Newbie - Need Budget advice

**Jluke** · 06-02-2017, 08:20 AM

how much do you have in savings/Emergency Fund?

is there a penalty if you defer your student loans?

what is your retirement plan - 401k? IRA or Roth IRA?

If 401k through work, do you get a match? either way I wouldn't drop retirement savings to $0 unless you only have the IRA or Rota IRA.

Payoff order on the credit cards: Amazon, PayPal, CapOne.

Is the $80 for each the required minimum or what you pay?

**Burning** · 06-02-2017, 08:49 AM

Originally posted by Jluke View Post

how much do you have in savings/Emergency Fund?
We currently have $2000 in the emergency fund

is there a penalty if you defer your student loans?
I don't think there is a penalty for new graduates to defer for 6 months.

what is your retirement plan - 401k? IRA or Roth IRA?
Neither of us have a retirement plan right now, our intent is to put the money into something.

If 401k through work, do you get a match? either way I wouldn't drop retirement savings to $0 unless you only have the IRA or Rota IRA.
My company is does not match 401k, but we do have ESOP. Her company does not have benefits at all, but they might have some by end of year if they get more people hired.

Payoff order on the credit cards: Amazon, PayPal, CapOne.

Is the $80 for each the required minimum or what you pay?

Minimums are below that but I paid $80 regardless.

Capital one is right around $70, Amazon is $52, PayPal is $54

See responses in Red

**Jluke** · 06-02-2017, 10:15 AM

Thanks for the details...

Good on the EF - it's a start. and it appears you are budgeting for future expenses (car, home maintenance, etc). I would roll all of that into the EF, if you are comfortable doing so.

Since you want to pay all 3 cards off in the next 3 months or so, I didn't bother to ask about the interest rates for each. If you were to only pay the minimums on the CapOne and PayPal, that would free up $36 to put towards Amazon, in addition to the $80 - probably not a big deal based on your timing but wanted to share that thought process.

Other than the EF, do you have other money stashed aside? Just wondering if you could payoff Amazon today.

**Burning** · 06-02-2017, 10:43 AM

Originally posted by Jluke View Post

Thanks for the details...

Good on the EF - it's a start. and it appears you are budgeting for future expenses (car, home maintenance, etc). I would roll all of that into the EF, if you are comfortable doing so.

Since you want to pay all 3 cards off in the next 3 months or so, I didn't bother to ask about the interest rates for each. If you were to only pay the minimums on the CapOne and PayPal, that would free up $36 to put towards Amazon, in addition to the $80 - probably not a big deal based on your timing but wanted to share that thought process.

Other than the EF, do you have other money stashed aside? Just wondering if you could payoff Amazon today.

I wanted to make sure that i have allowances for all of those items so that if something does happen in those categories i can go ahead and take care of them without touching the EF. Our goal is to roll over any additional money from the other categories that are not allowances into the EF every month I.E. Food, Gas and Pocket Money.

I got capital one to lower the interest rate from 22.99% to 16% for 6 months and that was in May. PayPal and Amazon are both at 19.99% and they will not lower either of them.

I have about $600 dollars stashed away for the remaining parts needed to finish a rebuild in the car i will be daily driving (should save money on insurance and gas as its a 94 Honda civic VS my 04 Mustang GT). My commute is about 60-70 miles daily so I think its best to keep that where its at so i can finish this motor before July.

**Gailete** · 06-02-2017, 05:31 PM

Are you doing this in conjunction with your girlfriend? How does she feel about where the money is going and the restriction on clothing, etc.? Unless or until you get married, you both should have your own savings accounts toward retirement. If those credit card bills and student loans are all yours, they should be coming strictly out of you pay. This is my personal bias seeing unmarried couples where one is helping to pay off the others bills and when or if they break up they walk away with nothing and the other walks away with at least their bills gone. I know not every one feels that way and those that are so much in love think that could never happen to them, but if it happens to married couples, it also will happen to unmarried ones as well.

