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 Post subject: Cranky's attempt at a budget/introduction
PostPosted: Sun Jan 04, 2009 10:52 am 

Joined: Fri Jan 02, 2009 7:42 am
Posts: 269
So, I haven't really introduced myself much on these boards yet. So, here is my plan and where I stand for 2009.

I'm a 27 year old electrician / estimator in Chicago IL. I have a wife and 1 kid with a second on the way. This kind of responsibility has shaken us awake to things we need to start doing. Our first kid is only 18 months but after living on one income for a while it has become apparent that steps needed to be taken.
Since I do not know anybody who is financial well off older than me in life, and most of my friends are still making up their minds about their careers... these steps are something that is up to me to discover and research.

Current Status: (end of 2008)
Made 80,000 Gross. About 65,000 after all the taxes.
I have a Condo that we bought a few years ago for 190,000. Our Current Mortgage is 120,000 due to a refinance debacle. It was 100,000.
Wife makes 0 money at the moment.
No Car Payments
No Credit Card Debt.


Goals for 2009: (Let me know here if you guys see anything that can help)

-Get term life insurance for myself and my wife.
-Consolidate all our bills and go through EVERY bill and trim any extra service per month we are not using.
-Redo W-4 So I get more money per week but don't get the 2,000+ tax returns I currently am.
-Save $15,000 and in an ING account I just opened.
-Pay off all medical bills from having a second kid (this may reduce that savings amount)
-In July (after birth of second kid) determine if I should open up an IRA or not.
-Close all extra bank accounts and consolidate my wife and I down to : One checking, One regular savings, One InG savings. (rather than the 4 different banks we have now)
*Edit - Make a will per Frugal.


Here is my monthly breakdown:

Mortgage: $1,159 (7% Fixed)
Association Fees: $288
Payment for a debt for my wifes father (will be done in march): $175
Kid's Music Class: $150
Groceries: $480 a month.
Going out to eat / misc. weekly expenses: $600
Gas: $150
Netflix: $15.99
Sprint Phone Bill: $130
Comcast Cable and Internet: $120
Electric: $188
Gas: $15
Water: $15
*Union Dues: $98 (Payed every three months in one lump sum of 288)


Our Insurance is eating up a portion of our monthly income between 2 cars, homeowners and POSSIBLY life insurance... however we are currently in the process of revising these plans and working on them.

On a 4 week month I take home $5,000. I am currently saving $1,000 direct into a savings account.

as I said, currently we have no savings, yet no debt either. but are cars are over 10 years old each now and they won't hold up much longer. What can you guys see that needs to be trimmed / any advice?

*Another Edit update. I also have a cat and a dog. We've never tracked how much that has been costing us.. and while we aren't going to get rid of them, we will not be getting another animal after they go away.

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


Last edited by CrankyBolt on Sun Jan 04, 2009 4:30 pm, edited 3 times in total.

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PostPosted: Sun Jan 04, 2009 11:30 am 
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Joined: Sun Aug 10, 2008 2:50 pm
Posts: 154
Location: South Florida
Choose between the cable and the Netflix ... you shouldn't need both.

Make a will.

At the risk of sounding sexist... if your wife is staying home, why are you spending $600 per month on going out to eat and miscellaneous expenses? With the $480 groceries that you already buy, I would think that you would be eating out much less often. I'm not sure what the situation is but I would think that you two could cooperate more in that department ... perhaps you could make breakfast in the morning for the whole household and your wife could pack a brownbag lunch for you to bring to work? Your wife can prepare the dinners most of the time (at least on the days you work) ... and for those evenings when she doesn't feel like cooking, she can just put together some leftovers from the fridge or take out something from the freezer that she made in advance on an all-day cooking spree for just such a purpose. If food prep isn't her thing, maybe a cooking class would be beneficial.


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PostPosted: Sun Jan 04, 2009 4:22 pm 

Joined: Fri Jan 02, 2009 7:42 am
Posts: 269
Here is the deal on the Netflix: We like Anime. A lot. Netflix allows us to watch all the anime we want, as opposed to buying entire anime seasons just to watch them once. About 3 or 4 months ago.. we would spend $75-$140 a month in just buying DVD's.

