Saving Advice Forums  

Go Back   Saving Advice Forums > Financial Chit Chat > Personal Finance

Personal Finance Credit cards, home loans, retirement plans and taxes. The place for all your personal finance questions.

Like Tree5Likes

Reply
 
LinkBack Thread Tools
  #1 (permalink)  
Old 07-10-2018, 06:40 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default How can I optimize my budget?

Hi guys,

I was wondering, how can I optimize my budget?

I currently have a home loan for roof repairs (2.5 years left) and mortgage (12 years left). With a baby on the way, daycare is soon going to cost the same price as the roof payment, but since the interest rate of the roof loan brings the total cost of the loan to an extra 5k, I wonder if I should try to pay off my mortgage first (total cost of mortgage on top of borrowed capital: 50k)

Anyway, regardless of that issue, do you think my budget is optimized?

Thanks!!
Attached Images
File Type: jpg budget-2018-july.jpg (17.7 KB, 17 views)
Reply With Quote
  #2 (permalink)  
Old 07-10-2018, 07:01 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

Welcome to the site.

I'm not sure we can answer your question without seeing your current budget. The pie chart is nice but can you post numbers?
How much do you earn?
How much do you owe on each debt and at what interest rate?
How much do you anticipate daycare costing?
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #3 (permalink)  
Old 07-10-2018, 07:06 AM
$ Saving Assistant Professor
 
Join Date: Mar 2008
Location: Alaska
Forum Posts: 3,600
Default

Your thumbnail doesn't have any actual numbers, and it's a little hard to make out some details... But I'm general terms, best way to optimize your budget (in my view, I see "optimize" as "accurate & effective") would be to track your expenses down to the penny for a few months. That would allow you to ensure your categories are in fact accurate for what you're spending, and it'll give you a way to analyze the spending to determine if there's any changes you want to make. You might find that your spend more on groceries than you would like, or so on.

As for the mortgage vs. roof loan, I would suggest doing it based on interest rate. The mortgage is probably charging less interest than the roof loan. Plus, it's also the smaller balance, so you can clear it off faster, then you can attack the mortgage with a vengeance using the payments for both.
__________________
"Praestantia per minutus" ... "Acta non verba"
Reply With Quote
  #4 (permalink)  
Old 07-10-2018, 07:06 AM
$ Saving College Junior
 
Join Date: May 2015
Forum Posts: 1,062
Default

the most important thing with budgeting is that your income is greater than your expenses.

end sarcasm...

Last edited by Jluke; 07-10-2018 at 07:11 AM.
Reply With Quote
  #5 (permalink)  
Old 07-10-2018, 07:09 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

Quote:
Originally Posted by Jluke View Post
the most important thing with budgeting is that your income is greater than your expenses.
Obviously, and the pie chart shows a nice big slice for savings, so that's good. But as far as optimizing things, you really need to dig into the numbers, so just the pie chart alone isn't sufficient information.
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #6 (permalink)  
Old 07-10-2018, 07:15 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

Sorry, wasn't sure how to include the numbers in the pie chart.
This is the table the pie chart is based on. (I calculated per year, not per month)
Attached Images
File Type: png budget-numbers.png (10.8 KB, 15 views)
Reply With Quote
  #7 (permalink)  
Old 07-10-2018, 07:17 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

Great. Can you also tell us the balances and the interest rates on the mortgage and roof loan?
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #8 (permalink)  
Old 07-10-2018, 07:23 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

roof: 17,178.30 left (I don't remember and can't find it on the breakdown they provided)
mortgage: 319,432.32 left (interest & capital as per their breakdown) (at 1.8%)

Last edited by marie132; 07-10-2018 at 07:29 AM.
Reply With Quote
  #9 (permalink)  
Old 07-10-2018, 07:29 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

Quote:
Originally Posted by marie132 View Post
roof: 17,178.30 left
mortgage: 256,636.45 left
You said you've got 2.5 years left on the roof loan. Could you accelerate that either by cutting back in other areas or (and) dipping into savings?

The one thing you do want to be careful about is dipping into savings when there's a baby on the way. The standard advice is to hold tight until the baby comes and all is well with mom and baby. You want to have that nice full emergency fund just in case anything happens.

Once the baby arrives, though, and any related bills are taken care of, you might consider tapping savings to wipe out the roof loan quicker and free up that monthly payment so that the money can start going to daycare instead.
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #10 (permalink)  
Old 07-10-2018, 07:34 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

You've got almost 31% going to savings. That's fantastic, but also gives you room to play with. Maybe cut back the savings rate a bit and knock out the roof loan faster.

Also, will your insurance costs change when the baby comes? There will be some increased expenses overall. Does the insurance figure include copays and meds and things or just the actual premiums? Babies have a lot of doctor visits especially in the first year or two so make sure you account for that.
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #11 (permalink)  
Old 07-10-2018, 07:34 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

Quote:
Originally Posted by disneysteve View Post
You said you've got 2.5 years left on the roof loan. Could you accelerate that either by cutting back in other areas or (and) dipping into savings?