**Burning** · 06-06-2017, 06:12 AM

Originally posted by Gailete View Post

Are you doing this in conjunction with your girlfriend? How does she feel about where the money is going and the restriction on clothing, etc.? Unless or until you get married, you both should have your own savings accounts toward retirement. If those credit card bills and student loans are all yours, they should be coming strictly out of you pay. This is my personal bias seeing unmarried couples where one is helping to pay off the others bills and when or if they break up they walk away with nothing and the other walks away with at least their bills gone. I know not every one feels that way and those that are so much in love think that could never happen to them, but if it happens to married couples, it also will happen to unmarried ones as well.

Not a bad question at all. We are doing this all in conjunction, the house loan is in my name and the title is in both of our names so its pretty much set in stone that we are going to married soon. Also have a ring already, just waiting for the time to come. Our intention is to take the budget for retirement and split it in two to contribute to our own retirement plans. The student loan is a mix of hers and mine, we have talked this all out and made sure that this is what we want to do and talked about the risk just to have it out there.

**Gailete** · 06-06-2017, 07:27 AM

Well that is good to hear. If you have the ring, what are you waiting for. Some night with a full moon, take her for a walk in it and propose. Nothing more romantic than being out with your SO in the moonlight, and it is just the two of you.

**Burning** · 06-06-2017, 12:23 PM

Originally posted by Gailete View Post

Well that is good to hear. If you have the ring, what are you waiting for. Some night with a full moon, take her for a walk in it and propose. Nothing more romantic than being out with your SO in the moonlight, and it is just the two of you.

We have a paid for trip to California in the fall, family owns a pretty large ranch out there. Plan to take the side by side up to one of the lookouts and do it then.

**Eagle** · 06-07-2017, 03:15 PM

Congrats wow this is a great start at 23!

Positives:

So you have a 5.2k income.
You are both gainfully employed.
You are taking control of your finances with a budget.
Your significant other is on board with knocking out the debt.
You are buying a house.

Negatives:

You have some consumer debt. But that is a minor point as you plan on paying them off in 3 months.
Student loans are going to be a bit of a drain on your retirement contribution potential. Not having an employer match is tough too.
You didn�t put 20% down payment on your mortgage so you owe PMI.

**Eagle** · 06-07-2017, 03:15 PM

Some questions to better understand your situation.

1. Are both cars are paid off?
2. What are your total monthly expenses? You listed a total of $5209.
3. What is your surplus? Or how much can go towards debt, savings, and retirement each month?
4. What kind of mortgage do you have? Is it a fixed rate mortgage?
5. Are you both comfortable with a $2000 emergency fund?
6. Do you guys plan on eventually expanding the family and having kids down the road?
7. Do you get health insurance through your employer?

Here's your budget breakdown.

Transportation 10.02%
$522

Home 24.04%
$1,252

Utilities 11.33%
$590

Entertainment 5.47%
$285

Dining1 3.05%
$680

Misc. 22.08%
$1,150

Debts 14.01%
$730

**msomnipotent** · 06-08-2017, 09:25 AM

Your plan sounds good to me. Halting retirement savings for a few months really isn't going to hurt anything at your age, and you really can't make a realistic budget until you have been in the house for a few months to see what costs will really be. If I were you, my next focus would be on getting rid of PMI, and then focusing on retirement savings, or at least 1/2 and 1/2. I can't stand PMI.

**Eagle** · 06-08-2017, 10:56 AM

Originally posted by msomnipotent View Post

Your plan sounds good to me. Halting retirement savings for a few months really isn't going to hurt anything at your age, and you really can't make a realistic budget until you have been in the house for a few months to see what costs will really be. If I were you, my next focus would be on getting rid of PMI, and then focusing on retirement savings, or at least 1/2 and 1/2. I can't stand PMI.

I can't stand PMI either.

The OP (Burning) mentioned Dave Ramsey so I'd assume the next thing to be tackled after the credit card debt is the student loans for baby step 2. The next step would be saving up 3-6 months of savings in a "fully funded" emergency fund in baby step 3. Once that is done baby step 4 would be save for retirement and baby step 5 would be save for kids college. Then burn through mortgage in baby step 6.

**Jluke** · 06-08-2017, 04:39 PM

I wouldn't go full on Dave Ramsey here...

after the CC's are paid off, it's just student loans and the mortgage.