I can probably deal without having 2 netflix dvd's at a time.. and drop us back down to one DVD and or find a way to use the computer to output to the TV.
I will do some research into ways to get rid of cable. I don't need it, I hardly watch any tv. However, there is another partner here who does.

As for $600 in going out to eat / misc. Here is pretty much what that entails:

We live in Chicago. It's cold here. Very Cold. My wife is 4 months pregnant. Going out for walks during the day or to the park isn't very fun at the moment for her. Not to mention with a toddler. We feel it is very important to expose our kid to as much as possible and I don't want Trent stuck in the same 4 walls all the time. So we have an option throughout the week we go out to eat to a restaurant once a week. For my wife and I that's about $35-$40 after tip. She will probably go to this breakfast place once a week with Trent for about $20.

I get sucked into going out with co-workers at least once a week for lunch... $15...

So call that at $75 bucks a week we spend easily. and I mean easily.

For some reason every single month of the year, its somebodies birthday, Holiday, Wedding, Having a Kid... Seriously, not a month goes by where we DON"T have some kind of social obligation to full-fill. Now, $300 (an extra 75 a week) seems like a little much to set aside for expenses... but look at Jan. Alone.

I have an Apprentice Graduation at Navy Pier... need a suit dry cleaned, parking, bar tipping, etc etc...
Also, we have our 6 year anv. Last year I kinda dropped the ball on it, so this year... I have to go a little above and beyond...
And we had new years over at our place. It was cheaper than us going out, but it still ran us $40 in groceries.

so its not that that "misc" section is us going out to eat every day like that number would entail. It just seems that for two late 20 year olds with social obligations its very difficult to not go and we don't want to be those people who don't buy people birthday gifts etc etc.

I don't feel wrong in doing this at all. I would like to trim it down to $100 a week set aside for stuff like this, or start using restaurant.com more often and we are making a pact to use that.

Think Trimming down to $100 would work?

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


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PostPosted: Fri Jan 09, 2009 11:18 pm 

Joined: Mon Jul 09, 2007 1:14 pm
Posts: 58
Trimming it all the way down from $600 to $100 could be a huge endeavor. I'm not saying you can't do it, but why not try to shave $200 off per month and seeing how that feels????

I would look into other plans besides Sprint. My wife and I just got cell phones from AT&T and the bill is $85/month with 200 text messages per phone a piece. $120 seems high. The cool thing with AT&T is the use of rollover minutes. IF you don't use some of your minutes one month, you can use them the next month (or any subsequent month) at no additional fee. For instance, my Wife and I didn't use 250 minutes last month so this month we could go over our 550 allotment and not eat any additional cost. This also makes you conscious of when you use your cell phone and makes you use it more during the nights and weekends.

My last suggestion would be to refinance your mortgage. I don't know if you will be able to, but with mortgage rates in many places approaching the low 5%s or even sub 5! You should be able to refinance and lower your payment substantially.

Also, your payment of $1,159 on your mortgage doesn't equate for me. If I plug that into a mortgage calculator using $120,000 and a 7% interest rate, it says you should be paying $800/year. I don't have a mortgage so perhaps I am ignorant as to why your payment is high.

Just for fun, plugging in a 5.5% interest rate on $120,000 gives me a payment of $681.00 per month! Almost HALF what you are paying!!! I know closing costs would have to come into play, but it seems like a material difference when compared to what you are paying!!!!!


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PostPosted: Fri Jan 09, 2009 11:46 pm 

Joined: Sun Aug 03, 2008 7:17 pm
Posts: 138
Location: MN
I'm curious about the toddler music class that's $150/month. I have two little boys and one of them took a music class around that age at a cheaper place for maybe $40 for a 6 week class. The super-duper fancy music school in downtown Minneapolis offers a slightly better toddler program for $232 for 4 months. If $150 was a semester-long fee, I can understand. If you're really paying that every month, there must be a cheaper program out there and a one year old really won't know the difference. For getting out of the house, I highly recommend buying an annual pass to something, whatever your wife enjoys the most, and go every week or two and really get your money's worth out of it. Here, it's either the Children's Museum or the Minnesota Zoo -- they cost a fortune to go once, but if you go every month, it's under $100 split at least 12 ways and totally worth it. I'm also a big fan of nature centers -- they're free here and hardly anyone is there, but my toddlers love them. Also, every library is slightly different and most offer free kids' programs. I'll go to a different library every week and it's something new for them (there must be at least half a dozen within 5 miles).

