Help with budget/saving?!

amother

Magenta

Tue, Aug 18 2015, 10:40 am

My husband has been in kollel for the past three years. He is starting to next week for an annual salary of 58k. I'm making 82k. Post tax and all deductions including insurance we will bring in approximately 84k. Daycare rent and food food alone adds up to about $3700 (we live in NY). We owe $15k in credit cards. We weren't careful about tracking our spending the past few years which was definitely a mistake- although we are not big spenders at all. We hardly go out and don't buy new clothing very often.
I estimated that after all monthly expenses we will have about $1500 extra each month which for the first six months of my husbands job will go to pay down credit cards (aiming to bring down cc balance to 30% of credit limit). After six months I want to take the extra $1500 and put it into savings.
We would like to have a second baby soon and I have no idea how we will be able to save much money since another child would probably be about $1000 a month. How does anyone save to buy a house these days?! I feel like we make so much more than other young couples - how do they manage? I have visions of us in 15 years still renting an apartment.
Advice? Words of encouragement?

amother

Amber

Tue, Aug 18 2015, 11:03 am

We waited a while to have kids so we could save up money.

We don't spend more than we have. Unless it's life saving medication, we put it off until we have the cash.

We attempt to increase our earnings as the years go on (promotions, job changes etc).

We use mint.com to track everything

SRS

Tue, Aug 18 2015, 12:29 pm

mommy2b2c wrote:

Why would a baby cost $1000 a month?

Daycare I presume.

OP, make sure you know what your taxes will total annually. . .all of them. . .and then start budgeting. Put income on top, subtract out each type of tax. The list expenses by size. Get yourself Quicken or another personal finance software and pull all info from checking and credit cards.

Get rid of the credit card debt asap (I think you can do it in less than a year, maybe even 6 months). Then start saving for 1) an emergency fund and 2) a downpayment.

Don't worry about how other people are doing it and spend lots of time with your own reality via the reports you will run from quicken after you reconcile your checking account.

amother

Magenta

Tue, Aug 18 2015, 12:38 pm

Op here. Another baby will probably cost more than $1000 since babysitting alone is about $1000 a month.
And-I already took out all my taxes and ended up at 84k. (Spoke to our accountant also)
How can we pay down all our credit card debt in six months? Is it better to aim for 30% of credit limit and then start saving or should we just wipe it out completely before we save?

amother

Natural

Tue, Aug 18 2015, 2:17 pm

amother wrote:

My husband has been in kollel for the past three years. He is starting to next week for an annual salary of 58k.

sorry I don't have advice but - what?! How is he getting such a well-paying job with virtually no experience?? Please share.
I teach and make 20k a year. And husband in kollel this first year of marriage. How are your jobs so well-paying??

mha3484

Tue, Aug 18 2015, 2:26 pm

Natural Amother, I just did a quick google for entry level positions that pay 50 or 60k and you would be surprised at what is out there.

I work with a nurses, many of whom have only a 2 year degree. The typical starting salary is $28 per hour which is approx 58,000 per year. I work on jobs that pay up to 100k and rarely is a 4 year degree required.

amother

cornflower

Tue, Aug 18 2015, 4:19 pm

OP

actually if you estimate extra $1500, plan for $1200

Also you must take half of that and start an emergency fund while paying down your credit cards.

So this way in 6 months you'll have $3000 in savings and be down to $12,000 on CC

In a year you'll have $6,000 in savings and only $9,000 in savings

Use any bonuses and gifts the same way, half an half.

Once you start saving, the numbers are motivating. You'll be inclined to cut back and save more.

If you have an emergency fund, you'll avoid more CC debt, its a must.

Don't worry about the extra expense of another baby. Once you focus on saving, you'll find space in your budget. Your numbers allow it.

But make a budget and stick to it, you'll be amazed. Remember to put aside money for everything including clothing and yom tov expenses. Its liberating/

amother

Magenta

Tue, Aug 18 2015, 4:37 pm

Op here. I'll post my estimated budget here.
Rent 1700
Childcare 1200
Food 700
Con Ed 120
Cell 100
Time warner 60
Gas 150
Metrocard 100
Diapers 50
Student loan 100
Mikvah 23
Miscellaneous 1000 (household stuff Sheitel wash activities clothing etc etc )

I need to pay my ccs down because my credit score plummeted.
We have $18k in savings - mainly wedding money and $10k in a CD which my parents opened for me a long time ago with some of my money and they add to it over time.
We had about $30k in savings until a year or two ago. When the baby started to get bigger our expenses soared and we came out in the red every month. We never really thought too much of it because we had the mindset that the lost savings is worth it if my husband can learn for a few years.
Now I just feel really down that we lost so much savings so fast.
I also have $22k in a 401k.

