Another Lurker budget, if you have the time

[liser]

Lurker budget if you all have the time. I'm 28, recently divorced, no kids and currently living with my mother at no charge, so rent/utilities/cable are all estimates (and pretty accurate based on my friend’s expenses in the area). Beginning next month, I’ll be contributing to my company’s 401k, 4% contribution w/ full match, so the income reflects that. I have just under $1k in retirement currently from a previous employer. Savings is currently $1,200.

My car payment currently is $450/month but I’m purchasing a new vehicle in the next 2 weeks. The loan is coming from my father @1.5% interest. I’ll likely spend about $7k, with an agreed payment amount of $150/month. This budget is what I'll be working with once I purchase a new vehicle and find a place of my own.

Income – 2600
Rent – 600
Utilities – 50
Cable – 30
Car Payment – 150
Car Insurance – 150
Phone Bill – 100
Gas – 300 (I drive about 70 miles a day for my commute)
Groceries – 250 (to include all toiletries, paper products, etc.)
Credit Card – 100 (minimum $75, balance is $2,700 @ 14.99%)
Student Loans – 75 (minimum payment, balance is $2,600 @ 3%)
Savings – 200
Car Maintenance – 50
Fun Money – 300 (includes eating out, shopping, haircuts/color, etc.)
Leftover – 245

Leftover will be used for additional payments towards credit card and additional savings. Once credit card is paid off, I’ll split the leftover between student loan payments, car payment and savings. I’d like to be debt free as soon as possible so I can aggressively contribute towards retirement and start a travel line item. Thoughts?

[hulley]

If you wanted breathing room to pay off your CC faster, you could possibly defer your SL for a short while and apply that money toward the CC payment. With such a small balance, I don't know that I would do that, personally.

Are you going to be trading in/selling the $450/month car? Will you owe money to get out of it?

You must live in an area with high car insurance rates. We pay $146 to for H and I with 3 vehicles on our policy. If this isn't the norm for your area, definitely shop around.

Groceries look good to me (some will say you can lower this, though).

Will you need savings for a deposit/first month's rent at your future apartment? If you move somewhere that requires first and security, that's your entire savings.

I would also see if you can lower your phone bill. Depending on whether you have a text/data plan, you could potentially cut that in half.

I would up your retirement contributions and save what's left over. I started retirement late and it isn't fun to play catch up. Otherwise, I think you're in good shape.

[liser]

I'm trading in the $450/month car or selling it privately. I'll likely break even, at best I'll net $1,000, which would be split between the credit card & my savings. Car insurance is high and based on my current vehicle. I have a hefty speeding ticket from 1.5 years ago, so once that is re-evaluated in August, it may be lowered. Cross your fingers!

I'm not planning on moving out of my parents place until mid-March. I am currently saving $700/month towards first & security. Yes, I could apply all that to the credit card and have it paid off sooner, but I'm being stubborn. I've been living with parents for a year waiting for my divorce to be final and I'm desperate to have my own space.

As far as the phone bill goes, it's a smartphone w/ data and my only internet access. I'd rather cut the cable, honestly, and use it to stream netflix or something.

Thanks for your advice! Retirement is a huge priority as I feel VERY far behind. I'm planning on opening a Roth IRA as soon as I have a few "on my own" months underneath my belt.

[aspentosh]

I think you're getting good responses already.

I'd definitely look for cheaper car insurance. I am 28, H is 31 and we have new/er cars and pay half that!

$100 for phone is high.

I like jjwriter's idea for maybe moving closer to work. 70 miles is going to take its toll on your budget and your car. And you!

[liser]

Thanks everyone. I'll definitely look into lowering the insurance this week before the purchase of the cheaper vehicle and shop around for a lower phone plan. I may be locked in for a few more months, so I should definitely check that.

As far as my commute, it is taking a toll! My entire support system is where I live now and was much needed during the divorce process. The location where I work is slightly more expensive, but I'll take a look at both areas to see what is most cost effective.

[aspentosh]

Or at least maybe somewhere in between. Cutting it down by 20 miles (10 each way) would surely make a difference.

I do understand wanting to be near your support system. It's hugely important.

[jenjen]

I agree about seeing if there is somewhere closer to work. Even if it costs a little extra, there will be less wear and tear on your car and lower gas.

I would probably knock down your fun money for a few months and throw that at the debt. I wouldn't eliminate it completely but maybe cut it in half? You could get rid of the cc debt pretty fast between that and some of your excess.

Also are you thinking you'll get a tax refund? Are you amicable with your exh where you could file jointly (if you were married at 12/31) and split the refund or will you do married filing separately? Not sure of your exact situation since you mentioned living with your parents for a long time... Maybe you qualify to file single?

