We are in the process of buying a house. Found the one we wanted yesterday but its on the higher end of what we considered spending. But its perfect (doesn't it always go this way?!) Heres what our budget would look like if we had this house. Any thoughts?
Mortgage/taxes/insurance-1750 electricity/gas/water-200 Car payments- 360 Student Loans- 300 Credit Cards- 50 (we only have like $200/interest free left) Car insurance- 150 Gas- 300 Food- 500 Daycare-625 Diapers-40 Clothing/fun money-250 Toiletries-200 Phone insurance-20 Cell phones-60 Netflix- 10 Total- 4855
Total take home-5425/month Additional income- minimally $7K year/bonuses. This is guaranteed if my H is employed. Current amount in savings- $17,000 We both have retirement accounts through work, though I don't know details. :/
Am I forgetting anything? I'm trying to estimate on the higher end for food and clothes to maybe give myself more cushion. This leaves about $575/month for emergencies/savings. Is this a comfortable cushion? Or is the house payment too high?
Any advice is appreciated. I am in and out of appointments all afternoon, but I will respond when I can! Thanks!
Just pay off your credit cards. If you really only have $200 on them you should be able to do that. You aren't going to save that much by keeping $200 in your bank account earning .05% interest.
Overall it seems fine but several of the costs here seem low. Are you planning to ever upgrade to a different phone? I also think you should have a birthday/holiday fund. Chances are you'll spend more than $500 in December beyond your normal spending so you might as well save toward that all year. ( think the average person spends between $700 and $1000 in december).
Is $17,000 all you have in savings or what you would have after your down payment, closing costs, cleaning/painting and moving costs? I'd want to know where you'll be after you'd move in. You'll need a lot of money if your buying a house.
Also find out about retirement. You might have plans from work but they may not be sufficient. This would be particularly true if you're getting any sort of state plan. Most state plans are forecasting gaps within the next 10 years.
It's a little (lot?) tight for my taste. I personally think $250 total for clothing/fun is way too low, there is no way we'd ever stick to it at least. $200 is high for toiletries on top of $500 for food, we lump those together but I assume you could include other household items in toiletries (like air filters, dishwasher soap, laundry detergent, etc) - right?
What are you currently spending on fun/misc stuff?
What is phone insurance? For cell phones? You realize you're paying 1/3 of your monthly bill to that, right? I'd cancel it but obviously $20 isn't going to make or break you here.
Your income is only slightly higher than ours and I wouldn't be comfortable with that big of a mortgage payment. Our other expenses are very similar (swap daycare for a 2nd car payment) and we pay about $600 less in mortgage each month and still feel stretched many months. Don't forget that with moving and owning a home there will be a million small expenses - and maybe some large ones - related to the house. I think with so little wiggle room each month you're going to end up feeling very house poor, even if you can swing making the payments you won't have anything leftover to do anything fun (including gifts, travel, eating out, etc).
No real advice, but I'm very curious to see the responses. We have almost the exact same numbers as you for everything, but we rent right now. The house payment we'll likely take on next year is nearly identical as well.
Does food include eating out/entertainment? That seems a bit low.
Why do you have insurance on phones that run $60 a month? (I'm assuming they aren't smart phones)
Electric seems low. We pay $200 for electric + $30 each a month for water and trash pickup.
What about home improvement/upkeep? We have spent over $5,000 this year on things like tree removal, etc.
What about start-up costs for a new home? Lawnmower, yard supplies, paint, new furniture
We also spend a fair amount on stuff for the home on an ongoing basis, curtains, new light bulbs, towels, etc. Of course a lot of these aren't necessities, but we spend at least $100 on this type of stuff.
Based on all of the questions others have asked, I don't think you can afford the house. Save as much as you can for a DP, look into your budget again for other ways to save.
Yes, $17K is after down payment/closing costs (or the estimation of closing costs)
Home maintence...I don't really know how to plan for that. Do most people set aside a general number? Or just have a good savings account/efund that they dip into?
For retirement- I'm not sure. I work for the state and pay into their system- so I'm covered there. My H was a financial advisor before he switched careers, so I let him handle everything. He says we are doing well, but I don't know what that means necessarily. I'll ask.
It's a little (lot?) tight for my taste. I personally think $250 total for clothing/fun is way too low, there is no way we'd ever stick to it at least. $200 is high for toiletries on top of $500 for food, we lump those together but I assume you could include other household items in toiletries (like air filters, dishwasher soap, laundry detergent, etc) - right?
What are you currently spending on fun/misc stuff?
What is phone insurance? For cell phones? You realize you're paying 1/3 of your monthly bill to that, right? I'd cancel it but obviously $20 isn't going to make or break you here.
