Author Topic: Optimizing my budget  (Read 2892 times)

ransom132

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Optimizing my budget
« on: March 06, 2016, 06:15:47 AM »
Hello fellow mustachians, please analyze my budget and tell me what I should change to optimize it.

Also, I will get three paychecks in march, what do I do with the third paycheck (which is basically like free money), do I put it all towards my investments or all towards my EF so I can reach my goal faster?

My average monthly income : 1940$ / month

Savings:
Long Term Investments (Canadian Couch Potato -> 60% VXC, 30% VCN, 10% VAB ): 350$
Emergency Fund (in savings account): 201.78$ (Until I have 3000$ accumulated)
Medical/Dental Emergency (in savings account): 20$ (Until I have 2000$ accumulated. I live in Canada, so healthcare is usually covered)
Total: 571.78$

Fixed Bills:
Rent: 300$
Groceries: 400$ (I live in Canada by the way)
Electric Bill: 187.15$
Cell Phone: 21.85$
Bus Pass: 79.50$
Gym Membership: 36.77$
Total: 1025.77$

Money I put aside each month to pay various stuff:
Costco Membership card: 14.45$
Magazine Subscription: 5.84$
Prescription: 24.54$
Passport Renewal: 14.62$ (I have to renew it in 2017)
Car Licence Renewal: 13$
Clothing: 25$ (Until I have 300$ for this category)
Gifts: 15$ (Until I accumulate 300$ for this category)
Household Items and Personal Care: 30$
Total: 142.45$

Non-Essentials:
Vacation: 100$
Dining Out: 50$
Spending Money: 50$ (On whatever I want)
Total: 200$




ohsnap

  • Stubble
  • **
  • Posts: 249
Re: Optimizing my budget
« Reply #1 on: March 06, 2016, 06:31:06 AM »
...

Money I put aside each month to pay various stuff:
Costco Membership card: 14.45$
...

This jumped out at me right away - that seems very expensive for a Costco membership!  In the US the standard membership is less than $5/month.

ransom132

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Optimizing my budget
« Reply #2 on: March 06, 2016, 06:36:51 AM »
...

Money I put aside each month to pay various stuff:
Costco Membership card: 14.45$
...

This jumped out at me right away - that seems very expensive for a Costco membership!  In the US the standard membership is less than $5/month.
We pay 130$ approx. per year (after fees and taxes) for the card (we do get 2% cashback though, but I will apply it towards my purchases) and since I started putting aside for the card in february and my renewal is in november, that means 14.45 * 9 = 130.05$

ohsnap

  • Stubble
  • **
  • Posts: 249
Re: Optimizing my budget
« Reply #3 on: March 06, 2016, 06:44:58 AM »
...

Money I put aside each month to pay various stuff:
Costco Membership card: 14.45$
...

This jumped out at me right away - that seems very expensive for a Costco membership!  In the US the standard membership is less than $5/month.
We pay 130$ approx. per year (after fees and taxes) for the card (we do get 2% cashback though, but I will apply it towards my purchases) and since I started putting aside for the card in february and my renewal is in november, that means 14.45 * 9 = 130.05$

Do you spend enough at Costco to get the extra membership fee back?  I pay $110 per year for the executive card instead of $55 for the standard card, but I spend more than the $2750 per year break-even point.  ($2750*.02 = $55 cash back)

ransom132

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Optimizing my budget
« Reply #4 on: March 06, 2016, 07:50:57 AM »
...

Money I put aside each month to pay various stuff:
Costco Membership card: 14.45$
...

This jumped out at me right away - that seems very expensive for a Costco membership!  In the US the standard membership is less than $5/month.
We pay 130$ approx. per year (after fees and taxes) for the card (we do get 2% cashback though, but I will apply it towards my purchases) and since I started putting aside for the card in february and my renewal is in november, that means 14.45 * 9 = 130.05$

Do you spend enough at Costco to get the extra membership fee back?  I pay $110 per year for the executive card instead of $55 for the standard card, but I spend more than the $2750 per year break-even point.  ($2750*.02 = $55 cash back)
Yes I do. Most of my groceries come from there, I put aside 400$ for groceries per month, but I usually end up spending on average 200-300$ per month, the extra 100$ I let it rollover so that when the protein powder is on special at Costco, I can buy it 3-4 bottles so that it lasts me at least for one year.
« Last Edit: March 06, 2016, 07:52:53 AM by ransom132 »

bearkat

  • Stubble
  • **
  • Posts: 122
  • Age: 29
  • Location: California
Re: Optimizing my budget
« Reply #5 on: March 06, 2016, 10:03:57 AM »
Is that $1,940 avg monthly just from 2 bi-weekly pay checks a month?

