Budget Critique Request

[Joan.of.the.Arch]

My last post on the topic until then.

[riverwed070707]

[auron]

None of the 'Important Facts' that auron posted were about how important the TV subscription is to his social life

Update:
Wow, I did not realize my dog spending habits would cause such an uproar! And no, I am not changing my pet spending.

More facts about me:
I'm 28, just a few years out of college.
Gross income: $85k
Bonus: was $7,300 this year but I don't count it in my budget as it's not guaranteed. I spent 2/3 after tax of this on my first international trip this summer (Morocco & Spain) and the rest in my savings.
I use Mint
Yes, I am taking full advantage of my 401k employer match
Phone Cost: $0 - company pays for my phone
Gym: I recently started using the gym at work instead of my normal gym membership
TV/Internet: I honestly don't know why I have the TV portion. Internet is needed, but I rarely use the cable TV. I will likely get rid of it next month after putting this in writing
Movies/DVD's: I haven't been spending this budget item. Actual cost has been $2/mo for occasional redbox
Car payment: 3.5% Will be paid off Aug 2016
Car maintenance: I haven't been spending $50/mo this budget item regularly. Spent $170 on car mait this year (filters, oil, transmission fluid).
Car Fuel: Actual costs (trend from my fuel logbook) is actually at $110/mo
Car washing: I haven't been spending this budget item
Car Insurance: I got a speeding ticket 2 years ago that caused my rate to double. 71 mph in a 55 mph construction zone =( Still paying the piper on that one
I finished paying off ~$54k (P&I) last October thus contributing to my currently low cash/investment levels.

Thanks for the feedback everyone! I've got some more thinking/re-evaluation to do!

[HappySaver]

It sounds like you've mostly covered it, OP, but I would look to reduce:

TV/Internet: hopefully you can cut that to $40-50/monthly just for internet. The cable TV is the single biggest waste in your budget right now.

Pet Insurance: is your dog older and already having issues? If so, keep the insurance. Otherwise I would say cut it. Everything I've read is that when you actually need, they don't cover most of what you need. We went through two costly knee surgeries with our dog, which insurance would not have covered (we had no pet insurance). Instead you may be better off putting the $60 into your own pet savings account so you can draw from it if you have future vet costs.

By the way, I also got a dog when I was in my mid-twenties, not yet married and renting, and she was my companion everywhere. I cannot tell you how much she enriched my life, and also that of my husband's once I got married, for many many years until her demise. The best thing I ever did. That, I agree, is NON-negotiable.

Gym fees: It sounds like you may be able cut these if you can use your employer's gym. That would be great - don't be double-paying here.

DVD rentals/Netflix/Hulu/Rhapsody: Combine these into one line item, especially since you're not spending in some of these sub-areas, and budget accordingly. No reason to ever pay for DVD rentals if you have Netflix and Hulu. Libraries are a great way to get free rentals.

There is no haircut/clothing budget line. You must buy some of these things occasionally. There is also no vacation line item.

Overall you're in great shape at your age, but if you want to purchase a house you will have to tighten the belt a little and prioritize for it.

[scfr]

In addition to the comments already made . . .

BUDGET - Have you included everything?
I don't see car licensing/fee/inspection on the budget. That's another expense that is paid only once a year but you can budget for monthly.

I don't see a budget for household items (cleaning supplies, toilet paper, postage stamps, etc) but perhaps that is included with groceries?

I also don't see a budget for gifts (birthday, holidays) or donations.

TRIM EXPENSES to boost savings
It sounds like you've already got a concrete plan to trim some of the expenses (cable, gym, etc.) - go for it!

Another expense that you might be able to trim if you did some comparison shopping is pet food. $100 per month seems quite high. Is this a situation where checking the prices at multiple stores (including warehouse stores) or on-line could result in an easy save?

Could you trim the eating out cost a bit by doing some cook-at-home dates?

When the car is paid off, start putting the car payment in to savings so that when it is time to buy your next car paying cash is an option.

As others have mentioned, start saving up for that wedding and down payment for a house. The way you do that is by cutting back on other expenses.

LONG TERM:
What has not been discussed yet, and what I see as the biggest potential problem as far as your long term security, is that ESPP. Am I reading correctly that over half of your total retirement savings are tied up in company stock? It's generally considered quite risky to have over half of your "portfolio" in just one stock, especially when your paycheck depends on the same company. Perhaps you have a very high tolerance for risk and it is a risk you are willing to take, but sometimes people aren't aware of the amount of risk they are taking when it comes to ESPPs.

