I need your help

[nick__45]

I am 31 and only owe money on a house bought last year. I do have a lot of CC bills, which are always paid in in full amount owed that month but it is still a lot of bills because I don't like using cash. I have a "loose money" phobia and every time I have cash on me, I keep counting it over and over again and question where I spend certain things. CCs solve that problem because I have one for food, groceries, eating out,one for gas and store purchase, and one for online transaction. I also have a few spares that I never use unless I am on travel because if I can track them better that way.

I am trying to keep track of what I spend this month in gas and eating out. I don't budget in fix costs such as insurance (health, life, car, etc) because they are auto-deduct from my paycheck before I see them.

My system, which works but not the best out there and I want to improve, is that I direct deposit my paycheck into an online account first. It pays 1%, which is nothing but much better than checking. Then I have 2 auto transactions to transfer it to one bank's checking account, which is used to pay bill. Then I manually transfer enough to cover monthly mortgage from said checking to the another bank that holds my mortgage, whose payment are auto-deducted on 5th of the month and grace period is to the 15.

Prior to owning a house, we live in a tiny 1 bedroom apartment and was not that frugal with your spending. While we don't buy junks like people because we didn't have places to keep them, we just CC exclusively and didn't save much. I think we saved about $1500 a month when we could have saved $2500 because CC is so painless to pay for things. Now that we have a house, I barely save anything and sometime I see myself having to manually transfer extra fund from my online bank to cover the mortgage.

My question is that: Should I quit using CC cold turkey and see if I have extra over from the spending/checking account. My bills are not constant because certain months have certain things I have to pay for or buy. For example, I just spent 2.5k to have 2 cars worked on for major things such as timing belt, water pump, spark-plugs, starter, alternator, brakes, etc. Since money is tight, I want to make sure the cars would not give me any problem. One car required a lot more repair while the other just need the periodic timing belt, water pump, and brakes.

I figure if I just stop using CC from the 15 of this month and wait till 15 December to see how much we spend. I can keep 1k cash on hand and use it for everything, including gas. The issue is that I don't like coming inside to pay first as my habit is to drive until empty and fill up. It is more efficient and cost effective than just paying 10 dollars every few days. It being winter I like to keep the tanks at least half full so it is hard to gauge how much gas I need to fill up. So maybe I just keep one card for gas and emergency. Either that or use a Debit Card, which I have never used before to pay for things. Is there a fee for using DC for pay for stuffs? Fees would defeat the purpose of saving money. I have never use DC for anything other than cash withdraw from my bank's ATM before trips or for buying toys for my hobby, which has come under control.

My intake/spending overview looks like this:
Take home: ~4000
Mortgage payment: ~ 1200
CC bills (CCs are used for pay for everything and I don't carry a balance that require interest or finance charge. I pay what I owe for each month the statement comes out) ~ 1300

I have no car payment for the last 5 years so it does help some. However, I feel broke all the time. I do eat out and don't hesitate or beat myself over it; however, I don't go fancy and ordering drinks like rock stars or most American. I eat mainly at buffet or semi-high end fast food place such as Chick-Fillet or 5 Guys or the Chinese food near work for lunch. I eat out about once a week on average and we eat out twice a week as family. That family outing bill is usually 25 dollars per trip.

[bjl584]

Yes. Stop using credit cards. Unless you get a reward and are disiplined enough to pay off the balance in full every month. Otherwise, stop.

[nick__45]

Yes. Stop using credit cards. Unless you get a reward and are disiplined enough to pay off the balance in full every month. Otherwise, stop.

I do get reward for gas, car related, and food/groceries. And I do pay what I owe that month in full every month, 5 days before it's due on normal month or on the day it's due if I have to massage things up a little. For example, if I have a 1400 dollars balance today and my statement last month has a balance of 800 dollars, I am going to pay only 800 dollars because that is what I owe. The mistake many people make is that they sign up for this account protection crap which requires you to pay the entire 1400 dollars or you get a finance charge. If my bill is due tomorrow and I charge 900 dollars today to pay for my mortgage, I am not obligate to pay that 900 until almost 45 days later. I don't have account protection because it's a scam that doesn't protect anything. MasterCard is a master of such scam.

