Budget Help

[Stump1000]

I don't really know how to go about making a budget and sticking to it. I've been reading on this site for a long time but that's the one thing I have trouble with.

Last year, I joined the site and made some great changes to our financial situation.

I'm basically having to start over right now. My wife took three month's off work this year to stay at home with our newborn baby. She's back at work now

We made it without paying anything late or doing without anything. I had to spend a lot of money during that time. Some of it was my own fault (new truck, weekend at the beach) and some of it wasn't. (Crib, New heat pump)

My wife was bringing home $650 a week. So we missed having that income for 3 month's.

Current status:
I bring home around $5000 a month. Sometimes it's a lot more, sometimes less but that's about what I average.

She brings home $2400 a month now. It's a little less due to adding the little one onto her insurance.

As of today we have about $2000 in our checking account and that's pretty much all we have.

Bills:
2012 Dodge Ram $689mo
2009 Chrysler 300 $400mo (Doubled the payment last month, trying to pay it off asap)
House $432mo
Insurance $100mo (Actually $296 every 3 months)
Hulu $7.99
Cell $140
Internet $47
Water $25
Electric $150

Credit Card Payoff's

1. $238.68
2. $581
3. $1715
4. $1446.93
5. $2451.96
6. $911.81
7. $0 Paid off about two weeks ago

Minimum payments total to $204

Regular bills total to 2233.99

I know buying the truck wasn't a smart move. I had one before and really missed it and I guess I justified it by saying it's a lot safer for my baby.

I just setup a transfer for $400 to go into my online savings every Friday. I had it setup at $450 before she took Maternity leave but had to stop it while she wasn't working.

My goals:

20k EF Fund
Fully Fund A Roth IRA. (I am self employed and have no retirement as of right now)
Bill free except utilities, one vehicle and house.

I'm not too good to answer any questions, so ask away. Sorry this post is so long but I felt it was all relevant. Thanks in advance!

[bjl584]

Your truck payment is outrageous. Technically it represents about 10% of your takehome, but I bet the loan is 5 or 6 years. Safe, yes, but a 6 year old Corolla is safe too. anyway, there probably isn't much you can do about it now. You would take a bath trying to sell it. Start by getting the other car paid off then roll that payment into the truck. That would be a good starting point. Maybe sell it when you have some equity in it (aren't upside down.) Or, refinance at that point to increase cash flow.

[Stump1000]

I'm trying to find ways to spend less of my money on other stuff. It seems like something always comes up. This morning my dog was limping real bad, I took him to the vet. They gave me four pain pills and said it should get better in a few days. The bill was $203.

I know I have a lot of extra money left over, I'm just trying to figure out how to spread it around and get stuff paid off. I'm definitely attacking all the CC's first. I paid the first one in full so that's a start. It seems like I don't know where my money goes, that's exactly why I need a budget.

If I pay the payments out on the car, it's just $10,400 I'll be paying. So that's coming down fast!

Should I get all my CC's paid off and the car before I open an IRA? Should I fully fund my EF before opening an IRA? Thanks for the replies!

[LivingAlmostLarge]

The budget is incomplete. There isn't food, clothing, iapers, medical, maintenance of home/car, etc. Just basic routine budget stuff is missing.

What is your real excess after everything? It's obviously not $5k/month or you wouldn't be in debt. Something is not fitting into the picture here. You should have a few thousand per month even with a complete budget.

How much do you owe on each car? Bad idea honestly to have bought the truck. What were you driving before?

[Stump1000]

The budget isn't complete because we don't have one. We usually waste a few hundred a weekend going out to eat with friends. It's wasteful and we are going to limit it to once or twice a month.

My wife just started back at work so we've been living on my money alone. We've spent a ton on the baby and getting ready for her. This house is older and we spend money on it all the time. We had our carport built in, insulated and put in a new 80gal water heater. All of our extra money can't be justified though, I've definitely wasted way too much myself. It's easy for me to see that I've wasted a lot but the point now is to get back on track.

I was driving a 2004 Ford f150 that was our company truck. The motor needed to be replaced. We sold it for what we could and put the cash in our business checking. I have to have a truck for work but I should have bought a $10k truck.

Our medical insurance comes directly out of her check. Copays will need to be figured not our budget.

[Financial Maniac]

A possible budget plan.

