop the gym payment, if you're not on a contract.
            2. Sell most of the stuff in storage, so as to either cancel it, or move to a smaller/cheaper unit.
            3. See if you can find lower cost car insurance.
            4. Ditto the cell phone.
            5. Trim that food bill. (You should easily be able to knock it down $50, and maybe more.)
            6. Do you know where all your money goes?

            Put all expense reductions (even if only $10 or $20) against debt.
            Really excellent advice here, thank you! There's room here to decrease my expenditures and move more money to debt. Some categories will just require more discipline, the others more research on my part for better options.

            And yes, I keep an Excel spreadsheet of all my expenses and income, tracked to various categories weekly. If anyone is in the same scenario - do this! It's free, I know where every last penny is going, and I catch any discrepancies quickly as well.
            80 hours bi-weekly is full-time.
            I meant 80 hours per month. I think that's plenty doable, especially if I pick something like tutoring, giving me flexible hours and above-minimum earnings.

            I'm not part of the "everyone with debt must drive a beater" school of personal finance.
            Having a solid, reliable vehicle has certainly added a lot of reassurance and stability to my life.

            Any reasonable possibility of staying at your parents house for a while longer, while getting a PT job, and putting all the proceeds towards debt?
            I really don't want to. It's not a healthy environment. However, I realize sacrifices are need to achieve goals.

            Comment


              #7
              Most feel that emergency savings should be at least 3 months worth of money tucked away for emergncies, like losing your job or being off work due to a broken leg, etc. It would help if you could have a roommate when you get an apartment that pays half the expenses. That will give you some leeway.

              If you are planning on using a tax refund to help fund paying off debt, it sounds as if you are having too much being taken out of your paychecks. You may want to recalculate what is being withheld. Some people look at paying extra in taxes monthly as a forced savings vehicle, however, you get no interest at all. If you want extra being taken out of your paycheck for savings, open a 401K if possible at your job and have the difference between what you will owe on taxes and the overpayment, transferred into your 401K each payday. You will never notice the difference because you have been getting along without it anyhow. Never use Uncle Sam and the IRS to act as your savings vehicle, they don't have your best interests in you. decide yourself where you want your extra savings to go. By the way, depositing that money into your 401K makes it non taxable money so you are saving even more on your taxes. Even if this is all you can put into your 401K each year, plus the company match, I would love to know in 30-40 years how much money you have just in that one account towards your retirement and thank of me (long dead I'm sure).

              Along with any money you can put in a 401K plan from not giving it to taxes, at least pay enough into the 401K to tap any match that your company will deposit on your behalf. If they give 50 cents for each dollar you contribute, that is 50% interest. You can't pass that up! You won't find 50% interest anywhere at this point. As you get your bills paid off, then add more to your 401K or other savings plan.

              Hope things work out well for you.
              Gailete
              http://www.MoonwishesSewingandCrafts.com

              Comment

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