Living paycheck to paycheck

[DumbSheila]

My husband and I (28 and 29 years old, live in Florida) recently got "big people" jobs after being out of college for a few years. This is the first time we are both bringing in credible and set paychecks since we've been living together (2 years now) at the same time. We earn a combined $4300 a month and get paid once a week thanks to opposite pay schedules. So it breaks down like this: one week, $1192. Next week: $897 and so on. This is take-home pay. Direct deposit goes to our joint checking, and then we have $200 each small check (mine) go into a joint savings at a bank we don't touch (included in the $897). Therefore I bring home $697 per paycheck while he brings in $1192. We have $900 in savings. Our bills are $2300 a month, and we have everything as cheap as possible (netflix streaming instead of cable, cheapest internet, cheapest car insurance, decent rent for a nice house, coupons, generic brands, thrift store shopping for clothes. all the little details people tell me can save money. We do it all). I am extremely thrifty (to the point of cheapskate) yet I'm not rigid to the point where we don't get to have a life. I handle the finances but husband has access to all of it. We communicate daily about finances. We have no kids but have a dog in good health. 2 cars (our truck costs too much in gas...looking to trade for something with better MPG in the next few months).

Here's our March financial breakdown on our roughly $4300 income:
Bills: $2300
Personal allowance ($40 cash each week to both of us to spend individually as we see fit): $320
Date budget (used only to go out together): $130
Groceries (no budget set yet but this amount is for last month): $267.
Gas: $299 (see above about the truck's gas costs...he drives to and from work only. Any other time we take my car, which has far better MPG).
Birthday gift for father: $150
Misc purchases (haircuts, dog, oil change, layaway plan for new TV--our gift to ourselves for the new jobs): $400.

The math is screwy b/c I'm doing this strictly from memory so please don't hold me accountable for exact numbers just yet.

The problem is that we are still living paycheck to paycheck and I just plain don't understand why. By that I mean that by Thursday, we are so strapped for money in the joint checking that we will be running on fumes in our cars (we each fill up once every other week on average) and are close to eating Ramen. We aren't extravagant at all. My most expensive piece of clothing is $15.00 from Target. We have no trouble thrift-store shopping or sacrificing "new" things (with the exception of the TV) in order to allow ourselves a decent social life (by that I mean, he plays Magic cards once a week and maybe drinks once a week with friends, and I will do dinner once every other week with friends. We go out to eat maybe once every other week. But our cash allowance, which is already deducted from our weekly paychecks, allows us the freedom to do what we want with our own money, in a way. We both like that set up since our finances are otherwise mutual. I'm more of a homebody and a non drinker and he hangs out at a comic shop in his spare time and that's for the most part free). We do like our gadgets and both have Iphones but no house phone.

Our bills are spread out throughout the month and that is so stressful to me but I don't know any other way to do it b/c of their due dates. Breaks down like this:
Rent on the 1st $620
Credit card on the 6th $40
Car, Netflix, Hulu, internet due on the 9th $467
Credit card on the 11th $35
Student loan on the 15th $150 (<--lowering that this month. Amt was part of a forbearance contract)
Truck, cell, car insurance on the 17th $730
Student loan on the 21st $25
Electricity and water near the 23rd about $130
Credit card on the 28th $35

So in the middle of the month and the first week of the month is the most stressful. And if my smaller paychecks fall on those, we struggle even more.

Why are we having such a hard time? I cant fathom it. I'm an extreme control freak when it comes to crunching numbers and keep way-too-detailed records but I don't mind doing it. I'm new to the actual predictable paycheck b/c I've waited tables for years and had no set income. This is all new to me. We are at a loss. We don't know why we constantly feel so broke.

Help us! Sorry it's so long. I just relaly need help figuring this out and need solutions. Thank you!

[disneysteve]

Welcome to the site.

I know you said not to hold you to the actual numbers but just going off of what you posted, you listed $3,866 in expenses for the month against income of $4,300. Based on that, you should have an extra $434. If you don't, you need to figure out why. Where did that money go? That's 10% of your income.

There are a number of things that would help us help you. List all of your debts with the outstanding balance, interest rate and minimum monthly payment. Break down the bills item by item rather than lumping them together (like "Car, Netflix, Hulu, internet" or "Truck, cell, car insurance").

we have everything as cheap as possible

This statement simply isn't true. You have Netflix, Hulu, iPhones and various other luxuries listed in your post. I'm sure there are a number of places where you could trim expenses, though I'm not really sure that you need to. That depends on the answer to my first question: where did the $434 go?

[jpg7n16]

Bills: $2300
Personal allowance ($40 cash each week to both of us to spend individually as we see fit): $320
Date budget (used only to go out together): $130
Groceries (no budget set yet but this amount is for last month): $267.
Gas: $299 (see above about the truck's gas costs...he drives to and from work only. Any other time we take my car, which has far better MPG).
Birthday gift for father: $150
Misc purchases (haircuts, dog, oil change, layaway plan for new TV--our gift to ourselves for the new jobs): $400.

The math is screwy b/c I'm doing this strictly from memory so please don't hold me accountable for exact numbers just yet.