I don't really know how to go about making a budget and sticking to it. I've been reading on this site for a long time but that's the one thing I have trouble with.

Last year, I joined the site and made some great changes to our financial situation.

I'm basically having to start over right now. My wife took three month's off work this year to stay at home with our newborn baby. She's back at work now

We made it without paying anything late or doing without anything. I had to spend a lot of money during that time. Some of it was my own fault (new truck, weekend at the beach) and some of it wasn't. (Crib, New heat pump)

My wife was bringing home $650 a week. So we missed having that income for 3 month's.

Current status:
I bring home around $5000 a month. Sometimes it's a lot more, sometimes less but that's about what I average.

She brings home $2400 a month now. It's a little less due to adding the little one onto her insurance.

As of today we have about $2000 in our checking account and that's pretty much all we have.

Bills:
2012 Dodge Ram $689mo
2009 Chrysler 300 $400mo (Doubled the payment last month, trying to pay it off asap)
House $432mo
Insurance $100mo (Actually $296 every 3 months)
Hulu $7.99
Cell $140
Internet $47
Water $25
Electric $150

Credit Card Payoff's

1. $238.68
2. $581
3. $1715
4. $1446.93
5. $2451.96
6. $911.81
7. $0 Paid off about two weeks ago

Minimum payments total to $204

Regular bills total to 2233.99

I know buying the truck wasn't a smart move. I had one before and really missed it and I guess I justified it by saying it's a lot safer for my baby.

I just setup a transfer for $400 to go into my online savings every Friday. I had it setup at $450 before she took Maternity leave but had to stop it while she wasn't working.

My goals:

20k EF Fund
Fully Fund A Roth IRA. (I am self employed and have no retirement as of right now)
Bill free except utilities, one vehicle and house.

I'm not too good to answer any questions, so ask away. Sorry this post is so long but I felt it was all relevant. Thanks in advance!

Well it took me a little while to figure out this plan and after a few minutes of researching for cost of food, diapers, clothing, entertainment for a family of three I have calculated a decent budget. This budget will have you paying off your CC debt in less than 3 months (on third month having approx. $2500 left to spend) as well as acquiring all of your expenses and paying off a monthly payment to both you and your wife's Roth IRA. (5k/yr max for each = 10k/yr). If you would like then I can make this much prettier and possibly a functioning budget plan with highlights and whatnot of what happens if you go over and stuff like that. Also I can give you a possible 6-18 month preview of your financial status ahead. I recommend after the three months to either start paying higher on your mortgage payment (to pay that off quicker) and/or (mostly and) to start placing roughly 3000 a month into an emergency/savings fund. That way in roughly 15 months you would have 6 months of your expenses in a emergency fund (which btw is $44,000!!!). I can also start helping plan for a college fund for your child (including inflation rates).

Please look at the image link. hope that helped

https://img692.imageshack.us/img692/1459/herepm.png

[LivingAlmostLarge]

FM gave you a nice starter budget. I'd look into life insurance for both of you.

Other budget categories to consider Eating out, groceries, clothing/shoes/seasonal clothes (kids grow fast), activities, vacations, retirement savings 15%, 5% to other savings, house maintenance, car maintenance, gas for cars, furnishing house, college savings, entertainment/activities, haircuts, continuing education classes/professional certificates, gifts for birthdays/christmas/weddings, diapers/wipes/formula, cell phones, cable/internet/tv, childcare?

Couple of questions are you planning on staying in your house? If not do you plan on moving and when? How much more expensive a home and do you need a bigger DP?

How much do you save for retirement now? Are you going to save for college? Are you done with kids?

I don't know if we can give you numbers but I think tracking your spending for 3 months will give you ideas of categories and how much you spend in each category to set up a complete budget.

[GrimJack]

An important part of your budget is that there is no money not budgeted - your budget should account for every penny of income. If you find that you have money not budgeted, then budget it as under "Not Budgeted Yet". Many banks and credit unions allow you create different accounts within your account so you can create a virtual 'envelope' system. Every once in a while, I have to pull out my envelopes, label them, and partial out my allowance to get back on track.

