Author Topic: Please critique our budget !  (Read 2117 times)

annapana

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Please critique our budget !
« on: January 27, 2023, 12:49:31 AM »
Hi all - we keep a very detailed budget (shared below) - I’d like some feedback on it to see if we can improve anywhere.

We are a family of 4 with 2 young children. We are 38/39 years old. We have paid off our house. We have a 7 month fully funded emergency fund and aim to increase it by a month every year. We have a share/etf portfolio and add any money leftover to etf’s - so we try to cut expenses where we can to ensure we invest as much as possible. We have one car (that we own) and a bike. I work full time and partner stays home full time - he’s a tradie and intends to start a business this year and return to work.

We have made a good effort to FIRE but I think we can accelerate more!

vitamins 70$ per month - could reduce, working it out
mobile phone saving - 40 per month (new low model iPhone every 2 years IF needed)
Yoga - 85 per month (one class per week) - could use YouTube
Chiro - 50 per month (for the family after, health insurance rebate)
300 per month - paying in law’s mortgage (she’s terrible with money) until they work out what theyre doing with the house - very complex situation
11 per month for zoo membership - we have 2 young children and use this a lot, we take our own food and avoid the gift shop !
30 per month - school fees (public school)
20 per month - saving for tyre replacements
11.99 per month - Spotify
45 per month for household security but will be reducing soon as have a DIY option on order
45 per month - Foxtel - my partner keeps for sport
10.99 per month - Netflix
80 per month - internet
545 per month - my partner’s insurance is via his super - it’s covers 1.8 mil life and disability insurance plus income protection - I pay with my post tax pay and claim it on tax plus my partner gets the 500 super co-contribution
1300 per month groceries

Kids activities (2 children)
2200 per year - swimming lessons
430 per year - gymnastics
We attend lots of free activities also - outdoor play, libraries etc

Eye check up - 500$ yearly - this is at a private clinic and the 500 of after the Medicare rebate (cannot claim on health insurance)
1600 yearly health extras - this covers all contacts/glasses/dental cleans so we find it worth it plus some extra stuff if needed
4600 per year for health insurance
60 per year woolworths extras - have done a tonne of research, this is worth it and have already made the subscription fee back in the first month plus some perks
100 per year museum - once again 2 young kids and we use a lot - take our own food, avoid gift shop etc etc
500 per year trauma insurance for my partner - lump sum payment of around 60k
900 per year car insurance
2300 per year home and contents insurance
800 per year car registration
1400 per year car servicing
60 per year licence renewal
300 per year for haircuts - we probably don’t even use fully so could reduce
1000 per year gifts - 2 small kids plus a tonne of birthday parties
1000 per year clothing
220 per year for tax returns for my partner and I - want to keep as they always find a better return than what I can !
150 per year - skin checks
30 per year - photo cloud
160 per year - my partner’s mobile plan
1200 per year - water and rates
2200 per year - electricity - always aiming to reduce and use off peak times
2500 per year - gas - will use our firewood stores a lot more this winter for heating to further reduce
2400 per year - council rates
140 per year - post office box - was going to cancel but partner is starting business this year and we want to keep for the business address
170 per year - water filter cartridge replacement for house

Savings items
300 per month to our emergency fund
250 per month for car saving - we aim to have our current car for many years !
420 per month for holidays - we mostly camp but might take an interstate holiday this year (mostly using points)
780 per month for household maintenance/improvements- we have some very specific plans for this year and will take advantage of free groups/sales to save in this area

Spending
590 per month for additional spending - ie fun money - parking fees, train tickets, occasional take out, coffees, date night - we can reduce here !

Thank you
« Last Edit: January 27, 2023, 01:02:00 AM by annapana »

Fresh Bread

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Re: Please critique our budget !
« Reply #1 on: January 27, 2023, 03:33:06 AM »
Hi Annapanna!

The big thing that jumps out at me is the electricity & gas. What state are you in? Because I'm wondering if a big solar install wouldn't knock all that down to near zero. Obviously there's capital costs of the system plus some reverse cycle aircon units if you don't have them, but those would be paid off in a few years.

I guess your husband's phone bill, phone savings and the PO Box could become business expenses once he starts up again.

