Budget Critique Request

**Jluke** · 08-19-2015, 05:47 AM

E) Not married, but want to be in a few years
F) I want to buy a house eventually (3-5 years?)

E: Start saving for a ring. will you have to pay for the wedding or parts of it?
F: Start saving for a 20% down payment.

Will the extra $500/mo surplus get you E and F??? probably not!

Adjust your spending and think big picture. Some of those little entertainment payments add up over the long run ($53 x 12). Obviously the dining out is absurd, but you have a low grocery bill.

$12,000 isn't a lot of money at your stage of the game. keep saving

Are you getting the full employer match in the 401k?
Your monthly savings category is nice, but you can't touch that money.

**riverwed070707** · 08-19-2015, 05:59 AM

How old are you? Where do you live and what do you expect to pay for a house (ie what's your downpayment goal)? How much do you owe on the car and what is the interest rate?

I see lots of areas to cut back in order to save more but knowing what amount you're trying to save is helpful.

**avil_saver36** · 08-19-2015, 06:55 AM

My take:

Your pet is costing you a chance at homeownership. Your net worth is under $50K and you are spending $5K every year on the pet. Just put that in perspective - upwards of 10% of your net worth is being spent over a pet. Are you OK with that?

Your theoretical savings of $500+ may not materialize every month because a couple of big ticket items are missing from the list (cellular bill - or is it part of TV/Internet, and travel). Even if those were to materialize, you are saving only $6K every year, and at that rate, combined with your current $12K, you will be at $30K in 3 years, which is nowhere close to buying a house unless you are in rural Iowa.

If you got rid of the pet, you get an additional $5K every year. So in 3 years, your savings will be at $45K, and there is some fighting chance you might get to be a homeowner. Conclusion: Your savings rate needs to ramp up dramatically. Ideally, a person should have close to $100K to buy a house valued at $300K. This takes care of 20% DP, all closing costs and plenty of cushion to fix things up as needed.

There are several other areas where cuts can be implemented - gym/sports thingies for example, where $120 per month is way too much. The single most big ticket item though is the pet.

**riverwed070707** · 08-19-2015, 07:09 AM

Originally posted by avil_saver36 View Post

My take:

Your pet is costing you a chance at homeownership. Your net worth is under $50K and you are spending $5K every year on the pet. Just put that in perspective - upwards of 10% of your net worth is being spent over a pet. Are you OK with that?

Your theoretical savings of $500+ may not materialize every month because a couple of big ticket items are missing from the list (cellular bill - or is it part of TV/Internet, and travel). Even if those were to materialize, you are saving only $6K every year, and at that rate, combined with your current $12K, you will be at $30K in 3 years, which is nowhere close to buying a house unless you are in rural Iowa.

If you got rid of the pet, you get an additional $5K every year. So in 3 years, your savings will be at $45K, and there is some fighting chance you might get to be a homeowner. Conclusion: Your savings rate needs to ramp up dramatically. Ideally, a person should have close to $100K to buy a house valued at $300K. This takes care of 20% DP, all closing costs and plenty of cushion to fix things up as needed.

There are several other areas where cuts can be implemented - gym/sports thingies for example, where $120 per month is way too much. The single most big ticket item though is the pet.

Nevermind that he's spending 30% of income renting, $200/mo on tv and movies, and nearly 17% of monthly income on transportation, lets get rid of the pet

**avil_saver36** · 08-19-2015, 07:26 AM

Originally posted by riverwed070707 View Post

Nevermind that he's spending 30% of income renting, $200/mo on tv and movies, and nearly 17% of monthly income on transportation, lets get rid of the pet

For a single person at $3700 take home, I think his gross income is $65-70K, and $1000 in rent is very very reasonable - it's in fact cheap. It really depends upon the location. It's possible he is living in a high cost area and is sharing a 2 bedroom apartment with someone - he did not say anything about it.

Transportation really can't be helped. I recently switched my job and I have to drive nearly everyday. I can WFH too, but being new here, there is tremendous value in being on site. I spend almost $150 on gas and an additional $50 in tolls. So yeah, someone could spend that much on transportation if the job is like 30 miles away (like mine is).

I left TV and movies because he needs his "luxuries". I assume that TV/Internet is really TV/Internet/Cell phone. Also, for someone who eats out very frequently (and probably pays for his GF too), $350 a month in eating out is really "not that much" for today's prices.

Pets to me are completely unnecessary and he is spending $400 a month on pet care + pet food + pet insurance and is probably not adding the cost of pet vaccinations. Pets are expensive and that can be easily rid of without making any significant changes in life.

He could make deep cuts everywhere but that's too drastic and will make him unhappy. If there is one single thing to be cut, pet is the obvious choice from that budget.

