Budget update and request for more critiques

[EconDiva]

My first post here detailed my budget back in January of this year:

http://www.savingadvice.com/forums/personal-finance/63691-noob-please-critique-my-budget.html

So, things have changed. I got a new job and moved to a new state/city in May. Been a little stressed the past few months, but things are leveling out and going well. I've had time to sit down now and go through what my budget looks like, and it's not too good. So, I'm back to post what things are looking like now, along with my current goals, etc. I need a kick in the butt to do better. So here, goes....and try to go a little easy on me if you can

Stats:
-33, single, no kids, no pets, no car, no tv/cable
-NET monthly income: $3366 (approx $55k annually...was $45k)
-Internet/water are included in rent
-$500 in emergency fund
-$20k in 401k (I contribute enough to get the match: 5%)

Immediate goals:
-1 month equivalent of expenses in emergency fund
-Max out ROTH IRA
-Double student loan payments
-Increase gross annual income to at least $75k by January 2014
-Reduce rent from 1195 to $950 or less (my current 6 month lease ends on 12/1/12)

Medium term goals:
-3-6 months in EF
-10% to 401k

Long term goals:
-save for a car purchase in 3 years (15k)
-save for a home down payment in 5 years (30-40k)
-be able to save/invest a minimum of 30% of net income starting in 2 years

Current monthly budget:

Emergency fund: 550
Laundry: 40
401k loan: 90
Checking account "padding": 125
Eating out: 250
Rent: 1195
Cell: 85
Discretionary (shopping/entertainment/beauty): 300
Student loans: 300
Grocery/household: 300
Electric: 40
Monthly transit card: 86
Total: $3366
-0-

[MonkeyMama]

At first glance, it seems eating out, discretionary, and groceries are quite high. These are the areas that will have to give if you want to increase your savings pace.

{Just for reference, my family of 4 spends about $600/month on groceries and eating out - and this is eating fairly well - lots of big eaters - a fair amount of luxury in the budget}. I wouldn't even necessarily eat out less - just eat out smarter. Seek out lunch specials - coupons are abundant in this economy. Just to point out this doesn't have to be an exercise in deprivation.

What is the balance on the 401k loan? It is wise to get $1k or so in an emergency fund just as a bare minimum. But other than that, I would pay off the 401k loan ASAP before putting more to student loans and savings.

[EconDiva]

At first glance, it seems eating out, discretionary, and groceries are quite high. These are the areas that will have to give if you want to increase your savings pace.

{Just for reference, my family of 4 spends about $600/month on groceries and eating out - and this is eating fairly well - lots of big eaters - a fair amount of luxury in the budget}. I wouldn't even necessarily eat out less - just eat out smarter. Seek out lunch specials - coupons are abundant in this economy. Just to point out this doesn't have to be an exercise in deprivation.

What is the balance on the 401k loan? It is wise to get $1k or so in an emergency fund just as a bare minimum. But other than that, I would pay off the 401k loan ASAP before putting more to student loans and savings.

Balance left on the 401k loan=$1500...I wanted to start making 300-400/month payments but they told me I could pay the payment or pay the balance remaining only

On a personal side note, I regret letting my health habits slip since moving...I've been eating out almost daily and no exercise. Gained 10 lbs in the first 2 months here Not to mention the hit my wallet has taken. No excuse for that. Gonna start walking home and meal planning this weekend...that's a start in the right direction at least.

[BMEPhDinCO]

Yay, a budget post, here I go...

1. For 1 month of NECESSARY spending, you need $2050. You currently have $500, so you still need $1,550.

2. Debt of $1,500 owed to 401k

These are your top two goals... And here's the budget to hit them.

Emergency fund: (see below)
Laundry: 40
401k loan: 90
Checking account "padding": ------ ($125 for ONE month, then nothing! It's padding, it stays put)
Eating out: $100 (and this is generous!)
Rent: 1195
Cell: 85
Discretionary (shopping/entertainment/beauty): $100 (and this is generous!)
Student loans: 300
Grocery/household: 250 (cut back on this just a bit for a little while, it'll help)
Electric: 40
Monthly transit card: 86

Month one: $955 for savings - put $500 into EF, put $455 into a "401k payback" account.
Month two: $1080 for savings - put $550 into EF, put $530 into "401k" account.
Month three: $1080 for savings - put $500 into EF (YAY, one month hit!), Pay off 401k loan with this month + savings from last two months!

So in three months, you'll have one month EF + no 401k loan. Then your budget can relax a little bit to be:
Emergency fund: 400
Laundry: 40
Checking account "padding": ------ ($125 for ONE month, then nothing! It's padding, it stays put)
Eating out: $150 (and this is generous!)
Rent: 1195
Cell: 85
Discretionary (shopping/entertainment/beauty): $150 (and this is generous!)
Student loans: 300
Grocery/household: 300
Electric: 40
Monthly transit card: 86

= $620 for savings - put $420 into a RothIRA (this won't max it for this year, but this for 11 months + $380 in month 12 will max it starting 2013). Put $50 into your house fund, put $50 into your car fund, and put $100 on the student loan (no, it's not double, but your income doesn't allow for that ... yet).

When you hit $6150 in your EF (ie, 3 months), you can back down on that a bit...at this rate, it'll be 14 months from now... (13 if you put in that $100 from somewhere else at the last month). At that point, you can shift to doing $300 in the student loan and $200 to the EF.