I think it's all quite frugal but I'm very spendy so we'll see what other people say!

annapana

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Re: Please critique our budget !
« Reply #2 on: January 27, 2023, 01:05:24 PM »
Thanks for the response- we have solar panels already (largest that you can get) but we also use refrigerated cooling (my partner can’t stand the heat, I don’t mind it!). And I’ll also add that every place we have owned we have had panels and they have never covered a huge portion of our bill - perhaps because of the cooling. We have been trialling no cooling during the day and only at night so we’ll see the impact of that on our bill soon. Same for gas, it does our heating and we run it all the time in winter for the kids, but will be using our firewood this year (also got a letter from our gas company that it will be increasing a further 500 per year).

Fresh Bread

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Re: Please critique our budget !
« Reply #3 on: January 27, 2023, 02:01:35 PM »
If your home is well insulated, it makes sense to run the aircon in the day when it's free and then it will take less power to cool it at night. We do this & shut blinds during the day etc but we still need a bit of aircon at night sometimes.

If you're interested in home efficiency to reduce running costs, the My Electric Home Facebook group has a wealth of information & knowledgeable people.

Gremlin

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Re: Please critique our budget !
« Reply #4 on: January 27, 2023, 06:40:50 PM »
Thanks for the response- we have solar panels already (largest that you can get) but we also use refrigerated cooling (my partner can’t stand the heat, I don’t mind it!). And I’ll also add that every place we have owned we have had panels and they have never covered a huge portion of our bill - perhaps because of the cooling. We have been trialling no cooling during the day and only at night so we’ll see the impact of that on our bill soon. Same for gas, it does our heating and we run it all the time in winter for the kids, but will be using our firewood this year (also got a letter from our gas company that it will be increasing a further 500 per year).

$2200 seems like a lot if you already have solar panels, even with air con.  Bear in mind that every degree adjustment to the air con temp can have a very big impact on that bill.  We are in humid, sweaty Brisbane.  We run the air con at 27C during the day, IF it goes on.  It only goes on if the internal thermostat goes above 35C.  Only through the peak of the day's heat and only in parts of the house.  If it's humid but not stupidly hot, we run it on a 'Dry' setting.  At night, it's 23C or 24C and it's on timer and switches off around 5am.  At the start and end of the summer season, it switches off around midnight.  It's perfectly comfortable.

We have friends who have a similar house to us.  They cool the whole house to 22C during summer days and 18C at nights.  In winter they heat the whole house to 25C during the day and 20C at night.  Even when they are not there.  Their electricity bill is a couple of thousand dollars more than ours.

One thing that's worth checking is your insulation.  Houses these days tend to have a decent level of insulation in the ceiling.  But garages don't require insulation above them.  If your garage is integrated to your house, like ours is, you may have a permanent uninsulated summer heat bomb/winter ice trap undoing all your cooling and heating efforts.  It's worth understanding if you do.

annapana

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Re: Please critique our budget !
« Reply #5 on: January 28, 2023, 01:31:45 AM »
Thanks for the responses - I went through the bills from December 2021-December 2022 and they total 1800, so I guess I’ve built in some room to move.  The house is fully insulated.  Our cooling cools the whole house, not just room by room, so I’m guessing there’s added expense in that too.

middo

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Re: Please critique our budget !
« Reply #6 on: January 31, 2023, 08:55:02 PM »
Some small things worth looking at:

Quote
11.99 per month - Spotify
45 per month for household security but will be reducing soon as have a DIY option on order
45 per month - Foxtel - my partner keeps for sport
10.99 per month - Netflix
80 per month - internet

Why pay for premium spotify?  Is it worth $144 per year?

Foxtel - dump it and get Kayo, which is about half the price.  And dump it when the footy season is over and reinstate it when it starts again.

Netflix - I can't really pretend we don't have it, but is it necessary?

Lastly, $80 for internet is a bit more than we pay.  I think we are $59 per month.  May be worth looking into.


Fresh Bread

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Re: Please critique our budget !
« Reply #7 on: January 31, 2023, 09:33:52 PM »
I'm still thinking about that high electricity bill!
How is the output from the solar panels? Do they need cleaning? And is everything hooked up correctly meter wise?

We have a 6kw system and we will pay probably under $200 a year (we are in credit right now) with two people, a fully electric house and EV. We don't heat the place though.

annapana

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Re: Please critique our budget !
« Reply #8 on: February 01, 2023, 03:34:33 AM »
Who would I contact to check ?

Fresh Bread

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Re: Please critique our budget !
« Reply #9 on: February 01, 2023, 03:57:47 AM »
I don't know! I once got a set of data from Ausgrid because ours wasn't right initially and it got changed but I never understood what had happened and the mistake actually benefitted me so I should have kept my mouth shut. 

