Hello All,
I am new to the community and would like some feedback about which items should be prioritized to cut back on in budget conversations (which we haven't had in about a year). I try to pick my battles for budget reduction conversations as most of the time the discussions turn more into arguments with no resolutions. Right now my strategy is to pay our mortgage down as fast as possible (currently paying an extra $5,000/month) and as long as we are in the black for the month after the additional payment I do not care how much else we save. Enough background let's just get right to the numbers:
Income:
Me:
Annual Gross: $80k/yr +$4k/yr bonus
Monthly Net (After health care, taxes, 401k): $4200
401k - I put in $7200/yr company gives $8,800 (I put in 9% company gives 11%)
Wife: Hers is a little complicated has 3 yr contract (which will be renewed in 2017)
Annual Base Salary: $110k
Bonuses:
-Annual Bonus - $30k, $35k, $40k years 2015, 2016, 2017 respectively
-Monthly Company Performance Bonus - 42% of Base Salary (~ $2800/mo after taxes) - She has been getting these every month since her raise in June '14. However we do expect a bit of a slowdown in the next few months
-Yearly Company Performance Bonus - 28% of Base Salary (~18,000/yr after taxes)
- 3 yr EBITDA End of Contract Bonus - Gross varies from $138k - $240k (This will be paid in June 2017 when contract expires)
401k - She puts in ~$9,300/yr + 6% of yearly bonuses, company puts in ~ $6,100
Basically she takes home about $9.3k/month
This year I plan on maxing our 401k's with the yearly bonuses she gets, so an additional $10.3k to my 401k and $8.2k for hers.
Monthly Expenses
Mortgage/ Ins/ Taxes 1974 + additional 5000 towards principal
Daycare 1950 (2 kids)
Electric 100
Water 60
Netflix/ Cable/ Internet 60
Cell 180 (Wifes company pays $120 of this)
Life Ins 47
ID ins 13 (Plan on cancelling provided now through work)
Car Ins 72
AAA 8 (Plan on cancelling provided now through car insurance)
Nat Gas 35
Maid 185 (Every other week. Wife won't let go as long as she works)
Gas 280
Tolls 150 ($7/day for me to commute)
Groceries 1000
Restaurants 500
Car Maint 120
Clothing 200
Gifts 300
Entertainment 100
Vacation 500
Misc 250 (includes babysitting, amazon)
Charity 150
Gym 150
Dance 88
Grooming 70
Total- $8542/mo + $5000/mo extra to mortgage
*She also gets an expense check of ~$300/mo she can use for discretionary spending
Debts:
Mortgage : $208k @ 4.375%
Student Loan : $30.8k @ 0% (Parents were extremely generous to loan us money and asked that we pay it back by 2019)
Both cars are paid off - We are planning on keeping these cars for a while possibly getting a used minivan with the bonus in 2017
2007 Camry
2008 Honda Odyssey
Our end goal is for her not to work anymore, so we are trying to pay off the mortgage with gazelle like intensity (Projected to be paid off in Feb 2018). She would like to be a stay at home mom once our kids start going to 1st grade, so I would like to not have any debt at that time.
My questions are:
1.) What items do you think are worth having a discussion about cutting back on?
- I have been focusing on the big items, such as not buying a new car and delaying aesthetic home improvement projects.
2.) Do you have any good strategies for budget conversations with your significant other?
- She has agreed to talk budget for 15 mins/ week.
Thanks for your help, and please not too many face punches.