Money/Budget Advice Needed

[sicilygirl]

I'm looking for some advice on what to do with the extra money that we have each month. Our income went up a lot in 2012, so for the first time, we have a good amount left over at the end of each month, and I'm not quite sure what to do with it. Our budget is below for reference.

Monthly Income: 7,360
Mortgage: 1,153
Loan to Dad: 193
Prop. Taxes & HOI Savings: 450
Utilities: 225
TV/Internet: 85
Cell Phones: 158
Car Insurance: 84
Gym: 42
Furniture: 71
House Cleaning: 160
Gas: 500
Food/Alcohol: 800
Household Stuff: 100
Charity: 200
Gifts: 175
Roths: 916
Fun Money: 400
Leftover: 1,648

Notes:
We currently max out our Roths and are saving a total of 15% for retirement. We are also putting money into an HSA. We have about $11,500 in our e-find, and our goal is to get $15,000 in there.

We just refinanced our mortgage (15 year, 3%), and the loan to my dad is for money he gave us for our down payment, at 3% over 10 years. I'm not in a particular hurry to pay that off because my dad likes making 3% on that money, and I don't mind paying it. But we do owe him about $15,000 at this point (started at $20,000 three years ago).

The only other debt we have is the furniture payment which is at 0% until next September, when we'll need to pay off the balance of about $500.

We just received $3,000 as a Christmas gift from my parents and also got about $2,500 in Christmas bonuses. I'm anticipating a $2,000 tax refund in about February, as well. (Don't worry, withholdings have already been adjusted.)

Our only other defined savings goal right now is to save about $6,000 for a vacation at the end of 2013.

I'd really like to hear ideas about the best ways to use our extra money each month, especially once we get past the approximately $9,500 that will get us to our current efund and vacation goals.

[cransplash]

Sounds like you've done a solid job so far- congrats!

I'd also look into creating a travel budget (save monthly), as well as saving for a car. We like to pay our cars in cash so even though DH just got a new car (and my car is fairly new), we have a line item for "car" so we can save money monthly. Then, by the time one of us needs a car (most likely me), then we have the money already saved (and not have to take it out of savings).

Also not sure how old you and your DH are, but I'd do any "catch up work" with retirement (if you started late).

Are you planning on having kids? I'd also start a line item for savings to have a baby too.

ETA: As for retirement, when you say 15%, is it 15% gross ot 15% take home pay? (You'd want to aim for 15% gross.)

[SJ]

It looks like you are doing a great job.

I would either:

1) Contribute more to 401K/employer plans (how much do you have total? Are you "on track"? Maxing out any matches?)

or

2) Start contributing to non-retirement investments. A good place to start would be a joint Vanguard account with a mix of ETF's/index funds.

[mrshabious]

Do you have separate lines for car maintenance, car insurance, medical bills? We have a "working savings" that we put money in each month to cover these items. I wouuld also establish a vacation line and put money in there every month. For us, that line covers not only our annual vacations, but weekend get aways, etc. I did not see one for home repairs either. Again, that would go into our "working savings". Beyond that, I owuld look into non-retirement investments as well.

[mokes]

Does 15% = fed maximum? If not, I'd max those out.

Do you have any taxable brokerage accounts? I'd open one for your additional savings.

[sicilygirl]

We do need to save for new cars at some point, though I wouldn't mind financing part of the cars if interest rates stay low. H's truck is a 2003 that he only drives to work. My car is an '06, but I drive about 400 miles/week to and from work. We will probably both need cars in 2-4 years I'm guessing. Both vehicles have about 70,000 miles on them.

We plan to have kids at some point, but not any sooner than 2 years from now.

Retirement is 15% of gross right now. We're 27/28. We have right around $60,000. H does not get a match unfortunately. I will be eligible for a 401(k) at my new job in June and can get up to a 3% match, which I plan on doing. H will start contributing less to his 401(k) when I start contributing to mine so that we stay at 15% of gross.

Sarajoy, based on that information, would you say that we are on track? I honestly don't know.

ETA: mokes, we are nowhere near maxing out our 401(k)s. Our gross is 125k, so that would be about 37% of our gross if you also include our Roth IRA contributions.

[sicilygirl]

Dec 26, 2012 13:44:48 GMT -5 mrshabious said:

Do you have separate lines for car maintenance, car insurance, medical bills? We have a "working savings" that we put money in each month to cover these items. I wouuld also establish a vacation line and put money in there every month. For us, that line covers not only our annual vacations, but weekend get aways, etc. I did not see one for home repairs either. Again, that would go into our "working savings". Beyond that, I owuld look into non-retirement investments as well.

Car insurance is listed in the monthly budget. Medical bills are paid through the HSA. Car maintenance (oil change, registration) is pretty minimal and we usually just pay it out of our monthly surplus. We have extended warranties that would cover anything major.

We do plan on adding a line for vacation savings. We haven't had to deal with any home repairs. We built our house in 2009, so it's still pretty new. As of right now, that would come from the e-fund. But I could set up a workings savings account too to account for that and potential auto repairs.

[kwynn]

You have the money, so I'd max the 401k for both and the Roths for both. Then look at non-retirement investments. I'd probably pay off my dad (I personally don't like owing money to family members) and then the furniture.