Critique welcome.

**Jluke** · 08-19-2015, 08:42 AM

Originally posted by avil_saver36 View Post

He could make deep cuts everywhere but that's too drastic and will make him unhappy. If there is one single thing to be cut, pet is the obvious choice from that budget.

Critique welcome.

I think the fact that he pays for doggie daycare speaks volumes for how he feels about his dog.

We should be focused on the non-pet expenses.

He has some financial maturing to do and we need to help with that.

cut dinners out
cut entertainment - can you really enjoy all of those services plus tv???
cut back on doggie daycare (assuming 5 days a week now)

more details will help: age, house prices, etc

**autoxer** · 08-19-2015, 08:51 AM

Originally posted by avil_saver36 View Post

I left TV and movies because he needs his "luxuries". I assume that TV/Internet is really TV/Internet/Cell phone. Also, for someone who eats out very frequently (and probably pays for his GF too), $350 a month in eating out is really "not that much" for today's prices.

Pets to me are completely unnecessary and he is spending $400 a month on pet care + pet food + pet insurance and is probably not adding the cost of pet vaccinations. Pets are expensive and that can be easily rid of without making any significant changes in life.

It's clear you aren't an animal person, but some people would consider ditching their pets to be a significant change in life.

I think the OP would be much better off ditching the completely unnecessary broadcast entertainment, turning the TV off and taking the dog for a walk. Seriously, why do you need, Netflix, Hulu, a TV subscription, DVD/game rentals and Rhapsody? Just one of those options could provide way too many hours of entertainment. If you take the dog running, then you can even ditch the gym membership.

**riverwed070707** · 08-19-2015, 08:57 AM

Originally posted by avil_saver36 View Post

For a single person at $3700 take home, I think his gross income is $65-70K, and $1000 in rent is very very reasonable - it's in fact cheap. It really depends upon the location. It's possible he is living in a high cost area and is sharing a 2 bedroom apartment with someone - he did not say anything about it.

Transportation really can't be helped. I recently switched my job and I have to drive nearly everyday. I can WFH too, but being new here, there is tremendous value in being on site. I spend almost $150 on gas and an additional $50 in tolls. So yeah, someone could spend that much on transportation if the job is like 30 miles away (like mine is).

I left TV and movies because he needs his "luxuries". I assume that TV/Internet is really TV/Internet/Cell phone. Also, for someone who eats out very frequently (and probably pays for his GF too), $350 a month in eating out is really "not that much" for today's prices.

Pets to me are completely unnecessary and he is spending $400 a month on pet care + pet food + pet insurance and is probably not adding the cost of pet vaccinations. Pets are expensive and that can be easily rid of without making any significant changes in life.

He could make deep cuts everywhere but that's too drastic and will make him unhappy. If there is one single thing to be cut, pet is the obvious choice from that budget.

Critique welcome.

Agree with autoxer. Someone who is putting their dog in daycare likely isn't going to consider getting rid of the dog all together (although I don't disagree pet expenses could be reduced). To me a $300 car payment is more of an unnecessary expense than a pet. I also feel an animal is a lifetime commitment - you don't just drop your dog off at the shelter to reduce your spending and someone earning $60k+ per year certainly qualifies to afford one. It isn't as if all resources are being tapped and he can't afford to feed himself - that would maybe be a different story. IMO it would be more beneficial to focus on the things the OP might actually consider.

**avil_saver36** · 08-19-2015, 08:57 AM

Originally posted by Jluke View Post

I think the fact that he pays for doggie daycare speaks volumes for how he feels about his dog.

We should be focused on the non-pet expenses.

I will disagree with this. His budget is exactly like someone who is a young social dating person, and likes to enjoy some luxuries in life. I think cutting out dining and entertainment expenses will hurt his social life more.

Plenty of people including me love dogs. My spouse had 2 large dogs when she was growing up in her house. My daughter loves dogs. We cannot afford the dogs period. We don't have one.

The thing about all the other "fungible" expenses is that they can easily be cut almost instantly. You can stop going to restaurants, you can cut the cord, you can give up the gym. You can get out and get in very easily. With a pet, you cannot simply cut on that. No matter how many corners you cut, pets need their care and in our busy life, we have to rely on someone else to provide it. At $3700 take home income and especially when he wants to own a house, he cannot afford that pet.

Over a long term, he can correct plenty of things on that budget, but asking drastic cuts everywhere while leaving the "pet in the room" is not smart in my opinion. In my opinion, he should find a good home for that pet preferably starting among friends and families and get rid of all pet related expense.

**avil_saver36** · 08-19-2015, 09:01 AM

Originally posted by autoxer View Post

It's clear you aren't an animal person, but some people would consider ditching their pets to be a significant change in life.

