Gather 'round & Let's Talk Budget!

[darkshark16]

Hi all!

First off, I want to say, you guys are great and I cherish every piece of advice I find on here.

I started this year off in an expensive relationship and with a mountain of debt from a stupid car purchase. But the start of the year wasn't all bad, because I discovered MMM! So now the end of the year has come and over the past several months I ended the expensive relationship and with my extra free time I picked up a second job to pay off my car, learned how to live a (slightly) more frugal lifestyle, and sold a lot of junk online. I finished the year strong by finding a roommate and paying off my car—and therefore becoming debt-free and increasing my cashflow!

I think I'm headed in the right direction. (snickers, you guys probably hate hearing those words.) I'm in my mid-20s and although I don't have a high income (state employee in a low income area in the field of communications/marketing), I don't have a lot of high expenses either so I drew up a new-beginning-of-the-year budget that I'd like you guys to take a peek at and give some much-appreciated advice on. I do love my job, but I've made it a goal for 2016 to find a way to increase my income because I'll be coming up on my two year mark with it.

Anyways my budget is as follows:

Budget
425 - rent (I keep this low with a roommate)
110ish - bills split w/ roommate (internet/electric/trash/water)
10 - netflix
30 - gym (on site at work very convenient to work out at in the mornings and I use it either every day or every other day)
140 - groceries
60 - gas
75 - Pop-up expenses (for gifts and things that break or need maintenance)
=850 living fixed-cost income

Remaining income: 1160
200 entertainment/eating out/clothes—50 per week set automatically on my Google card 'cause yeah, I know, I'm spoiled.
375 Roth (I'll put 1k in from my tax return to get the 5500 max)
300 taxable F*ck You Debt Fund through Acorns—right now these guys think I'm a student still (please, don't tell them that I'm not) so its free to invest with them in small amounts, at least until I get enough to open a taxable fund through vanguard and bonus: it automatically invests my change!
180 pension (Employer match of 100% of what I put in if I leave early/or if I retire here at 58 I get 69% of my highest income averaged over 5 years)
100 charity (I wish I could give more, but I donate some time on the weekends to make up for it and to prove I'm not a cold heartless bastard)


Side notes
*The F*ck You Debt Fund is for whatever my budget needs it to be such as large potential debt-inducing big expenses like marriage, buying my next car, or an extra emergency fund cushion. It is NOT for toys or travel.
*My car insurance is broken down as $75 a month from USAA, but I pay this upfront with the money I get from my tax return so it isn't factored into my budget.
*Yes, I have medical insurance, it's free (Thank you state of Texas employee perk!)
*Yes, I have a cell phone. But it's out of contract and only like 10-$15 on my parent's plan and they don't mind leaving me on for now—for this, I'll have to give them a nice retirement home later in their golden years...jk!
*I have an emergency fund of 1500 which equals about 2 months of my cost of living. I'm not a fan of storing a whopping 6 months of your money covered in an emergency fund and not growing, especially since I don't have a family and I have a pretty stable life.

Any tips or advice? I know many of you will probably want to facepunch me over not having a 401k but seriously the 401ks at my work are sucky (I think it's cause they focus mostly on the pension) they have high fees and I'm already currently in the 15% tax bracket, which is nice, so I chose to instead max-out an outside Roth because I figured that'd be a good complement to the pension later down the road.

Anyways, thanks all! I always appreciate the feedback I get on here.

[renata ricotta]

The main thing that jumps out to me - are you maxing out your pension benefit? Even if that account doesn't have tax advantages like a 401(k), a 100% return on your investment is unbeatable. The only reason I wouldn't contribute the max to such an account is if I were worried about my employer hitting hard times and not being able to fund their contribution when the time comes. If you aren't worried about that, I would kick over as much discretionary cash as possible over to that, taking it out of your fun money (or even charity, sometimes I'm a cold heartless bastard).

Gas seems a tad high to me, but it's possible you're more than making up for it by living a bit farther out in exchange for low rent. I'd take a look at whether you have public transit options (often subsidized/free for govt employees), or if you can ride a bike. If I *only* drive to commute to work, I'd probably spend $60/mo. on gas, and I only live 4.5 miles from work (totally bike-able).

Your entertainment/eating out fund is obviously a "want," but doesn't seem over the top to me (I'm not as mustachian as some). But, I'd fold my "pop-up" expenses into my entertainment/eating out expenses. If I need to spend $50 on an oil change one month, that means that month I can't get a new sweater. Wants can get bumped down in priority when the need arises, without too much heartburn.

Switch from Acorn to Vanguard the moment you hit $3k (should be by next October at that rate, faster if your change is being added on top of that). You won't have to worry about terms of service, or them switching you to a non-free option.

Why is your tax return so large that you can top off your Roth with $1k and also pay $900 in insurance premiums? Look over your W4, because you may be deducting too much from your paychecks. There's no reason to give the government an interest-free loan of >$1900, when you could be investing that yourself throughout the year. Think of the returns you could have made in your Roth, if that money had been dripping into your account all year long.

[norabird]

I'd say you can probably trim your clothing purchases. Budget looks quite good from here.

[AZDude]

If Texas is like AZ, then the pension is a set amount. They take like 12% or whatever of your paycheck no matter what you do, and then match the same amount. The money is pre-tax.

Your budget looks solid. Saving like 35-40% of your net income, plus the state match on your pension funds. About $1035 per month is being saved. I agree with bridget on optimizing your taxes better. A large tax return is not usually a good thing, although in this case its probably not going to make a big difference.

[darkshark16]

Hey all sorry for the delayed response,

AZDude is right, the pension is a set percentage out of my pay check and cannot be changed. Hopefully, I'll just get a raise sometime this year and get that number up that way!

Yeah my work commute is about 8 miles and I drive a mid-sized vehicle. Also traffic is pretty heavy on the times I go and come back to work, so I'll sometimes sit in stop and go traffic on the way there. I looked at rent prices in the immediate area of where I work and it is a lot higher and in most cases for a lot less. Unfortunately I live in San Antonio which is very spread out and has very weak public transportation options, and the area I live in is riddled with construction and big highways and doesn't offer much in the way of bike lanes :(

That's a good idea with putting pop-up expenses in the fun budget! I had planned on adding that in to my fun money at the end of the month if I ended up not using it, but I don't want to add it in at the beginning because I may be more tempted to spend it and then not have it at the end of the month if something were to come up. My friend even recommended putting charity in there as well and then I'd be giving out of my fun money (I'm just worried this would feed into my own personal greed if I didn't make it a separate line-item.)

Good catch on the tax return! I'm actually planning on receiving back around 1400 because that's what I received last year. So around the time my next insurance renewal comes up, it should fall right around the time my work gives raises and I'm planning to put the raise towards covering my monthly insurance. (Unlike some policies, USAA doesn't offer an incentive discount for when you pay the 6 months up front or pay it out monthly.) I leave the cushion on my tax return large because I always figured it was better to have them pay me then me mess up with my taxes and end up owing them at the end of the year, but I may consider changing it, because you're right I am losing a little extra on having that money work for me.

Thanks all for replying!