Author Topic: New Case Study for Life Change  (Read 2381 times)

Giro

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New Case Study for Life Change
« on: September 27, 2016, 08:56:34 AM »
So, I'm going from employee to 1099 and I'm really freaking out.  I was so excited to make the decision and now I need an outside opinion. 

Life Situation: I'm retiring in 2 years so I can't eff this up too significantly.  I have a 10 year old daughter and I'm married.  My husband is a govt employee and retired AF.  He pays ALL insurance and buys most of the food and we budget separately.  These numbers are MY half only.  We live in cheap Ohio and have no mortgage on our primary residence. 

Gross Salary/Wages: $160,000

Annual Pre-tax deductions: solo 401k - $45,727

Other Ordinary Income: Child Support - $6760

Taxes - $53,026  (City, State, Federal, SS, Medicare)

Current expenses (Monthly):

Car            $600.00
Electric    $150.00
Gas             $75.00
Water    $45.00
Cable     $195.00
Cell Phone    $180.00
Lawn Care             $130.00
Eye Glasses    $20.00
Contacts            $20.00
Gas                   $250.00
Netflix            $11.00
Restaurants    $250.00
Gifts                   $220.00
Pet                    $50.00
Auto Maint         $50.00
Clothing         $100.00
Private School    $366.67
Trash             $25.00
Savings for kids    $50.00
College Savings    $150.00
After Tax Investment    $2,000.00

Total Monthly $5338    Annual   $64056

This leaves me only around $400 per month extra. 

Specific Question(s): I feel that this budget is crazy tight.  Is there anything way too high here?  Is this doable?  How tight am I? 

I'm nervous about making sure I have the money for taxes and not screwing things up too badly over the next 2 years. 

« Last Edit: September 27, 2016, 09:02:29 AM by Giro »

Half-Borg

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Re: New Case Study for Life Change
« Reply #1 on: September 27, 2016, 09:23:23 AM »
You earn 5667 monthly. You spend 2737. (Savings for college, kids, after tax investments are no expenses)
There is more than 400 leftover.

Nevertheless, facepunches included below:

Car            $600.00 <- I guess that's a loan. What are the specifics on this loan?
Electric    $150.00 <- insanely high, how many kwh do you use? What kind of appliances are using all this power?
Gas             $75.00 <- and now gas, does the electric not even include heating?
Water    $45.00
Cable     $195.00 <- shop around and cut the extra premium mega football package...
Cell Phone    $180.00  <- is this for your whole extended family?
Lawn Care             $130.00 <- about 100% too high, your ten year old could earn her pocket money here
Eye Glasses    $20.00
Contacts            $20.00
Gas                   $250.00 <- Can you cut on driving around?
Netflix            $11.00
Restaurants    $250.00 <- This is also easliy cut
Gifts                   $220.00 <- way too high
Pet                    $50.00 <- what kind of pet?
Auto Maint         $50.00
Clothing         $100.00 <- high
Private School    $366.67 <- depends on your stance on private schools
Trash             $25.00

I'm missing mortage/rent?

Mother Fussbudget

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Re: New Case Study for Life Change
« Reply #2 on: September 27, 2016, 10:30:26 AM »
Welcome, and thanks for sharing your situation - you're on the right track by thinking about how to economize.  I find that the monthly bills are the biggest drain on one's budget.  And because your budget doesn't contain a large line item for 'mortgage', it appears you've got 'budget creep' from other areas of your life - things you spend money on 'because you can'.  To solve that problem, in a word:  Don't (i.e. don't simply spend money because you can).

