First post + first question on budgeting :)

[jpg7n16]

Sure, below is what we come up with so far
Recurring expenses:
rent* 2950
credit card payments 1670
nanny 1600
groceries 1197
kids 1191
dining 1110
auto 931
shopping 584
utilities 519
household 450
Gym 174

Monthly one time 1200
The problem with monthly one time stuff is that it happens every month.....

Regards,
T

Well - I'll do my method soo... start from the income - 300k = 25k/month minus taxes = say 13-14k/month? Any chance of raising that? Probably not! That's a really good income.

So income isn't the problem, let's check the expenses.

Rent: If you're desperate, you could try moving to a differnt place @2,000/month. ($950/month; drastic change)
Credit card payments: if you make a goal to pay these off by cutting some other expenses, this could be wiped to $0 (1,670/month; takes time to eliminate the debt owed)
Nanny: Not really able to lower this. Worth 1600 a month to make 300k combined. (n/a)
Groceries: Here we could do some good. I see you guys have expensive tastes when it comes to food. For 2 adults, 2 young children, and even feeding a nanny, you can get this down to $600-700 and still enjoy good food. ($500-600/month; easy change)
Kids: hmmm. I won't tell you how to raise your kids. But I will warn you that my parents paid for anything and everything for me, and saved nothing for retirement. I would have been happy with 1/2 of what I had -cause my family loved me a lot. You can cut this number down too. They're 3 and under - not like they'll fight the change. They'll learn to enjoy less, the sooner the better in my opinion. (600-700/month; easy change)
Dining: try cutting back to only eating out once a week. make a family trip out of it! and enjoy yourself. You can even go to a cheaper place (even Red Lobster) for like $100/meal, 4x a month is only 400. On the Border is awesome and only runs like $14 for each adult. You can cut out a lot here, and still be happy. -Now some of this may be business meals, etc. That's for you to decide- (700/month; easy-medium change)
Auto: That's a lot in car payments. 450-500 each? hmmm. Either paying them down, or moving down could decrease this expense by half. (450-500/month; hard change)
Shopping/Household: seems like a product of a good income and more expensive tastes. That's your lifestyle so there's nothing wrong with that. But you could save some money by buying less items for around the house, and/or cutting down on shopping (200-300/month; easy change)

If you did all of these changes, you could reduce your monthly expenses by $6,720. (That's 80,640 a year)

But you probably shouldn't do ALL of them. Consider that list as a list of options. Pick and choose which ones you'd like to implement and run with it.

The "easy" changes alone could save $3,600/month. (43,200/year)

which should be applied to your credit card debt, to ultimately save another $1,670 a month. Then to your car loans, to save another $930/month. = 2,600/month (31,200/year)

**edit - oh I saw you're trying an interest rate spread thing with the credit cards. Have you considered a muni-bond fund? Your income is so high that you would really benefit from the tax free nature of the income, since it will be held outside of your retirement accounts.

[Ticker]

Thanks for the superb reply.
We are not desperate but we are both aware that nobody knows what tomorrow brings...

2k a month in rent over here doesn't really get anything. We could probably find something for 2500-2700 though. Another option would be to go buy a house and go for tax deduction.

I'm surprised at all the food related comments. I really don't know how one can feed a family for 1000 a month. I'm not saying it can't be done but I just dont see it.
Restaurant bill is unfortunate but sort of comes with the job. That expense is mostly mine. We (me/nanny) cook pretty much every dinner, it not very common that we go out for dinner.
Kids, yes we can and will for sure cut the dancing/swimming/riding/baby singing etc. classes. It is amazing how expensive some of that is.
Car, its one car payment for few more months.

The taxes are a major pain. Since we are both employees there is nowhere to hide. We have a small C-corp for my side projects but since the income is low the deductions can be only minimal too.

I never thought I'd make the money I make now but I still feel like back when I was a student.

Regards and thanks for comments,
T.

