Middle Income Budget/Finances

[Deleted]

I found the HHI thread very fascinating, but since we don't make nearly that much money and we have loads of debt, I thought I'd share my finances here, because why not. I know it's always helpful for me to see what works and doesn't work for other people, so I'll share mine. My breakdown is a little wonky because I keep my budget in a spreadsheet, which is basically like a glorified, categorized check register LOL I can't get the numbers to match up exactly because we were moving a lot of money around between accounts last year when we ended up doing a small main floor reno, but this gives you the general gist. 

A couple of things:

• we had an influx of "misc income" because I had a part-time job for a couple of months, and we did a cash-out refi of our mortgage.
• misc income also includes my husbands expense checks that pay off one of his credit cards in full every month 
• our mortgage refi lowered our payment, but because we paid off a small loan, we're putting extra towards it going forward so our 2021 number is more like $25,000
• Credit card payments includes my Chase Amazon that we use exclusively for Amazon purchases, so those aren't categorized and we pay that card in full every month
• we are currently in debt pay down mode so our credit card payments are higher because we are throwing extra money at them
• with our current debt payoff plan, we'll be debt free other than our mortgage by the end of 2023
• we are way behind on retirement savings, only contributing 3% right now but will start increasing by 3% per year beginning next year and then eventually maxing out our contributions once our debt is paid off
• the four savings accounts listed are automatically deposited out of my paycheck
• our net income reflects the $15,500/year that H pays in child support which will conceivably end in 5 years

Feel free to ask any questions.

Net Income $115,749

Misc Income $50,658

Total Income $166,407



Mortgage (includes tax and insurance) $19,040

Auto Insurance $3,388

Taxes $1,566

Cable/Internet/Streaming $3,535

Cell Phone $3,164

Electric $2,670

Water/Sewer $597

Total Household Maintenance $33,960



Gym Membership $328

Groceries $11,358

Dinners Out $6,465

Entertainment $586

Gifts/Clothing $1,082

House Cleaning $2,160

Medical $1,936

Pets $1,871

Investment Accounts $313

Haircuts/Beauty $20

Misc Household $4,118

Spending Money/Allowance $5,200

Total Misc Household $35,437



Car Payments $10,982

Loan Payments $10,418

Credit Card Payments $54,500

Total Debt Payments $75,900



Vacation Savings $6,500

Christmas Savings $3,250

General Savings $2,600

Auto Savings $1,040

Total Savings $13,390

[aspentosh]

Thanks for sharing! Looks similar to our budget when we were in super debt payoff mode a few years ago. Your salary is higher than ours was but it sucks when it's such a large part of your income. It'll feel great when you get a bunch paid off!

Maybe I'll share ours.

[jinkies]

Thanks! I was thinking about doing something similar, but our 2020 spending was so unusual that I didn't think it would be helpful (major kitchen reno, new roof, paid off car loan, unusually,temporarily low income due to a job change). Our spending outstripped our income, although it was all earmarked money that we'd been saving for the projects. I don't think we will have another year like that for a long time!

[ohgillian]

Thank you so much for sharing. I love the "household maintenance" name. I may need to rename that category of mine.

Your spending is similar to ours in a similar net pay area. I am curious about your decision to start saving for the next car (I guess that's what auto savings is) when you currently have a car payment and other debt you're paying off. With savings interest rates so low, it seems like mathematically you'd come out ahead putting that $ into debt repayment. That said, I do think there's real psychological benefit, esp in debt repayment, to show yourself that you can save for future things so that once the debt is paid off, you're already ahead.

Last, this isn't a question, just a comment. I used to have a lot of "misc deposits" on my worksheets, and a few years ago I started categorizing as much of it as possible as negative spending. E.g., if I got a check from the health flex account, I would record it as a negative amount and categorize it medical. Same with H's work reimbursement -- I categorize as a negative work expense. I have found I really like this approach b/c it helps me see the net spending better in those areas; just offering this up as an FYI.

I too use an excel workbook that's basically a "glorified check register;" I've had the same approach for 2 decades now (gulp).

Thanks for posting!

