Budget Help (long)

[arch01]

Please don't quote, I will more than likely delete.

I got a promotion last week that came with a substantial raise. This weekend DH and I are sitting down to adjust our budget-I'm just looking for what you would do given the situation.

MONTHLY EXPENSES

Bill Name Budgeted
Mortgage $1,125.00
Power/Gas Bill $150.00
Water Bill $50.00
Groceries $300.00
Dog $50.00
Internet $40.00
Target/WalMart $50.00
Home Improvements $50.00
Eating Out $75.00
Gas/Car $175.00
Cell Phones $140.00
Car Payment $340.00
Life Insurance $65.00
Student Loan $285.00
Fun Money $300.00
DS $50.00
Insurance (DS) $125.00
YMCA $25.00
Total Budgeted $3,395.00

SAVINGS

HOA $50.00
Vacation $150.00
Home Improvement $100.00
Christmas/Birthday $50.00
Car (taxes, maint, ins) $250.00
Dog (annual visit) $25.00
Subscriptions (XM) $15.00
Total $640.00

Grand total: $4035

New take home is going to be right at $4800. To be safe we'll say there's an additional $700 that needs to be allocated.

The above budget is tried and true, we have lived on it for the last 18 months with no issues. We had to bring our dog to live with my mom last weekend after some aggression issues with our son, but we are still financially responsible for him.

The line for DS in our monthly expenses rarely gets used. We have clothes for him for the next 18 months and plenty of toys. I'll do a bit of shopping at consignment sales in the spring and fall. He is in cloth diapers and we have enough (at least I think) disposables for daycare from now until age 3 thanks to some great sales earlier this year. He's only in DC PT. He has already been eating our dinners, which hasn't changed our grocery bill (yet).

Pre-tax deductions-both of us are in the state retirement fund. We are required to contribute 6%. DH is vested, I have 2.5 years until I'm vested. The state contributes 7ish% to our funds. We both have a 401k as well, which DH contributes 5% (started a couple months ago) and I contribute 4%. We are definitely increasing this, but we don't know to what. The other option is to go back to our regular IRA contributions. Our deductions also include health/vision/dental insurance and daycare flex spending. Next year we'll also have a small flex spending account through my job due to some meds that DH and I are both on monthly-currently that comes out of the Target/Walmart line... the costs are very low.

The savings budget is strictly a paper budget. We have about 3 months expenses in there now. We know we will need to replace our HVAC system in the next couple of years, so that line needs to be increased. We are looking at a substantial tax refund next year and that will fund about half of that cost.

Home improvements is listed twice-in our monthly expenses it's for little stuff (grass seed, something small breaks) and in savings it's for the big stuff (this year it was appliances).

The car payment is at 0% through the "bank" of my FIL. We owe about $10k. This *potentially* will be paid early in 2013, I'm trying to convince DH to get rid of our truck... we don't need 3 vehicles.

I owe about $35k on my student loans. They're at under 3% for the moment.

We are in our forever home. We have no plans to move. We also bought a house that, outside of something breaking, we don't have to do anything to to it.

I am going to post and run for the moment... I'll try to check in later on this morning and then again in the afternoon. I hope I put the info out there that is needed...

[CloudBee]

I don't see daycare listed as an expense. How much do you pay monthly?

[SJ]

I know he is only in DC PT, but how much is it?

[ijack]

apart from the daycare it looks good. How does the state retirement plan work? Once you're vested is it yours completely or is that something that could be taken away? Since you're not vested I probably wouldn't increase your contributions to that. I would up your contributions to your efund for now and when it hits 6 months and half the cost of the hvac I would up your 401k or IRA contributions.

[kershnic]

It sounds like you're doing well. I would probably choose some small splurges (more towards vacation or fun money, depending on which you enjoy more) and then put the rest of the extra in a general long term savings low risk investment fund.

[arch01]

Daycare is covered 100% with the pre-tax flex spending. It's $275/month... he's there 15 hours a week.

ijack-we can't up our contributions in the state retirement plan. Once we're vested, it pays out upon retirement a flat rate for the remainder of your life. It goes on an average of the past 4 years worked and then there's a formula to figure that flat monthly rate.

[UnderProtest]

I would throw the extra $700 at your car or student loans, whichever has the higher interest rate first. But I'm pretty debt adverse.

[arch01]

Dec 19, 2012 14:30:40 GMT -5 UnderProtest said:

I would throw the extra $700 at your car or student loans, whichever has the higher interest rate first. But I'm pretty debt adverse.

Thanks-the car is 0%, SLs are 3% or under.

[SJ]

I would NOT throw any extra at the car or SL.

I would probably do a little loosening up in areas that you might want to (travel? hobbies? anything else?) and then focus on Roth IRA's.

[arch01]

Dec 19, 2012 14:40:57 GMT -5 SJ said:

I would NOT throw any extra at the car or SL.

I would probably do a little loosening up in areas that you might want to (travel? hobbies? anything else?) and then focus on Roth IRA's.

Thanks... I was hoping you'd chime in

DH wants to get a little more fun money and an additional $600 or so goes to our vacation account every year through our CC rewards. Would you do Roth IRA before 401k? This is where I struggle a bit-I know we need both but is it better to max out one and then focus on the other or spread the wealth a bit more evenly? I know this is dependent on situations in retirement, but the current plan is to have no mortgage or any other debt in retirement (the ideal plan is to pay for even vehicles in cash), and our income if we stay in the state system would be about 70% of what it would be if we were working.

[SJ]

Dec 19, 2012 16:15:58 GMT -5 arch01 said:

Dec 19, 2012 14:40:57 GMT -5 SJ said:

I would NOT throw any extra at the car or SL.

I would probably do a little loosening up in areas that you might want to (travel? hobbies? anything else?) and then focus on Roth IRA's.

Thanks... I was hoping you'd chime in

DH wants to get a little more fun money and an additional $600 or so goes to our vacation account every year through our CC rewards. Would you do Roth IRA before 401k? This is where I struggle a bit-I know we need both but is it better to max out one and then focus on the other or spread the wealth a bit more evenly? I know this is dependent on situations in retirement, but the current plan is to have no mortgage or any other debt in retirement (the ideal plan is to pay for even vehicles in cash), and our income if we stay in the state system would be about 70% of what it would be if we were working.

Yes. I would do Roth IRA before 401K.

I know that your employer does the state retirement fund, but do they do any other match or incentive to the 401K? If not, I would work on Roth IRA's. I think it is nice to have some post-tax retirement money available and it gives you more control.

[arch01]

Dec 19, 2012 16:22:59 GMT -5 SJ said:

Yes. I would do Roth IRA before 401K.

I know that your employer does the state retirement fund, but do they do any other match or incentive to the 401K? If not, I would work on Roth IRA's. I think it is nice to have some post-tax retirement money available and it gives you more control.

Great, thanks. They have a 3% match for the 401k. I can't remember what DH's has (he's state, I'm local, but same system operations for the most part).

[SJ]

Dec 19, 2012 16:29:13 GMT -5 arch01 said:

Dec 19, 2012 16:22:59 GMT -5 SJ said:

Yes. I would do Roth IRA before 401K.

I know that your employer does the state retirement fund, but do they do any other match or incentive to the 401K? If not, I would work on Roth IRA's. I think it is nice to have some post-tax retirement money available and it gives you more control.

Great, thanks. They have a 3% match for the 401k. I can't remember what DH's has (he's state, I'm local, but same system operations for the most part).

OK good to know! You are already putting in enough money to max the match with you 4% and 5% contributions.

Congrats on the raise BTW!

[arch01]

Thank you