Need Budget Advice!

**jpg7n16** · 05-22-2012, 09:18 PM

When you look at your budget, the largest issue is all debt burden you guys have.

In fact, 41.69% of your income goes to some form of debt. That's way too much.

I would raise/reduce the 401k contributions to the match. Nothing more, nothing less. And then start attacking the debts.

Which one to pay first? Just look for the highest interest rate and put your extra funds there each month. Repeat until you're just left with debts charging under 5%. Then start your other savings.

**DebtFree&Broke** · 05-23-2012, 01:47 AM

Originally posted by 85blazer View Post

Would like to reduce debt and increase savings! please tell me what i can do to better streamline.

Monthly Debt Rate
AUTO $250.79 $12,075.00 @2.2%
AMEX $25.00 $422.00 @ 0%
ACS FED $50.00 $3,049.59 @ 6.5%
Wells Fargo Priv$132.00 $13,125.32 @ 11.15%
Salle Mae Priv $381.10 $16,427.33 @ 10%
Salle Mae Fed $235.16 $18,772.36 @ 6.5%
Furniture $135.00 $1,680 @ 0%

Total Debt $1209.05 / month -- $65,551.60

Income $2,900

Rent $727.50
Cable $52.90
apt gas $59.13
apt elec $42.44
Phone $100.00
Insurance $100.00
Gas $100.00
Metro $200.00
Debt $1209.05

Leftover $308.98

Savings & Investment
401 K $3,734.23
Emergency $7,000.00

1. Start tracking your spending. You have categories missing from your budget: clothes, gifts, etc.

2. Your car is way too expensive. I would sale it and buy a car for $3000 or less.

3. Get a second job. Your budget is too tight to reduce debt or increase savings quickly. If you could bring home another $1000 a month it would help a lot.

Debt Reduction Options:

1.Don't make any changes and keep paying the minimum payments: it will take you 67 months (5 1/2 years) and $14,551 in interest to get out of debt.

2. Replaced car with a $3000 car: 57 months and $11,406 in interest.

3. Use $5,000 from savings to pay down debt: 60 months and $11,006 in interest

4. Use $5,000 from savings and replace car w/ $3000 car: 50 months and $8,709 in interest

5. Increase income (and debt payments) by $1000: 33 months and $5,677 in interest

6. Increase debt payments by $1000, use $5000 from savings, and replace car: You will be out of debt in 26 months and only pay $3,915 in interest!

**85blazer** · 05-23-2012, 05:29 AM

401 k is maxed at the match, which is 7%.

the $308 in savings is actually our misc. spending money between the both of us, which is $150 each. I think we tend to run it over if we go on long trips or buy gifts for others. So really im breaking even or dipping into the red.

Ideally i would like to go back to school and get my MBA. But im not sure how practical it would be to take on more debt at this time...

**riverwed070707** · 05-23-2012, 05:44 AM

Originally posted by 85blazer View Post

401 k is maxed at the match, which is 7%.

the $308 in savings is actually our misc. spending money between the both of us, which is $150 each. I think we tend to run it over if we go on long trips or buy gifts for others. So really im breaking even or dipping into the red.

Ideally i would like to go back to school and get my MBA. But im not sure how practical it would be to take on more debt at this time...

It would not be practical at all. Get your current debt under control, then think about school. Your extra time needs to be going toward making more money, not spending it. Not to mention, how great would it be to be out of debt or almost out of debt before your wife gets a job and your income dramatically increases?! That would be the time for you to go back to school -- you suppored her through her schooling, then she can handle the bulk of the finances as you work through school.

**85blazer** · 08-24-2012, 07:54 AM

update

Moved in with my parents to save on rent, but now im driving more so gas expense went up. Also paid off cc and furniture. still questioning if i should sell my car and buy an older one since i now drive 100 miles per a day in traffic... also my wife wants a second car.. something for like $2,000- 2,500 bucks... and we have now a baby on the way... which im trying to save an extra $1000 for... what to do now? Thanks. update below.