[Stump1000]

Well it took me a little while to figure out this plan and after a few minutes of researching for cost of food, diapers, clothing, entertainment for a family of three I have calculated a decent budget. This budget will have you paying off your CC debt in less than 3 months (on third month having approx. $2500 left to spend) as well as acquiring all of your expenses and paying off a monthly payment to both you and your wife's Roth IRA. (5k/yr max for each = 10k/yr). If you would like then I can make this much prettier and possibly a functioning budget plan with highlights and whatnot of what happens if you go over and stuff like that. Also I can give you a possible 6-18 month preview of your financial status ahead. I recommend after the three months to either start paying higher on your mortgage payment (to pay that off quicker) and/or (mostly and) to start placing roughly 3000 a month into an emergency/savings fund. That way in roughly 15 months you would have 6 months of your expenses in a emergency fund (which btw is $44,000!!!). I can also start helping plan for a college fund for your child (including inflation rates).

Please look at the image link. hope that helped

img692.imageshack.us/img692/1459/herepm.png

Wow, You've went through a lot of work. I thank your for that! I would like that information you were talking about as well. What you've posted so far has been really helpful and I saved that image. Thanks!

FM gave you a nice starter budget. I'd look into life insurance for both of you.

Other budget categories to consider Eating out, groceries, clothing/shoes/seasonal clothes (kids grow fast), activities, vacations, retirement savings 15%, 5% to other savings, house maintenance, car maintenance, gas for cars, furnishing house, college savings, entertainment/activities, haircuts, continuing education classes/professional certificates, gifts for birthdays/christmas/weddings, diapers/wipes/formula, cell phones, cable/internet/tv, childcare?

Couple of questions are you planning on staying in your house? If not do you plan on moving and when? How much more expensive a home and do you need a bigger DP?

How much do you save for retirement now? Are you going to save for college? Are you done with kids?

I don't know if we can give you numbers but I think tracking your spending for 3 months will give you ideas of categories and how much you spend in each category to set up a complete budget.

I've got most of that listed for my budget, but I'm having a little difficulty in coming up with reasonable numbers.

Childcare is something I forgot to list in my bill's. That's $135 a week.

We want to buy a bigger house after her car is paid off and all the CC's. I want to save a good down payment separate from my EF before making a purchase as well. My sister wants to buy this house when I'm ready at the payoff amount. I think thats about as good as I can expect right now.

I want to spend about $150k on a house. A builder I do work for builds and sells a nice 1700 square foot house for $149,900. I'm looking at something about like that.

We are done having kids. I am definitely going to save for college.

We aren't saving any for retirement as this time. I'm an idiot for not starting a ROTH when I was 18, but I didn't even know what an IRA was at that time. Her job doesn't offer 401k at all. Funding two ROTH IRA's is very important to me.

An important part of your budget is that there is no money not budgeted - your budget should account for every penny of income. If you find that you have money not budgeted, then budget it as under "Not Budgeted Yet". Many banks and credit unions allow you create different accounts within your account so you can create a virtual 'envelope' system. Every once in a while, I have to pull out my envelopes, label them, and partial out my allowance to get back on track.

Thanks for the input. I remember hearing that before somewhere. I've always been bad for just throwing extra cash in my sock drawer or somewhere. But then, in my head it's just extra cash and I'll end up blowing it on something I want that I don't really need. I bought a camera at the end of last year and ended up spending $2500 on it and then I bought two lenses that were $1500 together. I have to many hobbies and I'm going to pick whats important and drop the rest. Thanks for the input from everyone!

[Financial Maniac]

Wow, You've went through a lot of work. I thank your for that! I would like that information you were talking about as well. What you've posted so far has been really helpful and I saved that image. Thanks!

Hey no problem! I have actually just finished your budget. This budget is a plan for the next 5 years (actually 55mo. and all the way until your child is 18). Alright so let me explain what I have done. I have placed four different categories. There is income which is the amount you both are bringing in. There is expenses which is the necessary amount of spending each month. There is debts which is the amount of debt you have (currently credit card debt). And lastly there are goals which state what you want to do. This includes getting credit card paid off, 6mo. emergency fund, 35% down payment for a 150k house, a child college fund, and I've added two vacations (hawaii and disneyland, both should be paid off by the time your child is 4-5 (you start putting money aside for this at about year 3.3). You might be asking, where the heck is the roth ira retirement savings I wanted? Well that is actually in the expenses because that is a definite must! A saying you may hear around the finance world is "There is financial aid for your child's college, but there is no financial aid for your retirement." In the expenses I have included a 10k/yr (which the max is 5k/yr (after I think 52 its 6k/yr) for one person so 10k for you and your spouse. Some information on the 55 month plan. For the first 3 months the spare is meant so that you can transfer those funds to the next thing to pay off. Between the months of 42-54 you will have roughly 4 dollars left over to spend. After month 54 you will have 920 dollars a month to spend (I would relocate this money plus the money you have for current housing in order for you to pay for your future house at around 1200/mo which you could pay your home off in less than 15 years (at a approx..7.6% apr)!!!

