Review my budget / Can I stay home?

[melmel48]

Hi,

What does shopping include? Also, can you cut down on the gifts and donations? Is the home and lawn care a savings account for future needs, or is that paying for someone to cut the lawn?

[thegooser]

Can you re-post your budget without your income and the nanny etc?

[thatgirl2478]

Based on the new number - IF your spending habits don't change - I don't think it's possible. You're going into the red every month, which would have to come from savings.

Do you have any debt that you haven't mentioned here?

[thatgirl2478]

Categories I would work on cutting if you want to stay home:


Cells - $145.00 - I'm guessing you have 2 data plans & 2 smart phone? You can cut this down by going with prepaid (smart phones OR basic phones)

Groceries - $587.00 - We're a family of 3 as well and get by on around $400 / mo without using coupons or anything

Eating Out - $415.00 - WOW that's high! If you're staying home you'll have time to cook. If you consider groceries, you're spending $1,000 on food each month!

Shopping - $493.00 - I think you're going to need to reevaluate this one a bit more - what's going into this #? Do you NEED the stuff or is it all want?

Gifts & Donations - $280.00 - Maybe scale back on this

Baby Stuff - $293.00 - what on earth are you buying for $300 every month?

Travel - $314.00 - why? Are you saving for something big?

Misc. - $41.00 - what is this?

Home & Lawn Care - $130.00 - what is this?

[gt7301b]

I'd try to live on your DH's income for a few months and see if you can cut back on all the fluff in your budget and bank the difference. I think you can do it, but you won't be able to have much fun.

[chessie]

No, unless your H going to get more income, get a second job or maybe you could do some side/consulting on the side? Way too tight.

[smiley]

Are these figures based on just 1 month worth of spending or is this an average over a few months?

I asked because groceries /eating out seem very high -- almost 1k just for food for 3 of you! I can see it being high if you hosted Christmas dinner but is it really like this each month? I would work on cutting some of the categories over the next 2-3 months then reevaluate if you are out of the negative.

[thatgirl2478]

Jan 6, 2013 18:46:23 GMT -5 mrsmayhem said:

Jan 6, 2013 18:40:41 GMT -5 thatgirl2478 said:

Based on the new number - IF your spending habits don't change - I don't think it's possible. You're going into the red every month, which would have to come from savings.

Do you have any debt that you haven't mentioned here?

No debt other than the mortgage. We own our cars outright.

that's good!

FWIW, our financial situation is similar now that I've lost my job. Luckily for you, your savings is better than ours. We have a lot more wiggle room in the budget ($1500 / mo) because we cut out a lot of the 'extras'.

[drloretta]

Pretty much everything that girl said. And I'd like to see more details on some categories, eg the $300/month for travel.

[melmel48]

After looking at your revised budget, I don't think you can. Is there a way you can work part time at night? You will still be home with your baby during the day, but bringing in some income. If you cut down some of your categories ( shopping, eating out, lawn care) and bring in some part time income it may be more doable.

[Deleted]

obviously it's not ideal because you'd largely stop saving, but I think you have enough fluff in your budget and a large enough efund to make it work if you want to. (this also assumes you could jump back into your field and wouldn't take a drastic pay cut when you were done with SAH.)

changes I would make:

Jan 6, 2013 18:37:10 GMT -5 mrsmayhem said:

H Take home - $5,581.00

PITI - $1,887.00
Gas - $150.00
Utilities - $258.00
Cells - $145.00
Cable & Internet - $100.00
Auto Insurance - $79.00
Groceries - $587.00 $500
Eating Out - $415.00 $350
Shopping - $493.00 $375
Gifts & Donations - $280.00 $200
Baby Stuff - $293.00 $150 (assuming this is not rx formula or anything like that and instead is just clothing/random stuff)
Personal Care - $39.00
Health - $182.00
Pet - $61.00
Entertainment - $54.00
Car Maintenance - $183.00
Travel - $314.00 $300
Misc. - $41.00
Home & Lawn Care - $130.00
Total Spending - $5,691.00

Leftover $397.00
Put it all in a Roth for yourself assuming you can stick to the budget/aren't touching your $60,000 e-fund. Continue saving 22% of your H's income.

If things got too tight you could also downgrade phones, cut cable, get rid of lawn help... but I wouldn't want to right off the bat.

[dexteroni]

I was able to come up with $1268 in cuts. There might be other categories where you may be able to reduce , like car insurance (call around for prices), health, car maintenance, etc., but only you know if that's possible.

I can't for the life of me figure out how to use the "insert table" button here so here's a screen cap of the spreadsheet showing the proposed cuts.