The problem is that we are still living paycheck to paycheck and I just plain don't understand why. By that I mean that by Thursday, we are so strapped for money in the joint checking that we will be running on fumes in our cars (we each fill up once every other week on average) and are close to eating Ramen. We aren't extravagant at all. .

Car, Netflix, Hulu, internet due on the 9th $467
Truck, cell, car insurance on the 17th $730

I wanted to highlight a few things from your budget, because you have odd categories lumped together which makes it harder to spot where your real issues lie. But Netflix is like $8 and Hulu the same, so I'm betting your car runs around $400/month. And I'd be willing to bet the truck payment is even higher.

You also say you aren't extravagant but you have $320 in personal allowances, $130 for dates, $150/month to gifts, and $400 to random miscellaneous items. And as DS pointed out, there is still a large unknown figure we can't account for. That doesn't scream frugal to me.

Now you said you keep way too detailed records, so when youget a chance, to make it easiest for us help you, and so you can see for yourself, please post monthly totals, and don't lump categories together as you did above. Also, please include the info DS requested about your debts.

[DumbSheila]

Sorry I was trying to group things together to keep it shorter!

Breakdown
Rent 620
Credit card 40
Netflix 8
Hulu 9
Internet 54
Car 400
Credit card 35
Student loan 150
Cell 200
Truck 360
Student loan 25
Electric 100
Water 35
Insurance 169
Credit card 50

That's everything to the dime. One student loan will be lowered to about 50 soon and the other one raised to 50 (separate loans from college, one for each of us). Two credit cards we owe $246 on one and 147 on another. The other two: one has 1300 on it (husbands from before marriage) and the other one is a auto repair one with 1000 on it. When we married and combined everything, we went to strictly no charging (I didn't on the first place--they were all his) so we are paying them down.

The $150 gift: so not something we wanted to do. That was a result of family joining in to buy one gift for someone and that was our share. We thought we could swing it. That will def not be a common occurrence. The misc spending was a tv we put on layaway and we paid it off. Also won't be a common occurrence.

But even still, in doing the math, we Will be stretching the paychecks this month bc of the order they're coming in and what bills are due then. So I'm worried about how to continue to save and have a social life and pay bills and still have a cushion. It's overwhelming to think "we could have it all" even though realistically we obviously can't.


I just want to be able to get a haircut more than once a year and buy windsheild wipers when I need to (current problem). I'm just not sure how to get there. We don't want much--no weekend getaways or crazy trips. Not interested in buying a house for another few years (our rent is super cheap for where we live and we love it here). We just want to figure out how to get groceries the same week we fill up a gas tank.

[DumbSheila]

Btw the cash allowance is significantly lower than what it used to be since I was making tips every day waiting tables. We blew through that faster but never felt it bc it was daily rather than weekly income

Here's what we are looking at for April.

2300 in bills. $4200 in income.

$1900 left. 320 in cash allowance. Roughly $250 in groceries. 225 roughly in gas (we have found ways to save on each). That's about $1100 left. $300 to savings. Down to $800. Our first anniversary is Monday and we want to have a nice anniversary somewhere. So roughly $100 ( coming out of our monthly date budget).

We should still have money left. Plenty of it. But if you break it down by paycheck, that's where it starts to look scary. Like my one $700 check has to pay $730 in bills. We will def have some left from his paycheck but if we stock up on groceries (which keeps us from eating out), then how much will we have? If we both fill our tanks (roughly $110 combined) to last us two weeks (about average for us), and we get groceries, we won have as much as we'd like to go toward the bills due at my paycheck. And therefore the smaller paycheck will be stretched more.

I hope I'm making sense. I'm tired and stressed and typing from my phone. Sorry for the jumbled thoughts and typos.

[jpg7n16]

Thank you for taking the time to type that out. It really helps

As far as I can tell from your budget, there are very few things too far out of line.

$200 for cell phone seems high.
$760 total car payments is high.

And I don't know why you're buying Ramen if you have $1100/month left over ($800 excess plus $300 savings) and a personal allowance of $320. I think you should shift some money into the food category if you're not happy with it.

You said its scary when you break it down by paycheck - well... don't do that Base your budget on the whole month. You've got a good cushion each month. If you need to put it on a CC temporarily, do so, and pay the card off at the end of each month.

It seems like you just need to give it time. In just a few months, your picture will look much different.

What are the interest rates and balances on the cars?

[kv968]

I understand where you're coming from because I've had it seem at times as if I'm living paycheck to paycheck when certain bills come due in certain weeks. However, it's not an income problem but one of cash flow and you just have to look at it monthly instead of weekly as jpg suggested.

What you have do is "get ahead" of the bills. In that I mean save enough so that you have enough on those weeks you're short. It may take a few months but it can be done.

For example, you said in April your bills are $2300. With all your monthly deductions after the bills are paid (including saving for your anniversary) you still have $700 left over. If you were to put that $700 away, in a little over 3 months you'd have your total monthly expenses of $2300 saved up and wouldn't have a cash flow problem.

I understand you don't have it at the beginning and middle of the month, but you have to have excess in the other weeks and that's where you pull the money from. Just recognize it when it's there and put it away and designate it for upcoming bills.