So hey guess what after about five years you will have paid off all your credit cards, have $44,000 dollars in an emergency fund, have a 35% down payment for a 150,000 house, have saved for a trip to hawaii and disneyland, and have about 24,000 dollars for the start of your child's college fund. You have also saved for medical savings, pet savings, home maintenance savings, and car maintenance savings! and lets not forget are putting 10k a year to ROTH IRA! Your child is now about five years old. Look what you have accomplished so far. Wow!

(This is all based on one child, if you had two or more children then the cost of a child college fund, disneyland, food, entertainment, clothing, would be a little bit inflated. I did one child because you only mentioned a newborn). Also at 55 month is says pay CCF there is supposed to be pay CCF.. because you will have to pay that until 14 years from when you start paying it. (it is 300,000 child college fund) so essentially at 55 mo you could put that child college fund into expenses and have it out of your goals and into your monthly expense.

The link is the monthly budget plan. I have also placed my e-mail at the bottom right. Feel free to contact me for any questions, comments, or concerns. Click the link below for your new five year budget! Hope that helps you and your wife!

img560.imageshack.us/img560/457/stump100.png

P.S. I would recommend (if you do like the plan) printing it off and discussing with your wife of about going along with this. If you would like the excel document just send an e-mail to me (My e-mail is in the bottom right of the picture) and I can send it to you.

[LivingAlmostLarge]

So you have a major flaw in the OP budget. Your regular bills aren't $2200/month and you don't have $5k to pay off debt. People are giving you advice on paying off debt without a complete picture.

Budget sort of starts like this

$5k income DH
$2400 income DW

Retirement 15% = $1110/month = $13k/year, max out Roth IRAs then some

=$6290

Bills
$689 2012 Dodge Ram
$400 2009 Chrysler 300
$432mo Mortgage
$100mo Insurance
$7.99 Hulu
$140 Cell Phones
$47 Internet
$25 Water
$150 Electric
$204 CC minimums
$585 Childcare (@ $135/week)
= $3660 Leftover for categories below

Groceries
Eating Out
Clothing
Life Insurance/Home Insurance
Medical/Dental Copays
House Maintenance/Furnishing
Car Maintenance
Gift Giving
Haircuts
Vacations
Memberships
Activites
Travel
College
Pets

Credit Card Payoff's
1. $238.68
2. $581
3. $1715
4. $1446.93
5. $2451.96
6. $911.81
7. $0 Paid off about two weeks ago

As it stands you have $3660/month for a lot of other categories including eating out, groceries, even saving for the new $150k home. So how much equity do you have now in your current place?

[Financial Maniac]

So you have a major flaw in the OP budget. Your regular bills aren't $2200/month and you don't have $5k to pay off debt. People are giving you advice on paying off debt without a complete picture.

Budget sort of starts like this

$5k income DH
$2400 income DW

Retirement 15% = $1110/month = $13k/year, max out Roth IRAs then some

=$6290

Bills
$689 2012 Dodge Ram
$400 2009 Chrysler 300
$432mo Mortgage
$100mo Insurance
$7.99 Hulu
$140 Cell Phones
$47 Internet
$25 Water
$150 Electric
$204 CC minimums
$585 Childcare (@ $135/week)
= $3660 Leftover for categories below

Groceries
Eating Out
Clothing
Life Insurance/Home Insurance
Medical/Dental Copays
House Maintenance/Furnishing
Car Maintenance
Gift Giving
Haircuts
Vacations
Memberships
Activites
Travel
College
Pets

Credit Card Payoff's
1. $238.68
2. $581
3. $1715
4. $1446.93
5. $2451.96
6. $911.81
7. $0 Paid off about two weeks ago

As it stands you have $3660/month for a lot of other categories including eating out, groceries, even saving for the new $150k home. So how much equity do you have now in your current place?

I think you should look at the post above you (i posted above) it is a somewhat completed budget with everything you included and then some.