Your income is only slightly higher than ours and I wouldn't be comfortable with that big of a mortgage payment. Our other expenses are very similar (swap daycare for a 2nd car payment) and we pay about $600 less in mortgage each month and still feel stretched many months. Don't forget that with moving and owning a home there will be a million small expenses - and maybe some large ones - related to the house. I think with so little wiggle room each month you're going to end up feeling very house poor, even if you can swing making the payments you won't have anything leftover to do anything fun (including gifts, travel, eating out, etc).
Yes, I was thinking everything "extra" besides food for toiletries- soap, cleaning supplies, tissue, etc, etc, etc. I wasn't sure about the $250 in fun $/clothes. We'd have to buckle down and stick to it, but I think it would be doable. Thats $3K a year which seems like a lot.
Phone insurance- I've got a 1 year old that likes to throw shit. So its worth it to us- we both have iphones and data plans, but get $ through work to supplement because we are expected to answer emails nights and weekends. So thats why thats somewhat low.
Again- we have a 1yo so we don't do much for fun right now :/ I haven't seen a movie in over a year... Usually its out for a meal once or twice a month with friends. Not expensive.
We had cable in our last house (rented) and we cancelled it. We never watched it. Between netflix and watching episodes of ABC shows we watch on my work-provided ipad. We can barely keep up with that
It's a little tight, especially if you are first time home buyers and aren't sure what you'll be paying for maintenance/gas/etc. We make a little less than you, but our mortgage is about $200 less than that. It's tight, and we don't even pay for daycare. If the place has ac, you'll probably be paying more than that for electricity. If it has an irrigation system, you'll be paying more for water. Just to give you an example, for 2000 sq. ft, our summer gas/electricity bills topped out at $250. Our summer water bills were around $85 every month. Obviously these go down in the winter, but that's a big difference from the numbers you have listed. Food seems low to me, also, if it is including meals out.
Are you sure your electricity/gas/water will be that much in the new house? That would be way too tight for me.
This is based on the seller's disclosure. I think its probably accurate- she was a little old lady who is keeping the house at 85 right now- and we live in TX! I suspect she keeps the house warmer and cooler than we do. But I can't guarantee that.
Are these actual numbers? As in you've been tracking and know this is what you spend or is this what you think you spend?
Is the 17K after closing costs, down payment, etc?
We do have upcoming travel next June- a family cruise. Its paid for though. We have about $1K in another account that I haven't included here that we're holding on to for spending money/extra expenses that pop up on the cruise. Hoping to not use all/most of it, but its there if we need it. This is the first real vacation we've had in the 6 years we've been together because its hard to coordinate work schedules. We usually do little trips around TX/NM to visit family. Boring, but vacations can wait for us until A) the kid is older and everyone can enjoy them more, and B) we have the money.
Actual numbers except for clothing. I've never put myself on a budget for clothing except try to buy smart. But I could definitely cut back
I always get a little fuzzy with "fun" because we basically have 3 misc categories in our budget and fun falls into those. They are my spending, DH's spending, and joint spending.
This month in joint we included $50 for the last lawn treatment of the season, around $50 in medical copays, a handful of decorations at Target, the pizza we ordered last week, and a couple of eating out/movie night excursions. We'd also throw vet bills, water filters for the fridge, necessary new clothing, and any true "fun" in there.
Then in personal spending, I have my haircut, 5k registration, a couple of outings with friends (so you might not have those much), a donation I made independent of DH, a couple of cheap kindle books, a sandwich I picked up on the road last week....etc.
Some of these are by choice, but I think trying to catch all that misc spending with $250 a month would be really, really hard. I know some people do it, and if you're really frugal to begin with that may be just fine for you. I know personally if it was us, there is no way we could reign it in that much without feeling extremely deprived. A nice new house isn't much fun if you can't afford to maintain it or buy anything to make it feel like a home.
Also, your electric/water/gas sound about right for us most months - this summer we had a couple of very high water/electric bills because it was hot so we ran the AC a lot and we watered our lawn through a drought. They do seem a little on the low end for average over the year, but I think you're close since ours range from $150 for all that to over $300 depending on the time of year.
I think it's possible, but it depends on a few things. First, COL hasn't been taken into consideration here, so IMO it's definitely possible to do a $500/mo food budget including eating out, but it depends on where you are and what your habits are. Our fun money has been as low as $100/mo and we don't have any issues with that. It all depends on your habits.
Is it going to be tight? Yes. I think the big part that's missing is the home improvement/shit breaks fund, which probably needs to be $75-100/mo depending on what age the house is.
Also, depending on how strict you are with the bonuses, that could be used to build your e-fund, pay down a car, or go toward vacations/gifts/etc.
How much are you saving for retirement? Have to ask my H for more details. We will look at this tonight.
Does food include eating out/entertainment? That seems a bit low. It does. With a 1yo we don't do this much- shes unpredictable in restaurants. But I realize this won't always be the case.
Why do you have insurance on phones that run $60 a month? (I'm assuming they aren't smart phones) They are- iphones. We get $$$ from our jobs that supplements the cost because we are required to check email after hours. With the kid, I feel more comfortable having the insurance on the phones.