ETA: I guess as a question, did anything surprise you when you totaled it all up, or did it fall out about as you would have expected?

[flygirl]

Thanks for posting-Im sure you know there are areas where you could cut back to pay off debt but I think it’s great that you are realistic and save for goals that you also feel are important at the same time. Once you have your debt paid, you’ll be in great shape!

[Deleted]

ohgillian The Auto Savings actually isn't for a new car, it's for car expenses that come up on an annual or a few times a year basis that I don't want to budget for in a normal month. For example, I keep $250 in that account that would cover our Insurance Deductible if we ever needed it. And things like our annual inspection/emissions, registrations, and and undercoating that my H gets on his truck every Spring. And just starting in 2021 I increased the contribution and part of that will be to pay our auto insurance in full at renewal twice a year instead of monthly, which will save us about $280/year. 

I also really like the idea of putting the miscellaneous deposits in to a specific category, at least things like my H's work credit card, where essentially it would just zero out every month. 

As for surprises, our eating out budget. I mean, it was a surprise, but not totally a surprise because it was 2020, but our normal eating out annual amount is generally closer to $2600 and we're nearly 2.5 times that last year. 

[Deleted]

flygirl our goal is to not incur any more debt, so we try to do everything cash only, so that is why we've prioritized a savings account for vacation and Christmas, so that we can pay cash for both of those, of course, last years vacation fund helped pay for part of our remodel I know that we could cut back in other places, but I feel like we have a good balance right now. I did try to convince H to cut the cable, but that wasn't happening. 

[Roc A Bee]

What did $20 in haircut/beauty get you? Just curious because that’s less than one woman’s haircut costs here.

[Deleted]

Mar 16, 2021 15:57:23 GMT -5 Roc A Bee said:

What did $20 in haircut/beauty get you? Just curious because that’s less than one woman’s haircut costs here.

LOL Normally this is a much higher expense. That was one haircut for my H before everything locked down. I’ve been cutting his hair and the kids hair since, haven’t bought myself any new makeup or gotten facials, and haven’t had a haircut myself in a year and a half.

[imojoebunny]

How is medical Medical $1,936? Is that after what is taken out of your paycheck for premiums?

[Deleted]

Mar 16, 2021 20:23:57 GMT -5 imojoebunny said:

How is medical Medical $1,936? Is that after what is taken out of your paycheck for premiums?

No. Our premiums are taken out pre-tax, a total of $6448 annually, I put our net income above, so didn’t include on my list. The $1936 is co-pays and deductibles and prescriptions.

[heygrey]

Mar 16, 2021 17:58:31 GMT -5 mofongo said:

I just looked at my credit card year end break down for 2020:

Almost 20k on shopping
17k on groceries
And almost 14k on food and drink
Entertainment was $5400
Travel was 3k

So WTF to me and H, WTF 😳 lol. And this was a pandemic year!!! Granted we make enough to cover it, while still saving and meeting goals and we don’t have kids, but wow. Eye opening to see the numbers, especially considering we were home all year!

I want to know what you eat! We have been very liberal with our food/drink/groceries budget because it's basically the one joy we have this year. 

[ellipses84]

Thanks for sharing! Your budget is more similar to ours and we have debt, too. I’m glad you shared your strategy for budgeting during debt payoff. You made amazing progress this year! I see so many in the debt free community who sacrifice everything to debt payoff, but I have a more balanced approach.

Half our debt is from student loans and the other half is from unforeseeable life events. We’ve been treading water with it for 3 years, where it was like 2 steps forward, 1 step back. Now there’s a light at the end of the tunnel - child support ended, DH’s student loans were paid off, daycare is ending soon, our cars are closer to being paid off and both of our incomes increased a huge amount in the last half of 2020. We stayed in a tiny “temporary” apartment for 3x longer than planned trying to pay off more debt, but decided paying more rent would be worth the quality of life to be in a bigger place with a yard while our kids are young during a pandemic where we are home all the time.

Maybe sometime I’ll share my historical yearly budget comparison from our old city to our current city, and compares to our most recent income increases.