2015 Monthly budget, Salary and debt position - Please help

**snafu** · 01-23-2015, 12:24 AM

my .02 cents...

Mortgage payment details: $2450. what goes to mortgage, what to interest, property tax, other? Kudos for pay down effort
Car payment details, KBB value, interest rate, how many months? Note car insurance; what is house insurance when last reviewed?
Why land/home phone if you each have a cell?
Why not use free credit reports from each of the 4 providers quarterly, why do you need constant monitoring?
$710. food for a couple & small child is high for our region; fast food isn't healthy
$43K CC debt translates to supplementing income with other people's money; it would make me uncomfortable. If the market repeats 2008 drop will you still feel ok carrying so much credit owed? The gov't owes about $18T so the underpinnings are not what the PR suggests.

**Eagle** · 01-23-2015, 04:56 AM

Originally posted by MKKShah View Post

Please tell me what you think about this budget.
1. Is this reasonable given my income?
2. Are there areas that you will spend less?
3. What can I do to save more? or is it even necessary to save more?
4. Should I refinance my mortgage to a 30 year fixed @ 3.6%, getting an extra 750 per month?
5. Based on the number below can my Wife afford to be a stay at home mom (we have a 2 yr old)?
6. Is this a reasonable financial picture for a 34 yr old (w/ a wife and a kid) or are we falling behind?
7. Do you think I have underestimated any aspect of this budget?
8. Does this sound reasonable?
9. What else would you do if you were in my shoes?

@MKKShah This may or may not be what you were looking for... Lol.

1. Some things are very reasonable while others not so much�
1a. Why have a home phone and cell phones?
1b. As to your cell phone bill of $136 that seems pretty high� Who is your cell phone provider? We pay $150 for 4 cell phones, unlimited texts, unlimited minutes, and 10gb of data through AT&T�
1c. Have you researched Ting or Republic Wireless?

2. Areas to spend less�
2a. Why do you have a car payment of $453 a month if you make over 100k a year?
2b. What is the interest rate on the car?
2c. Why do you spend $26 a month on credit card monitoring? You could get 1 free credit report every 4 months for free from each of the 3 credit bureaus� Equifax, Experian, TransUnion.

3. What can be done to save more or is necessary to spend more� Yes, you can always save more� Particularly if you�re planning one spouse staying home with the kids. Looks like you�re saving about 22,000 a year with your 401k for retirement�
3a. What % of your gross income is 22,000?
3b. What would be 15% of your gross income?

4. Refinance to 30 years or not�
15 year fixed mortgage at 3% interest is good. Your mortgage payment is right at 32% of your income. That�s a little high� If you plan on your wife staying at home I might consider refinancing due to the lack of income. It depends on what your income is going to be if your wife does end up staying home.
4a. I�d venture to say your 15 year payment would be 35-40% of your household income if your wife stays home and stops working?

5. Wife staying home� Your household�s net income or what you guys bring home (after taxes) is roughly $92,000. To answer this question kind of need to know how much she contributes towards your household income�
5a. What would your net income be if your wife stayed home?

6. At 34 (with a wife and a kid) is this a reasonable financial picture� Looks like at 34 you guys have about 1.5 to 2 times saved (178k in 401k and 38k in CD's) of your annual salary. Is that correct? If so that's pretty good. Please see below from Fidelity�

7. Underestimated any aspect of budget� At 34k your emergency fund is about 5.5 months� worth of expenses. That is reasonable for your current income. I probably would aim for 9-12 months of expenses. Particularly if you become the sole bread winner in the family with your wife staying home.
7a. What do you think of increasing your emergency fund?

8. Does this sound reasonable�
8a. Why on earth would you want to continue carrying a perpetual balance of 43,000? Particularly when your gross income is over 100k a year?

9. What else would we do� I�d pay off my student loans and credit cards off ASAP.
9a. How secure is your job?
9b. How secure is your wife�s job?
9c. At 34 why are you invested in CD's? What is the return rate on those investments?

Lot's to chew on... Hope it helps!

**Leo** · 01-23-2015, 05:00 PM

I totally agree with snafu and Eagle.

Why do you guys have home phone and cell phone?

Why do you pay for credit monitoring? Also there's few websites that offers free credit score like CreditKarma and CreditSesame. Although I don't think if its 100% accurate but at least its close based on my experience. Also some credit cards offer free fico score.

I would pay your credit card and student loan asap. Also monthly misc $674 is a litte high in my opinion.

