Budget Critique

[J.Apple902]

Last month I tried to be smart about my spending / saving, I suppose I am aiming for a 50/30/20 spending plan. Please let me know what you think

Net monthly income = $3060

NEEDS

rent: $550
bills: $292 (weird month bc we missed a gas bill last month)
grocery: $217 (will go up to 250 or 275 average without eating out)
transportation: $197 ($30 of leisure travel)
personal: $120 (haircut, new contacts, etc)

TOTAL: $1377 (45%)

WANTS

protein stuff: $58 (i lift)
lunch out: $44 (every thursday)
eating out: $102 (this is subway five times, just one dinner, and one sunday order in, breakfast out one morning with a bloody)
party stuff: $176 (I am 24 with a 22 yr old roommate)
bar spending: $136
taxis: $27
luxury purchases: $114 (hotel for the weekend, $45 knife set that ill use for 10 yrs, etc)
clothing: $168 (all of the clothes bought can either double as work clothes or were exclusively for work)

TOTAL: $827 (27%)


Now the sticky part is this. Last month I put $383 towards either a CC payment or a SL. I have about $350 remaining on a 9% APR cc which is being paid off first. Currently I have one SL which is active at $177 per month. By the end of summer I'll have to pay ~ $450 / month in total SLs. I have no other debt (no auto, mortgage, or cc's)

Loan per month $450 or (14.7%), last month was 12.5%.

Therefore I saved nearly 15% for last month. Not bad. But there are a couple things missing her. I'm not contributing to my 401k yet, because get no match quit yet (not til end of summer) and I'd rather beef up my emergency fund. By June 1st it'll be $4k or so, and June is one of the two three paycheck months per year, so I'd like to be above $5k by mid summer.

In august I just may be getting paid 4-5% more (annual raise time), which I expect. I'll also be taking home $190 less per month because of my 401k contribution. Which sways my numbers because I'm taking home only $2870 at that time.

NEEDS: 47.9%%
WANTS: 29.1%
LOANS: 15.6%
REMAINDER: 7.4%

booooo on the SLs



If I want to become 100% frugal I can eliminate between $500-$600 expenses. Which would turn my existing WANTS category into "remainder" and ultimately go towards reducing debt or boosting savings.


Let me know what you guys think. Thanks!

[woodie96]

Good idea to get rid of the CC debt first. After that it would be the SLs.
You make good money, you just have to be smart with what you do with it that will benefit you the most.
It does seem ironic to me that you spend 58 bucks a month in supplemental protein, but then spend almost 340 bucks a month in parties, bar, and taxis.
Nothing at all against alcohol in my opinion, just seems kinda counterproductive. Some of us old folks (48 here) like our bud lights....LOL
You could be saving a good amount of money for future needs, car in the future? house in the future?
Life isn't all about saving, saving, saving and having no fun. Just have to obtain a good balance between the two, while you take care of your business.

Just my opinion.

[J.Apple902]

65k total in SLs

If you want me to fill in some more details about my budget it would be this:

Workout supplements: I use whey protein for every workout. I'm probably on track to use a $50, 5lb tub every 6-8weeks. I also use muscle milk once a day at work. A $26 tub of that will last me about 3months, so I don't buy this stuff every month. If I had a financial emergency I wouldn't buy it at all but for me right now the benefits are worth it.

Party stuff: It's a combination of wine / beer for the apartment / and definitely one or two purchases of medicinal. Could these things be cut out if I wanted? Yup.

Bar stuff: yup. had a annual bar crawl along with a couple more nights out. again, 24.


Woodie I agree. The appropriate balance is what people search for.

Thanks all. More comments please...

[J.Apple902]

I agree with getting the CC paid off first. Good move.

Instead of funding the 401k, I would throw that money along with any other money at the student loan debt. I would become debt free as soon as possible.

At your age, you can start contributing to your 401k as late as age 30 (although I would want to be debt free and start contributing earlier) and still retire at 59 1/2 as a millionaire or multi millionaire.

I hope you don't need $168 per month for clothing. My wife and I combined only budget $50 per month and that is mostly for my wife.

CC paid off first yes.

Not contributing to my 401k and instead putting that money towards my SLs is something that I have been thinking a lot about. I get a $0.50 for every $1 with a max match of my 6% with a 3% match. That's an extra $1600 of retirement savings for me per year (according to my present salary which should increase by 4-5% annually). Plus it's tax deductible, so not only do I get the free $1600 (3% match), but I forgo 6% of my salary for pretty much a reduction in taxes (on that 401k money). So rather than have my earnings reduced by $250 each month its only $190 (taxes drop). Not hitting max match is silly I think. The mutual funds should be getting 7-8% over 40+ years (meaning the month invested now will multiply by 6 or 7 times) and my SL rates are all under 5%; it makes absolutely no sense to not contribute. I'd stop going to the bar first if money became more of an issue.

I can run my amortization tables and calculate how much interest I would ultimately save by not contributing to 401k and in turning throwing that $$ at the loans. I don't think its worth it when you consider the growth of the 401k money. Not to mention I'd feel like in order for that strategy to make sense, I'd have to throw every single excess cent at the loans, which means I'd have no ring savings, wedding savings, car savings, house savings, id be F'd.

No no no, $168 / month for clothing is definitely silly. I bought a couple new polos, new pair of shoes, and two new pairs of slacks - all for work. I just started a couple months ago, summer is coming. Simply expanding the wardrobe.

More more more

[DebtFree&Broke]

It's impossible to spend 30% of your income, pay off your student loans quickly, contribute to a 401k, save for emergencies, a ring, a wedding, a car, and a home all at once. You have to decide what is most important.

I think that you should aim for a 50/15/35 spending plan. You know that your needs spending is $1300-$1400 a month. I would cut your "wants" spending down to $75 a week ($325 a month). That leaves you at least $1325 for loan payments and savings.

Leave your emergency fund at $4,000 for now. Throw all the money you can find at your loans until they are paid off. If you still have student loans when your company starts 401k matching, only contribute the 6% and keep paying off your student loans. If you want a wedding before your loan is paid off then don't contribute to the 401k until you have hit your wedding savings goal. But, I wouldn't purchase a car or a home until your loan is gone.