Monthly Debt Rate
AUTO $250.79 $12,075.00 @2.2%
Insurance $100.00
Gas $400.00 (now longer commute, driving 100 miles a day)
Parking Garage $140.00
FOOD (parents)
LOAN - have not checked on these numbers since May (paying Minimum on all)
ACS FED $50.00 $3,049.59 @ 6.5%
Wells Fargo Priv$132.00 $13,125.32 @ 11.15%
Salle Mae Priv $381.10 $16,427.33 @ 10%
Salle Mae Fed $235.16 $18,772.36 @ 6.5%
Rent $0 (moved in with rents)
Cable $0
Phone $120.00 (2 lines prepaid)
Furniture $0 (Paid)
Mis. Exp $300

Total ($2,108) $65,551.60

Pay $3,060.00

Savings $952

Savings & Investment
401 K $5,700
Emergency $6,000.00

Total: $11,700

**85blazer** · 08-24-2012, 07:55 AM

also, i drive an 08 accord worth about $15k

**BMEPhDinCO** · 08-24-2012, 10:50 AM

When does your wife take her boards? If she isn't doing anything but studying, she can pick up a part time job somewhere to help bring in something...a job at starbucks, for example, comes with health insurance that would be useful for the baby.

I wouldn't trade in your car right now, if you are driving that far, a honda will keep going and that's worth the price... plus, you'd only get around $3k if you sold it - not enough to buy a car that can do the long commute.

As for your wife getting a car, I don't see how that's possible right now, but if you are bringing in around $900 extra, you can save for the baby in 2 months, then a car in 3 months so that in 5-6 months, you can afford both (or reverse the order, baby is 9 months timeline total so easy to plan that one!).

Honestly, it looks like y'all will still be tight until she's able to work - whenever that is, as a new baby will make it even harder.

I hope that Misc is going towards things like clothes, personal needs (ie hair cuts), insurance, etc... if that is going towards blow money, you need to cut back on it, even another $100 for other goals now would be good.

Finally, with a 2 month EF, you are in a fragile situation... you should be looking to up that with a little one on the way and with not paying rent or food with that budget.

**Homebody** · 08-28-2012, 11:11 AM

It always cracks me up when budgeting advice includes getting a part-time job like at Starbucks. Yeah like out of all their applicants, they are going to hire a pregnant woman. Let's be realistic when giving advice.

Here is some real advice: See if parents will cut your rent if you do the housework, landscaping, etc. Does pregnant wife cook? Maybe she could take on cooking and shopping to contribute and give parents as break. Wait just reviewed...are the utilities your share? Or do you live in an apt attached to their house or what?

I agree going back to school is not a good idea. I'm sorry I didn't notice if your job provided insurance.

I assume your wife is not going to practice for 2 years because she wants to stay home with the baby? Maybe she could take a few shifts at a urgent care or ER?? I know an ER doctor who wanted to stay home with her kids and became a medical transcriptionist. I am a former transcriptionist and your wife, if she can type, would be a good candidate to do that for a while. There are tons of companies who utilize at home transcriptionists. I worked for Keystrokes out of Illinois.

I am actually impressed you don't have a bigger debt load with your wife going to medical school. Be sure to shop second hand for baby and you don't need every gadget made for babies. Of course breastfeeding is super cheap too!

**85blazer** · 05-29-2013, 12:59 PM

Update

Hi All,

I wanted to post an update on my status. I have good news and bad. Good news is that i sold my car for $12,700 and got rid of my autoloan of $10,000, and bought a new used car for only $3,000 it runs great and its all mine! Bad news is that my parents home that im staying at now is going in foreclosure and its more then my parents and i can afford but housing in the dc area is pricey so im concerned about what to do once we are forced to move. just a studio around here is $1000. a two bed apt would be $1500 not including utilities... my parents and i would like to stay together but since they are earning just around $1500 a month, there is not much they can afford...so a bit concerned. otherwise the baby is here and he is doing great. My wife is still taking her board exams which are costly but managable at this point.

would it be a good idea to cash out the 401k? would get around $8k after taxes and penalties and could use it to pay off my salle mae private loan, and pay the rest of the $4k loan off with emergency cash to free up the $366 monthy payment?

any suggestions on what to do and where to improve next? thx guys.

AUTO $0
Insurance $100.00
Gas $355(driving 100 miles a day)
Metro $220.00
FOOD (parents)
LOAN -
ACS FED $50.00 $2,500 @ 6.5%
Wells Fargo Priv$132.00 $12,900 @ 11.15%
Salle Mae Priv $366.10 $12,890 @ 10%
Salle Mae Fed $235.16 $17,095 @ 6.5%
Rent $0 (moved in with rents)
Cable $0
Phone $95.00 (2 lines prepaid)
Mis. Exp $500

