Budget/Life Changes

[AdventureTime]

As someone who constantly stresses over finances, I was excited to find this site.

I was curious to get a critique of my budget and the upcoming changes in my life.

Background: I work as an analyst for an insurance company. I do pretty well for myself and I have always been very responsible with my money. I always save some of it and I always enjoy some of it. My financial picture changed dramatically over the past two years when I got married. I married someone who did not have any financial lessons growing up. She was a fincial mess. It stressed me out going into it (and still does) but it was either marry her with her issues or move on. I decided she was more important and we would get through the fincnial mess. In the past two years I paid off some of the small debts she owed ($5K total), paid off her car (owed $10K at 18% interest on a $4K car!), paid for her last year of college. I also managed to pay for my MBA, buy us a house, pay for our wedding, and pay for a very expensive house reapiar in the past few years. Needless to say, my savings have taken a hit!

The good news is, my wife is learning more and more about finances. We managed to get her credit score up almost 200 points over the past two years. I still control all of the finances at this point as she learns more about them. The only debt she has left is about $75K in school loans (ouch!).

My current budget (monthly):

Income
My take home $3,000 (after medical insurance, HSA, vision, taxes, extra taxes to cover her taxes, 7% to Roth 401K, etc)
Her take home $1,000 (independant contractor (private music teacher - gross amount)
Total $4,000

EXPENSES
Mortgage/insurance/taxes/little extra on payment 1,000
Cable got rid of
Internet 40
Gas 80
Elec 80
Water/sewer 50
Cellular telephone 130
Home repairs/improvement 100
Trash 15
Groceries 400
Gas/fuel 280
Auto Insurance 100
Repairs 150
Car Payment - Me 275
Car Payment - Her Paid off
Going Out 100
Vacation 200
Glasses/Contacts 50
Dog 100
Charity 50
Gifts (Christmas/Birthdays/etc) 100
City tax (additional) 100
Savings 200
Spending Money - Me (Clothes, haircurts, spending) 150
Spending Money - Her (Clothes, haircuts, spending) 160
Total expenses 3,910

Left Over 90


So as you can see, all my money is going somewhere. I do not think there is anything extreme in there (let me know if you disagree!).

Now for the good news...my wife is pregnant with our first child! Very exciting!

So in the next 4 months, we will be adding a child and my wife's student loan payments will start (about $850/month for 10 years). She graduated with a teching degree but they are shutting down school and laying off teachers around here. She is hoping to pick up a substituing job. When she works we will also have daycare expenses (but it will be relatively cheap since it is from her sister). The student loans can be taken out past 10 years to reduce payments but that is a last resort for me.

So if a baby costs an additional $400 or so per month and student loans are $850 per month, to live the same liefstyle we need to make an additional $1,250 per month plus enough to cover any child care. That scares me. That is roughly another $23K per year on top of what she makes right now. These school loans are killing us.

Not sure if there is really that much we can change right now though. I guess we will just have to feel it out and see what happens with jobs. Just unloading my worries on here is a temporary stress relief! What else can I do? Any suggestions?

I know there are people that probbaly have far worse issues then I have (unemployment, medical bills, credit card debt, etc) so I am not looking for anyone to feel sorry for me. We will get through this but I just wanted to see if anyone has any input, critiques, or suggestions.

Thank you.

[Barclay]

I'm new here also, but this is a dire situation. You do not make enough to pay all of these upcoming bills. She needs to get a job ASAP. Is there any way you can get a better job?

I thought you said you bought a home, but you list a mortgage payment? I guess you had to borrow money for the home. That sucks.

I don't see anything extravagant in your budget. I just think you need to increase your income.

sorry...

[cypher1]

My current budget (monthly):

Income
My take home $3,000 (after medical insurance, HSA, vision, taxes, extra taxes to cover her taxes, 7% to Roth 401K, etc)
Her take home $1,000 (independant contractor (private music teacher - gross amount)
Total $4,000

EXPENSES
Mortgage/insurance/taxes/little extra on payment 1,000
Cable got rid of
Internet 40
Gas 80
Elec 80
Water/sewer 50
Cellular telephone 130
Home repairs/improvement 100
Trash 15
Groceries 400
Gas/fuel 280
Auto Insurance 100
Repairs 150
Car Payment - Me 275
Car Payment - Her Paid off
Going Out 100
Vacation 200
Glasses/Contacts 50
Dog 100
Charity 50
Gifts (Christmas/Birthdays/etc) 100
City tax (additional) 100
Savings 200
Spending Money - Me (Clothes, haircurts, spending) 150
Spending Money - Her (Clothes, haircuts, spending) 160
Total expenses 3,910

Mortgage/interest+ extra? I'd probably just stick with the minimum amount going forward. How much is the extra?
Cell phones 130 - Have you looked at prepaid or lowering plans?
Groceries 400 - Seems high for two people, but then again this is coming from a bachelor.
Repairs 150 - What kind of repairs, home improvement, or auto, or something else?
Car Payment 275 - Can you sell car and pay cash for downgrade? That would be a big one to reduce.
Glasses/Contacts - Isn't that paid for with HSA pretax money?
Spending Money Both: Could you both cut down on new clothes and haircuts for spending? That would also factor the Going Out category and possible Vacation?

