Case study: Reassessing after baby

[meerkat]

Deleted

[PharmaStache]

$792 Misc expenses?  You need to figure out where that's going. 

[Sibley]

Well, here's what I'm seeing.

You've got kid expenses. Makes sense. Don't buy clothing new - only gifts, used or hand-me-downs.

It seems like you're spending a lot on holidays.

$200 a month on dining - cut that down. Especially since you've got $350 a month in groceries.

But the Misc category is the real killer here. Figure out what that actually is.

Basically, you're zombies from lack of sleep and taking care of a baby and your habits have gone more towards what's easy.

[obstinate]

Phone is high, misc is very high (~1/4 of non-mortgage expenses?). You shouldn't do additional auto and additional mortgage payments. Pay only into whichever has the higher interest rate.

[Knitwit]

I noticed your Christmas/Holiday budget line is $200 a month, that's $2400 a year. What exactly does that get spent on? Gifts? Food? Travel? Anything there you can cut back?

[MDM]

The formatting looks terrible, even with the comments and annual columns removed. I used the Posting tab, but I am using Open Office instead of actual Excel so make that's breaking it? I'll be happy to fix it if someone can tell me how to do so easily, otherwise I'm going to hit post and come back to edit when I have more time. My apologies to your eyeballs in the meantime.

Column G on the Posting tab is what you want.  At least, that's how it works in Excel: column G takes the other columns and wraps table commands around them to line things up in this forum's software.

[dinkhelpneeded]

I am currently pregnant, and this is how I plan to keep things organized:

• Keep separate checking accounts for monthly expenses and another one for baby expenses, and no co-mingle the two.
• This way I know exactly how much I am spending on baby, and my other checking account has budgets and targets similar to pre-baby numbers (fixed costs).

I recommend you do this for starters, even at stores, check out twice if you need to - just to keep baby expenses separate. 6 months in you can always chose to co-mingle accounts and such.

This also helps recognize expenses as they happen and put in checks and balances as needed, instead of just overspending, and finding out later.

[MDM]

Specific question: Now that we have a baby in the house we knew our expeses would go up....

I tried using the spreadsheet from the tutorial post on how to make a case study but I'm not sure I filled it out 100% right. To be clear, our monthly mortgage due (with taxes and insurance) is $930.75 but we pay $1180.75. Same with our auto loan - we only owe $288ish per month but pay $500.

Filing Status	2	1=S, 2=MFJ, 3=HOH
# Exempt.	1

Loans:	Orig. Prin.	Orig. Length	Curr. Prin.	Yrs left	Rate
Mortgage	$120,000	30	$93,971	12	4.990%
Auto	$5,000	5	$3,456	4.5	1.750%

You are in better shape than those inputs indicate.  Increase your exemptions to 3, put 1 for both "# Children <17" and "# Children for EIC" (although you won't get the EIC with current income), and your federal tax bite will drop by $2,200.

See the 'Investment Order' tab in the spreadsheet regarding your loans.  Probably worth paying the mortgage before taxable investing, but paying the mortgage minimum until you maximize tax-advantaged contributions might be worthwhile.  The car loan interest is low enough that just paying the minimum looks best.

Now comes a significant question: are you comfortable enough with the spreadsheet results (both your inputs and its calculations) that you will increase your tax-advantaged (401k, IRA, etc.) contributions so the amount "Available for taxable investment" goes to zero?

[csprof]

Others have hit the high points:
(a)  Don't pay off your car loan at an accelerated rate.  If you want to continue kicking down debt, pay it into your mortgage instead, the interest rate is much higher.

(b)  But:  I don't see much pre-tax retirement contribution in there.  Free 25% extra money is nothing to sneeze at.

(c)  Your cell phone bills are high.  Cricket or Fi will get you down to ~$70/month or a bit less with no real reduction in anything ( http://da-data.blogspot.com/2015/10/comparing-prepaid-cell-plans-public.html ), though Fi is phone-specific.  It's usually worth switching even if you have to pay some early termination fee, but check carefully.

Do you need your landline?  I haven't found even with a 3.5 y/o that we lose anything by being a cell-only household.  That might change once the munchkin's friends want to call her, but we're a few years off from that (and I'll rig up some hacketyhack VoIP thing when that happens).

Your itemized expenses mostly seem low - kudos.

[CanuckExpat]

Unfortunately becoming a one car household is not doable at this time.

Relevant, if at least for future aspirations: How To Be a One Car Family

Your mortgage interest rate seems really high for the current environment. Have you considered refinancing? As an aside, I'm very jealous of the size of your mortgage and property tax payment.. alas..

Combining the two points above: you are paying almost as much for your car habit as you do in mortgage payments. Food for thought..

Other bits that caught my attention:

Child Misc (non childcare)   $170      $2,044

What does the miscellaneous represent that other child spending doesn't?

Clothing/Shoes   $40      $480

Is this for just the child or all three of you? Might be kind of high either way.

Dining (Lunch/Dinner/Etc.)   $202      $2,428

Groceries   $356      $4,274[/i]
Is one of these eating out? Combined total seems high.

Life Insurance   $46      $552

What kind of insurance is this, are you getting your $500 worth for something you will hopefully never need? Can't you get cheap/free term insurance through your workplaces?

Miscellaneous   $792      $9,504

Big black hole. This is your second miscellaneous category.

Phone (cell)   $120      $1,440

Phone (landline)   $37      $444[/i]
Why do you have cell phone(s) and a landline? The total is really high.

Shopping   $55      $655

This is your third miscellaneous black hole!


Anyways, it's easy to nitpick other people's spending (and kind of fun), but what are your goals? How much do you want to spend? What do you want to achieve? What was your spending like before you had a child? What categories do you think you can cut back on.