Just looked and the Chicago Center School of Music offers toddler classes for $225 for 12 weeks.


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PostPosted: Fri Jan 09, 2009 11:47 pm 

Joined: Fri Jan 02, 2009 7:42 am
Posts: 269
1,159 includes property taxes and home insurance.

Actually, I already have begun the refinance process this week. Got locked in at 5.25%... just need to finish the paperwork!

Also, when I said trim it down to $100, that was in direct reference to the line above where I said that the $600 was $150 a week... so in the long run, I'm really thinking about trimming it down to $400 a month.

Which is exactly what you just suggested.

As for Sprint. Wish I could but we just signed our contract. When the time is up however I'll look around.

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


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PostPosted: Mon Jan 12, 2009 9:22 am 

Joined: Fri Jan 02, 2009 7:42 am
Posts: 269
Current Goals Update:

Okay, I've been a busy guy. Here is the lowdown on status since I started this:


THE GOOD:

Filled out a new W-4 form. Claiming 6 now instead of 3. (I was due for a $2,400 tax refund). This just happened today so I don't expect to see a change for some time. However, what ever the difference is in my paycheck will go directly into to my weekly deduction of $250.

I have called my Insurance company. All of our policies are being rolled into one policy, all of them have deductables raised up to $1,000 to save on premiums. Also have life insurance quotes on the way from the same company. The nice thing is I worked it out with them so that everything is under one single bill rather than one bill for each car, home, and life.

Trimmed $30 out of my monthly sprint phone bill. This won't take effect until Feb.

Trimmed $10 out of my monthly cable bill by dropping back down to basic cable only.

Closed one Credit union account.

On track to close the second credit union account.

Opened up ING direct Savings account and set weekly deductions up. Account is all verified and set to roll.

Getting us down to One Regular Savings, One Checking, and One ING savings has been a hassle since we haven't cleaned up our finances in a long long long long time and at some point we both used to work at banks. So we had a total of 7 different bank accounts... usually with $50 left as a min. in each account.

All recurring MMO (City of Heros and Warhammer Online) game accounts officially end in Jan. Freeing up $60 per month.

On track to refinance Mortgage from 7% down to 5.25%. $350 fee for appraiser. Man, I should look into doing that.

Got my yearly credit report and started challenging things that are beyond 7 years old.



THE BAD


My wife had a Miscarriage. It is a tragedy at 4 1/2 months through the pregnancy. It happened a week and a half ago and we are starting to feel as comfortable as I think we ever will about it. However, this is truth and testament as to why one needs an emergency fund. All of the money we had set aside last year (about $1,800) will end up being spent over this. This does not bother us in the slightest as what happened is greater than money could ever be.

To Do

Need to save up $1,000 + the tax return for a vacation we ARE HANDS DOWN NO QUESTIONS ASKED taking in March. We are taking a week off and going on vacation. It needs to happen.

Get an External Hard-drive for all financial information.

Make a Will.

Get my wife a nice anniversary present by Feb. 7th.

Close last credit union account.

Redo budget after new tally and numbers finally roll in for Feb.

My goal is to get up to $300 per week into savings by May. I think this is 100% possible. I just need a month of stabilization after shaking everything up.

[/u]

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


Last edited by CrankyBolt on Mon Jan 12, 2009 9:25 am, edited 1 time in total.

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PostPosted: Mon Jan 12, 2009 9:24 am 

Joined: Fri Jan 02, 2009 7:42 am
Posts: 269
amyrobynne wrote:
I'm curious about the toddler music class that's $150/month. I have two little boys and one of them took a music class around that age at a cheaper place for maybe $40 for a 6 week class. The super-duper fancy music school in downtown Minneapolis offers a slightly better toddler program for $232 for 4 months. If $150 was a semester-long fee, I can understand. If you're really paying that every month, there must be a cheaper program out there and a one year old really won't know the difference. For getting out of the house, I highly recommend buying an annual pass to something, whatever your wife enjoys the most, and go every week or two and really get your money's worth out of it. Here, it's either the Children's Museum or the Minnesota Zoo -- they cost a fortune to go once, but if you go every month, it's under $100 split at least 12 ways and totally worth it. I'm also a big fan of nature centers -- they're free here and hardly anyone is there, but my toddlers love them. Also, every library is slightly different and most offer free kids' programs. I'll go to a different library every week and it's something new for them (there must be at least half a dozen within 5 miles).

