Am I on track or is there need to worry?

**bjl584** · 05-19-2014, 10:59 AM

I think that you need to look into the $400 to $600 a month "everything else" account. You can probably free up some money there fairly easy.

How old are you? How many years till retirement? What do your retirement savings look like?

**Randomsaver** · 05-19-2014, 11:22 AM

I'd put at least half the tithe into Principal.

**Petunia 100** · 05-19-2014, 11:58 AM

Hi Mr Hopkins,

How many people in your family?

How much is going into the Roth? Your current retirement contributions (a couple hundred per month into the Roth and 3% into the 401k) do not appear to be sufficient to build a comfortable retirement. However, you may have a pension or other assets.

You have not listed a budget for medical co-pays, gifts, home maintenance, car maintenance, car registration, vacations, entertainment, or clothing. I suspect that's where the $300 is disappearing.

How much of that $400 - $600 is food, and how much is "everything else"?

**Mr Hopkins** · 05-19-2014, 01:12 PM

We are a family of 4, the "everything else" category is mainly groceries.

My wife and I don't have health insurance. Her medical condition requires about $20 to $40 per month for prescriptions. Healthcare for the kids is $60 per month, and no co-pays.

I have a seperate account that I use for work related expenses, (I use my car for work and get reimbursed) and whatever is in that account takes care of the car(s) maintenace (basically just oil changes I do myself). I haven't had to do any car repairs in the last year or two. I don't include whatever my car makes as income in the budget, nor do I include these expenses.

Home maintenance, gas for the mower? comes from my expense account.

We usually buy clothing once a year, but it is no more than $30 a month. It falls into the "whatever else" category.

The $825 that goes to savings
$100 to mutual fund (car replacement fund)
$300 to ROTH IRA
$425 to college fund (529)

**Petunia 100** · 05-19-2014, 03:03 PM

How old are your children?

Your net income of 4k per month, is that from one working parent or two?

Do you typically receive a large income tax refund? If so, you may want to adjust withholding.

If you are not maxing out Roth IRAs for both you and your spouse, then why fund a 529? You can always tap Roth IRA contributions tax and penalty free, so you could certainly use them to help pay for college.

Personally, I would not put college savings ahead of having an adequate emergency fund and having my retirement plan on track.

I like to approach retirement planning backwards. What is the minimum amount I will need each month to cover my basic needs? Start with that number, subtract expected SS benefits from it. If you have a pension, you would subtract that as well. The answer is the minimum amount I will need from my own savings. Multiply by 12 to turn it into an annual number. Divide by .04 to arrive at the minimum size of the nest egg needed.

If you're not on track to reach that minimum number, you need to cut discretionary disbursements until you ARE on track.

If your gross pay is 5k per month, then at 3% you are contributing $1800 per year. Another $3600 is going into a Roth. That's $5400 per year, plus any employer match. That's 9%. It seems light, though if you have saved aggressively in earlier years, or if you have a pension or other assets, it may be perfectly adequate.

**snafu** · 05-19-2014, 04:14 PM

Mr Hopkins, I hear your frustration. I think you'd benefit by keeping a small notebook to note every dollar spent for a month or two to identify slippage that is moving you off track. I wonder if mileage reimbursement sums truly reflect the cost of operating your vehicle, which needs to include mileage, insurance, depreciation as well as gas and oil. Are you getting over .60 cents per mile?

Is DW onboard to work with you to seek more value for money? That $ 400. - $ 600. is $ 4,800. - $7,200. annually. I suggest you and DW work together to create a menu plan. It needn't be strict, just pick 5 meals you both like, 6th is a 'plan-over' or leftover buffet and one is children's favourite. Each week the grocery flyers identify their loss leaders/sale items as a start point. List the side dishes you'll eat along the vegetables and greens in season that you all enjoy. It's easy to print out the list of seasonal fruits, usually a better buy than imported out-of-season. Using up the food in your pantry, fridge and fridge freezer or deep freeze is a huge money saver. Don't throw out your plan, repeat it the following month .

It's very cost efficient to take lunch from home and truth be told it's much healthier than some restaurant foods full of sodium, sugar and unpronounceable chemicals. Ask DW to buy non edibles, cleaning products, paper/plastic products from discounters or liquidators, they are the biggest profit aisles for grocery stores.

Do you have items you could sell that are no longer used, no longer needed, not loved and would not be missed? There are several threads at SA with a multitude of small savings that add up over a year to surprise you. One of the items that often shock are bank charges. How much disappears from your account each month?

**Mr Hopkins** · 05-19-2014, 04:15 PM

Kids are 11 and 16. 4k per month is from my wife and I.

Tax refund was about $1500, federal and state

Started saving late for college. We have about $3600 in a 529 for the 16 year old and about $800 for the 11. I didn't want to use retirement funds for college. I was thinking that we would give them what we could save for college and they would need to come up with the difference.

