Budget Help

[Barclay]

I'm new here and would love some help with my budget.

I saw that a 50-30-20 ratio was a decent start. I'm trying to figure out how much I need to save and how much I should give us to spend. We spend quite a bit on food. I'm trying to eat out less often and prepare more meals at home. I think that one is a no-brainer. I also think pulling blinds and shades closed to help with the air conditioning. I have a dog that stays home in his crate so he needs air conditioning. I'm thinking of getting a Vespa to ride back and forth to work.

any other ideas?

[disneysteve]

Can you post your current budget for us to review? That would make it a lot easier to give advice that is relevant to you.

As for the Vespa, how do you get to work now? It doesn't make sense to buy another vehicle if you already have one, even if it is more energy efficient.

I think the 50/30/20 is good so where do your numbers fit now relative to that?

[Barclay]

Well I don't really have a budget right now. I will list what bills I can think of off the top of my head.

There are 3 of us. My husband, myself and my 6 year old. My oldest daughter starts college in the fall and rents a place. I will pay her college expenses. I have $15k for her and should have plenty by adding $800 to that each month.

Monthly
Daughter's college - $800
Utilities - $400
Cell Phone - $200
Real Estate Taxes - $500
Car - $330
Insurance (home, car, daughter's rental, personal) $320
Day Care - $500
Gas - $300
Food $800
Entertainment, clothing, etc. - $450

THANKS FOR THE HELP!

[Barclay]

And regarding the Vespa, it's just a toy. It wouldn't actually save me money. I would hope that I could recoup some of the cost, but not a lot.

[skydivingchic]

I ride motorcycles and have for a number of years now. The Vespa will not save money. It will end up costing you money. There is the original purchase, gear, insurance, and maintenance. While I firmly believe that everyone should get to decide for themselves what gear (if any) they want to wear, I will tell you that DBF is only with me today because we are both gear fanatics and won't set foot on a bike without being geared up from head to toe with the best, most protective gear money can buy. Its not cheap. Maintenance on motorcycles is far more costly than maintenance on a car. I live in one of the few places that it is feasible to ride year-round and you could potentially replace a car with a bike. Know how many people I know that do that? None. Insurance is nearly as much for my bike as for my vehicle and that is with a flawless driving record. If you choose to get a Vespa, please, please, please have don't ever ride unless you have good health insurance, a will, an advanced health care directive, and an adequate emergency fund. I don't say that to sound preachy, I say it from experience. I ride, DBF still rides and we both love it. But understand that a motorcycle or scooter is a complete luxury that will cost you money, not a money-saving machine. Between insurance, gas, savings for maintenance and registration, etc, I'd estimate that my bike costs me $150/month and that is after all my major gear purchases have been made.

The $400 you spend on utilities - what all does that include? That seems high to me.

Since you say you don't really have a budget, that would be a good place to start. Write down every penny you spend for a month or two so you can get a good idea where you money is going. it will be a lot easier to find places to save money once you know where it is going. If you don't want to keep a detailed budget after that, fine. But you need to understand where your money goes before you can really control it.

[disneysteve]

Since you say you don't really have a budget, that would be a good place to start. Write down every penny you spend for a month or two so you can get a good idea where you money is going. it will be a lot easier to find places to save money once you know where it is going.

I agree. The numbers you listed are not complete. Where is the mortgage payment? What expenses are you paying for your older daughter? You say there are 3 of you but there are really 4 of you since you are supporting the older daughter too.

I also don't see a savings figure. What percentage of income is going to the retirement accounts? What is the monthly household income? Lots of info missing here.

[Barclay]

We own our home and the college money is for tuition, fees and books.
We each put 17k in a 401k. Currently, we arent saving a great deal, thats the goal of my posting. Trying to do a little better.
Also, utilities are cable, internet, water, trash, electric and gas.

[disneysteve]

I think the best thing you can do, as we've said, is to write up a detailed budget. Don't lump together things like clothing and entertainment or cable and utilities because then you are mixing wants and needs in the same category. If your goal is to identify places where you can trim spending, the more detailed you can be the better. It would also be important to know your income because that's the basis for determining how much should be spent in certain areas and how much you should be saving. It is great that you own your home outright and are both maxing your 401k accounts so congrats on that.

[Barclay]

Our net income is around $11.5k.
Im considering pulling some equity from the home and paying off my car. We really need the tax deductions. We waste a lot of money. sigh

[disneysteve]

Our net income is around $11.5k.
Im considering pulling some equity from the home and paying off my car. We really need the tax deductions. We waste a lot of money. sigh

Whoah!

You listed $4,600 in expenses, which I realize isn't complete, but you are earning $11,500. I doubt that your expenses are another $7,000 over what you listed. That should mean you have a nice surplus each month. Why do you even have a car loan? You managed to pay off your house but had to borrow money for a car? That's not right.

And why would you possibly consider taking out a home loan to pay off the car loan? Just pay the thing off with cash. You can't borrow your way out of debt and you also should never "buy" a tax deduction. What good is paying $1.00 to save $0.25? That's what you would be doing by taking out a HEL.

Until we see your budget, there isn't much more advice we can give. I will say that the 34K going to retirement is good as that represents more than 15% of income so stick with that. $800 for food for 3 people is too much and could be trimmed. Other than that, we need to see more complete numbers.

[Barclay]

I guess I'm just a little nervous right now and trying to build my savings again. We just bought this house and drained almost all of our savings. Then we did some remodeling and bought all new furniture and spent even more cash. It's frightening and stressful.

I own another house that is rented (same renter for 6 years and has never been late). The rent covers the taxes and insurance so I consider that a wash and don't even include those expenses in my budget.

Last month, we had to pay the IRS about $10k so that blew our extra money to dump into a savings account.

So, starting this month, it's the first month of no "extras" and I'm looking to start leveling out my spending and building up my savings account again.

I think that is all of my monthly expenses, but I know it's not detailed.

Thanks for all of your help!!