[sillygoosegirl]

I think lowering your retirement contributions is okay. Depending on how much he needs to contribute to get that whole match, I might lower the 401(k) contributions so you can still contribute some to your Roth. With one income, your marginal tax rate may go down, which makes to Roth better in comparison to the 401(k) than it is now. It seems like, with time to cook regularly, you should be able to lower your food spending by at least $500/month between eating out and groceries. That still leaves you a bit short on general savings, but not outrageously short.

Another option might be a part time evening or weekend job, when DH will be home with the baby, which might close the gap.

[mokes]

PITI - $1,887.00
Gas - $150.00
Utilities - $258.00
Cells - $145.00
Cable & Internet - $100.00
Auto Insurance - $79.00
Groceries - $400
Eating Out - $200
Shopping - $100
Gifts & Donations - $250
Baby Stuff - $100
Personal Care - $39.00
Health - $182.00
Pet - $61.00
Entertainment - $100
Car Maintenance - $183.00
Travel - $250
Misc. - $41.00
Home & Lawn Care - $130.00
Total: $4655

Leftover ~$925
Roth (Goal is $917) = $458
General Savings (Goal is $833) = $464

Here's a potential budget. You'd have to cut back on spending and scale back your travel, Roth and savings goals. Increased entertainment since you'll be home more and will probably spend more.

[chia]

What is "shopping"?

You could probably do it if you made some major lifestyle changes.

[Deleted]

also, I would try to live on the new budget for a while before leaving your job. use all the money you end up saving for a SAH fund that can cover things like that wouldn't fit in your monthly budget (replacing a car, etc.). this would prevent you from draining your e-fund while you aren't working.

[Deleted]

What are you saving for every month? You have a great efund and you're saving 22% in a 401k. I'd try to keep the Roths if possible, but I don't see why you need to base you decision to work on putting over $800 into savings that isn't "necessary". I mean it's always good to save more, but I think there is such thing as oversaving at the expense of living your life.

So assuming you cut back on savings for those few years you are staying home, you really only need to make up about 1k. Your groceries, eatinging out, baby stuff, shopping, and gifts categories are high. So is travel, really. If you don't want to make any changes at all, you can't stay home. But I don't think the changes required would be that awful (maybe take a smaller vacation or 1 trip instead of 2?) If you're home more, you can cook more and be more creative with your grocery budget too.

[mellymel]

I think it looks wayyyy to tight as is. My DH is a SAHD and my income is what yours is currently combined. We have very similar expenses - same mortgage, etc. and I just think it would be too tight for you unless you cut way back and did one of the proposed budgets one of the PPs have posted for you.

Even then, what happens when something breaks or you have to replace a car? Luckily you have a healthy efund but do you really want to keep draining that?

With all that said, I am so so so glad one of us is able to stay home with DS (and baby on the way). We are happy to sacrifice a few other things to do it. It's probably something you will never regret. So if you think you can make it work, go for it! Life isn't always all about being MM all the time. Good luck!

[mrst2]

I think you can. You just need to cut back on the spending, eating out, gifts/donations, travel areas IMO.

I'm a SAHM we have a lot of extra money in our budget and we don't even come close to spending that much money on eating out and gifts each month.

[kershnic]

Jan 6, 2013 19:21:55 GMT -5 mellymel said:

I think it looks wayyyy to tight as is. My DH is a SAHD and my income is what yours is currently combined. We have very similar expenses - same mortgage, etc. and I just think it would be too tight for you unless you cut way back and did one of the proposed budgets one of the PPs have posted for you.

Well, I'm coming at this from the opposite point of view.... my fixed bills are not too different from the OP, and our current combined salaries are not all that much more than her husband makes alone. So I pretty much say of course you can do it.

This is probably MM flame-worthy, but I'd cut back on your H's 401k contribution and put the extra towards your ROTH. I'd way reduce saving during these few years of SAH, because you already have a healthy e-fund and this is temporary. You said you could cut back on baby expenses and health expenses this year, which I think sounds very reasonable. And I think you need to work on spending less on food (either eating out or groceries or both). And of course you have to accept that reducing savings and therefore delaying a new house and changing what options will be available when you need to replace your cars (cheaper cars, waiting longer, or needing to finance them) is the cost of staying at home. I would really really love to SAH if we ever manage to have a child, though I probably won't be able to. If the cost was basically only reducing monthly savings I would do it in a heartbeat. You can't get that time with your child back.

