Budget Advice/Newbie

**phantom** · 04-29-2013, 05:44 PM

Before you start concentrating on building up a reserve to cover a year's worth of irregular expenses, I would consider cleaning up some of your debt, like the car payment, braces, and judgements. If you could completely pay off any of those, you'd have some more breathing room. Wipe out all of them and you have $667 more to save every month, and $667 less to worry about having saved.

**disneysteve** · 04-29-2013, 06:45 PM

Originally posted by macher View Post

Total income : $5648/mo

Fixed Exp: $3117

Variable Exp: $1713/month

Variable Exp 2: $1100

That totals $5,930/month in expenses which is $282 more than your income. You have a MAJOR problem if that is true. You need to seriously cut spending. There are at least a few things on your list, which isn't a complete spending breakdown, that could get cut back or eliminated easily: cigarettes, clothing, gifts, holiday, sports, haircuts. Chances are you could also trim the grocery bill.

How much longer do you have to pay on the judgements and on the car?

**macher** · 04-29-2013, 11:24 PM

Originally posted by disneysteve View Post

That totals $5,930/month in expenses which is $282 more than your income. You have a MAJOR problem if that is true. You need to seriously cut spending. There are at least a few things on your list, which isn't a complete spending breakdown, that could get cut back or eliminated easily: cigarettes, clothing, gifts, holiday, sports, haircuts. Chances are you could also trim the grocery bill.

How much longer do you have to pay on the judgements and on the car?

Yea I see that. Where do I need to be? Break even? To me breaking even would be good because the goal would be a year of variable reserve. Breaking even would mean that all our bills are paid and that we have reserve for foreseeable maintenance expenses which is a huge chunk of the reserve. I have house maintenance at $167/mo and car maintenance(2cars) at $200/mo.

There is 3 years left on car loan @ $300/month. There are 2 judgements and making $217/mo total payments.

I'm looking at my expenses and the fixed expenses such as mortgage etc can't be trimmed.

I'm looking at Variable 1 expenses for trimming.

Variable Exp
Grocery. 759
Gas. 434
Bridge. 260
Cigs. 260
Total Variable Exp. 1713

Variable Exp 2
Pocket. 174
Clothing 209
Car Ma. 200
House M. 167
Hol/Gifts 167
Med. 50
Hair. 133
Total Var Exp 2 1100

Not ready to stop smoking right now so please let's not go there.

Gas, I estimated high. We don't use $434 a month in gas. For a newbie I wanted to estimate high on gas. I've been watching how much gas each car uses per week and the average is 10 gallons a week each. Very high estimate per gallon is $4. So 20 gallon total is $80 a week in gas.

$434-$346= $88

Bridge tolls. We live in NJ and work in Philly. My wife works part time I work full time. I estimated going over the bridge 12 times a week total. 4 for my wife and 8 times for me. My income includes guaranteed over time and I usually have a 1.5 layover when overt time starts. I estimated 3 extra trips in bridge tolls because I go home then come back to start over time. Even though we live in NJ it only takes me 10-15 minutes to commute to work. What I've been doing in the last couple of weeks is not coming home then going back. But I would still like to have at least an extra $5 bridge toll in there. So instead of 12 bridge tolls for 2 cars a week I can trim it down to 10.

$260-$216= $44

Clothing I have $2500. I figured $500/person(4). I'm not sure if I can cut that down to $2000. I wear uniforms for work and honestly for myself I don't buy much in clothing except for sneakers, socks and underwear. So conservatively speaking I might be able to trim to $2200/year.

$2500-$2200= $300/12= $25

Pocket, this is pocket money. Our kids when they go out have to have some money in their pockets as well as my wife and I. This is $40 a week total for a family of 4 and I'm not sure this can be trimmed.

Holiday/gifts, this I budgeted for $2000/year which can possibly be trimmed. This includes Gifts for the Holidays as well as gifts throughout the year such as birthdays etc. I will have to give this item some more thought.

House and car maintenance to me are the most important. I budgeted $2000/year for house maint and $1200/car totalling $2400 year total. I'm not sure how much of these 2 can be trimmed.

I just got our gas/electric bill. We had a new gas meter put in about 3 months ago. The fiscal year for the gas/electric company ends April. Prior I was budgeting $400/month and received a credit check in mail.. I recently asked about an equal payment plan. They came up with an equal payment plan of $300/month. That sounds kind of low to me. What happened was the electric company messed up and never installed a wireless meter in my house and haven't taken a meter reading for close to a year and a half. I didn't know this. So after they installed new meter where they can take reading from outside they said it will take 6 months to get an actual good estimate. But they said I can go on an equal payment for $300/mo. If this is the case then will trim $100/mo from gas and electric bill. But like I said I'm apprehensive about the $300/mo budget.

