2015 Monthly budget, Salary and debt position - Please help

[autoxer]

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.

You are compartmentalizing the dollars. You have decided that the dollars that you get from the credit card are earning you 7.5%, meanwhile you have 38k in CD's earning 1.5%. Look at it as one big pot, because a dollar is a dollar. What I see is that you are paying a balance transfer fee of 3% on 43k while you have 38k in CD's earning 1.5% and I'm guessing the emergency fund is earning even less. I see a net loss, not a net gain.

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.

You didn't list these in you balance sheet. It's tough to figure out your true financial picture, because you leave out certain assets and liabilities. You may want to create a complete balance sheet for yourself.

Assets
Primary House Value
Rental House Value
Investments
Cash

Liabilities
Primary Mortgage ____ @ 3.0%
Rental Mortgage 115k @ 3.625%
Credit Cards 43k @ 0% (when is the next rollover that will cost 3% in BT fees?)
Student Loans 19.5k @ ___%
Auto Loan 19k @ 3.24%

Very nice. Looks like I get hurt on my utils the most. I can't reduce my gas, electricity, and water bills.

Not with that attitude. back in 2011, I used 10,612 kwh. By 2014 I reduced it down to 4,758 kwh. Once I started analyzing my usage, it was very easy to find waste.

And can't you use skype for your international calls?

[corn18]

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.

How are these bonds doing now that the US dollar has gained SIGNIFICANT strength? I hope your bonds aren't in Euro. If they are they have lost 8% so far in 2015 and 24% in the past year.

[Eagle]

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 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.

@MKKShah15
I always wonder if newer members will come back to the threads they start. Good on you for returning and engaging others.

It seems like you are making a decent living and seems reasonable to me... You have a healthy emergency fund, some assets, and seem to spend less than you make. (Not sure how to account for CC debt though…) But that is totally subjective to your goals, priorities, and situation. There's always room for improvement if you're willing to change and make some adjustments.

Here’s what it seems people are recommending on this thread. It’s also what I’d do in your shoes…

A. Pay off the credit cards.

B. Pay off the student loans.

C. Pay off the car. You don’t need monthly payments. You can afford to pay for a car cash.

D. Invest for kids’ education. Consider starting a Vanguard Star account for each of them. It’s what we did.

E. Get rid of the CD’s at 1.5% and invest instead in mutual funds or something with a better rate of return.

F. I understand about having to make long-distance calls. Are these personal or business in nature? Why not use Skype or Oovoo instead of having a home phone? Or even consider getting your family a Magic Jack account? Does the party you are calling not have reliable internet service?

G. IMO 12 years is way too long to have AT&T without shopping around. I’d definitely look into the Ting or Republic Wireless options now. Even with cancellation fees you might still be saving a ton. I called to cancel our plan and went from paying $225 a month to $150 with AT&T.

H. Create a balance sheet. Assets – Liabilities = Net Worth. Track and update this once or twice a year.

I. Re: Risk averse… As to the “relatively risk free investment” that pays 7.5% = Investing in foreign currency denominated bonds which pay off more than 10%... You not only assume a currency risk but let’s hope your investments aren’t in Euro as Tom said..

I. Credit monitoring services many people agree are over-rated. Use http://www.annualcreditreport.com and get your free credit report once every four months. You should worry less about your credit score and more about utility. What’s the best rewards I can get for everyday expenses like groceries, gas, etc.? My lowest bureau credit score (Transunion) is 788. It fluctuates between 750-815 most months. I get this score free through Discover. I hear other credit card services are going to be offering this free too. That said, anything above 750 doesn’t matter much anyway.

[snafu]

You've had excellent advice and I hope you will give the suggestions serious consideration. A great many boosts to saving result from a great many small cuts. For example, at Costco, put through non food purchases 1st and ask your cashier to 'sub total,' the continue with the edibles and track how much you are spending on food, eating out, buying lunch, take-out, fast food etc. In my experience a small amount of time spent meal planning frees up considerable sums for investment and even more important foods prepared at home are so much healthier than convenience stuff full of unpronounceable chemicals. That benefit is harder to measure but the less medical issues the better, prescriptions are expensive.

I live in a different area but energy {KWH] cost less after 7 pm, so it's cost efficient to run the D/W for the day, 'Air Dry' by opening the door is free! The clothes dryer is the most expensive appliance to operate. Lots of items can be hung on hangers right from the washer, hung to dry from a ceiling mounted unit that costs under $20. and a DIY mount.

Mary Hunt's Everyday Cheapskate e-newsletter is free (mary@everydaycheapskate.com). If you look for frugal ideas on line you'll discover countless ideas for snippets. I started making home made detergents just because they were so much better a product than bought. Have a look at You Tube. Those small bits cumulatively, can be applied to your SLs along with the regular payment so as to give every dollar a job.

[MKKShah]

You are compartmentalizing the dollars. You have decided that the dollars that you get from the credit card are earning you 7.5%, meanwhile you have 38k in CD's earning 1.5%. Look at it as one big pot, because a dollar is a dollar. What I see is that you are paying a balance transfer fee of 3% on 43k while you have 38k in CD's earning 1.5% and I'm guessing the emergency fund is earning even less. I see a net loss, not a net gain.


You didn't list these in you balance sheet. It's tough to figure out your true financial picture, because you leave out certain assets and liabilities. You may want to create a complete balance sheet for yourself.

Assets
Primary House Value
Rental House Value
Investments
Cash

Liabilities
Primary Mortgage ____ @ 3.0%
Rental Mortgage 115k @ 3.625%
Credit Cards 43k @ 0% (when is the next rollover that will cost 3% in BT fees?)
Student Loans 19.5k @ ___%
Auto Loan 19k @ 3.24%


Not with that attitude. back in 2011, I used 10,612 kwh. By 2014 I reduced it down to 4,758 kwh. Once I started analyzing my usage, it was very easy to find waste.