Hope all this helps, I realize it requires a bit of a budget cut for the first few months, but that will go by quick. Good luck!

PS. technically, you will have a little extra on month three, since I didn't include the 401k payments in the loan payoff - use this to treat yourself!

[MonkeyMama]

Okay - I absolutely agree with BMEPhD's plan.

I am relieved your 401k loan balance is not much larger. I have seen much worse. But that sounds like a good plan. Get a little extra cushion in the bank and make that the priority. Then focus on ROTH and emergency fund - agreed agreed.

[EconDiva]

Yay, a budget post, here I go...

1. For 1 month of NECESSARY spending, you need $2050. You currently have $500, so you still need $1,550.

2. Debt of $1,500 owed to 401k

These are your top two goals... And here's the budget to hit them.

Emergency fund: (see below)
Laundry: 40
401k loan: 90
Checking account "padding": ------ ($125 for ONE month, then nothing! It's padding, it stays put)
Eating out: $100 (and this is generous!)
Rent: 1195
Cell: 85
Discretionary (shopping/entertainment/beauty): $100 (and this is generous!)
Student loans: 300
Grocery/household: 250 (cut back on this just a bit for a little while, it'll help)
Electric: 40
Monthly transit card: 86

Month one: $955 for savings - put $500 into EF, put $455 into a "401k payback" account.
Month two: $1080 for savings - put $550 into EF, put $530 into "401k" account.
Month three: $1080 for savings - put $500 into EF (YAY, one month hit!), Pay off 401k loan with this month + savings from last two months!

So in three months, you'll have one month EF + no 401k loan. Then your budget can relax a little bit to be:
Emergency fund: 400
Laundry: 40
Checking account "padding": ------ ($125 for ONE month, then nothing! It's padding, it stays put)
Eating out: $150 (and this is generous!)
Rent: 1195
Cell: 85
Discretionary (shopping/entertainment/beauty): $150 (and this is generous!)
Student loans: 300
Grocery/household: 300
Electric: 40
Monthly transit card: 86

= $620 for savings - put $420 into a RothIRA (this won't max it for this year, but this for 11 months + $380 in month 12 will max it starting 2013). Put $50 into your house fund, put $50 into your car fund, and put $100 on the student loan (no, it's not double, but your income doesn't allow for that ... yet).

When you hit $6150 in your EF (ie, 3 months), you can back down on that a bit...at this rate, it'll be 14 months from now... (13 if you put in that $100 from somewhere else at the last month). At that point, you can shift to doing $300 in the student loan and $200 to the EF.

Hope all this helps, I realize it requires a bit of a budget cut for the first few months, but that will go by quick. Good luck!

PS. technically, you will have a little extra on month three, since I didn't include the 401k payments in the loan payoff - use this to treat yourself!

Thank you.

I think this is an EXCELLENT plan. Two things I forgot to mention I now need to budget for are 1-going home during Christmas, and 2-a deposit on the next apartment lease....so I need to figure out a number for those and include it in my plan since both of those things will be coming up very soon.

What I am hoping is that by the time I get into another lease, the rent will be low enough to still be able to hit the goals in about 3 months, as you've laid out above....

[BMEPhDinCO]

Ok so amendment for christmas - I'm assuming around $500 - if it's more, honestly, you can't afford it.

So use the $500 from month 1 of the EF for christmas.

Amendment for apartment - I would've assumed you could use the security deposit from the other place, but if not, and if it's 1 month (ie, $1000), then take $500 from month's 2 & 3 of the EF (ie, you'd only put $50 in for the first 3 months).

This means in 3 months, you'll have the 401k paid off, the trip home ready, and the apartment security deposit ready.

In month 4, after you move (?), put the security deposit into the EF and keep adding to that until it gets you back on plan.

And if you plan on traveling more, instead of the house and car fund, put that $100 into travel for the first few months.

In general, although this plan should work, you do need to draw up EVERY category of spending and figure out what is most important to you and allocate savings to that. New computer? New cell phone? New Car? New House? Medical? Gifts? Travel? ---- these all need to be accounted for so you don't have to go off budget to work them in.

[EconDiva]

Ok so amendment for christmas - I'm assuming around $500 - if it's more, honestly, you can't afford it.

So use the $500 from month 1 of the EF for christmas.

Amendment for apartment - I would've assumed you could use the security deposit from the other place, but if not, and if it's 1 month (ie, $1000), then take $500 from month's 2 & 3 of the EF (ie, you'd only put $50 in for the first 3 months).

This means in 3 months, you'll have the 401k paid off, the trip home ready, and the apartment security deposit ready.

In month 4, after you move (?), put the security deposit into the EF and keep adding to that until it gets you back on plan.

And if you plan on traveling more, instead of the house and car fund, put that $100 into travel for the first few months.

In general, although this plan should work, you do need to draw up EVERY category of spending and figure out what is most important to you and allocate savings to that. New computer? New cell phone? New Car? New House? Medical? Gifts? Travel? ---- these all need to be accounted for so you don't have to go off budget to work them in.

Thanks for helping me revise this plan!

In regards to the final paragraph, you are so right...I am finding that I am not accounting for everything I need to be. Working on a budget is opening my eyes to this and helping me anticipate future expenses so they're not coming out of places they shouldn't be. In turn, it'll help me make more realistic goals that I can actually reach...