Intro and budget help

[farfegnugen]

Hi, I'm Farfegnugen, Farf for short ;D

I used to lurk MM on TN a long time ago, but haven't spent much time on the GBCN boards. However, my financial situation is such that I am having trouble figuring out how to get ahead.

DH took a job late 2012 that was a good move career-wise, but we took a hit in salary. We are on a pretty tight budget, live in HCOL, and would one day love to own a home or heck, even have a second child, but it's just not happening.

I use mint.com, we make most of our purchases on a Chase cc with a % cash back (up to 5% on certain spending categories) and pay it off each month. We have student loan debt, and one car loan.

I have a retirement account through my long-term employer, DH has a pitiful one from his last job that hasn't been rolled over. He is turning 42 this year.

I planned out our budget for the year, and while we will make it, we will really just be breaking even when all is said and done. And that's not taking into consideration a retirement for DH. I am going to grad school, and hope that an MBA degree will help a few years down the road. But I'm reaching out for MM's expertise.

I feel like we have good paying jobs and make decent money, but rent and daycare suck us dry. I have a lot of wants and goals that I feel will never be reached. Basically, HALP!

[limey]

You'll get more helpful responses if you post an exact budget.

[farfegnugen]

OK - as for income, DH is averaging a $550/wk paycheck (take home). He is paid weekly, is not contributing to retirement, but is on health insurance through his work. My annual salary is $51,500 and I will find out shortly if I got a cost of living for the new year (it is likely, probably 3%). My take home last year was $2,554/mo after 6% retirement contribution which my employer matched at 9%; $600 health savings account pre-tax; $5,000 daycare flex spending pre-tax, and medical insurance for the family (with DH's new job he automatically has $10/wk deducted for health insurance, so we sectioned him off this year on his own plan, with me and DD on my employers).

So take home is roughly $4,754, plus I have $416.67/mo I can take from the daycare flex plan. This past year I tried to keep it in there all year and take out for birthday/christmas/emergency, but I think I may need to rely on it this year.

I feel like our budget is so tight that while I might be able to save $50 or $100 a month, that's not going to get us anywhere. When really DH should be putting $$ toward retirement. We should have a bigger emergency cushion. Anywho, my ears are open.

Very little savings, just a cushion I try to keep at least $3K.

Expenses:
Rent $1,700
Daycare $1,058
Student Loans $437
Groceries $500
Car Loan $320
Fuel for cars $220
Auto insurance $220
Kid supplies (clothes, gear and other things that crop up during the year) $100
Household goods and gifts for birthdays/showers/etc. $100
Cell phones $70
Electric $90 (this is an average of annual usage/spending)
Internet/Netflix $58
Fun/Flex Money for lunch out/haircuts/etc $100 ($50/$50 for DH and I)
Restaurants/take out $50
Auto Service/parts $40
Life insurance premium $31
Gas bill $15

Those are our monthly expenses, and we have annual expenses such as car registrations, book supplies, Christmas/birthday, an upcoming wedding, AAA membership, etc.

[farfegnugen]

Oh, and I had signed up for amazon prime in November (loved it and the fact that I didn't have to accumulate $25 worth of stuff for free shipping), but I just used my student info to get a refund and signed up for AmazonStudent. 6 months free membership and the $39/year as opposed to $79.

I haven't renewed our Costco membership at $55 because I'm not sure it's worth it, even though I loved buying TP only twice a year. I also just signed up for ebates, so thanks for that

[dexteroni]

Hi and welcome! Your expenses aren't outrageous or anything. I think the problem is just that you live in a HCOL area but you don't make HCOL salaries. Rent and day care, neither of which seem particularly expensive for a HCOL area, are eating up over half of your take home. Are you both making the most you can right now? You said your DH took a job that was a good move career-wise but paid a lot less - how is that the case? Does this move give him the potential to earn a lot more anytime soon? If not, then this might not be the best place for you guys. What fields are you in? What part of the country are you in? You said your DH is turning 42; how old are you?

[Muddled]

Why is your H not contributing to retirement?

Have you ever tried to lower your grocery bill?

[aspentosh]

The only thing that really stands out is car insurance. Your H is 42 and you are... Unless you're in a super high insurance state or you/your H are getting tons of tickets, I would imagine you should be able to lower this a lot.

Also, your H needs to contribute to retirement. That scares me!

[makingithappen]

I'm coming up with over $2200 left over each month along with your H's 3rd checks. What is happening to that money? Your H could easily be fully funding a Roth plus contributing elsewhere seeing that he's behind.

ETA: oh, I take that back. I looked at HH TH as your TH. reading fail.