[snafu]

nick: You give the impression you are focussed on whether to use cash, CC or DC without having a realistic set of numbers to keep you in control of your money rather than having money control YOU. I challenge you to add up how much you spent on all eating out over the past four months. If you multiply that figure by four, you will have an idea of line of spending.

http://www.savingadvice.com/articles/2010/11/01/106674_you-really-cant-screw-this-up.html

'Budget' is a word that frightens people so I'll suggest you take a serious look at your 'Cash Flow.' Spending [whether your using CC,DC, automatic withdrawal, cheques or cash] in various categories starting with fixed costs like mortgage that are paid every month, utilities [electric, heat, water, phone cable/internet] variable or on 'budget' [paying a set amount based on previous year's usage] transportation [operation & service] and food [groceries, take-out, restaurants] category. I'd like to persuade you to take 10% of the top & pay yourself first to create an emergency fund and savings starting point.

If you have occasional payments for auto insurance, property taxes, school fees divide those by 12 to work-out monthly set aside. How much is spent for clothes, gifts, household items and personal expenses? You need to know how much money is spent on categories: entertainment, recreation, fun and vacation.

While banks have always charged retailers/service providers 2% for DC, they are beginning to charge customers $1.50 per transaction. So if you buy groceries, expect to see or soon see a transaction fee added.

If you want to know how average people spend... What % you spend

Housing 30%
Auto/transportation 15%
Food 17%
Health & Life Insurance 5%
Medical 6%
Entertainment 7%
Clothing 4%
Debt Repayment 5%
Savings/Investment 5%
Misc. 6%

[yes, I know the health ins. & medical figures do not reflect American values]

[Hector]

I like using CC for rewards as well. Also, I never had budget and I dont feel comfortable with it. But I was tired of living paycheck to paycheck wanted to cut down my expenses. For doing so, I started writing down my expenses. I started writing how much money do I spend in each categories. By keep looking at my spending reports regularly, I found out the areas that I felt I was wasting money. I found that I was wasting a lot of money in dining out, clothes and going out. So I started changing my spending habits. I am not sure, this is the perfect method or not, but I am spending less than I used to and I feel better about it.

[maat55]

You need a budget and to simplify your credit card use.

Write down your fixed expenses, your necessities and your luxury expenses. Use your credit card for only normal fixed expenses like paying bills, groceries and gas. Pay cash for all luxuries.

Plan your savings as just another fixed bill.

[nick__45]

Thank you everyone for your advices. I really appreciate it.

We don't budget for food and maybe we should. It is just that we live near grocery stores and shop often there. We do not leave the stores with full load like those on government cheese. We look for sale on items and buy enough to last and never had to throw away anything. However, we don't go out of our way to buy cheap and low quality stuffs to eat just to survive. I actually need my food to provide my energy. This is why we rarely go to doctor and I have seen a doctor twice in 5 years and my wife hasn't seen one in 6 years. We do have very good insurance but we just never had a need. Our kid goes to doctor sometime and that is about it.

I think the best way to do is to use only 2 CCs this month of November and see what I am using/spending on. Then do nothing but cash for December. I consider insurance as fixed expense and there is nothing to budget for it and other fix expense. We do have DSL for 31 dollars and 3 cellphones for 73 dollars. It is Verizon and our friends have mostly the same so we never go over the limit. We thought about getting pay-as-you-go because for 30 dollars we can have a phone for 3 months before the minutes expires. That would be 90 dollars per 3 months for 3 phones verses 73x3 we currently pay. The issue is that I need more discipline and just not use the phone much if we go that route. I will probably do that in a month or whenever this building cycle ends. Our contract expired almost a year ago and we didn't get new phones because we want the freedom to just stop if there is ever an financial speed bump that requires us to cut it. We don't have cable, home phone, Netflix, or anything else. Business DSL is very fast and we use Hulu as well as Youtube for everything.