[mokes]

Dec 26, 2012 13:57:08 GMT -5 sicilygirl said:

We plan to have kids at some point, but not any sooner than 2 years from now.

Retirement is 15% of gross right now. We're 27/28. We have right around $60,000. H does not get a match unfortunately. I will be eligible for a 401(k) at my new job in June and can get up to a 3% match, which I plan on doing. H will start contributing less to his 401(k) when I start contributing to mine so that we stay at 15% of gross.

Any particular reason why? Since you are planning to have kids, front loading your retirement can help give you more flexibility down the road should you need it.

[cahabalily]

I may get flamed to high hell for this, but I think your charity line is super low : $200 on a $7000 per month income. Even if you volunteer time and not money, you could be doing more wrt charity/giving.

[sicilygirl]

Dec 26, 2012 14:47:06 GMT -5 mokes said:

Dec 26, 2012 13:57:08 GMT -5 sicilygirl said:

We plan to have kids at some point, but not any sooner than 2 years from now.

Retirement is 15% of gross right now. We're 27/28. We have right around $60,000. H does not get a match unfortunately. I will be eligible for a 401(k) at my new job in June and can get up to a 3% match, which I plan on doing. H will start contributing less to his 401(k) when I start contributing to mine so that we stay at 15% of gross.

Any particular reason why? Since you are planning to have kids, front loading your retirement can help give you more flexibility down the road should you need it.

I am totally fine with increasing our total contribution to more than 15%, (although I don't see how we can comfortable max out our 401(k)s and Roths on our income). I just meant that we will shift the money around once my 401(k) is available to me. H's take home is just almost nothing at this point since he is taking on the majority of contributions right now and makes significantly less than I do. I'm thinking after the comments that I should aim for 20% to retirement?

[sicilygirl]

Dec 26, 2012 14:50:58 GMT -5 cahabalily said:

I may get flamed to high hell for this, but I think your charity line is super low : $200 on a $7000 per month income. Even if you volunteer time and not money, you could be doing more wrt charity/giving.

The $200 is what is automatically deducted from our account every month to 2 specific organizations. We actually donated about $5,000 total in 2012. The rest is random contributions we make throughout the year at fundraisers and year-end contributions we make using our bonuses. This is something that I need to think more about increasing as we enter 2013. Thanks for the reminder.

[Deleted]

This is low lying fruit, but do you both have life insurance policies?

[wannabe]

Dec 26, 2012 16:48:07 GMT -5 nuggetbrain said:

Dec 26, 2012 14:50:58 GMT -5 cahabalily said:

I may get flamed to high hell for this, but I think your charity line is super low : $200 on a $7000 per month income. Even if you volunteer time and not money, you could be doing more wrt charity/giving.

*Side. Fucking. Eye.*

Mmmmmhmmmm.

[SJ]

Dec 26, 2012 16:24:54 GMT -5 @emy said:

I would take half and allocate that to upping your retirement (with the goal of maxing out your 401ks), and the other half to non-retirement investments (a mutual fund is a great place to start). I would definitely not lower your DH's 401k contribution to stay at 15%.

I like this. Why not contribute more while you can? You have the extra room and since 401K contributions are pre-tax, it won't reduce your take-home as much as you might think.

You can always scale back a little when you have kids or if things are too tight down the road.

[w2w]

Dec 26, 2012 14:50:58 GMT -5 cahabalily said:

I may get flamed to high hell for this, but I think your charity line is super low : $200 on a $7000 per month income. Even if you volunteer time an
d not money, you could be doing more wrt charity/giving.

I don't think 3% is low. I bet it is much higher than average.

[sicilygirl]

We do both have life insurance. Both paid up policies from our parents and policies from work. We'll get larger policies on both of us once we have kids. But we have a decent amount now.

I think we will up our total retirement contribution to 20% of gross. I think there's some confusion when I say we are going to lower my H's 401(k) contribution. He makes a lot less than I do. He is only contributing such a giant percent of his income right now because I don't have a 401(k) available. Once my 401(k) is available to me in June, we will change the contributions so that is he actually getting a decent paycheck again. Anyway, it doesn't matter. We'll up our total to 20%, I think.

[sicilygirl]

Just to update: H and I sat down last night and made some decisions.

We are upping out total retirement contribution to 20% of gross for 2013, which brings our net income each month down about $230.

Then we'll be putting $1200/month towards other shorter-term savings goals: finishing off our e-fund, vacation, CPA exam expenses (for H), cars, & baby. We should be able to achieve all of those goals by the end of 2014, so two years from now.

The remaining ~$250/month will be used to increase charitable contributions and as a general slush fund.

Thanks for all the responses!

[SJ]

That sounds like an excellent plan!

[sicilygirl]

Dec 27, 2012 13:18:25 GMT -5 @vicmo said:

Sounds good! Question - are you and your H on a fully joint money system? I'm curious because you made comments about your H's take home pay being low. Other than issues regarding whose name the 401k savings are in, does it matter who brings home which dollars?

Yes, all of our money is joint. It's just a little demoralizing for him to get such small paychecks compared to mine. Since he already makes considerably less than I do, I don't see any reason why all of our 401(k) contributions (and HSA) should have to come out of his paycheck too. He also doesn't get a match, and I will.