How old is your kid; how much longer for the daycare? How much longer for the car loan and what is the interest rate on it?

[mrshandy]

Jan 8, 2013 7:11:39 GMT -5 aspentosh said:

The only thing that really stands out is car insurance. Your H is 42 and you are... Unless you're in a super high insurance state or you/your H are getting tons of tickets, I would imagine you should be able to lower this a lot.

Also, your H needs to contribute to retirement. That scares me!

I agree your auto insurance is way high.

Dexter is right about your salaries.

[farfegnugen]

Jan 8, 2013 1:22:28 GMT -5 dexteroni said:

Hi and welcome! Your expenses aren't outrageous or anything. I think the problem is just that you live in a HCOL area but you don't make HCOL salaries. Rent and day care, neither of which seem particularly expensive for a HCOL area, are eating up over half of your take home. Are you both making the most you can right now? You said your DH took a job that was a good move career-wise but paid a lot less - how is that the case? Does this move give him the potential to earn a lot more anytime soon? If not, then this might not be the best place for you guys. What fields are you in? What part of the country are you in? You said your DH is turning 42; how old are you?

I am 31. DH's career move was to move from an unstable (as far as job security and working hours) teaching job to a secure, 8-5 job at a large corporation with benefits, etc. His $/hr didn't change much, but he was working a bit of OT at his last job. I do think there is room for growth, and he is excelling at his new position, but I'm not sure if the potential is necessarily for "a lot more". We are in SoCal. I think I will have greater earning potential when I am done with my MBA, but that is a few years down the road.

Thanks for the response!

[farfegnugen]

Jan 8, 2013 1:34:20 GMT -5 Stan said:

I live in HCOL and make what your H makes, but it is very, very entry level. You make about what my H does. We do fine, but we don't have daycare or any other child expenses. I'll ditto others and ask how it was a good move for YH.

I get really nervous at your H's age and retirement issues.

As do I. I almost feel that unless we pump a lot of $$ in there now, it's going to be a while before it's worth much. There is only about $7K in there now.

[kadams767]

How much longer will you be paying on the car loan and/or student loans?

[farfegnugen]

Jan 8, 2013 1:45:35 GMT -5 Muddled said:

Why is your H not contributing to retirement?

Have you ever tried to lower your grocery bill?

He should. I think I was nervous that our budget was strapped too tight to take any other funds out, but I've been cutting back. On the grocery bill as well, I've been spending roughly $100/wk, so on average it's lower than the $500 we had budgeted.

[farfegnugen]

Jan 8, 2013 7:11:39 GMT -5 aspentosh said:

The only thing that really stands out is car insurance. Your H is 42 and you are... Unless you're in a super high insurance state or you/your H are getting tons of tickets, I would imagine you should be able to lower this a lot.

Also, your H needs to contribute to retirement. That scares me!

I actually emailed my credit union last night because as I typed it out I thought the same! I'm hoping they will be able to get us a better rate. No, neither of us have a bunch of tickets. Just street sweeping violations, which I hope they wouldn't hold against us

[farfegnugen]

Jan 8, 2013 9:08:22 GMT -5 makingithappen said:

I'm coming up with over $2200 left over each month along with your H's 3rd checks. What is happening to that money? Your H could easily be fully funding a Roth plus contributing elsewhere seeing that he's behind.

ETA: oh, I take that back. I looked at HH TH as your TH. reading fail.

How old is your kid; how much longer for the daycare? How much longer for the car loan and what is the interest rate on it?

Haha, when I started reading your post I was like, WHAT?! WHERE?! Show me the waaaay!!

She will be starting Kindergarten in Fall 2016. Sometime this year she may be eligible to go to another (less expensive yet still great quality) preschool down the street from us. That would save us almost $400/mo. But she hasn't met the age requirement yet and needs to be Potty Trained, which we're working on.

The car loan is new. We had both cars paid off, but one of those cars included a Mustang GT which was not only impractical for our family, but continually having issues which required costly repairs. I got a 1.9% rate on our new vehicle. Payment is $310, but I would like to put extra money in here when we can (more than just the $10 extra I've budgeted, obviously), since this is our only consumer debt.

[farfegnugen]

Jan 8, 2013 10:20:28 GMT -5 kadams767 said:

How much longer will you be paying on the car loan and/or student loans?

This is where it gets sad and a bit overwhelming for me. I have about $9K left in student loans and pay $104/mo. The rest goes toward DH's roughly $60K balance. I think he had his loans on deferment up until recently, so it's going to be a really long f-ing time before those are paid off if I can't snowball his various loans.