**disneysteve** · 01-23-2015, 06:30 PM

Originally posted by MKKShah View Post

I invest this money in a relatively risk free investment of 7.5%.

Please tell us what "relatively risk free investment" pays 7.5%. I think we'd all like to know about that.

**sblatner** · 01-23-2015, 08:20 PM

We have a real landline (that plugs into a wall with an old time phone that doesn't rely on electricity) and cell phones because we live in California and if there is an earthquake, one is bound not to work. Sometimes there is a need for both.

**Petunia 100** · 01-24-2015, 09:58 AM

What are the details on the rental property? That's a pretty big thing to only mention in passing.

**autoxer** · 01-24-2015, 12:00 PM

Originally posted by MKKShah View Post

Please tell me what you think about this budget.
Is this reasonable given my income?
Are there areas that you will spend less?
What can I do to save more? or is it even necessary to save more?
Should I refinance my mortgage to a 30 year fixed @ 3.6%, getting an extra 750 per month?
Based on the number below can my Wife afford to be a stay at home mom (we have a 2 yr old)?
Is this a reasonable financial picture for a 34 yr old (w/ a wife and a kid) or are we falling behind?
Do you think I have underestimated any aspect of this budget?

It actually looks fairly similar to my budget, except my only debt is my mortgage. It's tough to say this is reasonable or that you need to save more until you define your goals and what you are saving for. If your goal is to save 20% and retire in 30 years, then you seem to be on track.

Here is my budget for 2015. I'm 35 and this is for a family of four:

Mortgage: $ 2,007 (12 years remaining, 3.875% apr)
Food: $ 600 (includes groceries, restaurants, fast food and alcohol)
Entertainment: $ 200
Home repair/maintenance: $ 180
Transportation: $ 320 (gas, insurance & maintenance)
Health & Fitness: $ 211
Kids: $ 130
Personal care: $ 75
Pets: $ 80
Utilities: $ 270 (includes electric, natural gas, water, cell phone, internet)
Travel: $ 200
Shopping: $ 200
Gifts: $ 100
Life Insurance: $ 111
Uncategorized: $ 100 (cash withdrawals)

Total: $ 4,784

Originally posted by MKKShah View Post

Does this sound reasonable?
What else would you do if you were in my shoes?

I would get rid of most of the debt, just to simplify things. Two mortgages is enough complication, you don't need to be carrying student loans, credit card debt or even the car payment. Getting rid of those would really free up cash flow. I'm not sure if the credit card games are really worth it, because investments that return 7.5% are generally not risk free.

And define your goals.

**MKKShah** · 01-24-2015, 10:41 PM

Originally posted by Eagle View Post

@MKKShah This may or may not be what you were looking for... Lol.

1. Some things are very reasonable while others not so much�
1a. Why have a home phone and cell phones?
1b. As to your cell phone bill of $136 that seems pretty high� Who is your cell phone provider? We pay $150 for 4 cell phones, unlimited texts, unlimited minutes, and 10gb of data through AT&T�
1c. Have you researched Ting or Republic Wireless?

2. Areas to spend less�
2a. Why do you have a car payment of $453 a month if you make over 100k a year?
2b. What is the interest rate on the car?
2c. Why do you spend $26 a month on credit card monitoring? You could get 1 free credit report every 4 months for free from each of the 3 credit bureaus� Equifax, Experian, TransUnion.

3. What can be done to save more or is necessary to spend more� Yes, you can always save more� Particularly if you�re planning one spouse staying home with the kids. Looks like you�re saving about 22,000 a year with your 401k for retirement�
3a. What % of your gross income is 22,000?
3b. What would be 15% of your gross income?

4. Refinance to 30 years or not�
15 year fixed mortgage at 3% interest is good. Your mortgage payment is right at 32% of your income. That�s a little high� If you plan on your wife staying at home I might consider refinancing due to the lack of income. It depends on what your income is going to be if your wife does end up staying home.
4a. I�d venture to say your 15 year payment would be 35-40% of your household income if your wife stays home and stops working?

5. Wife staying home� Your household�s net income or what you guys bring home (after taxes) is roughly $92,000. To answer this question kind of need to know how much she contributes towards your household income�
5a. What would your net income be if your wife stayed home?