Well - I'll do my method soo... start from the income - 300k = 25k/month minus taxes = say 13-14k/month? Any chance of raising that? Probably not! That's a really good income.

So income isn't the problem, let's check the expenses.

Rent: If you're desperate, you could try moving to a differnt place @2,000/month. ($950/month; drastic change)
Credit card payments: if you make a goal to pay these off by cutting some other expenses, this could be wiped to $0 (1,670/month; takes time to eliminate the debt owed)
Nanny: Not really able to lower this. Worth 1600 a month to make 300k combined. (n/a)
Groceries: Here we could do some good. I see you guys have expensive tastes when it comes to food. For 2 adults, 2 young children, and even feeding a nanny, you can get this down to $600-700 and still enjoy good food. ($500-600/month; easy change)
Kids: hmmm. I won't tell you how to raise your kids. But I will warn you that my parents paid for anything and everything for me, and saved nothing for retirement. I would have been happy with 1/2 of what I had -cause my family loved me a lot. You can cut this number down too. They're 3 and under - not like they'll fight the change. They'll learn to enjoy less, the sooner the better in my opinion. (600-700/month; easy change)
Dining: try cutting back to only eating out once a week. make a family trip out of it! and enjoy yourself. You can even go to a cheaper place (even Red Lobster) for like $100/meal, 4x a month is only 400. On the Border is awesome and only runs like $14 for each adult. You can cut out a lot here, and still be happy. -Now some of this may be business meals, etc. That's for you to decide- (700/month; easy-medium change)
Auto: That's a lot in car payments. 450-500 each? hmmm. Either paying them down, or moving down could decrease this expense by half. (450-500/month; hard change)
Shopping/Household: seems like a product of a good income and more expensive tastes. That's your lifestyle so there's nothing wrong with that. But you could save some money by buying less items for around the house, and/or cutting down on shopping (200-300/month; easy change)

If you did all of these changes, you could reduce your monthly expenses by $6,720. (That's 80,640 a year)

But you probably shouldn't do ALL of them. Consider that list as a list of options. Pick and choose which ones you'd like to implement and run with it.

The "easy" changes alone could save $3,600/month. (43,200/year)

which should be applied to your credit card debt, to ultimately save another $1,670 a month. Then to your car loans, to save another $930/month. = 2,600/month (31,200/year)

**edit - oh I saw you're trying an interest rate spread thing with the credit cards. Have you considered a muni-bond fund? Your income is so high that you would really benefit from the tax free nature of the income, since it will be held outside of your retirement accounts.

[Ticker]

Hi, can you elaborate on where and how? Any trip to a store is $100-$200 for 3-4 days of food.
Do you buy meat in large amounts (farm raised?). Also greenery is ridiculously expensive.

Tried both Beluga and Dom Perignon and didn't really see anything worh repeating in either of those two

Regards,
T.

You could buy all the food a family could ever need plus hire a person to prepare every meal for $2500 a month.

This number he's given must include meals out, entertaining/parties, prepared meals, wine/booze, plus the regular groceries. That or they have Beluga caviar and Dom Perignon at breakfast/lunch and dinner.

[jpg7n16]

Thanks for the superb reply.
We are not desperate but we are both aware that nobody knows what tomorrow brings...

2k a month in rent over here doesn't really get anything. We could probably find something for 2500-2700 though. Another option would be to go buy a house and go for tax deduction.

No prob The house idea is a possibility. You'd add property taxes and insurance to the equation, but if you had a paid for house, all that would be less than current rent. And income tax deductions along the way.

I was more just showing you how I'd go through analyzing a budget. "Is this too high? Could we change that? Would this be an option?" -type questions. And I figured that some of my suggestions are just not possible, but that's how I'd think through it.

I'm surprised at all the food related comments. I really don't know how one can feed a family for 1000 a month. I'm not saying it can't be done but I just dont see it.
Restaurant bill is unfortunate but sort of comes with the job. That expense is mostly mine. We (me/nanny) cook pretty much every dinner, it not very common that we go out for dinner.