Why do you say this? Because I don't have a pet at my house?

And isn't this forum about making "significant changes to your life" to make your financial situation better?

Also, in your example, taking the pet out for running will save him on the gym, but how will it save him from the pet care? He is working full time and is single. All the pet related expenses he listed seemed mandatory to me. I will let the OP elaborate. My last post on the topic until then.

**autoxer** · 08-19-2015, 11:25 AM

Originally posted by avil_saver36 View Post

I will disagree with this. His budget is exactly like someone who is a young social dating person, and likes to enjoy some luxuries in life. I think cutting out dining and entertainment expenses will hurt his social life more.

None of the 'Important Facts' that auron posted were about how important the TV subscription is to his social life, so that seemed like an easier place to make cuts, without affecting quality of life. His budget should reflect his values, not necessarily look like every other young dating person.

Originally posted by avil_saver36 View Post

At $3700 take home income and especially when he wants to own a house, he cannot afford that pet.

Surely owning a pet will make other concurrent goals tougher, but that doesn't mean they absolutely can't afford a pet. The choice of whether or not you can afford something has more to do with your values than anything else. If auron is saving his budget surplus in addition to the tax advantaged savings, then he is already putting away about 30% of his income, while also supporting an expensive pet. Sure he could be doing better, and I hope he can learn from everyone's input, but I don't expect him to automatically adopt my spending patterns, because my values are different from his.

Auron,
I also think the transportation spending is also pretty high, between the car payment, gas, insurance, repairs and car wash, that's over $8k / year. I know there are a lot of factors with car insurance, but I'm only paying $78/month for full coverage on two vehicles. Have you shopped around for a better rate? With that much money spent on gas, you must be driving a ton of miles, or just have a very inefficient vehicle. Can improvements be made there? How long is it financed for? How much do you owe and what is the interest rate? Would a less expensive vehicle cover your needs? Why are repair costs so high (out of warranty?), if you are still making payment on the car? Does it need to be washed so frequently?

**Goldy** · 08-19-2015, 11:28 AM

I think it looks like a fine budget to me with a few areas open for additional savings. The car insurance seems high to me, it might be worth shopping around a bit to see if you can lower that. When I was single I was paying about 60/mo and even now with 2 drivers and 2 cars its about 80 bucks a month.

What do you think about downsizing your cable/internet? Or at the very least shopping around some. I call every year when my contract comes up and sign back up for a promo rate after threatening to cancel service. My internet is 21/mo and we just use Netflix and over air TV for the rest.

What's the reason you have doggy daycare? Is it for the dog or is it for your piece of mind? If the dog has separation anxiety (like mine) I wonder if it would make sense to hire a trainer for a bit to get the dog used to staying home alone. Then you have an extra 232 to play with.

Honestly the rest of the budget looks fine to me. Ya, you spend money dining out but I think its reasonable as long as it is actually 350/mo. Did you calculate that number or is it a guess? I have found that this is the category that people most often underestimate and sometimes by a lot.

Have you signed up for a budgeting service like Mint (free)? It will make budgeting and keeping track of your budget very easy.

You will need to increase your saving rate or limit the price of the house if you want to buy a house in 3 years.

**LivingAlmostLarge** · 08-19-2015, 02:05 PM

Another dog owner here and cut the other crap. Spending on a pet comes with the territory. And I'm sorry but I'd rather not have a car payment and a dog than having a nicer luxury car than my dog. But then again I've always had dogs.

And Avil a dog is a part of the family. Just cause you want one and "grew" up with one doesn't mean you are a dog person. You have one because you understand the commitment and get one. Most people don't which is how I ended up with all my dogs. FREE (well donations to SPCA, etc). If people were responsible then there wouldn't be so many pets looking for homes.

**avil_saver36** · 08-20-2015, 03:04 AM

Originally posted by LivingAlmostLarge View Post

Another dog owner here and cut the other crap. Spending on a pet comes with the territory. And I'm sorry but I'd rather not have a car payment and a dog than having a nicer luxury car than my dog. But then again I've always had dogs.

And Avil a dog is a part of the family. Just cause you want one and "grew" up with one doesn't mean you are a dog person. You have one because you understand the commitment and get one. Most people don't which is how I ended up with all my dogs. FREE (well donations to SPCA, etc). If people were responsible then there wouldn't be so many pets looking for homes.

Whoever you are, lay off. Do NOT get personal. You know nothing about me except my financial situation. You cut the crap. You got a dog, congratulations. Give yourself a Nobel prize.

Your post has got NOTHING to do with the discussion. The OP posted a budget, I suggested what he could cut, period. You don't like it, disagree with it in a civil language. I am not forcing my view here, you do the same.

Budget Critique Request