6. At 34 (with a wife and a kid) is this a reasonable financial picture� Looks like at 34 you guys have about 1.5 to 2 times saved (178k in 401k and 38k in CD's) of your annual salary. Is that correct? If so that's pretty good. Please see below from Fidelity�

7. Underestimated any aspect of budget� At 34k your emergency fund is about 5.5 months� worth of expenses. That is reasonable for your current income. I probably would aim for 9-12 months of expenses. Particularly if you become the sole bread winner in the family with your wife staying home.
7a. What do you think of increasing your emergency fund?

8. Does this sound reasonable�
8a. Why on earth would you want to continue carrying a perpetual balance of 43,000? Particularly when your gross income is over 100k a year?

9. What else would we do� I�d pay off my student loans and credit cards off ASAP.
9a. How secure is your job?
9b. How secure is your wife�s job?
9c. At 34 why are you invested in CD's? What is the return rate on those investments?

Lot's to chew on... Hope it helps!

We need to make international calls. One option will be to use calling cards, but good quality ones will come to almost the same price.

We use AT&T as well. Unlimited talk and text for two iphones (one fully owned, the other still under contract @ $15/mo, included in the monthly bill)., and 1GB Data.

I just looked up the Republic and ting options. Thanks for those pointers. Looks like I never bothered to research beyond AT&T, whom I have had for 12 years now.

The car is a luxury SUV. Purchased it used (off lease, 3 year old w/29K miles when I bought it) for 72% of the original car value. I enjoy driving it, and take my family on long drives in the weekend! But I have always gone back and forth on whether this purchase was necessary or if I should have gone for something lower in monthly payments.

The car note is at 3.24% APR, with $19,000 remaining on it.

I have 2 mortgages, a HELOC, 18 credit cards, 2 department store card, 1 Auto loan and most importantly Excellent credit score at 790. I want to protect this. I understand that fraudulent charges can be seen on the statement, what if some ones applies for credit in my name? I can find that out immediately with a text alert from the monitoring company.

22k is 15% of my Gross income (not counting rental income).

My Wife currently stays at home. So all the above numbers are my income only. The reason I ask is because we go back on forth on her need to work. She feels that she can contribute at least another 80K/Yr based on her education / credentials, and that it will help towards an early retirement.

I am really risk averse. Given that I have so little, I can't fathom another 50% loss in market value. But going forward, I plan on Dollar cost averaging future savings into the market, while keeping current positions where they are. I guess I have taken the "Past results are not an indicator of future results" disclaimer to heart!

My job is reasonably secure (I don't work for the govt., and in the private sector this term really is an oxymoron!). Wife does not work.

Embarrassed about this, but I get about 1.5% on my CDs.

I am comfortable with this level. Based on established industry practices, someone in my position will stand to get an 80k benefit upon loss in income. This in addition to what I have will become close to a year's worth of emergency fund.

Besides, even if I want to increase it what option do I have other than continuing to save?

I have been receiving these 0% BT for almost a decade, and got them even through the downturn in 08-09. So, 43000 @ 7.5% less 3% BT fee comes out to about 2000 risk free (again within reason). I keep the extra 2000 in a separate account, not listed in above.

**MKKShah** · 01-24-2015, 10:45 PM

Originally posted by snafu View Post

my .02 cents...

Mortgage payment details: $2450. what goes to mortgage, what to interest, property tax, other? Kudos for pay down effort
Car payment details, KBB value, interest rate, how many months? Note car insurance; what is house insurance when last reviewed?
Why land/home phone if you each have a cell?
Why not use free credit reports from each of the 4 providers quarterly, why do you need constant monitoring?
$710. food for a couple & small child is high for our region; fast food isn't healthy
$43K CC debt translates to supplementing income with other people's money; it would make me uncomfortable. If the market repeats 2008 drop will you still feel ok carrying so much credit owed? The gov't owes about $18T so the underpinnings are not what the PR suggests.

Thanks snafu.

Mortgage is something like this:
Principal: 1250
Interest: 800
Property tax: 300
Insurance : 100

As mentioned above I need the land line to make international calls. I agree with the food / groceries bill. I am planning to work closely on it. I now have this number based on what I purchased from Kroger, Costco, Safeway and Walmart. So it will include some clothes for kids, the occasional home use item etc. But I will pay closer attention this year.

**MKKShah** · 01-24-2015, 10:50 PM

Originally posted by Leo View Post

I totally agree with snafu and Eagle.

Also monthly misc $674 is a litte high in my opinion.

