Help with budget/saving?!

amother

Magenta

Tue, Aug 18 2015, 9:41 pm

I make 72 not 82
Priority is to pay down credit cards.
We started using excel to track our budget and expenses and it works very well. We should've done this from the beginning. I wish someone would've enlightened me back then.
It is frightening to think that even though we both have relatively good paying jobs, we may not be able to buy a house for a long time or even just live more comfortably.

Last edited by amother on Wed, Aug 19 2015, 8:27 pm; edited 1 time in total

a1mom

Tue, Aug 18 2015, 10:18 pm

I highly recommend the mint app- it will track every dime you spend, then you can better allocate your budget, I agree that 1,000 a month is alot for miscellaneous, better to figure out a yearly allotment for sheitels, clothes, entertainment and then divide it monthly. also if you really want to save for a house that category would be the easiest to cut back on.

pause

Tue, Aug 18 2015, 10:25 pm

DM1109 wrote:

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

Depends on what kind of food you buy. Prepared foods costs loads more than ingredients. Ready-made dips for shabbas, for example, are a luxury item in our house, IOW, non-existent. Other things, you may not have a choice because you work so you need to be able to cut down on prep time in the kitchen. You need to figure out what's the most cost-effective.
Individual items cost more than a package. Baked goods besides for bread are also an extra. Bake or don't have. Shabbas shouldn't be costing that much more. I mean, what kind of main dish do you serve? Steak, or deli, or chicken bottoms? Bought challos too cost a ton. Bake once every six weeks and freeze.

amother

Jade

Tue, Aug 18 2015, 11:54 pm

justforfun87 wrote:

How does 58,000 go to taxes and deductions?!

$46,000 in taxes. OP had a typo. See below. Yup, this amount of taxes sounds about right for family of 3 with an income of $130,000.

DM1109 wrote:

amother

Magenta

Wed, Aug 19 2015, 7:52 am

$44k in deductions goes mainly to taxes but it also includes medical, dental and vision insurance and 401k contributions for each of us.
For shabbos we don't have anything fancy. Friday nite is fish, homemade cole slaw, Santa chummus and maybe one other dip. Soup in the winter, chicken, a veggie and a starch side. Shabbos day is usually just cholent, a salad and leftovers. Shalishudis is simple usually just bagels and cream cheese, maybe lox on occasion. We buy the yaated and Mishpacha when we are home for shabbos, we also buy soda which we don't drink during the week. Until now I didn't really bake Cuz I had no time and my baby's room was practically in the kitchen so I couldn't do anything at night. We would spend probably $12-$15 a week on bakery cake. We just recently moved to a real two bedroom apartment with a separate kitchen so I hope to start baking for shabbos. This could be a real savings. I don't plan to bake challah since I don't have that much spare time and I don't think the extra $5 a week savings will make much difference.

Last edited by amother on Wed, Aug 19 2015, 8:28 pm; edited 1 time in total

amother

Orange

Wed, Aug 19 2015, 8:33 am

OP, I think it is hard for you to budget bec. these past years --you have been overspending so much

however, I dont think I need give ideas on how to budget bec. I think enough posters gave great ideas.

Personally, my dh and I make almost half what you and your husband make and we live very very simply in order to be able to pay many tuitions ---I am not sure if we would ever be able to buy a house bec. I must point out something to you.

Once you start paying tuition, the schools will give a hard time giving a deduction if they see you have a lot of savings-so, no pressure, but I would suggest that when you pay off your credit bills and learn to budget, you buy a house before your kids get older-- with tuitions it is hard to save since then most of your money will be going towards tuitions

so paying off your debt should be your priority bec. your debt is a factor when getting a mortgage....

SRS

Wed, Aug 19 2015, 9:19 am

OP, I'm surprised this money stuff is a bit mysterious to you as an accountant. Like I said before, you need a personal finance software. You should be putting in your entire pay before taxes, putting in your taxes, and tracking every single last expense with detailed categories. Then you can look at the detail of your food purchases or your clothing purchases and adjust your spending accordingly. And I'm uncertain why you have savings and credit card debt. I think the credit card debt was masking the issue of doing above your budget.

And I think you could knock your problem out in 6 months or less. In fact, I'd stop contributing to the 401k for 3 months to get this right. Stop worrying about your credit card score. Freeze the card in a block of ice, use your checking account to pay for everything and knock out each credit card one at a time, from the smallest balance to the largest balance.

amother

Magenta

Wed, Aug 19 2015, 9:34 am

Yes I am an accountant but I've been doing auditing for the past four years which has nothing to do with this.
I think you're right about avoiding contributing to the 401k for the next few months. This will yield anther $1000/month. Great suggestion.
Thanks!

Last edited by amother on Wed, Aug 19 2015, 8:29 pm; edited 1 time in total

a1mom

Wed, Aug 19 2015, 9:49 am

I don't think you should be knocked for dealing with this now, unfortunately not everyone receives the greatest financial education, kol hakavod for asking for assistance, its not easy. Comments that are belittling are not helpful. Like I said previously put everything into a personal finance software program and then adjust from there. I also found personal finance blogs like frugalwoods and Mr money mustache to be very enlightening and inspiring, they aren't frum so the challenge is different because tuition is not a factor but they have some pretty interesting money saving ideas. Hatzlacha.