[nevermind]

I'm not sure that I like the idea of financing a car through family

[liser]

I don't like the idea of financing a car through family either, but it is my only option. After paying spousal support for the marital home and then having him NOT pay the mortgage, my credit took a huge beating and that house is nearing foreclosure. I cannot get an auto loan, even with a co-signer. The current car at $450/month is just not an amount I can afford. My father & I will have a written contract notarized detailing monthly payments, interest amount, etc.

Re: filing taxes: It is doubtful I'll get any significant refund, and will be filing single.

The fun money can be cut down. I've been upside down for months due to the divorce, so it would be nice to "live a little" but is not necessary. I'm used to making homemade meals, finding free activities, etc.

I've toyed with the idea of staying put at my parents rent-free until the CC is paid off, and that might still happen. I constantly second-guess myself, so posting the budget is my way of making sure I'm "okay" in the long run. And feel free to keep the advice coming, I'm making a list of things to tackle!

[countthestars]

I think you need to cut your fun money in half and put more towards retirement. I know it's hard, but $300 is a big percentage of your income (over 10%) to be spending towards fun when you have so little in retirement and savings. All the other advice you've gotten here is good!

ETA: I was posting at the same time as you . Just wanted to say that you are doing a good job and it's great that you are willing to be flexible! Don't deprive yourself of nice things but just be conscious of what you are spending. Maybe instead of rolling unused fun money into the next month you could put what wasn't used into savings. (so if you only spend $200 of the $300 in January put the $100 to savings instead of allowing $400 in February).

[Mashara]

I don't think financing the car through a family member is necessarily bad. I depends on the poster and her relationship with her family.

You've already stayed with family this long. I think a reasonable option would be to stay awhile longer, and sock the rent/utility money away as if you were already living on this budget. We offer this idea up all the time for people thinking of buying houses. As long as it works, you can safely use the money to pay off the CC or your rent deposit.

PS. I would also cut down the fun money in the meantime. Go ahead and earmark $35 or whatever for haircuts, but save coloring for later. I also don't see anything for medical. You don't wear glasses or contacts? No prescriptions? No annual wellness visits? If so, you're lucky!

[magdala9]

Congratulations on the divorce. The longer you stay in a bad situation, the worse it is for your own well being.

The groceries portion looks high by about $50. Since you cook, budget for a single woman can be $50 per week. I lived on $50 a week for food for years before I got married. The car maintenance looks low as an average monthly amount. Even with a new car, things can go wrong.

Your student loan interest is tax deductible so pay the minimum on your student loans and prioritize the credit cards first then car payment BEFORE paying off the student loans. If you are legally married at 12-31-2012, you have to file Married Filing Separately even if the ex is a non-event in your day to day life. When your divorce decree comes through, you will want to send a letter and a copy of the divorce decree to the three credit agencies. You want to explain in that letter that you and the ex no longer should have any joint accounts as a result of your divorce. Also get copies of your credit reports to make sure that the ex hasn't opened any new joint accounts that you do not know about. If you find any close them and request a letter from the credit entity confirming closure. If nothing else, closing the cards may put a wrench in any plans of his.

[y4m]

At $100/month it will take you like 2.5 years to pay off that $2700 at 14.99%. If you get money back from your car sale, I'd use it there. Otherwise, I'd cut my fun money down to apply another $100+ there. It's a low balance at a high interest rate. I'd try to pay it off in a year or less.

[liser]

I actually work at a beauty school, so cut/color is $10 every 6 weeks or so! I'm very lucky (and very grey for 28, so I unfortunately need it!) The car maintenance amount is for oil changes, which I need approx. every 6 weeks, so that is an every other month amount. I could roll that excess into doctor co-pays and things that like when necessary. No prescriptions for me, just my annual visits.

The fun money estimate can, and likely will, be cut. Like I said, I've been living on way less the past 6+ months, so I will cut that in half as I move through the next few months.

I appreciate the suggestion of living on this budget for 3-4 months to make sure it works. I do have a great relationship with my family and do not feel pressure to move out any time soon, so I'm sure they'll be supportive of my plans. And that would mean I could move out with no CC debt and on the right track for savings/retirement.

[Deleted]

I've never had utilities or cable that low or a phone bill that high.

My smart phone with most everything is $70 per month and DH's through another carrier with literally everything is $90.

[liser]

The divorce was final before 12-31, I pushed hard for that, so I can file taxes as single and be done with him. Credit reports have been pulled. My score has dropped significantly but nothing has been opened without my consent recently. I do plan on opening a pre-paid CC once the majority of the debt is under control in an effort to boost my score. This is something I would use for gas and pay off monthly. I was once CC debt free and I'll get there again!

