My Budget

[hamchan]

I am also kind of surprised you would suggest that I delay rebuilding the emergency savings and starting a retirement fund until after finishing paying off all of the debts. It would seem foolish to put off DH getting his certification too since that will bring in additional income and he should be done with it by the end of the year. I could delay saving for college as well, I suppose, but it's only $50 and the clock is running out on that one. I am not expecting any help from her dad.

[bigdaddybus]

hamchan, you are obviously a very black or white type person and very dramatic as well.

Budgets are a goal to try to hit, with flexability within them. For my budget if I spend more this month on category A, I spend less on category B to keep things close....if I can. Or if I pull from savings in Month A, I spend less in month B to repopulate the savings.

My wife and I also receive additional money over our base budget. That money either goes
1. directly to debt repayment principal (if we have any) 2. directly to savings or 3. We have it earmarked or another expense (for example my wife bought a new stove with part of her last bonus)

Paying down debt is not easy or fun, if it was the average american wouldnt have $7K+ in consumer debt.

[disneysteve]

I don't think you need to cut out all of the luxuries, although I do think you could trim things back a bit.

I DO think you need to focus more on debt repayment, especially the tax debt. I wouldn't be paying a penny extra on anything else until that is gone.

I think what most here are trying to get you to do is change your mindset about debt. Stop being comfortable carrying it so that you can pay for all of your luxuries. What you are really doing in the process is financing your luxuries. Let's say your credit card is at 20%. That means Netflix isn't costing $9. It is costing $9 plus 20%. Rhapsody isn't costing $17. It is costing $17 plus 20%. Get the idea?

Your situation really isn't bad at all and you are making good progress. I just think you could be making even better progress if you focused a bit more for a short time.

[hamchan]

We have decided to finish paying off the tax bill first. I had suspected that we should do that. Both the tax bill and the remaining CC debt should be paid off completely by the end of the summer at the latest. This is the busy time of year for me at both of my jobs, and DH is still making some bonuses despite it being the slower season for him.

We still don't know the extent of the medical bills. So far we've only gotten $150 worth in the mail from urgent care. We have not received anything from the ambulance or hospital. All we know is that the individual OOP maximum is 2000. It could wind up being less.

The bottom line is that I have already discussed this new budget with DH, and between the two of us this is as low as we're willing to go right now. I don't have the right or authority to make these decisions without him agreeing to it. So even if I thought we could live without certain things that is not solely my decision to make.

We have pared the discretionary budget down a LOT from previous months. The things that are left are the things that we use the most and get the highest value from. So yeah, if I look at it that way it honestly is worth paying 10.9% more to have them. If they went up that much in price I'd still keep them in the budget. Just like going on a diet, if a budget feels overly restrictive and punitive then I am not going to stick to it. Maybe I'd lose weight faster if I cut out every last bit of desserts, but I would burn out really fast and then be right back where I started.

[hamchan]

DH is looking into switching to Spotify. No sense in paying more if it does the same thing. Thanks for the tip.

[shaggy]

I am also kind of surprised you would suggest that I delay rebuilding the emergency savings and starting a retirement fund until after finishing paying off all of the debts. It would seem foolish to put off DH getting his certification too since that will bring in additional income and he should be done with it by the end of the year. I could delay saving for college as well, I suppose, but it's only $50 and the clock is running out on that one. I am not expecting any help from her dad.

The certification won't b completed for 2 years, IIRC, so it will immediately add to your expenses but not your income.

There are a lot of "it's only $50" "It's only $17" in your budget as it stands, but those things really add up when you already have "must pay" items that total more than 60% of your income. Like Steve said, it is a mindset shift, and it's up to you if you want to continue as you are or not.

Re: College. It's admirable when a parent wants to pay for college, but it's foolish for a parent to jeopardize his or her own financial health to do so. Children can always borrow money to go to school. But no one is going to give you a loan to eat when you're old.

[hamchan]

Nope. The certification takes two months to complete. Not two years.

I don't think it's realistic for the vast majority of people to have their retirement fully funded before they start college savings for their kids. It seems kind of dumb to me to borrow money later and pay interest on it when I could be saving at least some of it now and earning interest on it. I can see the logic in paying off credit cards first, and I can see the logic in prioritizing retirement savings, but I don't see the logic in not saving for college at all if you are just going to be taking loans out for it later. I don't know. Maybe I'm missing something here.