Clothing, which include shoes and socks, expense is none for me almost every month and about 100 a year maximum. I am not a kid and buy high quality clothes so most of the stuffs I have from college still fit perfectly. Once in awhile, I run into those Outlet store down south and pick up 3-4 pair of blue jeans and that should last me about 5 years. The last time I bought any clothes was 3 years ago. My wife buy a about 1 shirt and 1 pair of pants every 6 months and they usually come out to be about 20-30 total, so that is about 60 dollars a year. We do wear nice clothes and shop only at Hollister, American Eagle, Express, and the like but has set the limit that pants should not cost more than 20 dollars and shirt should not cost more than 10 dollars. Most of the time, pants and shirt are bought at 15 and 7 dollars, respectively.

As mentioned earlier, there is no car payment for the last 5 years. I bought a used car 5 years ago and before there was no payment. My first and last payment was April 2002 and October 2003 because I had a 18 months loan for a brand new car, which we still have and in perfect shape. Even still, it was a financial disaster owning a new car. Our second car bought for 2500 dollars was paid in one payment through private sale and needed some repairs, total about 1800 dollars over 5 years, with 1400 of which was done recently for replace almost everything known to man. So I can expect another 150k miles or 10 years out of it. The newer, 02 Accord top of the line, should go for another 20 years and 200k miles easily.

My big expense has been gun purchase. While it is an investment, it has not been the best one. I haven't lost money but I haven't actually made money. Folks here may feel different about guns so I won't go too much into it. Basically, there is a fix cost of obtaining the investment and it cost nothing to maintain or handle as long as it is not fired. It is a cheap form of therapy. I had opportunity of tripling my money but was greedy and ending up at square one now. Since it cost nothing to just keep, I am keeping them as EF assets.

I bought much more house than I need because there was simply no good house in decent condition or neighborhood at a lower range. Most house in the 100-190k dollars were in very poor shape. I went over budget and got a 221900 dollars house but it is much bigger than all the other house and in a very good neighborhood. It has 5 bedroom and 3 bathrooms and 2 car garage but we only use 1 bedroom. All of the rooms are hug too and not tiny like those you see. I feel like it is a waste because I should have look harder for something small and in the 115k range, which could be found but may need a little work. It would be much cheaper to heat and cool, which we barely doing it to save money. Our summer e-bill is about 40 dollars and half of it is service/admin fees. In the winter, it goes up to 80 dollars because we have to use the space heater in the bedroom and keep the lower level at 50 degree.

I feel like I am doing a lot to keep cost down. Using energy efficient bulb and not wasting water, which runs about 20 dollars a month in cold seasons and 35 in summer due to price adjustment.

There is no new furniture in the house. The fancy dinning table was bought at a consignment place for 700, it goes for about 3k new. The leather wrap-around couch was a free gift from a college buddy who got it from a millionaire uncle. It is used but still in excellent condition. I see it goes for sale at $6k in the store so I gave him a $450 gun, which I got for $300, for it as a gesture. It cost 50 bucks in gas to go get it though so that comes out to be $350 of my cost and a potential of $500 if I sell the gun and not have to drive to get it. But there was no chair or anything so we kinda needed that. Appliances are all original and could use an upgrade but we not getting anything anytime soon.

I guess my worry has a lot to do with the economy and how people are loosing jobs left and right. I just want to make sure I put about 40% of my take-home away in case of emergency. I stopped putting money in Roth IRA because I don't think we can tap into it for emergency. It has to be for college education, death in the family, or something and not a loss of income. That is really too stupid and bad because people could really use it as a EF vehicle instead of messing with a stock market, which is like throwing good money after bad.

So I think I am going to try to square away $1000 minimum a month and shoot for $2000. My salary is exactly 4040.50 cents. I didn't get a raise last year because they found out I looked for another job. Because I have a misdemeanor assault charge (no conviction) 5 years ago I didn't get the job when they did my background check. That is what scaring me. That job didn't need a clearance but I do have a clearance for my current job. I don't know if that would be a problem next year when my renewal paperwork is processed.

[Seeker]

Nick, you just posted in another topic that you have approx 65k in EF savings.

Your emotions and feelings are all over the place. What exactly are you looking for help with?

[nick__45]

Sorry for the long and mix-up post. I do have roughly 65k in EF saving. However, it is growing very slowly at only 700 dollars a month when I think it should be growing at 40% or around 1500 dollars a month. I am hoping to see if someone was in my shoes at one point in time and decide to go cash only for non-fixed expenses. I don't even know how to budget my non-fixed expense because I never have to worry about money until I got this house, which runs about 30% of my take-home.