Hashem_Yaazor

Wed, Aug 19 2015, 9:53 am

I just want to point out something that hasn't yet been mentioned, concerning the first post where you are worried about the future. I assume your husband's starting salary will not stay at that level, but will increase as he gains experience, and your income will be more, and therefore you will have more breathing space for future children, downpayments, etc.

saw50st8

Wed, Aug 19 2015, 10:17 am

DM1109 wrote:

Does your job give you a 401k match? It might be beneficial to keep putting the maximum to match into your 401k so you aren't throwing away that money. However, you need to do a cost benefit analysis based on the match vs debt carrying costs.

amother

Magenta

Wed, Aug 19 2015, 10:32 am

If my husband and I avoid contributing for the next six months, we will lose about $4000. (The maximum to match is 6%). By the time retirement comes around I highly doubt that $4000 is going to make much difference, but for me right now it would be a huge load off my back if I could pay down an additional $4000 to credit cards.

Last edited by amother on Wed, Aug 19 2015, 8:29 pm; edited 1 time in total

SRS

Wed, Aug 19 2015, 10:50 am

You could also just write a single check from your savings and knock out your credit card debt and then start again with the vow that there will be no more use of a credit card. There is good evidence out there that people spend more on credit cards than out of checking (a debit card is like a check). Since you know you are not an outlier, I'd suggest paying off the cards since you can, shredding the credit cards, and not reconsider their use for another 5-10 years, if at all. You have the ability to turn this situation around right now. And don't underestimate your skills just because you are on the audit side. You have the academic knowledge to create your own personal financial statements and by going over them religiously, you will learn some other skills that will serve you for a long time to come.

a1mom

Wed, Aug 19 2015, 11:05 am

srs is right, you can knock off the credit cards, stick to a cash budget and save save save while still contributing to your 401 k. you can probably save 15000 in less then a year if your careful, more if your meticulous. as long as you have an emergency fund- which you will because you will still have 7,000 left there is no reason not to pay off the balances. if you want to keep the cards open in ice that's fine- you can pay one utility with each and then pay off the card each month- set it up online to automatically deduct from your checking, then use cash or debit for everything else. I found it very liberating to be in complete control of my budget with cash- it takes all the guesswork out of the equation.

saw50st8

Wed, Aug 19 2015, 11:36 am

DM1109 wrote:

The $4,000 is in today's money - in 30 years that turns into a lot more.

I personally think you need to talk to a financial advisor about all this. The $4,000 you don't contribute to your 401k will also increase your tax burden (about $1,000 or so) because your 401k is pre-tax.

If your savings is liquid, I would pay off your debt ASAP. Do you know what your monthly carrying costs on the debt is? If your money is just in the bank, the carrying costs are much more than the interest you are earning.

SRS

Wed, Aug 19 2015, 11:56 am

Financial advisors can project out and might even tell the OP that she should keep investing because they will compare debt versus potential earnings and debt financing works in a bubble, but causes tremendous stress in real life where risk and mental health are bigger factors. But the issue isn't investment saavy (op just has an emergency fund and that isn't money that should be invested). The issue is behavioral in that op and her husband were not tracking expenses and were spending more than she was bringing in.

This issue can be solved overnight. Food budget can be cut in half (pea soup, lentil soup, homemade challah, least expensive chicken for Friday night or ground beef). The miscellaneous $1000 a month is cut to $50 per week and OP washes her sheitel. The couple inventory all bank accounts and credit card accounts, decide if they want to clean slate this or enter into the 2-6 month payoff plan. Today not a penny more is charged to the credit card. They go to the no-cash, no-buy budget.

I think that when you start tracking and you go to the no-cash, no-buy budget and you pay yourself before spending anything, you will find out that you can have a 2nd child and the house will work itself out.

vicki

Wed, Aug 19 2015, 12:49 pm

DM1109 wrote:

It's a lot more than $4,000 that you'll be losing by the time retirement comes around. I wouldn't cut here.

amother

Magenta

Wed, Aug 19 2015, 2:12 pm

Op here.
After reading and thinking about everyone's responses we came to a conclusion.
We will pay out $8000 from savings to credit cards right away. After that we are expecting about $5000 post-tax in October related to cpa bonus and expense reimbursement. We will pay the remainder down by about $1700 a month. After that we should be able to start saving again - about $1700+ a month.
We will not stop contributing to our 401k
We still need to learn how to spend/budget correctly and that will definitely take hard work.

Last edited by amother on Wed, Aug 19 2015, 8:30 pm; edited 1 time in total

kollel wife

Wed, Aug 19 2015, 2:29 pm

One way to cut down on the shopping is find a store like Shoprite or Walmart or similar where you can get laundry detergent, diapers, cereals, flour, sugar - stock up on these.

These products can be four times the price in a local, corner grocery store.