I too agree. This is huge, and came as a shock to me when I actually finished compiling the numbers for 2014. But this includes:

Diapers/Wipes for baby. (approc $60 /mo)
Home maintanence. (HVAC service, Lawncare products, servicing lawnmower etc)
Entertaining visiting relatives and friends.
Kid's Birthday parties
Gifts
Travel budget.
Any new appliances (eg: our coffee machine can go out any time now, a PC may need replacement).
Auto maintenance (I need a new set of tires on one car, that $400 right there).
Medical/Dental copays (the latter is pretty high as dental insurance doesn't always cover stuff, and I already have $400 in copay for some dental work I had done this year)

This is just from the top of my head. There are a few I missed, but overall, they come to around what I mention above.

**MKKShah** · 01-24-2015, 10:55 PM

Originally posted by disneysteve View Post

Please tell us what "relatively risk free investment" pays 7.5%. I think we'd all like to know about that.

OK. You got me there!

I invest in foreign currency denominated bonds (available to me due to my residency status in those countries. These bonds (With top performing local companies and state & municipal bonds) pay more than 10% pa. In return I am assuming a currency risk. i.e the risk that the exchange rate with US Dollar becomes unfavorable. My observation over the last 10 years has been that the benefits have far outweighed the risk.

The exact terms of investment that is available to someone with my legal status in those countries is not available to general institutional investors, who will have to face repatriation (of profit & Principle) risk, in addition to the currency risk.

**MKKShah** · 01-24-2015, 11:02 PM

Originally posted by Petunia 100 View Post

What are the details on the rental property? That's a pretty big thing to only mention in passing.

The rental property is worth $170,000. I owe $115,000 on it.

Monthly outflow:
Mortgage: $1078 (14 yrs left @ 3.625 fixed, includes principle, interest, insurance, taxes)
HOA: $150

Total: $1228

Rent: $1300

Current market rate is $1450. I placed an add at a discount to current market rate to increase the number of potential tenants. This is in an incredibly strong rental market with high quality tenants.

**MKKShah** · 01-24-2015, 11:11 PM

Originally posted by autoxer View Post

It actually looks fairly similar to my budget, except my only debt is my mortgage. It's tough to say this is reasonable or that you need to save more until you define your goals and what you are saving for. If your goal is to save 20% and retire in 30 years, then you seem to be on track.

Here is my budget for 2015. I'm 35 and this is for a family of four:

Mortgage: $ 2,007 (12 years remaining, 3.875% apr)
Food: $ 600 (includes groceries, restaurants, fast food and alcohol)
Entertainment: $ 200
Home repair/maintenance: $ 180
Transportation: $ 320 (gas, insurance & maintenance)
Health & Fitness: $ 211
Kids: $ 130
Personal care: $ 75
Pets: $ 80
Utilities: $ 270 (includes electric, natural gas, water, cell phone, internet)
Travel: $ 200
Shopping: $ 200
Gifts: $ 100
Life Insurance: $ 111
Uncategorized: $ 100 (cash withdrawals)

Total: $ 4,784

I would get rid of most of the debt, just to simplify things. Two mortgages is enough complication, you don't need to be carrying student loans, credit card debt or even the car payment. Getting rid of those would really free up cash flow. I'm not sure if the credit card games are really worth it, because investments that return 7.5% are generally not risk free.

And define your goals.

Very nice. Looks like I get hurt on my utils the most. I can't reduce my gas, electricity, and water bills. I think my consumption is really reasonable. These alone come to $265. I am stuck with my cell phone for another 17 months. So not much luck there. My TV + Internet is 105.mo with the internet portion of it @49.99. But if I remove TV service (which again is only basic cable), the provider will bump up my internet cost to $69.99. So that is a potential $30 difference if I remove TV, but I would say that give my TV viewing habits, $30 is also a reasonable number. So I think I am stuck with $507 for a while.

Or do you have any creative ideas?

I am definitely going to look at Ting/Republic wireless type providers as soon as my current contract is up.

**Reggie** · 01-25-2015, 01:55 AM

I would focus on reducing debt. I realize that your income is a little low with your wife not employed but I think you could pay down credit cards and that high auto loan. Keep investing in your retirement! Good job with that. I would jot down your financial goals to give you a little direction. My goal was paid off home before 40 yrs old and I met that 3 years early. You seem like your floundering a little and reaching for comparisons. Don't compare yourself to anyone because people's finances are generally screwed up!!

2015 Monthly budget, Salary and debt position - Please help