Not counting insurances (fixed costs) and gas and electric costs (not controllable cost) what should a family of 2 adults and one 4 years old should be spending in Virginia. Not counting daycare either because that is not controllable. What is logical for food cost, which is the expense in question. I think we spend about 500-700 dollars in food for 3 people. It depends on where we shop at different time of the month/year and some of those items are long term items such as spice and herbs.

[nick__45]

65k in saving is really nothing because I see people not being able to find a job in a year or longer. I make much more than that in a year so that saving could be wiped out faster than someone being able to find a good paying job again. I need seriously help of being able to save 18 to 20k a year. Before the house, I could save 30k a year without any problem and should have saved at least 40k back then.

I keep hearing about Dave Ramsey's fan wiping 40k debt on an income of 70k and family of 3. How could they do that? How do they do that? Anyone here has done it?

[minnie1928]

I keep hearing about Dave Ramsey's fan wiping 40k debt on an income of 70k and family of 3. How could they do that? How do they do that? Anyone here has done it?

I think many of those stories involve selling of assets to contribute to the 40k payoff. So, for example, they sold off their 3rd vehicle or the ATV. Then they go "gazelle intense" and pare down their expenses to the bare minimums...so we're talking extremely cheap meals, no cable tv, etc.

So, basically it comes down to priorities...do you want to save more? Then you have to make some decisions to stop spending your money. With each purchase you need to determine if it's a want or a need. If it's a want, is it something you want more than increasing your emergency fund by the same amount?

[nick__45]

Thanks. I am not in debt but do want to have a big EF in the 200k range and possibly have a tiny house as rental property. If I have gotten my act tomorrow, I could get a lot and put a few double-wides up for rental. There is a market for that about 15 miles from my house.

[Seeker]

Sorry for the long and mix-up post. I do have roughly 65k in EF saving. However, it is growing very slowly at only 700 dollars a month when I think it should be growing at 40% or around 1500 dollars a month. I am hoping to see if someone was in my shoes at one point in time and decide to go cash only for non-fixed expenses. I don't even know how to budget my non-fixed expense because I never have to worry about money until I got this house, which runs about 30% of my take-home.

Not counting insurances (fixed costs) and gas and electric costs (not controllable cost) what should a family of 2 adults and one 4 years old should be spending in Virginia. Not counting daycare either because that is not controllable. What is logical for food cost, which is the expense in question. I think we spend about 500-700 dollars in food for 3 people. It depends on where we shop at different time of the month/year and some of those items are long term items such as spice and herbs.

Confusion just multiplies....

You posted that you make $4050/month (48k/year?)
You posted that you, your SO, and a 4 YO, eat approx 500-700/month
You posted that your mortgage is 1200/month
You posted that you "save" 700/month
your regular expenses add up to approx 1300/month (but a good thing, you owe no debts other than the mortgage)

And that you'd like to save more?

What does child care cost you? (you posted elsewhere that you drive your child to day care)

Does your SO work as well? What is SO's income? What does SO spend on bills?

There's a ton of missing information. That's the problem here. Your struggling with how to do this... you do not have to do it alone. Where is SO? Why do I get the impression that we only have half the info needed here?

[Seeker]

65k in saving is really nothing because I see people not being able to find a job in a year or longer. I make much more than that in a year so that saving could be wiped out faster than someone being able to find a good paying job again. I need seriously help of being able to save 18 to 20k a year. Before the house, I could save 30k a year without any problem and should have saved at least 40k back then.

I keep hearing about Dave Ramsey's fan wiping 40k debt on an income of 70k and family of 3. How could they do that? How do they do that? Anyone here has done it?

Before house versus after house is going to be different. When you spend 30% of your income on housing, the picture does change quite significantly. But you have a partner and a four year old child, so you must have had a similar outgo pre-house? Renting expenses may have been less overall, but the house was your choice.

[nick__45]

Yeah. We lived in a tiny one bedroom and moved when the baby was old enough to start needing more space. It was difficult to use powerwheel inside an apartment. We have 2 acres to do that now.