I'm sure others on this forum can break down better for savings. Do you have some kind of emergency fund set in place? What I just listed were some areas to at least reconsider for spending. Congrats with a new baby on the way.

[josetann]

Gas + Electric - do the normal things like turn off lights, take shorter showers, have the thermostat set higher in summer and lower in winter, etc. Easy savings $10/mo, extreme $20/mo

Cellular telephone - Prepaid. Even with two of you on unlimited prepaid plans, we're looking at $100/mo or less. Wife and I would spend maybe $15-$20 TOTAL per month, often less. And yes, you have to buy your own cellphone...but if you can get just a bit creative, you can get that free too (I did some buying/selling on Craigslist and ended up with a Samsung Captivate plus cash in my pocket, plus I got to try out several phones to see which I liked best). Easy savings $80/mo, extreme $100/mo

Home repairs/improvement - Only repair what's necessary. Leaking roof = necessary. Worn out carpet = not necessary. Estimated savings $50/mo, extreme $75/mo

Gas/fuel - If "going out" means driving...then cutting back on that will save a bit here. Estimated savings ??

Auto Insurance - Shop around. See about raising your deductible, getting just liability insurance on the paid-off car, etc. Estimated savings ??

Going Out - Is this for restaurants, movies, other? I do like going out to eat a bit too often, but movies are more enjoyable at home for me. Plus, a new baby will help to bring this category down; it's just so much more convenient to stay at home for a dinner and a movie when you have a newborn. Easy savings $50/mo, extreme $100/mo (true, if you skip a restaurant you'll be eating at home instead...but just eat leftovers or something that would get thrown out soon)

Vacation - I'm guessing this is one large vacation a year? With a newborn, you might be skipping that (and if not...well it probably won't cost much more to bring a newborn along with you, unless we're talking about a cruise). This could easily be brought down. Easy savings $100/mo, extreme $200/mo

Glasses/Contacts - 1800 Contacts (or something similar) for contacts, and if you have a basic eyeglass prescription try something like Zenni Optical. Easy savings $30/mo, extreme $45/mo

Charity - Would you consider donating used items in the same category (i.e., baby clothes that your new baby will quickly outgrow)? Perhaps you could donate an hour or two of your time instead? Easy savings $25/mo, extreme $50/mo (I'm not advocating against charity...rather I'm saying you would spend more of your time donating your services).

Gifts - Easy. Explain that with the new baby, you're a bit strapped AND just don't have time to go shopping for gifts. We might spend $50 or so a year, total, on presents (not including our kids...probably spend another $100 or so total on our two kids, just a rough estimate). Easy savings $75/mo, extreme $100/mo

Savings - COULD be cut back in an emergency, but I wouldn't unless it was a true emergency. Estimated savings $0/mo

Spending Money - Shop at thrift stores, stretch the haircuts a bit (even if you're not comfortable giving yourself a full haircut, if you can just trim it up and put off a "real" haircut for another 2+ weeks, that's money in the bank). But you definitely need SOME spending money (let's say $50 for you, $60 for her). Easy savings $200/mo (won't go into extreme)

Now, I used off the wall, non real world numbers for the estimated savings. I expect in some things you couldn't/wouldn't save that much, but in others you'll save more. But using these useless numbers, I estimate you can save $610/mo without huge sacrifices (some of the things you'll be doing anyways, like not going out as much). Past that you have to decide whether you want to cut more, or work more; if you cut more you can save an extra $280 for a total of $890. And a kid doesn't have to cost that much (though the department stores would surely disagree!). Breastfeeding instead of formula = nearly free. Thrift store clothes or hand-me-downs. Don't need a diaper changing table (an old towel and the floor/couch/bed/whatever will easily work in a pinch, ok a changing pad might be nice). Don't need a $500 crib that's used for a year or two. $200 stroller would be nice, but a $50 will do almost as well. Etc. etc. Diapers and wipes...ok that's my weak spot, I do buy disposables, just try to get as good a deal as you can (budget at least $50/mo for that).

Again...I expect my numbers are way off. The point isn't so much the numbers, it's sitting down and figuring the numbers for yourself. See what you can easily cut, and do so now. Once you're used to that, start to cut in other areas. Anything extreme, feel free to introduce after the baby is born. Your life is going to be turned upside down anyways. Plus suggesting that you just trim your hair at home so you don't have to go out with the baby and fight the crowds for another two weeks, or suggesting a nice meal at home so you don't have to worry about a screaming baby in the middle of a restaurant, will be seen as a GOOD thing instead of a sacrifice. Anyways...I think with some minor/moderate lifestyle adjustments, you can probably manage a new baby AND the new student loan without having to bring in that much additional income.