Just looked and the Chicago Center School of Music offers toddler classes for $225 for 12 weeks.


You kinda hit it on the head there. It is $150 for a 6 week class. The other portion of that budget covers a fee to the children's museum / other kid activities.

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


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PostPosted: Mon Jan 12, 2009 11:39 am 

Joined: Sun Apr 29, 2007 8:11 am
Posts: 1088
Location: Sunny Florida
I'm so sorry to hear about your loss.

Re: the budgeting. It sounds like you are in pretty good shape with just mortgage debt.

I would suggest tracking your spending for a couple of months to see where your money leaks might be. It sounds like certain experiences are important and you want to keep funding them (eating out, music lessons) but there are probably other "misc." expenses that you could cut way back on. If you want to eat out as a family to get your wife out of the house then you take your lunch to work or you go out every other week as a family. You don't have to cut everything out but cut out the things that don't matter and reduce the frequency. And I agree with others, if you wife is at home that should cut back on eating out or other services that a working couple might incur.
On the $150 music lessons for your child, I would be putting that money into college savings before I'd be spending it on lessons (unless you already have college funded in some other way). I live in a much smaller city and there are tons of free activities in my city I have to imagine that Chicago should offer even more.

On the gift front, I would cut back on the gifts for others (not to be mean but because you can't afford it) and come up with a plan/budget for gifts. Just because someone buys you or your child a gift doesn't mean you have to buy them a gift. You don't have to buy a gift for every wedding, birthday, etc. And when you have events set the tone by requesting no gifts I know how it gets out of hand with kiddos. For us, we have a holiday gift giving budget that we fund (via auto transfer to ING) each month and any and all other gifts come out of our allowance. We pay our bills, move money to investments/savings and we each get an allowance for every two weeks. When the allowance (which covers all spending without a bill - grocery, dry cleaning, eating out, entertainment, clothes, personal expenses, and gifts) is gone we stop spending. If you've got an allownace system and you have a $100 left until pay check you won't be buying gifts or if its really important I'll buy the gift during the next allownace period and go without something else (like eating out). This system works really well for us, we pay the bills and we save/invest before we do any other spending and our other spending is capped via the allowance.

Vacation, even when we were paying off $55,500 in debt in 2007 we took a vacation. We did, however, set a budget for the vacation, set aside cash and paid for it in full before we left and stuck to our spending budget during vacation.

_________________
Sam

http://adventures-of-sam.blogspot.com
(Follow Sam's financial and real estate adventures.)


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PostPosted: Wed Jan 28, 2009 10:56 am 

Joined: Fri Jan 02, 2009 7:42 am
Posts: 269
End of Jan. Update:

So, my Wife has been awesome. Every time I want to stop by Portillos or pick up some food... she stops me and says she's already cooking dinner. I end up not picking up food and going home instead. I still WANT to go pick up food... but I figure she is already cooking.

I am getting a tax return back of $3,562. $3,000 of that is being set aside for our vacation in March. The rest goes into savings. Whatever is left from the vacation, will also go into savings.

As such as of the end of Jan:

$2,763 of the planned $15,000 for the year is saved into our EM Fund.

Now here is the next question. I just shook up the beehive of all our finances. I'm going to let all the bills settle down and re-evaluate our monthly expenses in May again to tweak / alter the budget. However, should I be saving up 6 months of my GROSS Income for my emergency fund? Or should I be saving up 6 Months of Expenses. Obviously, they are drastically different numbers. One is about twice the other.

The next question, is what should I turn my attention to learning about next: In a 2-3 years, we will probably need a new car. Our current cars are both over 10 years old. I want to take about 1 or 1.5 years in building up an emergency fund as fast as possible. Then I will start saving for a new car. This is the catch:

If I want to save for a car but I will not buy a new car until our current ones break down. Sure it could be tomorrow. It could also be in 5 years. Either way, I want to save money in an investment that will earn greater interest than say.. a CD..... what kind of short term investment should I start looking to learn about? Index Funds? Bonds?

