Author Topic: Ready to change my life…don’t know where to start  (Read 1356 times)

ikata1313

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Ready to change my life…don’t know where to start
« on: May 29, 2018, 02:17:04 PM »
I’ve been lurking in these forums awhile. My financial situation is not ideal at all and I’m ready for the change. Trying to keep up with the Joneses has left me in a situation I do not want to be in. You are all so darn inspiring so I know you’ll help me get back on track.

Life Situation:
I’m 32, divorced with joint custody of a child and have a dog. I file single this year, file with one dependent child every other year. Live in NYS (high taxes).

Gross Salary/Wages: Gross $2953.49 every two weeks (26 pay periods)

Individual amounts of each Pre-tax deductions – all every two weeks
Health - $57.33
403(b) - $5.00
Taxes – all every two weeks
Fed Withholding - $413.46
Medicare - $42.00
Social Security - $179.56
NY Withholding - $152.97
After tax deduction – every two weeks
Union Dues (pays for dental/vision) - $29.53

Other Ordinary Income:
Child support - $100 (every two weeks)


Adjusted Gross Income: 2173.64 every two weeks (26 pay periods)


Current monthly expenses (just made this new budget – new to budgeting):
Mortgage (P&I) - $974
Real Estate Taxes (I save this, no escrow) - $532
Savings (I dip into this more than I should like for home stuff and just bad spending) - $700
Daycare - $228
Food and Household - $425
Car Payment - $218
Home Expenses/Repairs - $200
Gas and Electric (average)- $150

Entertainment - $100
403b loan (paying myself back) - $95
Vacation Fund - $75
Hair cut account - $60
Healthcare acct (son on high deductible plan plus my copays) - $80
Car insurance - $72
Clothing/shoes acct - $50
Child college fund (mandatory per divorce) - $50
Miscellaneous - $50
Internet - $42
Dry Cleaning - $40
Gifts - $40
Pet Account (grooming/vet) - $40
Spotify/Netflix/Moviepass - $30
Garbage - $27
Car Maintenance - $25
Life Insurance - $21
Water Bill - $6

Monthly total: $4330

Assets:
House (purchased in 2017) - $229,000
Car (purchased in 2016) - $15,000
403(b) - $23,000
Savings (basically the 403b loan I owe back to myself) - $14,400
Total Assets:  $281,400

Liabilities:
403(b) loan paying back myself in interest: $11,400
Mortgage (29 years left): $197,800
Car Loan: $8,750
Total Liabilities: $217,950

Net Worth: $63,400

Retirement Info:
I’m 10 years into a pension system. So, even if I left service now, starting at 55 I would get something each year.

Specific Question(s): I want to get on stable ground (getting a real emergency fund) and then start working towards saving for retirement.  I would consider downsizing my home or car even though I just got both quite recently – within the last two years). I don’t want to repay my 403b loan yet because that is my emergency fund should I ever lose my job. What would you do if you were in my situation? This is kind of embarrassing to put it all out in one document but I needed it. I want to do something now before it gets worse. Thank you all!

GuitarStv

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Re: Ready to change my life…don’t know where to start
« Reply #1 on: May 29, 2018, 02:36:41 PM »
Couple thoughts:

60$ a month on hair?  Get a razor for 40$ and save 7200$ every ten years by cutting your own!
What are you dry cleaning for 40$ a month?  Why do you own things that need to be dry cleaned at all?
Your home expenses seem quite high.  Are you doing them yourself, or rich enough to pay someone to do them?

You've got almost a quarter million dollars in debt.  You cannot afford to go on vacation.

What is your 100$ entertainment budget . . . that doesn't include Netflix/Spotify/Moviepass or Internet???

You're also spending a ton on food.  Eat cheaper stuff.

ikata1313

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Re: Ready to change my life…don’t know where to start
« Reply #2 on: May 29, 2018, 03:56:29 PM »
All very helpful questions. It’s crazy when you keep living a certain way and just never question it.

Just stopped professional dyeing my hair so that budget will go down. Just cuts for me and kid.

I have to wear suits every day for work so I dry clean when Dryel doesn’t work as well.

Yeah I guess that is a lot on entertainment above what I already spend on that category - didn’t think of it that way.

I do my own home stuff. I spend the $200 a month mostly on maintenance things or diy projects. Maybe that is too much too.

MDM

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Re: Ready to change my life…don’t know where to start
« Reply #3 on: May 29, 2018, 04:53:12 PM »
What would you do if you were in my situation?
If you put your numbers into the case study spreadsheet, what marginal tax saving rate do you get on 403b contributions
- when you file single?
- when you file HOH with 1 dependent?

Swish

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Re: Ready to change my life…don’t know where to start
« Reply #4 on: May 29, 2018, 05:04:49 PM »
Have you ever considered getting a roommate or hosting a student? We have a student coming from Europe @ $500/mo for our spare room+ their own bathroom.

Make a meal plan of a few simple recipes. -our household grocery budget for a family of five is $350/mo. No processed/prepackaged food. Takes a bit of effort to shift this thinking. We used to easily blow $800-$1000 per mo on junk and now eat much healthier/consistent meals.

On the clothing front I have to wear suits/dress clothes and got a steam cleaner+iron. Can get them used cheap. Takes a bit of effort but saves the $$$ long term.

Can you sell your car and buy a less expensive used one(assuming you cannot live without one)?

I just took a pay cut to drop a two hour commute and it juggling the budget change has not been easy but the lifestyle difference has been amazing. We ditched the commuter car and just have a van for family use now as I can walk to work.

ixtap

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Re: Ready to change my life…don’t know where to start
« Reply #5 on: May 29, 2018, 05:19:16 PM »
-Are your home expenses things that need done or projects to keep yourself busy?
-Why are you spending more on gifts than putting into retirement?

CrispKale

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Re: Ready to change my life…don’t know where to start
« Reply #6 on: May 29, 2018, 05:50:35 PM »
As for saving for retirement have you calculated out the income gap in retirement between what you’ll get from your pension and what you’ll need to live on? Taking the projected amount of retirement income you’ll need you can then plug it into a retirement calculator to determine the amount to save to get there (be sure to include taxes and inflation).

As for Emergency Fund Account
Setup a spending diary of every penny that gets spent from these categories for at least two months, after the spending review can you cut them in half?
Food and Household - $425
Home Expenses/Repairs - $200

Monthly expenses:
I subtracted the $700 savings as I wasn’t sure if that was supposed to be an asset or your saying that each month $700 seems to fly out the door and you’re not sure why, if latter add the savings category to your above spending tracking to see where it’s going.

4330-700=3630 in expenses

6 month E Fund comes to about 21k 

Without making any other changes to house or car if you temporarily stopped the spending in the below categories and instead funneled these into your E Fund it will take you about 21 months or under 2 years to complete the 6 month amount.

Entertainment - $100
Vacation Fund - $75
Hair cut account - $60
Miscellaneous - $50
Gifts - $40
Savings-$700
               Total: $1025 each month going to E Fund

If you can slice even more from your overall budget as those above mentioned you can build your E Fund up faster and put more towards your retirement.