[disneysteve]

You've got a serious problem here. I'd say the biggest problem is that you don't earn very much and your wife earns next to nothing. She needs to get a job. I don't care if it is in her field or not at this point. She can't make $850/month loan payments when she's only grossing $1,000/month.

I agree that there isn't anything outrageous in your budget but there certainly is room for improvement.

As someone who constantly stresses over finances, I was excited to find this site.

Mortgage/insurance/taxes/little extra on payment 1,000 stop paying extra
Groceries 400 you could trim this some. shoot for 300 for now
Car Payment - Me 275 what do you owe and what is it worth?
Going Out 100 stop this or at least cut back significantly
Vacation 200 can't afford it right now
Glasses/Contacts 50 wear glasses. stop the contacts for now.
Dog 100 nobody ever likes to hear it but consider finding it a new home
Charity 50 you're buried in debt. that's not the time to be giving money away
Gifts (Christmas/Birthdays/etc) 100 can't afford it
Spending Money - Me (Clothes, haircurts, spending) 150
Spending Money - Her (Clothes, haircuts, spending) 160 cut these numbers a lot. you probably have all the clothes you need. if not, thrift shops are great. she's going to need some maternity clothes. check craigslist and ebay and thrift shops too. my wife and I have been cutting our own hair for years.

If you really want to attack this, you can. The two of you just need to agree to go bare bones. And your wife absolutely needs to get a job and you probably need to get a second job. This is one of those times when I will recommend you pick up a used copy of Dave Ramsey's book "The Total Money Makeover". Start listening to his podcast at daveramsey.com or in the iTunes store if your cellphones are smartphones (which they shouldn't be).

[AdventureTime]

Thank you all for the advice. I think you are all right, there is some cutting back to do.

Hopefully my wife can get another/different job after the baby is born. I may look elsewhere too but I am stuck in my current place until the end of the year.

Worst case scenario, if job changes do not provide a significant boost in income, I think all of you pointed out areas where I can come up with the extra money.

Thank you!

[disneysteve]

I may look elsewhere too but I am stuck in my current place until the end of the year.

Worst case scenario, if job changes do not provide a significant boost in income, I think all of you pointed out areas where I can come up with the extra money.

Why are you "stuck" in your current job for 7 more months? Are you under some type of employment contract?

I don't think the spending cutbacks are "worst case scenario" suggestions. I think you need to start doing as many of those things as you can right now, no matter what happens to your income. The sooner you start getting used to living on less, the better off you will be. Have you thought about what might happen if your wife is unable to work for any period of time? What are you going to do during the time that she is out on maternity leave and you are working with $1,000 less per month. I certainly hope her pregnancy goes smoothly but what if she has to stop working a month before delivery? What if she has to have a c-section and can't work for 6-8 weeks after delivery? You guys need to trim your spending now and start building up your emergency fund.

[breathemusic]

If she's already going to be spending all her free time at home taking care of a new baby... why not take on a little babysitting as a side gig? Obviously finding a job that pays a lot more would be better, but in the mean time, babysitting is at least something that she can do, and it might be easier to manage than taking on more work that would put her away from home and just increase your own costs of having to have family or a sitter watch your own kid.

[riverwed070707]

Thank you all for the advice. I think you are all right, there is some cutting back to do.

Hopefully my wife can get another/different job after the baby is born. I may look elsewhere too but I am stuck in my current place until the end of the year.

Worst case scenario, if job changes do not provide a significant boost in income, I think all of you pointed out areas where I can come up with the extra money.

Thank you!

Why wait til after? She should pick something up now so you can sock away extra money until the baby arrives. This is a significant shortage and unless you make changes now, you're going to find yourself saddled once baby arrive, not to mention the med bills, added doctors visits, etc. I also assume she doesn't get paid maternity leave so theres a couple months where you'll be without her income entirely and you need to prep for that now! How much do you have in savings currently?

[Eleanor]

Why wait til after? She should pick something up now so you can sock away extra money until the baby arrives. This is a significant shortage and unless you make changes now, you're going to find yourself saddled once baby arrive, not to mention the med bills, added doctors visits, etc. I also assume she doesn't get paid maternity leave so theres a couple months where you'll be without her income entirely and you need to prep for that now! How much do you have in savings currently?

Agreed, now is the time to start bringing in extra cash, not after the baby is born. I got a degree in journalism so I know it's frustrating to not be able to get a job in your field, but I didn't decide to just not work or barely work, I got a job doing whatever I was qualified to do because bills were due.

[Sham12345]

Budget/Life Changes

Its very sad here your story , but only solution to you or your wife can move to another job ,or take any part time job for her ,like summer training courses for child in weekend, it willl solve tour problem.

[bluewaves]

Education Loans

I was reading your story and did the math on the education loans. $850 for 10 years is $100,200.00. That seems like a huge amount. Especially if it is a teaching degree. I'm wondering why the big bil?