And if it doesn't work out immediately put what little you need to hold you over until the next week on a CC as jpg also suggested and just pay it off when it comes due.

I hope that made sense

[DumbSheila]

Yes it makes sense thank you. We are looking into refinancing/trading in the truck within the next few months for something cheaper and/or better gas mileage. We are looking into a lower cell plan bc of where our contracts fall. I will also be changing the due date on car insurance to fall somewhere else so it's not one big bundle with 2 other big bills on the 17th.

I like the cash flow idea. It seems logical to sacrifice and go without for 2 months to build up rather than go like that every month for the rest of our lives. It's putting into motion that's scary

[kv968]

Yes it makes sense thank you. We are looking into refinancing/trading in the truck within the next few months for something cheaper and/or better gas mileage. We are looking into a lower cell plan bc of where our contracts fall. I will also be changing the due date on car insurance to fall somewhere else so it's not one big bundle with 2 other big bills on the 17th.

I like the cash flow idea. It seems logical to sacrifice and go without for 2 months to build up rather than go like that every month for the rest of our lives. It's putting into motion that's scary

Glad it made sense. Wasn't too sure. It can be scary I guess to implement a different way of budgeting but once you do it and find something that works you'll wonder why you didn't do it sooner. I'm not promising it'll be perfect but it'll be better than sweating out those weeks you're short.

Getting the vehicle payments down would be an immense help too.

You may also want to check with the CC companies to see if you can move those due dates to a better time also. Sometimes they'll work with you in that way. Although the best thing to do of course would be just pay them off in full.

[DumbSheila]

I've got all the credit cards set up to come out automatically each month on days before they're due, just to be doubly sure we don't get hit with a late payment fee or anything. So I control those due dates where they fall in our payment schedule, so to speak. I just want to be done with them all together though.

Getting rid of the truck is our biggest goal this year, for obvious reasons. It's too expensive to have and I know there are better options out there for us.

[jpg7n16]

Getting rid of the truck is our biggest goal this year, for obvious reasons. It's too expensive to have and I know there are better options out there for us.

How much is the truck worth? (Official Kelley Blue Book Values You Can Trust From kbb.com - Kelley Blue Book )
How much do you owe on it? At what interest rate?


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Another thing that I thought of that could be psychologically helpful to you: close your savings account.

If you have your $900 in a separate savings account, close it out (temporarily) and combine those funds into your main checking account. Only reopen the savings account after you have no CC debt, have paid off one/both of the cars, and can keep $5,000 in your checking acct at all times.

[DumbSheila]

We owe $10k on the truck and it's worth about $9800. So we aren't too upside down in that if we get rid of it and get something more cost efficient.

I will not close the savings account. After my husbands stint of unemployment last year and we had no savings whatsoever, we decided we never want to go through that again. I get the purpose of what you're saying but I don't want to always live in fear of the unknown. This way we have something to fall back on in case of lapse of employment, auto emergencies, medical emergencies, or dog vet emergencies.

[NetSkyBlue]

What I do: first I tracked all expenses in quicken for a year. You don't have to get quite so radical, but do track everything for at least a couple months. Then figure out all your semi annual expenses. You want 6 haircuts and 12 car washes a year? How much will you budget for birthday and holiday presents for friends and family this year? Etc. I calculated how much I spent in gas in 2011 and divided it by 12. So far, I'm "ahead" on gas this year, but that just means the money is there if I have to go out of town a few times.

Then divide all of these semi annuals by 12. This is how much you need to be setting aside each month on a separate line in your budget. When you have a total for all your monthly bills and semi annual expenses, divide each category by four (since you have four paychecks). Say you spend 800 on rent-$200 from each paycheck goes to rent.

If you start with a cushion (by cutting back for a couple months) you should always have enough to cover those expenses that are due before you've had all four paychecks.

[DumbSheila]

Thanks for responding. I actually have fun organizing and getting a little radical figuring things out. What I do now is I print all statements and put them in a notebook, divided by months. I also include paystubs and a printed calendar with our due dates (in addition to the dry erase board I keep everything on). At the end of each month, I list how much our income was, our bills, and what we have in savings. Then on a separate piece of paper, I write down everything by category, looking solely at our bank statement from the first to the last day. So I track the amounts at all the gas stations and add them, same with groceries, bills, dates together, etc. Then if there are things that don't have typical categories but are "mutually beneficial", I group them all together, all the while noting how much we spent on haircuts, car maintenance, any gifts, dog, etc.

March was the first month I did that. I will be doing it for April as well.

But it's afterward that I don't know where to go with it but thank you for the ideas.

[riverwed070707]

It does just sound like you're going through an adjustment period, but I also wanted to say that I woudn't consider spending $1000/mo on transportation frugal... You have two car payments that total more than your RENT! Isn't that concerning to you? Its certainly not the sign of a couple who is only spending what they have to to scrape by like you make it sound. You could double the amount you're putting in savings if you got rid of one of the car payments.

Also, you should be able to choose you're SL payment dates if you wanted to arrange those to make the bills better align with paychecks.

Congrats on the jobs! Looks like you're in a good position to get things on track.