[autoxer]

Un-allocated Surplus $558

I think you should take the un-allocated surplus and allocate it properly. Set up an automatic transfer that coincides with your paycheck, to move that money into your savings account, so that saving for your future house happens first, just like the other paycheck deductions.

[scfr]

I think you should take the un-allocated surplus and allocate it properly. Set up an automatic transfer that coincides with your paycheck, to move that money into your savings account, so that saving for your future house happens first, just like the other paycheck deductions.

Excellent point. If you have a target date for home purchase, you could even purchase CDs that would mature shortly before the earliest possible purchase date. You could earn a tiny bit more interest that way.

[auron]

In addition to the comments already made . . .

BUDGET - Have you included everything?
I don't see car licensing/fee/inspection on the budget. That's another expense that is paid only once a year but you can budget for monthly.

I don't see a budget for household items (cleaning supplies, toilet paper, postage stamps, etc) but perhaps that is included with groceries?

I also don't see a budget for gifts (birthday, holidays) or donations.

TRIM EXPENSES to boost savings
It sounds like you've already got a concrete plan to trim some of the expenses (cable, gym, etc.) - go for it!

Another expense that you might be able to trim if you did some comparison shopping is pet food. $100 per month seems quite high. Is this a situation where checking the prices at multiple stores (including warehouse stores) or on-line could result in an easy save?

Could you trim the eating out cost a bit by doing some cook-at-home dates?

When the car is paid off, start putting the car payment in to savings so that when it is time to buy your next car paying cash is an option.

As others have mentioned, start saving up for that wedding and down payment for a house. The way you do that is by cutting back on other expenses.

LONG TERM:
What has not been discussed yet, and what I see as the biggest potential problem as far as your long term security, is that ESPP. Am I reading correctly that over half of your total retirement savings are tied up in company stock? It's generally considered quite risky to have over half of your "portfolio" in just one stock, especially when your paycheck depends on the same company. Perhaps you have a very high tolerance for risk and it is a risk you are willing to take, but sometimes people aren't aware of the amount of risk they are taking when it comes to ESPPs.

Thanks for you reply! Very helpful comments.
Pet food: My dog has some digestion issues and she has to have special food
Groceries include household supplies
Car tags/etc: You're right, I didn't take this into account but I would lump this into car maintenance
Clothes: I don't budget for this mostly right now only because I very rarely purchase clothes and have never looked that close out my spending habits here. I think I'll need to figure this one out

Your comment about security is one that I have thought about quite a bit actually. I contribute to my ESPP since I get a 10% company match (ie, I contribute 6% and company matches 0.6% equivalent). My plan with this is to sell this stock and invest it in my Scottrade account. I just don't want to pay normal income tax on it (over 1/2 the principal amount is less than 1 year old).

[scfr]

Thanks for you reply! Very helpful comments.
Pet food: My dog has some digestion issues and she has to have special food
Groceries include household supplies
Car tags/etc: You're right, I didn't take this into account but I would lump this into car maintenance
Clothes: I don't budget for this mostly right now only because I very rarely purchase clothes and have never looked that close out my spending habits here. I think I'll need to figure this one out

Your comment about security is one that I have thought about quite a bit actually. I contribute to my ESPP since I get a 10% company match (ie, I contribute 6% and company matches 0.6% equivalent). My plan with this is to sell this stock and invest it in my Scottrade account. I just don't want to pay normal income tax on it (over 1/2 the principal amount is less than 1 year old).

Pet Food: Makes sense about the special dietary needs. I don't compromise on my dog's care. But I do look for ways to save a little without compromising. Do you look for coupons, or ask about rebates if you buy from your vet? For example, I just went to the HillsPet.com web site and there was a popup offering me a $7 coupon for Hills Prescription Diet food. And when I buy monthly preventatives from my vet, there is always some sort of rebate or "buy some, get some free" promotion going on. I just ask and the front desk staff are always happy to help.

ESPP: I'm not an expert on how this works, and I'm sure every plan is different, but you may want to create a plan to sell shares of the company stock as soon as you can without taking a tax hit, and then move the proceeds to whatever asset mix you have chosen for yourself. I think the biggest risk would be to just let shares of company stock keep accumulating for many years and ignore them. If the company ran in to serious trouble, you could lose your job and a big chunk of your retirement nest egg all at once.

[autoxer]

If you are concerned about taxes, you can contribute a lot more to your 401k.