Budget help please!

[lys]

I would use the 1600 savings line to add to your car payment and credit card and get rid of them - yes, I know they are 0%. Then save toward a future vehicle replacement (pay cash if possible - but have them paid off in 3 years of less.) . I prefer HEL rather than HELOC as the temptation is to prolong the debt repayment. It is also tempting to use equity as a cash cow - and can be a dangerous debt developer. I would work toward being debt free (other than mortgage) for now. You have a good income and that is very doable.
Small cuts add up - where you cut would depend on your priorities.

[Deleted]

If you actually stick to this I think you are fine. We make a similar amount but I prioritize different things and our family has different needs so my budget wouldn't look like this but as long as you are paying your bills and saving I don't see a problem.

If you would like to pay more towards debt or reduce spending to put more towards the HELOC you have a lot of discretionary spending that you could reduce. Groceries, eating out, target, clothes, fun money, gifts, vacations, and dry cleaning total $2900. That is a number that can easily be lowered. Just reducing each of those categories by $25-$50 will make a big difference in your bottom line.

[formerlyak]

If you are only paying $200 per month on the interest free credit card, you will not have it paid off before the interest kicks in. That usually results in a lot of back interest. I would find a way to double that monthly payment to ensure you pay it off by 2/17 and don't get hit with a fat interest charge.

[Deleted]

What is the $1160/ month in general savings targeted towards?

You mention kids; do you have any kind of child care costs? How old are your children?

When do you/ your husband hope to retire?

Do you hope to stay in this home after retirement, or will you sell it and move/ downsize?

[Deleted]

shygirl You guys are in a really good position, I think. It's just a matter of playing your cars to full advantage.

It's obvious that you need to pay off your credit card before the 0% time period is up. Throw any bonuses you get at this, as well as your extra $1,000/ month.

Will you refinance the house to roll the $32k HELOC into the mortgage, or pay that back separately?

One more question: how important is it that you pay for your kids' college?

I keep stumbling over the idea that your house will be paid off when your H is 72/73. I'd be curious to see what the ladies around here say about paying off a low interest mortgage before retirement, or hoarding the cash to cash-flow mortgage payments during retirement. There is a point of diminishing returns on the mortgage interest tax deduction.

[awick14]

@idaholakelady- I personally would want to be mortgage free before retirement. We pay an extra $150/month towards our mortgage and we only have 17 years left when we should have 26. BUT we are also in Canada so our mortgages are a little different here.

OP, I would put that extra savings each month to pay off the 0% credit card. The interest once the promo period is up is most likely huge.

[SJ]

Overall I think it looks really good.

I am not sure why anyone is concerned about the 5K interest free card when you have 45K in unrestricted savings. You can just pay it off in full the month before it's due.

What are your general thoughts on paying for college? Do you live in a state that offers tax breaks for 529 contributions?

How much more would you need to contribute to max out your retirement plan?

You have healthy reserves and are saving more monthly. None of your debt concerns me that much since you can pay it off at any time if truly needed. Do you have any taxable investments? You might want to set a threshold ($25K? $50K?) for comfort level of cash and then start investing over and above that.

Any other large goals or expenses looming? Do you actually find yourself able to save that much monthly or is this an ideal "paper" budget?

[aurora]

How secure are your jobs? Depending on that, your general savings could be reasonable or not.

Depending on your college savings philosophy I'd consider putting a big chunk of the $1160 into that. You could also invest it outside of the retirement and 529 so you have more options but could choose to use the returns toward college when the time comes.

Overall you seem to be in pretty good shape. Do you have any other big goals?

[shygirl]

Feb 8, 2016 21:54:20 GMT -5 @idaholakelady said:

shygirl You guys are in a really good position, I think. It's just a matter of playing your cars to full advantage.

It's obvious that you need to pay off your credit card before the 0% time period is up. Throw any bonuses you get at this, as well as your extra $1,000/ month.

Will you refinance the house to roll the $32k HELOC into the mortgage, or pay that back separately?

One more question: how important is it that you pay for your kids' college?

I keep stumbling over the idea that your house will be paid off when your H is 72/73. I'd be curious to see what the ladies around here say about paying off a low interest mortgage before retirement, or hoarding the cash to cash-flow mortgage payments during retirement. There is a point of diminishing returns on the mortgage interest tax deduction.

we plan to pay the HELOC off separately.

We know we wont be getting any financial aid - so I would like to be able to pay for more of their college than we currently can with the amount of money we are contributing. that is something we definitely need to think about adjusting.

[oswin]

Feb 8, 2016 21:54:20 GMT -5 @idaholakelady said:

shygirl You guys are in a really good position, I think. It's just a matter of playing your cars to full advantage.

It's obvious that you need to pay off your credit card before the 0% time period is up. Throw any bonuses you get at this, as well as your extra $1,000/ month.

Will you refinance the house to roll the $32k HELOC into the mortgage, or pay that back separately?

One more question: how important is it that you pay for your kids' college?

I keep stumbling over the idea that your house will be paid off when your H is 72/73. I'd be curious to see what the ladies around here say about paying off a low interest mortgage before retirement, or hoarding the cash to cash-flow mortgage payments during retirement. There is a point of diminishing returns on the mortgage interest tax deduction.

I say pay it off! shygirl, I think you're doing pretty well, but I'll tell you what I would do in your situation. First, lower discretionary spending, you're blowing a lot of money on clothing, coffee, haircuts, and cable. Second, you have $45k in savings, that's more than enough for an efund - why did you take out $32k in debt? Pay off that HELOC ASAP. You didn't say what the interest rate is, but it's not free. The only time it's better to leave debt than pay it off is if the interest rate is so low that you can make significantly more money by investing in the market, and you're not doing that. So I'd put everything you have leftover each month towards paying it off, including that $1160 going to savings right now and the $175 unidentified. Once that's paid off, pay ahead on the mortgage for a while to shave a couple of years off the term so you're not still paying it well into retirement.

[SJ]

oswin and I are pretty much diametrically opposed

I do agree that cash is paying next to nothing (so better to pay off debt than hold tons of cash) which is why I suggested beginning to invest the money. It should outperform your low interest rate debt.

[Deleted]

shygirl I'd take a hard look at saving more than $50 month/ kid for college. If your kids are elementary age, you may be less than 10 years from college expenses. If you do want to pay for a chunk of college, you're rapidly running out of time for compounding interest to work it's real magic. It would be even better if you could take any income tax breaks for contributing to a college savings plan.

I'm well aware that the logic around here is to save for retirement and let your kids take loans for college. That said, you guys are 18 years from retirement with nearly $775,000 in retirement savings. Unless you live in an incredibly HCOL, I think you're on track for retirement.

[kylerules]

Since you have 45K in general savings, I wouldn't be putting anymore into that each month. Instead I would use your extra money and pay off debt.