$400-$300= $100.

**macher** · 04-30-2013, 10:56 AM

Originally posted by disneysteve View Post

That totals $5,930/month in expenses which is $282 more than your income. You have a MAJOR problem if that is true. You need to seriously cut spending. There are at least a few things on your list, which isn't a complete spending breakdown, that could get cut back or eliminated easily: cigarettes, clothing, gifts, holiday, sports, haircuts. Chances are you could also trim the grocery bill.

How much longer do you have to pay on the judgements and on the car?

Hi just did a revised budget and trimmed some fat. What I'm going to do is get a part time job to pay off the judgements and braces in a year. So I'm not going to include in the budget. I get direct deposit in a separate account.

Total Income. 5648

Fixed Exp
Mortgage. 727
Taxes. 484
Insurance 200
Gas/Elec. 300
Car Pay. 300
Cable/Int. 180
Cell. 215
Water. 40
Sewer. 34
Union. 70.
Total Fixed Exp. 2550

Variable Exp
Grocery. 759
Gas. 434
Bridge. 239
Cigs. 260
Total Variable Exp. 1692

Variable Exp 2
Pocket. 174
Clothing 209
Car Ma. 200
House M. 167
Hol/Gifts 167
Med. 59
Hair. 108
HCol. 25.
Total Var Exp 2 1109

Total Expenses. 5352

Profit $297/mo

**disneysteve** · 04-30-2013, 12:48 PM

Originally posted by macher View Post

Total Income. 5648

Total Expenses. 5352

Profit $297/mo

That's certainly an improvement over the first list. At least it is net positive.

Still, there is a lot of room for improvement. You and your wife just need to decide how aggressive you are willing to be to improve your situation.

Some items that jump out:

Cell phone $215. I'm assuming this is for the two of you but even if the kids have phones (I don't know how old they are) it is a lot. We have 5 people on our plan, 3 have iPhones with data, and our bill is $187/month (and we live very close to you).

Cable/Internet $180. We pay $99, just about half of what you spend.

Hair: $133/month. Really? For 4 people? Hair Cuttery is under $20/person so getting a haircut once a month would be $80 total. For you and any male children, buy a clipper on Amazon for $25 and start cutting your own hair. I've done that for 6 years or more. My wife actually cuts her own hair too. No way would we spend that kind of money on haircuts.

Clothes: $209. You and your wife probably have all of the clothes you need. Growing kids need clothes regularly but that's why there are thrift and consignment shops all around you. Goodwill on 73 or 70, Village Thrift (Route 130), etc. Buying new clothes that will just be outgrown in a few months is a waste.

I notice there is no Savings line in your budget. Of course, as you trim expenses to well below income, the difference should go to savings, but ideally, savings should come first and then spending should be base on what's left after that. The ideal would be to be saving 20% of income - 15% for retirement and 5% for other purposes.

In fact, a good general rule of thumb is for your budget to fit into this model: 50% for needs, 30% for wants, 20% for savings.

**snafu** · 04-30-2013, 12:55 PM

You've been offered excellent suggestions, it's now your job as Change Agent to have a family meeting including DKs if age appropriate, to move the process forward. Explain the need to reduce expenses emphasizing Short Term to take the pressure off finances. If you have concerns about heating equalization payments, transfer $ 50. to a no fee savings a/c awaiting need. DS gave a list of obvious cutbacks. Each is small but cumulative difference in both attitude and $$$$. Compliment wife and help her create weekly menu plans using items in pantry & freezer before expiry. [I read almost 40% of food gets wasted]. Can cost be reduced 20%? Do you take your lunch?

Will the family buy in reducing professional hair care, clothing, gifts, entertainment, Short Term so that extra money can go to car principal or judgement [depends on interest rate]? Make car operation as efficient as possible following the manual for maintenance, using coupons or sales for oil changes, filters etc. Make use of Gas Buddy, special gas sales days, tacking errands to regular commutes to reduce costs. When house and auto insurance renew, research whether you are getting the correct coverage for an appropriate cost.

I won't discuss cigarettes but hope you'll open options.

Where does the money go? [Statistical Averages] What percentages do you spend in these categories?

Housing 30% includes utilities
Auto 15% includes operation & maintenance
Food 17%
Health & Life Insurance 5%
Entertainment 7%
Clothing 4%
Medical 6%
Debt Repayment 5%
Savings/Investment 5%
Misc. 6%

**macher** · 04-30-2013, 01:16 PM

Originally posted by disneysteve View Post

That's certainly an improvement over the first list. At least it is net positive.

It's net positive because I removed the braces and judgments totalling $367 and I trimmed some others. As I said I'm going to get a part time job and income from the part time job will be to pay down the braces and judgements. So that's why I removed them.