If not, it will take you ~28 years of savings $572 / mo. to reach $410k ($1,368*12/0.04) -- assuming you have $0 saved as of today.

If you get 2 extra pay checks a year (in addition to $1,940 / mo.), you can cut that time down to ~24 years by investing 100% of those extra pay checks for an average monthly savings of ~$734 / mo.

My suggestion is to really look at ways you can increase your income and then save 100% of it. Just getting up to $1,000 / mo. savings takes another ~4 years off.

Unrelated: what is a magazine subscription and why does it cost $72 / year?

ransom132

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Optimizing my budget
« Reply #6 on: March 06, 2016, 10:08:58 AM »
Is that $1,940 avg monthly just from 2 bi-weekly pay checks a month?

If not, it will take you ~28 years of savings $572 / mo. to reach $410k ($1,368*12/0.04) -- assuming you have $0 saved as of today.

If you get 2 extra pay checks a year (in addition to $1,940 / mo.), you can cut that time down to ~24 years by investing 100% of those extra pay checks for an average monthly savings of ~$734 / mo.

My suggestion is to really look at ways you can increase your income and then save 100% of it. Just getting up to $1,000 / mo. savings takes another ~4 years off.

Unrelated: what is a magazine subscription and why does it cost $72 / year?
Yes I make 1940$ per month after taxes, I have 75K$ net worth (72K$ iin investments). I meant to say subscriptions cost me about 5$/month, not just magazines (sorry about that). Another question I have, should I put less money per month towards my EF and into my investments or even better, should I put all my available money towards investments and if I get hit with an emergency, I simply withdraw it from my bonds (VAB) or the ETF that is making most profit (Buy low, sell high)? It's the saving part number I am not sure of, as of now, I am splitting 350$ towards investments and 200$ approx. towards EF.

bearkat

  • Stubble
  • **
  • Posts: 122
  • Age: 29
  • Location: California
Re: Optimizing my budget
« Reply #7 on: March 06, 2016, 10:36:50 AM »
Quote
Another question I have, should I put less money per month towards my EF and into my investments or even better, should I put all my available money towards investments and if I get hit with an emergency, I simply withdraw it from my bonds (VAB) or the ETF that is making most profit (Buy low, sell high)?

Of your $72k in investments, how much is accessible quickly and penalty-free versus RRSP (or whatever the Candian equivalent is of 401k/IRA)?

How long have you had an emergency fund and how many times have you ever withdrawn from it (and in what amounts)?

YMMV, but after two years of us never touching our EF, we chose to just invest it. We've continued to manage big outlays with CC's and monthly savings buffer in the 2 years since. So that said, investing 100% of "EF" works great for us.

ransom132

  • 5 O'Clock Shadow
  • *
  • Posts: 91
Re: Optimizing my budget
« Reply #8 on: March 06, 2016, 10:51:52 AM »
Quote
Another question I have, should I put less money per month towards my EF and into my investments or even better, should I put all my available money towards investments and if I get hit with an emergency, I simply withdraw it from my bonds (VAB) or the ETF that is making most profit (Buy low, sell high)?

Of your $72k in investments, how much is accessible quickly and penalty-free versus RRSP (or whatever the Candian equivalent is of 401k/IRA)?

How long have you had an emergency fund and how many times have you ever withdrawn from it (and in what amounts)?

YMMV, but after two years of us never touching our EF, we chose to just invest it. We've continued to manage big outlays with CC's and monthly savings buffer in the 2 years since. So that said, investing 100% of "EF" works great for us.
Approx. 24K$ comes from the TFSA (This is where I put my investments), the rest is from my work RRSP (I only put 3,5% of my pay automatically towards that).

As for my EF,I have had to use it once per year on average, usually it's when my family need money (last year it was 300$ to my sister and the year before that to help my parents out to repair the roof (4000$) of their house). So I would say once a year and it's usually for my family. If it weren't for my family, I would never use the EF, but it's usually close family members that come to me for help and I don't mind to help them, because they have done alot for me and they don't usually come for me for me unless they really have no choice which is why I help them out whenever I can. The most I spent on my EF was for the roof like I said (4000$)...it has happened in the past that I paid 3000$ in one shot to help out a family member, but that was a long time ago. On average, I would say I would withdraw at about 300-500$ per year.
« Last Edit: March 06, 2016, 11:05:51 AM by ransom132 »