Electric seems low. We pay $200 for electric + $30 each a month for water and trash pickup. I'll look into this- going off of the seller's disclosure
What about home improvement/upkeep? We have spent over $5,000 this year on things like tree removal, etc. Is there a good way to budget for this? I am not sure what I should be estimating- is $5K/ year normal?
What about start-up costs for a new home? Lawnmower, yard supplies, paint, new furniture ...we have some stuff. Not everything though. Something I will talk to my H about and see what he thinks as far as what we would need
We also spend a fair amount on stuff for the home on an ongoing basis, curtains, new light bulbs, towels, etc. Of course a lot of these aren't necessities, but we spend at least $100 on this type of stuff. $100/month? Yeah, you're right. I didn't include that...I'll make sure to add it for when I show my H tonight.
Do you have life insurance? Cable/Internet? Yes we have life insurance- just through our jobs, but at 4X our salary. So not amazing by any means...no cable, though we would need internet. I'll add that in there as well. Eeek!.[/quote]
I think it's possible, but it depends on a few things. First, COL hasn't been taken into consideration here, so IMO it's definitely possible to do a $500/mo food budget including eating out, but it depends on where you are and what your habits are. Our fun money has been as low as $100/mo and we don't have any issues with that. It all depends on your habits.
Is it going to be tight? Yes. I think the big part that's missing is the home improvement/shit breaks fund, which probably needs to be $75-100/mo depending on what age the house is.
Also, depending on how strict you are with the bonuses, that could be used to build your e-fund, pay down a car, or go toward vacations/gifts/etc.
I think we're LCOL? Dallas/Ft Worth suburbs. I think thats pretty low compared to elsewhere in the country
And thats what I was thinking with bonuses....add to the efund/savings to make it so that if we had a month that we weren't able to save as much (or at all, gulp!) it wouldn't impact us as badly. But I didn't know if that was realistic/smart.
Another meeting for about an hour....I'll think on this a little and check back in once I'm done. Thanks everyone!
How much are you saving for retirement? Have to ask my H for more details. We will look at this tonight.
Why do you have insurance on phones that run $60 a month? (I'm assuming they aren't smart phones) They are- iphones. We get $$$ from our jobs that supplements the cost because we are required to check email after hours. With the kid, I feel more comfortable having the insurance on the phones.
E!.[/
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I would ditch this and put the $60 in a savings account for if a phone breaks. That is $720 a year. More than enough to buy two new iphones.
How much are you saving for retirement? Have to ask my H for more details. We will look at this tonight.
Why do you have insurance on phones that run $60 a month? (I'm assuming they aren't smart phones) They are- iphones. We get $$$ from our jobs that supplements the cost because we are required to check email after hours. With the kid, I feel more comfortable having the insurance on the phones.
E!.[/
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I would ditch this and put the $60 in a savings account for if a phone breaks. That is $720 a year. More than enough to buy two new iphones. [/quote]
The insurance is only $20 a month, so $240 a year. However, not sure if this is the case with all phones/companies but it seems you can buy a refurbished or used one off of ebay, craigslist, or from a retailer for a lot cheaper. For example, we have Verizon and have a local Verizon store that sells a bunch of refurbished phones for fairly cheap. DH broke his phone earlier this year and was able to replace it for $120 (different phone, but still a nice smartphone). Considering insurance is $10 a month with a $100 deductible, buying a refurbished phone was MUCH cheaper than paying $120 a year in insurance plus a $100 deductible to use it.
We always had insurance on our phones in the past, until we realized how high the deductible was and how readily available cheap used phones really are.
I think your budget is tight, but doable. It doesn't sound like you spend frivolously. Just realize you may not have as much wiggle room as you like for a year or two.
Do you or your H have potential for income growth in the future? When my H and I bought our house, it was a bit of a stretch (although we could have been approved for higher), and the first year or so was very tight as we bought furniture and appliances. Since then, our income has grown significantly, so our budget has loosened. With no prospect for increased income, I feel like your budget is going to feel tight for a long time - I don't really see any expenses that are going to go down in the future. And if you doubled the daycare payment, you'd use up your entire cushion.
Yes, and thats why we are even considering a house at the top of our price range. He's working on the CPA- hoping to pass the rest of the portions in the next year and a half (work is paying for the tests, so I didn't include that into my budget). His income should increase dramatically then (probably $15-20K with his work experience). Mine will increase some- I took a paycut to take my current job and plan to stay here 2 years then move on. I will never make a ton, but I can expect a $5-7K jump when I move on. This is a house we can easily grow into and stay in for as long as we would want- even with a second kid. Or, God help us b/c we only want two, a third kid. lol
In addition- this house is currently inhabited by a little old lady who recently lost her H. She needs out, and has priced the house to sell. Its currently selling at about $30K under market value. Which is again, why we are considering spending at the top of our budget. :/