BP rising. This is one of the things I want to take care of. More so than owning a home. Less so than having another child.

[makingithappen]

Jan 8, 2013 10:30:33 GMT -5 farfegnugen said:

Haha, when I started reading your post I was like, WHAT?! WHERE?! Show me the waaaay!!

She will be starting Kindergarten in Fall 2016. Sometime this year she may be eligible to go to another (less expensive yet still great quality) preschool down the street from us. That would save us almost $400/mo. But she hasn't met the age requirement yet and needs to be Potty Trained, which we're working on.

The car loan is new. We had both cars paid off, but one of those cars included a Mustang GT which was not only impractical for our family, but continually having issues which required costly repairs. I got a 1.9% rate on our new vehicle. Payment is $310, but I would like to put extra money in here when we can (more than just the $10 extra I've budgeted, obviously), since this is our only consumer debt.

LOL

Your car rate is really low. I would def prioritize H retirement over paying it off. Don't pay extra on it. Depending on your SL rates, I wouldn't pay extra on those either and would add it to his retirement.

That would be great if you get into the new preschool! Fingers crossed it happens soon for you.

I'm not in a HCOL area at all, but is there anywhere you could rent for cheaper just while you're still in school?

[kadams767]

Jan 8, 2013 10:33:45 GMT -5 farfegnugen said:

Jan 8, 2013 10:20:28 GMT -5 kadams767 said:

How much longer will you be paying on the car loan and/or student loans?

This is where it gets sad and a bit overwhelming for me. I have about $9K left in student loans and pay $104/mo. The rest goes toward DH's roughly $60K balance. I think he had his loans on deferment up until recently, so it's going to be a really long f-ing time before those are paid off if I can't snowball his various loans.

BP rising. This is one of the things I want to take care of. More so than owning a home. Less so than having another child.

I really wouldn't bother putting extra towards the car right now, with that interest rate. Anything extra on the car should go towards his retirement. What kind of rates are you looking at on the SLs? I wouldn't put extra towards those either unless they are particularly high.

[phunluvin82]

Jan 8, 2013 9:13:40 GMT -5 mrshandy said:

Jan 8, 2013 7:11:39 GMT -5 aspentosh said:

The only thing that really stands out is car insurance. Your H is 42 and you are... Unless you're in a super high insurance state or you/your H are getting tons of tickets, I would imagine you should be able to lower this a lot.

Also, your H needs to contribute to retirement. That scares me!

I agree your auto insurance is way high.

Dexter is right about your salaries.

But if they still have a loan on the car, they are probably required to have full coverage on it and may have gap coverage as well, so that could be why the insurance is high.

[makingithappen]

Jan 8, 2013 10:48:00 GMT -5 phunluvin82 said:

Jan 8, 2013 9:13:40 GMT -5 mrshandy said:

I agree your auto insurance is way high.

Dexter is right about your salaries.

But if they still have a loan on the car, they are probably required to have full coverage on it and may have gap coverage as well, so that could be why the insurance is high.

Full coverage still shouldn't be that high. We have full coverage on 2 vehicles with H and I both having an accident on our record and H having a couple tickets and we pay $130. And we have roadside assistance and rental reimbursment.

[ESF]

Can you explain how your H has $60k in SLs in deferment until recently and is 42? Did he go to school recently? For what?

The MBA plan concerns me - if you are just doing it to earn more money, it's probably not a good idea. What are your goals? Have you had conversations with alumni of the program (not the school) about what your job prospects will really be like when you finish?

[phunluvin82]

Jan 8, 2013 10:51:57 GMT -5 makingithappen said:

Jan 8, 2013 10:48:00 GMT -5 phunluvin82 said:

But if they still have a loan on the car, they are probably required to have full coverage on it and may have gap coverage as well, so that could be why the insurance is high.

Full coverage still shouldn't be that high. We have full coverage on 2 vehicles with H and I both having an accident on our record and H having a couple tickets and we pay $130. And we have roadside assistance and rental reimbursment.

Depends on where you are though...I pay $110 for full coverage on an inexpensive Honda.

[farfegnugen]

Jan 8, 2013 11:03:47 GMT -5 ESF said:

Can you explain how your H has $60k in SLs in deferment until recently and is 42? Did he go to school recently? For what?

The MBA plan concerns me - if you are just doing it to earn more money, it's probably not a good idea. What are your goals? Have you had conversations with alumni of the program (not the school) about what your job prospects will really be like when you finish?