Total ($2,053) $45,355.00

Pay $3,135.00

Savings $1,082.00

Savings & Investment
401 K $12,800
Emergency $9,900.00

Total: $22,700

**riverwed070707** · 05-30-2013, 05:40 AM

Originally posted by 85blazer View Post

Hi All,

I wanted to post an update on my status. I have good news and bad. Good news is that i sold my car for $12,700 and got rid of my autoloan of $10,000, and bought a new used car for only $3,000 it runs great and its all mine! Bad news is that my parents home that im staying at now is going in foreclosure and its more then my parents and i can afford but housing in the dc area is pricey so im concerned about what to do once we are forced to move. just a studio around here is $1000. a two bed apt would be $1500 not including utilities... my parents and i would like to stay together but since they are earning just around $1500 a month, there is not much they can afford...so a bit concerned. otherwise the baby is here and he is doing great. My wife is still taking her board exams which are costly but managable at this point.

would it be a good idea to cash out the 401k? would get around $8k after taxes and penalties and could use it to pay off my salle mae private loan, and pay the rest of the $4k loan off with emergency cash to free up the $366 monthy payment?

any suggestions on what to do and where to improve next? thx guys.

AUTO $0
Insurance $100.00
Gas $355(driving 100 miles a day)
Metro $220.00
FOOD (parents)
LOAN -
ACS FED $50.00 $2,500 @ 6.5%
Wells Fargo Priv$132.00 $12,900 @ 11.15%
Salle Mae Priv $366.10 $12,890 @ 10%
Salle Mae Fed $235.16 $17,095 @ 6.5%
Rent $0 (moved in with rents)
Cable $0
Phone $95.00 (2 lines prepaid)
Mis. Exp $500

Total ($2,053) $45,355.00

Pay $3,135.00

Savings $1,082.00

Savings & Investment
401 K $12,800
Emergency $9,900.00

Total: $22,700

So your parents make half as much as you and their home is going into foreclosure yet you live with them paying no rent and make them buy food for you and your wife? You need to get out on your own... for their sake. Its not fair to take advantage of their generosity when they can't afford to pay their own bills. If you choose to move with them, you need to find the money in your budget to help contribute to household expenses -- it isn't their responsibility to clean up your debt mess. You should be ashamed. Get a second job, sell belongings, cut back on driving, whatever it takes. Also, where's the other $1,100 in your budget going? You have a lot of money unaccounted for -- you say your wifes boards are expensive but I don't see a line item for them. What is the miscellaneous line? With your current debt you can't afford $500 of misc spending.

**disneysteve** · 05-30-2013, 05:51 AM

Originally posted by 85blazer View Post

Gas $355(driving 100 miles a day)
Metro $220.00

You're driving 100 miles/day and still spending $220/mo. for the Metro. Why is that?

**disneysteve** · 05-30-2013, 06:05 AM

Originally posted by 85blazer View Post

would it be a good idea to cash out the 401k? would get around $8k after taxes and penalties and could use it to pay off my salle mae private loan

Salle Mae Priv $366.10 $12,890 @ 10%

No. It would be a horrible idea. You'd be paying 35% to get the 401k money in order to pay off a loan costing you 10%. You'd be losing 25% in the process. Not a good idea at all.

**85blazer** · 05-30-2013, 06:29 AM

my dad recently lost his job, and was planning on letting the house go anyway since the mortgage is under water and the payments are too much. They have been helping me out and keeping me afloat so i can help them later when they will need it the most. my commute to work is 2 hours from my parents home. my dad is ill and i dont want them to be on there own. my plan is to rent a apt/house closer to work and take on paying the bulk of the rent utilities and grocery. so im asking how can i make it work? the misc is baby diapers, formula, clothes, outside dinning ect.
i need to come up with $1500 a month to help support. i already work/commute a total of 12 hours a day so a second job would kill me. what should i do?

**riverwed070707** · 05-30-2013, 08:00 AM

Originally posted by 85blazer View Post

my dad recently lost his job, and was planning on letting the house go anyway since the mortgage is under water and the payments are too much. They have been helping me out and keeping me afloat so i can help them later when they will need it the most. my commute to work is 2 hours from my parents home. my dad is ill and i dont want them to be on there own. my plan is to rent a apt/house closer to work and take on paying the bulk of the rent utilities and grocery. so im asking how can i make it work? the misc is baby diapers, formula, clothes, outside dinning ect.
i need to come up with $1500 a month to help support. i already work/commute a total of 12 hours a day so a second job would kill me. what should i do?

Get a job closer to where you live. THen get a second job also close to home. More money, cheaper gas, more time. Commuting 4 hours a day is money lost -- given that you aren't making ends meet, it can't be worth it. There has to be other options.

Need Budget Advice!