Suggestions:
Car            $600.00 - sell this car, and buy a good used car off CraigsList for CASH.  See THIS, and THESE posts...
Electric    $150.00 - Switch to LED lighting.  Walk thru your house, and count how many light bulbs you have.  On your way home from work, stop at your local CostCo, or HomeStore/Depot/Lowes, and buy at least one (1x) LED light bulb per day, and replace 1x existing bulb with an LED bulb.  This allows you to sample the different bulbs / colors of light (pay attention to lumens) and see how the lights look *in your home*.  Once you find one you like, buy many more.  Be sure to shop around on-line for the bulb you end up liking. 
Gas             $75.00 - seems okay for winter heating. 
Water    $45.00 - You should also consider switching to low-flow faucets in the kitchen & bathrooms.  This will save on gas (hot water) as well as water. I did it without telling anyone, and actually got compliments on the new large (but tricky low-flow) showerhead.
Cable     $195.00 - kill your cable, but make a game out of it.  Buy an indoor HDTV antenna (Amazon, CraigsList), and have your 10 year old help you 'experiment' with how many channels you can receive locally WITHOUT cable tv.  Include them in the process, and they're less likely to complain about losing the Disney Channel, or whatever favorite source of 'endless commercials' they might have. 
NOTE:  if this includes 'internet', consider going DSL with the local phone company.  I did this, got their cheapest package available, and my sons and I use it to watch Netflix from two rooms nightly.  Cost?  $21/month.
Cell Phone    $180.00  - kill this.  Pay off your phones, and switch to Airvoice Wireless on their $10/month 250 talk & text plan (or Republic Wireless) for each line in your house.  If you have 3 phones, $30/month.  You'll probably spend more than that the first month - just add another $10 to the fund, and use it until you need to refill. Savings:  $150/month.
Lawn Care             $130.00 - kill this.  Have husband or your 10 year old cut the lawn.
Eye Glasses    $20.00 - is this budgeting for buying glasses once-a-year?  Consider one of the less expensive eyeglass sources.  I used CostCo before I broke down and got lasik.
Contacts            $20.00 - seems ok.
Gas                   $250.00 - when you sell your car, buy a used Prius, or other small economy car.  Cut this by half by choosing the right car.
Netflix            $11.00 - keep this, but kill your cable-tv bill.
Restaurants    $250.00 - Go down to 1 restaurant meal / month, and bring this down to $50/month.  If that's not enough, take the family to CostCo, and dine on pizza slices before going inside to buy bulk foods to make for dinner the rest of the week.
Gifts                   $220.00 - kill this.  Consider thrifting at Goodwill, Value Village, etc. thrift stores.
Pet                    $50.00 - keep this.  A cheap price to pay for unconditional love.
Auto Maint         $50.00 - seems high.  If this is budgeting, cut it to $20/month and see if that works.
Clothing         $100.00 - Consider thrifting at Goodwill, Value Village, etc. thrift stores.  I watch for the '50% off' days, and buy back-to-school, christmas, and work clothes around twice a year.  This year I've spent ~$100 on clothing for the year - and already have a few things put away for the holidays for the kids.
Private School         $366.67 - keep.
Trash         $25.00 - seems good.  (mine is $36/month)

I don't recommend a 'budget' in the normal sense of the word, I recommend people make a conscious choice at the time-of-purchase as to whether the 'item to be bought' is a:  1) Need, 2) Want, or 3) just more future-landfill-material to be temporarily stored in my house until someone realizes it should be thrown out.  Another tried and true way to cut the budget is to use less of EVERYTHING you use.  Start with toothpaste - use half the normal amount, and see how well you can do with half-the-amount.  Half might not be enough, but try it, and adjust.  Same for shampoo, toilet paper, cooking oil - lighting (turn the lights off BEFORE you leave a room).  You'll quickly find your comfort zone, and probably adjust your 'needs' list downward, and find yourself saving with virtually no pain.

This is a good start - putting your situation up here to be reviewed as a 'Case Study'.  Congrats on your first steps.  Be sure to reply in this thread to tell us what steps you're taking to improve your monthly savings.

des999

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Re: New Case Study for Life Change
« Reply #3 on: September 27, 2016, 10:53:33 AM »
-I live in Ohio, can I mow your grass for $130 / month  :)    this should go away for sure.

-I'd get rid of cable, that seems high
-I enjoy trying to get my electric bill down every year, kind of a game for me, we have a fire place so I enjoy using that in the winter to see how much I can save, be sure to keep an eye on how much you have plugged in all the time and how much you use your dryer vs hang clothes outside, turn off lights, honestly little changes add up.  (just realized you have gas too, we are all electric no gas and my bill is less that 150)
-cell phone bills are way too high
-that's a lot for eating out, but I too like to eat out so I'm not one to judge.

Over all, I think there is room for improvement, but it's not bad.
 

Giro

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Re: New Case Study for Life Change
« Reply #4 on: September 27, 2016, 11:23:48 AM »
Thank you everyone!!!

No mortgage.

I will work on electric and cut out some of the cable bill to try and lower it.

The private school has to stay because that's basically why I'm getting the child support money.  We don't have a legal agreement and I don't want to ruin my daughter's relationship with her father.  He lives 1500 miles away.  If I pushed for real child support, he probably wouldn't even try to see her the few times a year he does now.  it's not worth the fight at all.  So, he pays me and I keep her in private school. 

I want to keep the car.  It's a toy not a commuter but I enjoy cars.  We don't do much as far as vacations, so this is kind of my "vacation".  Car has about $19k left on the loan.  I paid $60k but put down $30k.  The rate is 1.9%. 

I can work on restaurants for sure.

In April, my cell drops another $20.  I'll shop around for cell service.

I always shop thrift stores but somehow I still spend a fortune on clothes.  Idk.  I need to track this for awhile.  good points.

I don't trust the kid to mow the lawn.  She is a walking disaster.  She would probably cut off a toe the first time out.  I will cut this back to 2x a month and have husband mow every other week.  It's also only for a little more than half the year (April - October). 

Giro

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Re: New Case Study for Life Change
« Reply #5 on: September 27, 2016, 11:47:06 AM »
I'm going to take the next 2 years and really try to live within my allocated dollar amount.  I've never really lived within a budget.  I guess that's what I'm most nervous about.  I really don't want to do OMY.  I want to be done done at the end of 2018.