I'm not very well versed in good short term investments so, I have a while to learn about them while our emergency fund is built. I just want to know where that next step should take us.

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


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PostPosted: Wed Jan 28, 2009 4:14 pm 

Joined: Mon Feb 04, 2008 7:35 am
Posts: 1148
Location: Maryland
Sorry to hear about the miscarriage. That's really sad.

I'm glad your wife is making dinner every night though. That really works out well for you when you call her and want to order food.

I keep most of my liquid money in ING. I know that there are probably better options for short term savings, but ING works for me because I can title the subaccounts. I just seem to like those subaccounts. Not really sure why. hee hee. Sorry I can't be of more help there.

Keep up the good work.


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PostPosted: Sun Feb 01, 2009 8:50 am 

Joined: Fri Jan 02, 2009 7:42 am
Posts: 269
grumble... car needs new brakes and our furnace broke down....

Scratch $225 for furnace repair, and $150-$300 for brake swap / oil change off that EM Fund....

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


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PostPosted: Sun Feb 01, 2009 9:30 am 

Joined: Fri Jan 16, 2009 6:25 pm
Posts: 30
Cranky-

I'm very sorry about your loss.

As to your question about where to put money such as your car savings until you need it, in general, we use cds at allow the maturity to be out as far as 5 years IF the interest rate seems attractive. Currently, my bank's cd and savings interest rates are about the same so there's no advantage to a cd. However, because we've been doing this for awhile, we still have some cds that are making nearly 5%. It gives a bit of protection against the low interest rates that we're seeing now and inflation. In general, we have these cds somewhat laddered so something extra matures each year. So basically, I have no good ideas for now, but I hope this helps in the future.


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PostPosted: Thu Feb 19, 2009 7:38 am 

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So, Feb is not shaping up well.

Bad Financial News:

6 Year Anniversary ring: $1,000 (And hey, I shopped around and found a jewelry store going out of business so, trust me, it was an appropriate present considering that I dropped the ball on the 5th year present... either way, things went perfectly)

Anniversary night out: $50 thanks to subtle use of resturant.com Savings of $50 bucks.

Wife needing to sign up for a local gym: $90 for the next three months. (I know some will say she can work out at home. Not in this case, she needs certain equipment that they have for rehabilitation and getting back into shape now that 6 weeks have passed.)

Wife Sanity Night Outs: $75 over the course of the month. She's good about money, but she needed to get out after being stuck in the same four walls and needed to hit up a bar.

Gen Con Badge Purchases for Vacation in August: $150

Car Breakline / new tire / oil change Repair: $880

Birthday Gifts for Nephew: $30
Birthday Gift for Mother InLaw: $30

Charity Case to Friend Emergency: $150.

Medical Bills from Hospital Visit in Jan: $560

Refinance Closing Costs: $460

Plane Tickets for Vacation in March: $668
Weeklong Vacation in March: $1,300 (that is total for everything)


Good Financial News:

We've barely and I mean barley gone out to eat. Almost all of our food so far in Feb. has been at home. All of the above are one shot expenses that aren't recurring. Some of them like the refinance will save us money in the long run. We've tried to offset all these crazy expenses by selling things that we aren't using. We have so far only had to pull $1,200 from the EM fund. The rest is being taken out of our tax return.

I know we are spending money like blood flowing out of an amputated arm at the moment, but our every day spending that we used to have has been replaced with either mandatory big ticket items or voluntary planned expenses.

Now I just need to make sure March and April stay pure of outside influences and I should be able to recoup and through money back into the fund.

_________________
"Look, the people you are after are the people you depend on. We cook your meals, we haul your trash, we connect your calls, we drive your ambulances. We guard you while you sleep. Do not... f*** with us. " --Tyler Durden


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PostPosted: Thu Feb 19, 2009 7:28 pm 
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A 6 year ring? WTF? I'm not aware of this being a tradition of any sort.

Don't sweat the EF. That's what it's for, emergencies. If it were me a year ago, all that would have gone onto a credit card, and might have paid off in 4 years. :)

Don't be so frustrated at breaking even. Most of us were far below even for a long time. You're doing OK.

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