Yeah I thought there might be some business lunches/dinners in there. Can't do anything about those! Well worth it for the income that comes with the job!

Well... chicken is like $2/lb or less. Buy in bulk, put in freezer. What types of foods do you normally buy? Fruit and vegetables are usually inexpensive. Grains (rice, pasta, bread, etc.) can be purchased relatively cheap. Store brand milk tastes fine hah I don't know about wines... I don't drink. Guess that saves me a ton!

Kids, yes we can and will for sure cut the dancing/swimming/riding/baby singing etc. classes. It is amazing how expensive some of that is.

Ball and couple stuffed animals = 100 bucks or less. Lasts for a long time. I had stuffed animals when I was little. Then I played all sorts of sports outside. 1 bat and a bunch of tennis balls lasted us forever! A football a basketball and the local park. Spent lots of time there.

Car, its one car payment for few more months.

The taxes are a major pain. Since we are both employees there is nowhere to hide. We have a small C-corp for my side projects but since the income is low the deductions can be only minimal too.

I never thought I'd make the money I make now but I still feel like back when I was a student.

Regards and thanks for comments,
T.

When the car payment is gone that will add some room to your budget (hope you own, not lease). I hope I have to pay that much in taxes one day

The cash flow drain from the credit cards is pretty much self imposed to take the attempt at an interest rate spread. Without the CCs and car, you'd have an extra $2600 a month. Plus don't forget that you're accumulating 100's of 1000's of $$ in investments. Hope they are earning more than the 1.9%.

Have you considered retirement plans for the C-corps/side jobs/"hairbrained ideas"?? A SEP would allow you to shelter 20% of that income which would also lower your income taxes.

[disneysteve]

I'm surprised at all the food related comments. I really don't know how one can feed a family for 1000 a month. I'm not saying it can't be done but I just dont see it.
Restaurant bill is unfortunate but sort of comes with the job. That expense is mostly mine. We (me/nanny) cook pretty much every dinner, it not very common that we go out for dinner.

That changes the story. You need to have two separate budgets - a personal one and a business one. The dining out done for business is likely tax-deductible, though you said you are both employees so I wonder why you are paying for the dinners. Shouldn't the company be paying for them?

As for feeding a family of 4 for $1,000, it can certainly be done. I'd suspect that most folks here do it every month. Search around and you'll find numerous threads on the topic.

[jpg7n16]

..You need to have two separate budgets - a personal one and a business one...

Agreed

[frugalgirl]

I am with those that are shocked by your food budget and your budget for kid's activities. I feed my family every month for $450 for a family of four with 2 boys, 9 and 12 years old. I rarely use coupons. We eat regular food: spaghetti, meatloaf, pork chops, tacos, rotisserie chicken, salads, veggies etc. I don't buy in bulk and I shop twice a week at a regular grocery store. This budget includes stuff like laundry detergent and toilet paper. I can't fathom how you are spending that much money on food!! My kids are in soccer, baseball, chess, Latin, piano lessons and cub scouts. We spend about $300/month on their activities -this includes extra costs associated with being on traveling tournament teams and high-end music lessons. Again, they are 9 and 12 and are in reasonable activities for their ages.

I'd definitely start with the food budget. You seemed to have asked for a bit of help in the food area. My family's annual income is in the $130 k range. I try to be frugal by picking up items on sale but I am not a coupon freak.

A typical weekly "menu" for my family would include:
day 1: meat loaf, mashed potatoes, corn
day 2:tacos with black beans, sour cream and salsa or tomatoes and lettuce (use bagged lettuce for this and for another meal)
day 3asta with salad (lettuce from taco night) and bread and Ragu for sauce
day 4:tuna casserole (consists of tuna, noodles, cream of celery soup, French fried onion rings for the topping, frozen peas)
day 5: ham steak, mac-n-cheese, green beans
day 6: stew (potatoes, carrots, chick peas or beef, onions, spices for sauce, tomato paste)
day 7: pizza (Chef Boyardee kit) with mozzarella cheese, fresh carrots
3 gallons of milk
2 bags of snacks
staple items like soups, bread, crackers, cereal, granola bars
$10 worth of "toiletries" - deodorant, detergent, etc

We eat cereal for breakfast and the kids each lunch at school. We eat typical sandwich fare for lunches.