[Deleted]

Our personal Choice was to reduce retirement contributions (still at 10%) knowing that after childcare is done we will increase.

The only think I worry about is only contributing to your husbands retirement. I think you should make sure you have some Roth contributions as well.

There are plenty of places to cut, especially since you have such a strong Efund.

[thegooser]

I think you can afford to SAH if that is what is important to you. If it were me, I would cut a lot of the extras and a little of retirement to get there. Kids are only little for so long.

[barefootcontessa]

Do you have any sources of income? Do you get 24 or 26 paychecks per year? I think it can be done, assuming you are willing to work at economizing things like food, shopping, baby stuff. I would also think about whether you can easily return to the workforce or else are willing to scale back for the long term. When I quit working I knew it would be hard to go back, so we had to accept living on a single income for the long term.

[theintended]

Month-to-month budget costs aside, I'd max out your Roths using the 60k efund money. You can always withdraw that money penalty-free should you need it.

[barefootcontessa]

Jan 6, 2013 21:16:16 GMT -5 mrsmayhem said:

Jan 6, 2013 21:11:28 GMT -5 barefootcontessa said:

Do you have any sources of income?

No. There are several things I could do to earn some side money, but honestly - I would rather scale back on other things first.

Do you get 24 or 26 paychecks per year?

Our income is based on 26 paychecks.

I think it can be done, assuming you are willing to work at economizing things like food, shopping, baby stuff. I would also think about whether you can easily return to the workforce or else are willing to scale back for the long term. When I quit working I knew it would be hard to go back, so we had to accept living on a single income for the long term.

This is a big concern. I don't know the answer.

I just realized something else. One of the reasons our food budget is so high is because we entertain a lot. We have dinner parties probably twice a month. This is our main form of entertainment.

Still, the food costs are out of hand and I have no excuse for the eating out budget...haha.

My DH gets paid 26 times per year but we base our monthly budget on two checks per month. I am not sure if you do the same, but we use those "extra" checks to fund various things. Also, given your large EF, you could consider investing in some high-quality dividend paying stocks. I know everyone's tolerance for risk is different, though. The other possibility is to look at how your tax situation might change on a single income. You may be able to increase your DH's withholdings for more take home.

[SJ]

Jan 6, 2013 21:26:51 GMT -5 theintended said:

Month-to-month budget costs aside, I'd max out your Roths using the 60k efund money. You can always withdraw that money penalty-free should you need it.

Me too!

I wouldn't mind not adding to "general savings" much given that you have $60K already, but skipping the Roth's would definitely give me pause. I think funding Roth's with the $60K if/when needed is very smart.

[kellygreen]

How much is preschool in your area? That can be a big line item for some...

[vanillacourage]

Can you? Yes.

Should you? You and your DH need to talk about long-term priorities (and perhaps talk with a financial planner) to decide. And, I'd also look for PT work as a compromise since you do enjoy working.

Personally, I feel like if you're willing to trim the fat from your budget then you'll be fine. You have ok retirement savings and a very high efund, and its only temporary. At some point just sitting on a pile of cash at the expense of other things you badly want in life (especially a kiddo getting bigger by the day) is silly. What else do we save for if not major life decisions?

[gt7301b]

Jan 6, 2013 21:09:28 GMT -5 mrsmayhem said:

I am totally prepared to reduce our spending, and I don't think it would be too difficult since we're not really trying at this point. But since we couldn't make it by reducing our variable spending alone, I guess I need to decide if I am comfortable reducing retirement / general savings temporarily. While we have a healthy e-fund, I'm not really sure where we stand on retirement. We are saving a lot right now, but I still think we have some catching up to do since we got kind of a late-ish start. I need to figure out what our retirement goals are, and then determine if we can still meet them without saving as much for a few years.

I am not completely set on staying at home. I really like my job, but it's just too many hours away from home right now. I just want to know I have the option of staying at home if it comes to that.

I don't think you can know if you can cut spending till you give it a try for a few months.

[aspentosh]

Jan 6, 2013 19:03:33 GMT -5 dexteroni said:

I was able to come up with $1268 in cuts. There might be other categories where you may be able to reduce , like car insurance (call around for prices), health, car maintenance, etc., but only you know if that's possible.

I can't for the life of me figure out how to use the "insert table" button here so here's a screen cap of the spreadsheet showing the proposed cuts.

This is pretty similar to what I was thinking. There is a lot of fluff to cut IF you really want to stay home. The biggest ones to me are eating out, shopping, baby stuff, travel and lawn care.

Also- ditto all the PP that suggested living on the more bare bones budget for a few months and see how it goes.