The one thing you do want to be careful about is dipping into savings when there's a baby on the way. The standard advice is to hold tight until the baby comes and all is well with mom and baby. You want to have that nice full emergency fund just in case anything happens.

Once the baby arrives, though, and any related bills are taken care of, you might consider tapping savings to wipe out the roof loan quicker and free up that monthly payment so that the money can start going to daycare instead.
When I asked the bank, they said that for the roof loan I couldn't pay extra installments, I could only pay the full amount that was left. I have the cash to do that now but that wouldn't leave me with much else, although I could rebuild savings at a rate of an extra 650 a month until daycare time in Jan, which will be the same price.

Also, sorry, I edited my previous message, copied the mortgage number from the wrong box XD

But basically, my 30k roof loan cost me 5k extra in interest (35k total). My 350k mortgage cost me an extra 50k in interest (399k total). Not sure if they apply repayment penalties on mortgages, I have to go ask them.

And yeah, I wanted that money to go to daycare instead but is it reasonable to pay off that much at once?
Reply With Quote
  #12 (permalink)  
Old 07-10-2018, 07:36 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

Quote:
Originally Posted by marie132 View Post
When I asked the bank, they said that for the roof loan I couldn't pay extra installments, I could only pay the full amount that was left.
Ah, if there's no pre-payment option that ties your hands. You could consider getting a HELOC and using that to pay off the roof loan and then you can pay off the HELOC as fast as you want, but that's probably more trouble than it's worth.

I'd probably just keep stockpiling cash until I had enough to pay off the roof loan in a lump sum while still maintaining an adequate EF.
marie132 likes this.
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #13 (permalink)  
Old 07-10-2018, 07:37 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

Quote:
Originally Posted by disneysteve View Post
You've got almost 31% going to savings. That's fantastic, but also gives you room to play with. Maybe cut back the savings rate a bit and knock out the roof loan faster.

Also, will your insurance costs change when the baby comes? There will be some increased expenses overall. Does the insurance figure include copays and meds and things or just the actual premiums? Babies have a lot of doctor visits especially in the first year or two so make sure you account for that.
I don't think the premium will change much if at all, and coverage is excellent, so I didn't even bother factoring that in, because it won't cost me much more than a couple dinners out on the town, which I will gladly forego if it comes to that.
disneysteve likes this.
Reply With Quote
  #14 (permalink)  
Old 07-10-2018, 08:22 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

What would you consider a decent EF at this stage?
If I pay the roof off right now, I am left with roughly 7k in savings, which makes me a bit nervous. What do you think?
Reply With Quote
  #15 (permalink)  
Old 07-10-2018, 08:28 AM
$ Saving College Junior
 
Join Date: May 2015
Forum Posts: 1,062
Default

Quote:
Originally Posted by marie132 View Post
What would you consider a decent EF at this stage?
If I pay the roof off right now, I am left with roughly 7k in savings, which makes me a bit nervous. What do you think?
25k would be a good EF. which if I am following your math is what you currently have.

some say 3-6 months of expenses if you want general terms...

Since there is a baby on the way, all debt payoffs should be off the table until a few months after baby arrives.
marie132 likes this.
Reply With Quote
  #16 (permalink)  
Old 07-10-2018, 08:55 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

Quote:
Originally Posted by marie132 View Post
What would you consider a decent EF at this stage?
6 months of basic unavoidable expenses (does not include stuff like Netflix, vacations, dining out, etc.).
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #17 (permalink)  
Old 07-10-2018, 09:53 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

In that case roughly 25k is about right.
Is there anything else I can do to optimize my budget?
(I had more savings but used that to pay the workers who came to fix up the house before the baby is born so I can rebuild savings after that without worrying too much I think)
Reply With Quote
  #18 (permalink)  
Old 07-10-2018, 10:50 AM
disneysteve's Avatar
Super Moderator
 
Join Date: Jun 2006
Location: New Jersey
Forum Posts: 28,245
Default

Quote:
Originally Posted by marie132 View Post
Is there anything else I can do to optimize my budget?
Can you clarify what you mean by "optimize"?

Without studying your numbers in any more detail, I think someone who is saving 31% of income is doing quite well already.
__________________
Steve

* Despite the high cost of living, it remains very popular.
* Why should I pay for my daughter's education when she already knows everything?
* There are no shortcuts to anywhere worth going.
Reply With Quote
  #19 (permalink)  
Old 07-10-2018, 01:54 PM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

I don't know, just wondering what I can do better.
If it was your budget, would you do anything differently?

Before I bought a house my expenses were around 1600 per month on a 6k salary. I was able to save over 2/3 of my income XD. Starting to miss that time of my life lol.
disneysteve likes this.
Reply With Quote
  #20 (permalink)  
Old 07-11-2018, 07:19 AM
$ Saving Second Grader
 
Join Date: Jul 2018
Forum Posts: 12
Default

So no advice for me?
Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are On
Pingbacks are On
Refbacks are Off



All times are GMT -7. The time now is 11:20 AM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
SEO by vBSEO 3.6.0 PL2 ©2011, Crawlability, Inc.