Last edited by amother on Wed, Aug 19 2015, 5:26 pm; edited 1 time in total

amother

Magenta

Tue, Aug 18 2015, 5:12 pm

My medical insurance comes out of my paycheck it's $280 a month. Prescription cost is very minimal and neither of us are on anything BH. Like I said our net annual income (starting next week IyH) will be approximately $84k

Last edited by amother on Wed, Aug 19 2015, 5:26 pm; edited 1 time in total

pause

Tue, Aug 18 2015, 6:14 pm

DM1109 wrote:

I'm not sure how old your child is but I think 700 for 2 adults and a child seems a bit much.

I agree with MagentaYenta that 1000 for miscellaneous each month is also a lot. You don't buy clothing, wash sheitel, and do activities each and every month for that amount of money. (And if you do, you need to cut!)

There are companies that can help you settle your debt with the credit card companies. It may be worth a call to someplace like Debt Crushers to see what they can do for you.

Also, 18K in savings is really not so bad, especially considering you also have a 401k that you might be able to withdraw from (with a 10% penalty) in order to purchase a home.

amother

cornflower

Tue, Aug 18 2015, 6:14 pm

just out of shock here

Do you realize your husband's entire paycheck goes to pay for taxes and insurance? How nuts is that?

Really if you have some liquid cash in savings, you can probably afford to pay down your credit cards. If you are not planning to buy a home within the next 2 years, you should find out if its better just to settle with the cc and give them a lump sum of cash lets say half, instead of paying them off the whole amount month by month. It may pay to save it up over 6 months and then settle so in 6 months your totally done. I don't know exactly how that effects your credit score though. You'd have to consult a specialist on that.

Otherwise maybe you can find one of those cards that give you 12 months interest free on balance transfers and then work your head off to be done paying it off by then. Free of debt is the way to go.

The 30% they talk about, you'll reach by using your cc for everyday things and paying off monthly. In a short time you'll see your credit score rise.

SRS

Tue, Aug 18 2015, 6:17 pm

The Dave Ramsey plan is $1000 savings and then $1K gives you something for an emergency and proves you can save. If I was in NY, I might cut to save $3K first and then start saving like mad. As CPAs you should make getting rid of the debt a priority before any savings. As I understand it, there are (future) employers out there that will run credit checks before hiring a controller. Debt is a risk factor in your profession, so you need to get rid of it in case it does come into play for future opportunities. I'm not sure how prevalent the practice is, but I've seen articles on it in industry pubs.

SRS

Tue, Aug 18 2015, 6:21 pm

pause wrote:

There are companies that can help you settle your debt with the credit card companies. It may be worth a call to someplace like Debt Crushers to see what they can do for you.

Also, 18K in savings is really not so bad, especially considering you also have a 401k that you might be able to withdraw from (with a 10% penalty) in order to purchase a home.

No, no, no, and no. You don't need debt services to pay off 15K with an 82K and 58K jobs.
And you should never pay a penalty to take from a 401k. If you cannot set aside the money for a downpayment that brings you to a reasonable mortgage in the area you want to live in, you need to relocate.

The OP and her husband need to start tracking their budget (in an accounting software now that we understand they know how to use it) and then acting on the information. Think of it as an exercise in becoming a controller.

amother

Magenta

Tue, Aug 18 2015, 6:24 pm

I would imagine that using one of those credit card consolidation companies would really hurt my credit score.
Also I didn't follow what you were saying about settling with the credit card company for a lump sum?
Magenta yenta - my daughter is two and I also have to feed the babysitter since I don't allow her to bring food into my home. In September my daughter is going to school where they provide food so my food bill may decrease.
Even so we really don't buy anything fancy and somehow our food bill is ridiculously high. Food prices in my area are pretty steep (yes even in NY). When we are home for shabbos our food bill is even more.
Any suggestions on how much to allocate to each of those miscellaneous expenses? It's only mid month and I'm almost at $1000.

Thanks

Last edited by amother on Wed, Aug 19 2015, 5:27 pm; edited 1 time in total