I would do a balanced approach at that point:

I would look into saving for retirement - Roth IRA? I didn't get a clear picture on the employer plan for OP. At 23, that is a lot of time for that compounding machine to get started.

Save $ to build up the EF.

Don't acquire any more debt.

Do careful calculations to figure out how to get rid of PMI and when that would occur. If they aren't living there for more than 5 years, then maybe focus more on the student loans.

**Burning** · 06-09-2017, 04:42 AM

Originally posted by Eagle View Post

Some questions to better understand your situation.

1. Are both cars are paid off? All 3 cars are fully paid for. In the next two years I would like to get a newer used truck but I can not see that in the budget at this point.
2. What are your total monthly expenses? You listed a total of $5209. There is a bust somewhere in between bringing over from my excel worksheet. My total EXPENSES are just over 3500. I am using a 0 dollar based budget so that is why i have other categories for allowances each month.
3. What is your surplus? Or how much can go towards debt, savings, and retirement each month? As stated in the first post if i cut out some allowances and also defer the student loans and retirement savings then i would have an access of $1800/Month to pay off consumer debt. Estimated pay off debt is in September, after that is reached all other allowances would go back into place and the extra money would roll over into the student loans principle.
4. What kind of mortgage do you have? Is it a fixed rate mortgage? The loan is a USDA, fixed rate.
5. Are you both comfortable with a $2000 emergency fund? We both feel like $2000 is a good starting point, but would like to increase this after debts are paid.
6. Do you guys plan on eventually expanding the family and having kids down the road? Our long term goal is to have kids (if planned) after our student loans are paid for.
7. Do you get health insurance through your employer?
I do have health benefits through my employer, but i elected not to enroll this year as i am still covered underneath my mothers insurance with Duke.

Here's your budget breakdown.

Transportation 10.02%
$522

Home 24.04%
$1,252

Utilities 11.33%
$590

Entertainment 5.47%
$285

Dining1 3.05%
$680

Misc. 22.08%
$1,150

Debts 14.01%
$730

Originally posted by msomnipotent View Post

Your plan sounds good to me. Halting retirement savings for a few months really isn't going to hurt anything at your age, and you really can't make a realistic budget until you have been in the house for a few months to see what costs will really be. If I were you, my next focus would be on getting rid of PMI, and then focusing on retirement savings, or at least 1/2 and 1/2. I can't stand PMI.

Correct, this is a preliminary budget. This will not go into full motion until the first of July as that is when my girlfriend receives her first full check from the new company. Also the debts may be paid off even faster because we just learned that our closing date of July 3rd just pushed back another 2 weeks, meaning I probably wont have my first mortgage payment till September

.

Originally posted by Eagle View Post

I can't stand PMI either.

The OP (Burning) mentioned Dave Ramsey so I'd assume the next thing to be tackled after the credit card debt is the student loans for baby step 2. The next step would be saving up 3-6 months of savings in a "fully funded" emergency fund in baby step 3. Once that is done baby step 4 would be save for retirement and baby step 5 would be save for kids college. Then burn through mortgage in baby step 6.

This is the goal.

Originally posted by Jluke View Post

I wouldn't go full on Dave Ramsey here...

after the CC's are paid off, it's just student loans and the mortgage.

I would do a balanced approach at that point:

I would look into saving for retirement - Roth IRA? I didn't get a clear picture on the employer plan for OP. At 23, that is a lot of time for that compounding machine to get started.

Save $ to build up the EF.

Don't acquire any more debt.

Do careful calculations to figure out how to get rid of PMI and when that would occur. If they aren't living there for more than 5 years, then maybe focus more on the student loans.

Our goal is to be in this house for 10-15 years, my understanding is that once I reach 20% of principle paid the PMI drops off. I could be wrong here.

As far as the retirement through my work goes, we are an Employee Owned Company. Basically each year we receive shares back in our company, which they invest in different avenues. The company has been earning more than 20% ROI over the last 5 years, and even during the recession was bringing in over 10%. If i worked with this company till retirement i would have $3M+ in retirement from them alone without me putting a dime into it.

Newbie - Need Budget advice