The grocery budget really is just an estimate. I don't have to buy paper products and some meals currently because of my living situation, so I estimated on the higher end. The last time I lived as a single person I was at about $50/week as well.

I'll be discussing my budget and options with my parents this week. I wanted to be able to go in with hard numbers and a plan considering I may be living there for another 3-4 months or more.

Again, this is all great advice and I appreciate everyone's responses! I look forward to a happy update in the next few months as I get some debt tackled and my life back on track!

[hulley]

I'm sorry your ex put you in such a bad position. I've been there, and it sucks to see things you've worked hard on go down the drain, but it gets better! Good for you for pushing to be divorced before 12/31. Better to start the new year fresh

I think the car loan from family is fine, lots of people do this and if your father is okay with it, I say let him help you. It saves you a lot of money in the long run. When I was recently divorced, my grocery bill was around $60 a week for myself and a then 8YO DD, so I can see $50 being doable for a single person.
You have a great outlook and I think you will come out of this fine. Good luck!

[Roc A Bee]

So how much a month are you saving while living with your parents? $700?

I would cut fun money to $150
I think your phone bill is a bit high as well.
Try to find cheaper car insurance. We pay 8 months a year and are under $100/month.

I would probably suck it up and stay with my parents until the cc debt was gone. I would take the $700ish your saving by staying there + the $245 you have left over + $100 you already have going towards cc and apply all of it to the credit card. It could be gone in just a few month.

When you move out I'd take the $100 cc payment, $245 left over + $150 from fun money and open a Roth.

[ellipses84]

I agree you should stay with your parents for a few more months if you can. I lived with mine for a short time between jobs and got an apt. the first month of my new job, but I wish I had dealt with the long commute and stayed there a couple more months to save money.

I also think you should move closer to work if you can find a more mm option, or at least halfway between.

[mollybrown]

I agree with cutting fun money by at least $150. It sounds like you're on the right track overall.

Regarding insurance, I actually disagree that your rate looks high. You drive an expensive car and have a "big" speeding ticket. No one else's rate is relevant since we don't know where you live, or what coverage you have. That rate doesn't look abnormally high, although you should definitely shop around periodically. My H is accident and ticket prone, so I understand how those things can REALLY increase a rate.

[liser]

I'm saving a minimum of $850 this month (remember, my car pymt this month is $450) and will continue to have at least that much "leftover" while I'm not paying rent. I could easily pay off the CC in 3 months with that amount, which is what makes staying at home that much more appealing and something I'm more likely to do.

With the switch in car payments in the next 2 weeks, that'll free up a minimum of another $300/month. I'll definitely be shopping around for new insurance rates before I buy, along with checking out cheaper phone plans.

After all your advice, I'll be looking into starting a Roth IRA by next month along with my employer's 401k plan. I think having those in place BEFORE I move out on my own is the best bet for me. I can always increase the contribution amount once things are a little clearer.

[Deleted]

I don't see anything wrong with staying with your parents a few more months, and borrowing money from them for your car loan, if thats the type of relationship you guys have. I would do the same. My sister is also 28 and living at home rent free (she does pay for food and the parent student loan my parents took out for her college even though its in their name).

I think staying at home to pay off your CCs is a good idea.

But if you move, why wouldn't you move closer to work so you dont have that commute? I'd rather commute to see my friends and family on the weekend than have to commute to work. it would save gas and wear and tear on this new-to-you car, which at 7K, isn't going to be as reliable as a new car.

I also dont think your phone bill is insane, but you could slash it at least 10 a month and still have a ton of features. I pay $97 a month and I have unlimited texting ($20/month) that I could probably slash if I really wanted to. I also have a bazillion roll over minutes.

Good luck to you.

[awick14]

In regards to the phone bill:

If you call and say that you can not afford your current plan and wish to cancel they may offer you a similar plan for a reduced rate. (I have done this and got about a 20% decrease and they gave me a few extras at no cost)

If they don't offer anything just ask how much it is to buy out your plan an say you need to think about it before you make your decision. There is no harm in asking.

I also agree that you should stay with your parents as long as you can to get rid of all your CC debt and if possible your SLs.

[Mashara]

Jan 7, 2013 12:05:09 GMT -5 liser said:

With the switch in car payments in the next 2 weeks, that'll free up a minimum of another $300/month. I'll definitely be shopping around for new insurance rates before I buy, along with checking out cheaper phone plans.

Also, keep in mind that insurance is also based on your zip code, so whatever you shop could go up or down based on wherever you move.

I only pay $40 a month for Virgin Mobile. It's unlimited data (well, they do throttle) and text plus 300 minutes. This is fine for me, since I don't talk much. I think unlimited minutes is $55. Other carriers might be better for your region but still be much cheaper than your current plan.