Budget from a Lurker

[heckler]

O.K. I'll make my first post a budget one. Be gentle!

Net Income: $11,300

Debt:
House: $2575
Car:$338 ($16,000 owed at 3.69%)
SL1: $95 ($7000 at 1.9%)
Sl2: $75 ($8000 at 2.5%)
SL3: $289 ($55,000 at 1.9%)
Total: $3372


Expenses:
Utilities:$350
Cell: $125
Internet: $62
Car Insurance: $135
LifeInsurance: $55
Nanny: $1900
Lawn Care: $150
Tithe/Charity: $1000
Total: $3777

Spending:
Food/Household/Diapers: $600
Eating out/ entertainment: $200
Gas: $250
Pets: $75
Clothing: $200
Misc.: $275
Total: $1500

Grand Total: $8649

Leaving $2649/ month

Net is after retirement (H has fully funded employer pension and stock ownership and I am a state employee with a great pension) and medical. Our jobs are very stable. We have about 8k in savings. Until November I was a SAHM and we lived on just over half this income w/o incurring debt but couldn't save that much. We have three young kids (5, 2, 1) and the nanny is way cheaper than daycare for all three. We have a 529 we put money into before I was a SAHM but haven't in about three years. We'd like to do a pretty substantial remodel of our kitchen in the next few years, increase savings, and pay debt. We live in a Medium to High COL area (NorCal but not Bay Area).

We are ok living frugally as we have for years, but will not change our tithe or get rid of the Gardner -- we both have high demand jobs and a very large lot and hiring someone to do the yard was a given when I went back to work.

Thoughts about what to tackle first?

Sorry about the poll -- maybe this is why I don't post!

[heckler]

Thanks! We got used to living on a lot less and want to try to keep it that way as much as possible.

[heckler]

Meant ask whether we should pay off the car before funding an e-fund and how much of an e-fund is good? This is where I'm not sure.

[Roc A Bee]

I wouldn't pay off the car at 3%. I would want 3 months of bare bones in an efund.

[aspentosh]

Jan 7, 2013 6:02:12 GMT -5 suzubell said:

Looks good to me. I agree to upping savings to at least 3-6 months of expenses.

Agreed! Great job!

[gt7301b]

Are you Roth eligible? I wouldn't be comfortable relying on two pensions as my only source of retirement. If possible I would put at least some money aside in your Roths incase there are pension changes in the future.

I'd beef up general savings at the same time, but I would also be tempted to get rid of the car payment rather than having a ton of cash sitting around doing nothing. (Even though it is 3.69 percent)

Way to go and I am impressed by your charitable giving!!

[SJ]

Can you provide some more details on your retirement savings? Do you contribute beyond the pensions? Are you eligible for Roths? Do you have any IRA's or other accounts?

I would just start saving. Maybe auto-transfer $2,000 per month at the beginning of the month. You could also add back 529 savings.

Any target for how much the remodel will cost?

I wouldn't worry about the car loan until you have more in savings but even then since you are saving for a remodel I probably wouldn't pay it off.

[saywhatnow]

Two thumbs up for living so frugally compared to your income. We have a similar income and spend way more frivolously and don't give nearly that much to charity. You're my inspiration!

To answer your question...I would beef up your cash savings before I would pay off that car. And I would also start funding those 529s again.

[heckler]

Thanks ladies! My retirement will be a percentage of my income at retirement and I am fully vested. Not worried about the pension going anywhere at this point. MH's pension is one I don't fully understand but he is vested at a certain percent and could take the money if he leaves. We are not Roth eligible. I am, however, now eligible for a 457 account which is essentially like a 401k but for public employees. We've thought about putting some money in there.

Looking at $25-35k for a remodel -- willing to wait to get what we want.

Also, please realize our discretionary spending is so low because it HAD to be for the last three years. I'm sure it will increase a bit as we accomplish some of our more long-term goals.

[doobeedoo]

I agree that the expense numbers look great, albeit on the low side. Are you keeping to this budget?

Either way, I would commit much/most of that overage every month to emergency fund savings. In your case, I'd aim for at least 4 months liquid in the EF. Once that is funded, you can move on to other priorities like renovations, etc. I just wouldn't be comfortable with only $8k in savings for too long, even with stable jobs.

[heckler]

We do for the most part stick to this budget. As I said, I'm sure it will creep up now that we have more income but we want to control that as much as possible.

[Deleted]

I think your charity line is well within your means and awesome.

I'd probably put $917 into IRAs (you can convert traditional to ROTHs), and put the rest into e-fund until you hit 3-4 months. Then I'd start to save for the remodel.

[lys]

E- fund to 6 months' expenses is a necessity when you have 3 children
Then pay off car

[heckler]

Thanks so much for taking the time with this! You all pretty much confirmed what I thought and have made me feel way better about our position! Planning on setting up an Auto deposit to savings this week. I really hope to post more now!

[doobeedoo]

I amend my former recommendation--I would take $2k of your current overage and put toward your EF.

If you currently have $8k, it will only take you 9 months to fully fund it at $2k per month ($8700/mo x 3 mos).

Any remaining overage can go toward additional retirement investment funding until EF is funded.

After EF is funded, and while you are beefing up retirement outside of pensions, I'd save more aggressively in the 529s and for other goals.