I had the same thought, forget about college and fully fund two IRAs, not just one. But it seemed selfish, so I did one IRA and a 529. This past January I started another 529 for the other one. There won't be much in either one, but its better than nothing, I think...

The car makes on average $500/month, and it takes about $405 of that to actually use and maintain the car ($360 fuel, $30 insurance, and $15 oil change). The reasons you stat is exactly why I use a separate account for business.

Is DW on-board...not really. Doesn't really care to know anything about the finances except how much cash can be withdrawn every month for groceries/whatever, the $400-$600 expense I listed. However, she does the shopping and tries to spend the least amount possible (no name brands, only will but certain things if they're on sale, etc.)

We don't consume junk - sweets, sodas, chips, etc. Brown bag it everyday, except once a month we'll go to a grocery store cafe and have lunch ($11 for the two of us, courtesy of my car).

I have no "big" items to sell to be worth trying to sell anything. There are no bank charges.

**Petunia 100** · 05-19-2014, 04:53 PM

I understand wanting to help your children pay for their educations. Remember, there are a lot of options available to them. One way you could help is to continue supporting them in your home while they attend community college for two years before transferring to a 4 year school. They can apply for scholarships, work during summers, etc. If they do find it necessary to take student loans, when it comes time to repay them, you could volunteer to make part or all of the payments. In the meantime, what you are saving for them continues to grow.

I just focused on what could be better, but the truth is you are doing a lot of things right. You don't have any consumer debt, you do have some savings, you are saving ahead for your next car, you are saving for retirement, you own a home, and you are chipping away at your mortgage.

If you are having trouble adding to your emergency fund, it may be time to consider cutting back in some other areas in favor of the emergency fund.

I think you could do a little better on your cell phone bill by switching to Ting or Rebuplican Wireless.

My family does not have cable, we have high speed internet and a Netflix subscription. We find it is more than adequate for us. The money that I saved from cutting cable was re-directed to savings.

How are your investing costs? Costs compound against you and can have a dramatic impact on your account balance over time. Have you chosen low-cost investment products? If not, you can keep more of your money for yourself by switching.

Do you have any life insurance? A family with two wage earners and dependent children should have some life insurance. Term insurance is very cheap, and all you need.

**Petunia 100** · 05-19-2014, 05:01 PM

Originally posted by Mr Hopkins View Post

Is DW on-board...not really. Doesn't really care to know anything about the finances except how much cash can be withdrawn every month for groceries/whatever, the $400-$600 expense I listed. However, she does the shopping and tries to spend the least amount possible (no name brands, only will but certain things if they're on sale, etc.)

We don't consume junk - sweets, sodas, chips, etc. Brown bag it everyday, except once a month we'll go to a grocery store cafe and have lunch ($11 for the two of us, courtesy of my car).

I have no "big" items to sell to be worth trying to sell anything. There are no bank charges.

DW sounds on-board to me.

She's doing her best to shop carefully, not out buying things on credit behind your back. Trust me, that is a very frustrating position to be in.

You're miles ahead of me in the eating out department, that continues to be an area in which I struggle.

**rennigade** · 05-19-2014, 05:24 PM

It looks like you're giving more away per month ($225) than you are contributing to your 401k? Please tell me im dreaming!?

**feh** · 05-20-2014, 06:14 AM

Hard to give advice w/ such a limited view of your finances/goals, but the 3 budget items that immediately stick out to me are:

tithing
cell phone
cable/internet

**autoxer** · 05-20-2014, 06:26 AM

Originally posted by Mr Hopkins View Post

Don�t feel like I�m on track. Finance is a big stress for me.

On track for what? What are your goals?

Do you really need three vehicles?

You seem to be prioritizing your children's education over your retirement, do you already have a retirement nest egg built up? How many more years do you intend to work?

**TBH** · 05-20-2014, 07:39 AM

I think part of your problem is you're not listing ALL you expenses in your budget. Track your spending and make a more completely list of expenses.

A few other thoughts--

* In my opinion you are CRAZY to put money in a 529 without having health insurance. If you get sick or injured, that's going to hurt your kids way more than having to take out loans to pay for all of college. Get insurance! Right now!

* I agree with others that you are not putting enough in retirement. I think you should stop 529 contributions til you've got a bigger emergency fund, then start small 529 contributions and put more toward retirement.

* I actually think $400-600 a month for groceries and incidentals (shampoo, clothing, etc) is really great. I don't think you have much fat to trim there.

**LivingAlmostLarge** · 05-20-2014, 10:41 AM

Agreed you need hdhp. Do you have any life insurance or disability? Does your wife work? Is the $4k two incomes or one? If it's one what does she do while the kids are in school all day? Can she pick up a job with "mother's hours". Even if it pays little it might be able to pay for college and you can focus your income on the rest.

Am I on track or is there need to worry?