Does your bill have a reasonable amount of feed in kWhrs for the size?

mspym

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Re: Please critique our budget !
« Reply #10 on: February 01, 2023, 04:02:46 AM »
Yeah I am also stuck on the power bill which is higher than ours and we don’t have solar panels yet. Have you shopped around using the gov power comparison site to check you are with the best provider for your usage?

Gremlin

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Re: Please critique our budget !
« Reply #11 on: February 01, 2023, 04:42:33 PM »
Anna,

I have a couple of questions and observations.  You may not be willing to share the responses, in which case, they are simply food for thought, but it would help us understand your position better if you were able to answer them.

You've obviously done well to have a paid off house in your 30s, particularly with a SAHP.  You are making a lot of great decisions.  I particularly like how you are giving your young kids a lot of mind-expanding experiences (zoo, museum) that are low cost and yet really memorable - some of my best childhood memories are from days like this and I'm now in my late 40s.  But you are asking for critique and areas of improvement, so my comments are focussed in that direction.  Your current spending amounts to over $85k a year.  Depending on your income levels, this might be disastrous or perfectly manageable.  Are you salaried or is your income lumpy?  How secure is your job in a downturn?

Is your $545 a month your super contributions or your insurance within super?

Overall, your insurance expense looks like a lot, unless I've misunderstood.  It might be worth critically assessing what insurances you and your partner need.  Eg, at the moment you're paying for income protection for your partner, but he's currently a SAHP earning no income?  What income is being protected there?  Does your partner need $1.8m in life insurance with a fully paid off house and money already in shares and ETFs?  You might only need disability cover depending on what you and your kids might choose to do if the unthinkable happens.  What life insurances do you have?  Are they appropriate and necessary for your life situation?  Mrs G and I were at a similar point when we were your age and we decided we were better off putting that money into growing our own ETFs, in effect self-insuring, rather than paying a life insurer - obviously YMMV.

Also, your home and contents insurance may be expensive (or it may be ridiculously cheap if you are heavily exposed to natural hazards).  It may be worth shopping around on this at your next renewal.

What changes to your spending do you anticipate if/when your partner's business commences?  Will you have daycare/after school care expense that you don't have now?  Are there start up costs that you will have to bear?  Will you be able to cut aircon/heating during the day because no one is home?  Will he require another vehicle which will be funded by the household?  What income will this deliver as well?  Do you currently get the Private Health Insurance Rebate and will this change your rebate if your partner generates an income?

I note you don't have petrol listed as an expense.  Is this an oversight?  Is your car full electric (note that this could explain why your electricity bills are higher than most expect)?

$70 a month on vitamins is a lot for fit and healthy adults in their 30s, with young kids (assuming you are fit and healthy).  What are you not getting from your diet?  If possible, can you spend that $70 on fresh food to provide what you are otherwise missing?

There's a lot of talk about air con, but I'd also look at your heating.  Do you run it 24/7 during winter?  If so, is that necessary?  My MIL lives in one of the coldest places in the country and doesn't run heating 24/7 in winter.  It goes off about midnight and not back on until someone gets up.  It's on for a few hours in the morning and then off for a few hours in the afternoon, then back on before the sun goes down.  I don't think I've ever felt cold there, but her place is very well insulated as well.  Maybe your profile of when you might run heating/not run heating is different with the solar panels to maximise their contribution - they're obviously not as effective in winter, but they still make a contribution.

Do you have the ability to break down your additional spending?  You need some 'fun' money.  You MAY reduce here.  You may decide you don't want to, but it's hard to assess whether you're getting 'value' from it without finer categorisation.

Finally, the elephant in the room - your In Law's mortgage.  Family involves a bunch of complex decisions.  I know that I would help my parents and MIL if I could and do it in a heartbeat.  But it's also a drain on your own financial wellbeing.  Optimising $5 and $10 here and there whilst having an expense of that size in the mix is challenging - in context, that's all your electricity bill and half your gas.  It may also be completely non-negotiable.  I suspect you've been through the wringer on this, but it's worth thinking about whether there are controls around this that can limit your loss on your MIL's poor money habits.

All in all, you're on the right track though.  Keep up the good work!

annapana

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Re: Please critique our budget !
« Reply #12 on: February 04, 2023, 02:28:20 PM »
Thanks all and Gremlin - I think we can cut back more in some areas to accelerate our journey !

 

Wow, a phone plan for fifteen bucks!