Budget Review - Two House P'ments

[ejpint]

We're going into a situation where it's very likely we'll have two house payments. We're trying to rent our house out, but having some difficulty getting it rented.

Our budget is below - I've cut it to about as bare bones as I realistically think I can for a short term change. Any suggestions? Is this realistic? Am I missing anything? We do have some e-fund to draw from, but as this budget doesn't take into account any sort of repairs (home or auto) or medical emergencies, I don't want to have to touch it.

We also have a trip to Europe in a week or so. It's mostly paid for, but I don't want to feel like we can't do anything fun after paying $$$ just to get there. We'll probably have a bit more in spending just from eating out and museums/sightseeing, and may need to pull from savings to cover the CC bill next month. We'll tighten up in other places, but I'm reluctant to cheap out too much on a big trip like this.

Anyway, income is after all deductions - healthcare, retirement, investments, life insurance - but before bonuses. They are significant, but we don't use them for monthly budgeting. They don't get paid out until the spring anyway, and if we're still paying two house payments then, well...I don't know what I'll do!

Car payment is high as it's a 36-month loan.

Utilities are an estimate - big, old house, so I'm trying to guess high.


Income $7,500.00

Mortgage $1,850.00
Rent $2,000.00
Phone $105.00
Electric $100.00
Gas $100.00
Water $30.00
Internet $50.00
Car $720.00
Fuel $350.00
Insurance (auto and home plus renters) $110.00
Groceries $450.00
Eating out $100.00
Dog food $60.00
Grooming $100.00
Doctor co-pays $75.00
Netflix $20.00
Sirius XM $5.00
Student Loans $570.00

Balance About $700.00

I can go without new clothes, hair cut (though my roots are getting scary) or any "fun" purchases for the next month or few. I can't realistically see cutting the eating out, especially in October when we'll be moving and unpacking.

I confess, having only $700 cushion makes me nervous. Just a little extra in a few of those line items can wipe that out pretty fast!

[hocus]

What portion of your mortgage will be covered by rent once you do get renters? Overall I think this is fine in the short term -- though I'd do your best to only spend $700 on your trip to Europe. That seems like plenty of spending money to me.

[kadams767]

What kind of "investments" are coming out of your pay before takehome? If things get too tight, can you decrease those for awhile?

I agree that it's tight, but doable, short term. Though your utility estimates might be off depending on your climate. If you are in a place with a cooler winter and using natural gas heat for a big, old house, $100 is kind of low.

[Pilsy]

EJ, are you able to say where the home is? Just curious.

Where in Europe are you going? And for how long?

[sometimesrunner]

I think it's fine short term. I think it would feel too tight if you have to maintain this long-term. Do you have a pretty large efund? If so, I wouldn't hesitate a bit to spend money on your Europe trip. Am I reading correctly that you've only allocated $200 for utilites? (electric and gas) I don't know where you live, but for a "big, old house" that would not be enough in the winter or summer. I live in NE and have heard friends complain of $400+ utility bills in the winter.

[Deleted]

Why the 2 house payments? Are you relocating? Can you just sell the house. I don't think it's realistic to have housing be more than 50% of your budget for very long.


Also utilities seem really low unless winter will be very mild. Our not big, old-ish house costs $300 to cool in the summer, and $300 to heat in the winter, and it's relatively efficient.

[makingithappen]

Can you cut the dog grooming out? I also don't think the utilities are a high estimate. We are in a rather mild climate and spend that much in February in a 1250 sq ft house, although our water/sewer is $75.

[ejpint]

We can't cut grooming, we have high maintenance dogs. We might could for one month.

We could sell the house, but it would be at a loss. We'd need to bring probably $15k to the table at this point. We're hoping to rent it out, and have it placed with a property mgmt company, but haven't found acceptable tenants yet. FWIW, our payment will actually go down about $250/month after December - we're catching up tax payments this year due to bank error. We plan to try and sell again in two years (when we won't be competing with new construction).