And can't you use skype for your international calls?

Assets
Primary House Value : 360,000
Rental House Value : 170,000
Investments - stocks & Bonds : 174,000
CDs: 54,000**
Cash (=EF): 35,000
Total: 793,000

Liabilities
Primary Mortgage: 275,000 @ 3.0%
Rental Mortgage: 115,000 @ 3.625%
Credit Cards: 43,000 @ 0% (when is the next rollover that will cost 3% in BT fees?)
Student Loans: 19,500 @ 6.8%
Auto Loan: 20,500 @ 3.24%
Total: 473,000

Net: 320,000

**(slightly different now from when I originally posted the numbers to the thread. I am getting back a good tax return this year, and some additional income!)

I am already looking closely at my utility usage. But if you can, please share tips on what measure you took.

[MKKShah]

How are these bonds doing now that the US dollar has gained SIGNIFICANT strength? I hope your bonds aren't in Euro. If they are they have lost 8% so far in 2015 and 24% in the past year.

I am not in Euro denominated bonds. The currency I have my investments denominated in is stable, and has help up quite well against the Dollar. Of course, things can change in a jiffy.

I would like to think of my 43K in CC debt as just debt. To be either paid off with current savings, or future earnings. That money is not included in my balance sheet as I don't plan on repatriating the money (One reason why discount the exchange rate risk...it's not coming back).

[MKKShah]

You've had excellent advice and I hope you will give the suggestions serious consideration. A great many boosts to saving result from a great many small cuts. For example, at Costco, put through non food purchases 1st and ask your cashier to 'sub total,' the continue with the edibles and track how much you are spending on food, eating out, buying lunch, take-out, fast food etc. In my experience a small amount of time spent meal planning frees up considerable sums for investment and even more important foods prepared at home are so much healthier than convenience stuff full of unpronounceable chemicals. That benefit is harder to measure but the less medical issues the better, prescriptions are expensive.

I live in a different area but energy {KWH] cost less after 7 pm, so it's cost efficient to run the D/W for the day, 'Air Dry' by opening the door is free! The clothes dryer is the most expensive appliance to operate. Lots of items can be hung on hangers right from the washer, hung to dry from a ceiling mounted unit that costs under $20. and a DIY mount.

Mary Hunt's Everyday Cheapskate e-newsletter is free (mary@everydaycheapskate.com). If you look for frugal ideas on line you'll discover countless ideas for snippets. I started making home made detergents just because they were so much better a product than bought. Have a look at You Tube. Those small bits cumulatively, can be applied to your SLs along with the regular payment so as to give every dollar a job.

Yup. I am now saving my receipts and going to do do weekly budget monitoring (instead of the once a year stock taking that I did). Little bit here, little bit there and everything just vanishes!

[autoxer]

Assets
Primary House Value : 360,000
Rental House Value : 170,000
Investments - stocks & Bonds : 174,000
CDs: 54,000**
Cash (=EF): 35,000
Total: 793,000

Liabilities
Primary Mortgage: 275,000 @ 3.0%
Rental Mortgage: 115,000 @ 3.625%
Credit Cards: 43,000 @ 0% (when is the next rollover that will cost 3% in BT fees?)
Student Loans: 19,500 @ 6.8%
Auto Loan: 20,500 @ 3.24%
Total: 473,000

Net: 320,000

**(slightly different now from when I originally posted the numbers to the thread. I am getting back a good tax return this year, and some additional income!)

I am already looking closely at my utility usage. But if you can, please share tips on what measure you took.

With that info, I would probably use money from the cds to attack the student loans.

Regarding the utility bill, I used a kill-a-watt meter to measure everything and found the worst offenders were the old fridge and air conditioner. I replaced an old wall unit with a mini split and replaced the extra fridge with a chest freezer. I use the ceiling fans, so I can adjust the thermostat but still be comfortable. I also started shutting down the desktop computer and replaced the most frequently used bulbs with leds. DVRs and gaming systems are also big energy hogs. Check out all of your appliances to see if they have energy star ratings. If you have an electric hot water heater or dryer, consider changing them to gas when they need to be replaced.

[MKKShah]

My January numbers are out.

Here are the results:
- Reduced utilities
- Water lower by $15
- Gas lower by $5
- Electricity lower by $10

My monthly gasoline bill is lower, but that is due to lower gas prices.

But my budget itself was blown out of the park.

I spent huge on the following:

- Clothes:$500 - I don't feel bad about this at all. All the clothes were 80-90% discounted. So This really represents about $2500-$3000 in clothes if I purchased the same items in November or December. Apparently mid-January is a great time to pick up clothing items that are being cleared by retailers to make room for Spring clothing. This also includes some items from Holiday returns! Our clothes shopping is done for at least a couple of years.Between me and my Wife we got about 55 pieces of clothing.

- A new computer: $595. Don't feel bad here either. The old one (3 years old) was busted with non working LCD screen. Replacing it myself would run at 4 hours of work + $170 parts. Replacing at the store I got a quote for $230. I purchased the old computer in 2012 for $550 so felt replacing was necessary.

- A new router: $100. Our existing one was bought when I was in a one bedroom apartment. Now with a house that is more than 6 time larger than the original one, I need a good router for signal.

- New tires: $500. This is a safety issue. Had to do it.

I spent a lot on coffee snacks in January. But I chalk it upto my pre-budgeting era...I really only got a complete handle on my finances mid-jan or later.

I still did not stay under budget this time. But feel I know exactly where money is going. Let's see how Feb goes.