Also, if you have a kind of rotating menu, you can buy things that you will use for different meals like cheeses (cheddar for tacos and for mac-n-cheese), potatoes (for stew and for mashed potatoes), sour cream, sauces. You will also tend to stock up on things you use a lot of when you see them on sale like pastas, sauces, soups, etc.

This is pretty easy stuff. There are plenty of way more advanced methods of saving tons of money that we are not even scratching the surface of here!

[Ticker]

Thanks all for the comments, we'll start by trying to reduce the food/kids cost a bit. We should be able to cut 1500-2000 relatively painlessly.

Regards,
T

[Ticker]

Well here is an update

One month later, things look quite a bit better:
May June
rent 2950 2950
kids 1191 1190
dining 1110 0
auto 931 512
groceries 1196 1087
utilities 519 500
tax 491 0
shopping 583 244
household 240 238
misc 67 0
credit card payments 1670 1670
nanny 1600 1600
cleaning 40 0
WW - 86
gym 174 174
other 100 0
tax 19.95 0
travel 574.18 0
Work/Parking 12 70

So in short we cut 3k in expenses pretty quickly with no real issues. The biggest change was no eating out for non work related events. This was a rather painless change and while I don't think it will stay at 0 its quite a bit better then before. The biggest change was writing down all the expenses.
Another positive was predicting the stock market taking a dump....

[buildmybudget]

Do you have a budget and cash flow projection? In tough situations like this, the best solution is a cash forecast that shows you exactly where you are headed...so you can see whether your goals are plausible and if you will run into any trouble spots. Create a budget that shows you this and you'll be empowered to make better decisions.

[jaine]

Are you shopping at Whole Foods by any chance? (Or some other high-end grocery store.)
My food bill was cut in half when I stopped shopping at Whole Foods and starting buying directly from local organic farms instead. The quality is the same or better but the prices are so much more reasonable! Plus it's better for the environment!

ETA: never mind, I see you already cut your food spending somehow! That's great.

[snafu]

Government Breakdown on Spending Net Income*
Housing 30%
Auto 15%
Food 17%
Health & Life Insurance 5%
Entertainment 7%
Clothing 4%
Medical 6%
Debt Repayment 5%
Savings/Investment 5%
Misc. 6%

[*Canadian so medical & Ins. costs will be radically different]

We started by doing the figures to see what percentage of income was used for the various categories. Housing included utilities, home insurance and any decorating/repair. Auto included payment, maintenance, repair, insurance, parking. Food included all edibles no matter where consumed. Misc. included personal allowances, non edible stuff like tp, cleaning products. We instantly saw where we were overboard.

We are committed to the 50% needs, 30% wants, 20% savings. Some months have events that cause higher expenses in a given category. We cope by cutting back another category.

[Ticker]

Update after 2 years

Its been a wild two years. Kids are bigger and louder, bought a house, sold the company.
Trying to keep a lid on expenses and thinking on what to do next.
mortgage 6000 (PITI+PGE)
kids 2500
dining 1500
auto 0
groceries 1200
shopping 1000
household 1000
credit card payments 0 (all paid off)
nanny 0 (preschool now)
cleaning 150
gym 150
travel 0
other 1500

[maat55]

What percentage of your income are you saving?
Are you satisfied with your current savings and retirement fund?
Do you carry any debts other than your mortgage?

Your high income affords you the ability to spend unwisely in many areas as long as you prioritize your saving goals.

With your income, you should be able to put away 8 months to a years expenses in an emergency fund. You should be funding college funds and putting at least 15% into retirement investments.

[Ticker]

Yeah, we do all of that. I'm just starting to worry about the coming market crash and recession again.