Re: utilities, I'm in the Midwest. Utilities could be a rude awakening come late November/December, but right now it's fairly mild. We're currently paying $95 on avg. for gas and electric for a SFH. This house is about 200 more sq. ft., but definitely not as energy efficient. I anticipated it doubling. Another reason, though, that I'm concerned about the cushion.

[ijack]

I don't think it's too bad. $700 isn't a horrible cushion. Take a look at your efund and decide how much you're okay drawing from for your trip. I would encourage you to have a good time- you've both had A LOT on your plates lately and you need to be good to yourselves

[Deleted]

Why the new place? For 15K I'd sell the house and be done. I wouldn't hold with the hope the market is going to rebound in 2 years. The chances of that are pretty unlikely. 7 mos of mortgage payments and you would be better off selling now anyway.


Also, I don't see how you can heat a big house in the Midwest Dec-Feb for less than $300/month.

[ejpint]

Re: Europe, we're going for two weeks. London, Paris, Brussels. Flights, train travel and hotels/apartments are already paid for. We're strictly looking at local travel (tube, metro passes), museum entrance, food and maybe a few souvenirs. We're not going to go buck wild, but I also don't want to limit myself to eating supermarket sandwiches and looking at stuff from the outside only. Seems like a waste of a trip.

Re: renters - when we do have tenants, we'll break even on the mortgage. I'm totally not worried about our budget then - I can comfortably keep the $700 cushion for blow money/entertainment, and drop the rest back in savings. It's just the short term that I'm concerned about, or if it drags out for more than a month or three.

Re: investments, we could pull back there, but don't want to if I don't have to. We have money that we pull from each check to invest in mid-term accounts and an IRA. I really don't want to have to touch that since we're backing off saving for short term needs.

[ejpint]

Sept 26, 2012 16:03:44 GMT -5 BirdGirl said:

Why the new place? For 15K I'd sell the house and be done. I wouldn't hold with the hope the market is going to rebound in 2 years. The chances of that are pretty unlikely. 7 mos of mortgage payments and you would be better off selling now anyway.

I took a new job in a new city. I don't think the market will rebound, but we're in a new development. After two years, the lots will all be built, and we'll no longer be competing against brand new construction. It's a hard sell when the house next door is cheaper AND you can choose your paint colors. Now we would sell for $35k less than what we paid three years ago, and would have to bring money to the table. Unfortunately, relo package didn't cover loss on sale.

[ejpint]

Sept 26, 2012 16:02:48 GMT -5 ijack said:

I don't think it's too bad. $700 isn't a horrible cushion. Take a look at your efund and decide how much you're okay drawing from for your trip. I would encourage you to have a good time- you've both had A LOT on your plates lately and you need to be good to yourselves

Thanks:) That's my plan. I just hope I can get H to loosen up a bit, he's (rightly) pretty stressed right now. I think we'll be fine if we pull an extra thousand or so out.

[ejpint]

Sept 26, 2012 18:10:32 GMT -5 @vicmo said:

Sept 26, 2012 16:04:18 GMT -5 ejpint said:

Re: Europe, we're going for two weeks. London, Paris, Brussels. Flights, train travel and hotels/apartments are already paid for. We're strictly looking at local travel (tube, metro passes), museum entrance, food and maybe a few souvenirs. We're not going to go buck wild, but I also don't want to limit myself to eating supermarket sandwiches and looking at stuff from the outside only. Seems like a waste of a trip.

I agree that you shouldn't scrimp. However, I'd probably think about whether you want to go lighter on some meals and then have a few nice dinners out in each city. If you have an apartment, you could buy breakfast foods to keep on hand. We were in Germany earlier this year and we ate lots of sandwiches from take-out counters - they were still delicious and "special" but cost a lot less than a full sit down meal. I also know people who can do the big breakfast, no lunch (or a small snack) and then big dinner thing - that can save money, especially if your hotel includes breakfast. (I can't do that because I love eating too much.)

And not to harp on Rick Steves, but I have travelled with his guidebooks twice this year and he has GREAT food recommendations, with very realistic price guidelines.

Thanks for the input - I agree, I like Rick. We're fairly seasoned travelers, so I feel comfortable that we'll be set on where to spend and where to save on food.