[disneysteve]

between the two of us this is as low as we're willing to go right now.

if a budget feels overly restrictive and punitive then I am not going to stick to it.

I think that's fine. You need to do what you are both willing to do and you both need to be on the same page working together. Could you do better? Sure. But as you said, I could lose more weight if I didn't have dessert at all but I wouldn't be happy about it.

Get the debts paid off with the "extra" that comes in every month above your budgeted number. Clean up the tax bill FIRST, then go in order from highest interest to lowest interest. Let us know how things proceed.

[hamchan]

That sounds like a good plan. How about the college savings? A few years ago I opened a 529 account for DD and was making small but regular monthly investments. I contributed a total of 225 before switching to a new bank account and I never set the contributions back up as I was newly single again and struggling. I never even opened the statements when I got them in the mail. I just found out that the current account balance is 350. That is despite money getting deducted for annual fees. That seems like pretty good growth to me, but I don't really know. We've only got five years left and I feel like I should be taking advantage and at least setting aside something into the account. I guess my fear is that the more I put it off, it's just never going to happen. But maybe it would make more sense to hold off at least until the tax debt and credit cards are finished.

I know my retirement is more important, but this is important too. I want to be able to help her with school at least a little bit. I was pretty much on my own at 18 and I feel I had to struggle way too much. I wound up having to work more and more to keep up with even my bare minimum living expenses plus medical bills that I could not afford and eventually I just had to drop out of school leaving me struggling with student loan debt I couldn't afford either. I know they say that kids value their education more if they pay for it themselves, but I do not want what happened me to happen to her too.

[disneysteve]

How about the college savings?

I know my retirement is more important, but this is important too. I want to be able to help her with school at least a little bit.

Yes, your retirement is more important. So is getting out of debt. Until you are debt free except your mortgage and fully funding your retirement accounts, I would NOT be putting money aside for college. That's not at the top of the priority list.

[hamchan]

Realistically how is anyone supposed to save for college by the time their kids are college aged then? If I am planning to help out with the costs either way, then doesn't it make sense to save up what you can in order to avoid paying interest on loans later on?

[shaggy]

Realistically how is anyone supposed to save for college by the time their kids are college aged then? If I am planning to help out with the costs either way, then doesn't it make sense to save up what you can in order to avoid paying interest on loans later on?

If one has adequate resources, then one can save for retirement and college at the same time. When the budget is tight, difficult choices have to be made, and it's not prudent to put college for a child ahead of retirement savings because there are no options for borrowing money for retiremnt.

Your daughter will pay the interest on her college loans, and she will have the entirity of her working life to do so. Parents, on the other hand, have a limited number of working years before retirement in which to save for that retirement, and those years dwindle as they get closer to retirement age.

[hamchan]

I am not seeing my current resources as being too limited to help her out. Maybe if someone had helped me out it wouldn't have taken me so long to get here.

[shaggy]

I am not seeing my current resources as being too limited to help her out. Maybe if someone had helped me out it wouldn't have taken me so long to get here.

Well you asked why it wasn't a good idea to save for education and retirement and I was attempting to answer your question.

I don't know if it's intentional, but you sound like you don't want input or advice, so I will step back from your thread. Good luck to you.

[disneysteve]

Realistically how is anyone supposed to save for college by the time their kids are college aged then?

You change your priorities. You put saving ahead of spending, needs before wants, necessities before luxuries.

I totally understand that you don't agree with what some of us have posted, and I respect that, but that doesn't change the fact that there is fat in your budget that could be trimmed if you wanted to. My wife and I earn more than you but we don't have Rhapsody, we don't have a $150 cell phone bill. We don't have a gym membership (but I do exercise regularly), we don't have pets, we spend very little on gifts, we cut our own hair (I literally just cut mine before sitting down at the computer), we don't carry balances on our credit cards. I had student loans - 6 figures worth actually - but we lived extremely frugally and made paying them off a priority when we first got married and got rid of them in 12 years, right around the time our daughter turned 10. That freed up a ton of money some of which could then start going into her college fund. We've managed to accumulate 55K in there in 7 years and we have one more year before she starts college. We also max both our Roth IRAs each year. Now again, we do earn more than you so maybe you couldn't do it all to the extent that we do but hopefully you get the point.