Hello. I'm Honey Smith. I'm thrilled to be a part of the GRS community, though of course a little embarrassed that it's essentially as an object lesson to others of what not to do. However, I do hope that everyone on the site learns something along with me.
For those of you who are financially comfortable (or close to it), those lessons may be about empathy or discovering how a significant percentage of people in their 20s and 30s with lots of formal education are struggling in these days of student loans. For those of you living with student debt, hopefully we learn some ways to get back on track together.
Where I'm Starting From
As I mentioned in my previous post, my husband Jake and I owe a combined total of over $230,000 (about $100,000 apiece in student loans and $30,000 in credit card debt — I gave initial totals there but will provide a debt update in another post).
Many of the comments said that the information about our debts was meaningless without a list of our income/expenses. Since we're newly married, all the historical data I have easily available pertains to me. In addition, we haven't combined finances yet, and Jake started his business a year ago. This means that I'm still soliciting and compiling information about his situation that will be meaningful, and of course we know that the first couple of years of his new business are not indicative of how things were when he had a big firm job (or how we hope things will be once he grows his current business some more), so today's post will focus on my situation.
How I Budget
The Reckoning goes back to summer 2008, when we moved in together. I was reading GRS by this time as well, in addition to several other personal finance blogs. (I currently follow about 25 in this category.) While my student-self budget strategy was “don't spend a bunch of money on crap,” I quickly realized once I got my first “real” full-time job that I'd have to be more strategic and forward-thinking if I wanted to make any headway on my debts.
So, in addition to the Reckoning, I started a budget using an Excel document that I created and have since adapted to a Googledoc. I start a new document each year so I can track annual totals.
Here's how the Googledoc is organized:
- Register Tab. This is where I keep track of the actual transactions in my checking account (since Mint and my bank's website don't make it possible to play with the numbers or track pending payments that haven't hit yet).
- Credit Card Payoff Tab. This is where I list out finance charges, charges I make, and payments. This tab is there because the website for my card with the balance only shows one statement period at a time; now that I have Mint and can view total historical data at a glance, I may start using that for this purpose. As I've mentioned, I actually have three credit cards but only track one this way; one of the others has Jake's balance and he is just paying it off, not making additional charges, and the third card is for everyday purchases and is paid off in full every month. However, it's easy enough to create a tab showcasing multiple accounts if you have them.
- Irregular Expenses Tab. This has columns for the annual amount of the expense, a column showing the annual amount divided by 12 (if I were to save on a per-month basis for irregular expenses, which I haven't been able to implement yet but hope to soon), and a column indicating what time of year the expense generally occurs in, if it's not monthly but is predictable. Both the annual and the “divided by 12” columns show the sum of irregular expenses for each category.
- Monthly Budget/Paycheck Tabs. There is a tab for each month that shows when I get paid, what deductions come out of each paycheck (so I can see gross and net at a glance), and what my anticipated expenses are for each paycheck. As those expenses are taken care of, I highlight the cell so I can see what's left.
My Irregular Expenses
The list below are estimates based on last year's amounts. Unless otherwise noted, the amount listed reflects just my share — even for things like auto insurance that will be joint going forward, since we haven't combined finances yet and I also don't have all the data about his costs.
- Auto insurance: $500 (twice a year, January and July)
- Auto expenses (repair/maintenance): $250
- Auto registration: $42
- Hair care (service): $600
- Hair care (product): $300
- Gifts: $1000
- Health care (copays, etc): $1000
- Vet expenses (pets): $2300 Note: wow, I didn't remember we paid so much last year. This, however, is a joint expense so last year I would have paid half.
- Mensa annual dues: $60
- Sorority alum club annual dues: $55
- AAA Plus annual dues: $95
- Long term care insurance: $292
- Total: $5344
On target so far this year: auto insurance, auto registration, hair care (service), hair care (product), gifts, health care, mensa and sorority dues, AAA dues, and long-term care insurance. Under target: auto repair/maintenance and vet expenses (as I recall all three animals had dentals last year), though obviously this can change at any time. No categories over target at this time.
My Regular Expenses
Like the irregular expenses, the amount listed reflects only my share for things, even if they are a joint expense. Accordingly, the pet, grocery, netflix, internet, rent, satellite cable, renter's insurance, and electricity categories should be doubled if you want to get an idea of our joint costs.
- Gas, auto: $45
- Pet expenses: $50
- Grocery/household: $300
- Cell phone: $68
- Massage membership: $65
- Netflix: $8
- Internet: $32.50
- Withdrawal/cash: $40
- Life insurance/supplemental disability: $96
- Rent: $488
- Student loan 1: $387
- Student loan 2: $80
- Satellite TV: $37
- Renter's insurance: $9
- Electricity: fluctuates throughout the year, in summer $100
- Total: $1805.50
With my salaried job, I net $2000 per month (after taxes, 403(b) contribution, health/vision/dental, supplemental short-term disability, and parking), so you can see that I end up with about $200 or so to put toward my credit card debt using my regular salary. However, while my regular expenses do come in just under my regular income, they don't get me very far towards debt repayment or leave anything over for irregular expenses. And you'll also notice that this budget doesn't include eating out, like, ever, or any other entertainment expenses outside of TV.
There are, of course, two months a year where I get a third paycheck, which isn't reflected here and which I usually bank for irregular expenses. Also not listed is irregular income from freelance work, our Amazon and Half.com stores (we're purging our Stuff), tax returns, and birthday/holiday gifts from my generous dad. In 2011 my irregular expenses were $5003 and my irregular income was $5450, for example.
However, while in the past things have worked out so I could cover everything, it's always been a near thing. A not-guaranteed thing that makes me very nervous. Especially since I suspect tax refunds will be a thing of the past now that Jake doesn't have automatic withholding and cash gifts from my dad will be a thing of the past now that I'm married.
Where Would You Start?
To me, the satellite television (for a small win, though I'd replace it with Hulu plus) and my hair service are obvious first targets. I had a haircut on Friday and called earlier in the week to change the cut-and-color to just a cut. This brought me from $150 or so for a cut-and-color to $62 for just the cut, so that is a good start (both totals include tip). I also recently discovered a new product routine that will shave some costs in that category, though those will take some time to manifest.
What else would you do? If this were your budget, where would you start to make imrovements? Are there any line-items that you'd like more information on (in the comments or another post)?
Honey Smith has been reading GRS since at least 2008, right when she got her first â€œrealâ€ job and started getting serious about finances. She and her husband Jake are in their mid-30s and recently bought a home together. Currently, she manages graduate programs at a large state institution, and he is an attorney at a mid-sized firm.
Between them, they have paid off approximately $30,000 in consumer debt since she started writing for GRS in 2012. However, they still have nearly $200,000 of student loan debt, so she will continue to chronicle their debt-paydown journey. In addition to personal finance, Honey is interested in vegetarianism and cooking, gardening (despite living in the desert and having a black thumb), issues in higher education (including the student loan bubble and the slow death of tenure), and animal rights; however, her heart lies with fantasy novels, trashy TV and Skyrim.