The majority of those loans are from a stint at a career college (Devry) about 9-11 years ago. He didn't graduate and didn't apply the education he got there (something to do with computers) to a job, just went back to his previous job/experience, which was as an RDA. He kept deferring based on hardship, and then after we got married (about 6 years ago) he started taking photography classes at a community college (we paid cash for that, but since he was going part time he deferred again). He does have a photography business, but he just doesn't get a lot of work (he doesn't put enough effort into running the business).

Back at the time, I thought this photog business would be our saving grace. He does love doing it, but doesn't have a revenue stream.

The MBA I am working on is paid for by my employer. Do you think it's not a good idea because of the cost? Because my only financial output is books and those are minimal. I am hoping it will help me get a higher paying job, but the education I'm receiving is also very useful, not only with my current job, but if we were to go gung ho with DH's photog business (and I have a lofty dream to one day open a small business), the skills I learn would help.

Another option I have been considering is to get a Graduate Certificate in Business Administration. I'm not sure yet how beneficial this certificate would be. I do know it is an attainable goal, one that can be accomplished by summer with the courses I've taken thus far.

[farfegnugen]

Also, thanks for your responses thus far. Sometimes I feel like mentally I'm swimming around with "solutions", and then I get snippy at DH for spending $5 on lunch. We don't spend a lot, so it does help to realize that we need to increase our income. Whether that's with DH's photog business, taking a side job, or climbing in my career, I do agree that's the direction we need to head in.

It also sounds like, in addition to seeking additional income, we need to start funding DH's retirement and fast. Do you recommend we allocate his funds to a high-yield sector? I like to play it safe but I understand he has lots of catching up to do.

Also, can I ask about my retirement? At 31 I have roughly $40K in retirement savings. Does this seem like a good point for me? I am pretty diversified, but do you think I should also stack my funds to a high-yield account? Should I be putting more in? The amount I put in seems like the best value - employer will match 1.5X my input up to 6%me/9%them.

Thanks again, I really appreciate your input!

[limey]

bucks.blogs.nytimes.com/2012/09/12/suggested-retirement-savings-goals-by-age/

Here's where you should be, by age. Your H should have more than double his salary saved up at this point.

[farfegnugen]

Yikes. I'm glad I'm a little ahead of the game, but obviously we (as a couple) are way behind.

[farfegnugen]

Jan 8, 2013 10:39:06 GMT -5 makingithappen said:

Jan 8, 2013 10:30:33 GMT -5 farfegnugen said:

Haha, when I started reading your post I was like, WHAT?! WHERE?! Show me the waaaay!!

She will be starting Kindergarten in Fall 2016. Sometime this year she may be eligible to go to another (less expensive yet still great quality) preschool down the street from us. That would save us almost $400/mo. But she hasn't met the age requirement yet and needs to be Potty Trained, which we're working on.

The car loan is new. We had both cars paid off, but one of those cars included a Mustang GT which was not only impractical for our family, but continually having issues which required costly repairs. I got a 1.9% rate on our new vehicle. Payment is $310, but I would like to put extra money in here when we can (more than just the $10 extra I've budgeted, obviously), since this is our only consumer debt.

LOL

Your car rate is really low. I would def prioritize H retirement over paying it off. Don't pay extra on it. Depending on your SL rates, I wouldn't pay extra on those either and would add it to his retirement.

That would be great if you get into the new preschool! Fingers crossed it happens soon for you.

I'm not in a HCOL area at all, but is there anywhere you could rent for cheaper just while you're still in school?

Our student loan rates are all pretty good, everything is under 5%. The 2 loans which make up $50K of SL debt are at 2.625%. My $9K is at 1.65%.

DH has an $8,600 SL at 4.75%; a $3K SL at 5%; and a $1,600 SL at 4%. Now that I'm looking at the balances, I'm actually afraid the 2 large ones are still in deferment because the balance doesn't seem to be going anywhere. This is why I felt the need to pay off the smaller ones and then re-assess the 2 large ones. I have a feeling our payment should be higher.

As for alternate living, our rate is actually pretty comparable to other options, and that's comparing our house rental to apartment rentals. I walk to work and get a pretty good deal on University housing. I'm not completely opposed to it, but I am trying to avoid moving around a lot since that's something I experienced growing up.

[farfegnugen]

I wish we had room for an extra freezer in the garage. At this point we don't, but I could store the TP there and other shelf-stable goods. Plus, I do love their rotisserie chicken I will probably renew in a few months. Thanks for the advice.

[farfegnugen]

Small house = small fridge, but I could do most of that. One day I would love to be able to buy really bulk (like, 1/4 cow kind of bulk). We were buying the chicken, fruits and veggies before our membership lapsed.