Reader Case Study - General Checkup

[Tyler54121]

Want specific info related to your situation?

My wife and I currently live on a single income in the U.S. We are both college grads (we are 25 & 24 respectively). I am working full time at a law firm as an administrative assistant. My wife is in process of looking for a job, but has been for the past year to no avail. Not even getting interviews in 90% of cases. We live in a low COL area so we are able to do quite well with our income. However, I wanted to get the opinion of other readers to see where I can improve (and perhaps get some encouragement!). I am in process of job hunting as well as I am underemployed currently ($14/hour).

Yearly Gross Income: $29,120 + likely potential $1,500 (bonus during Christmas) = $30,620/year
Monthly Net Income:  $2,240

Current Monthly Expenses:

Rent including water: $375
Charitable Contributions: $210
Gas & Electric (averaged): $120
Internet Access (Comcast...unfortunately!): $45
Auto Insurance: $40
Auto Repairs: $20 (budgeted)
Grocery Expenses: $100
Healthcare costs: $350 ($250 for subsidized insurance through healthcare.gov and about $100 for prescriptions/Dr. visits)
Student Loans: $85
Gas: $70 (this is probably a bit high of an estimate . . .probably closer to $60.)
Mobile Phones: $30 (2 on Republic Wireless w/ money saved for future replacements)
Miscellaneous Expenses: $150 (including entertainment, eating out, gifts, grad school, clothes, etc.)
Total Expenses: $1,595/month
Roth IRA: $500/month
Remaining: $145/month

Assets:
2007 Hyundai Accent - $4,000
Roth IRA: $8,150 (through betterment w/ 100% stock allocation)
I don't have a 401k match plan at work :(
Entertainment Fund: $649.11
Total Assets: $12,799.11

Liabilities:
Student Loans @5.6% interest on average - $34,977 *I thought this was $40,000, but was wrong.

Total Net Worth: -$22,177.89

Specific Question(s):
I am mainly looking for areas where I am doing well and where I can improve. Thanks!

Let me know if you need any more details!

[sarahsmc22]

Great job with what you've done so far (Groceries $100!!! WOOHOO!). A couple of expenses that I'd question...

Charitable contributions: while 10% charity is admirable, you currently have debt. That's where I'd be putting that.
Healthcare costs: in my state, they will subsidize and usually pay for Medicaid coverage for low income households. Your income is technically right around 185% poverty level, so you may want to check into that.

You also indicate that you have car savings and travel funds... but these aren't listed as assets. What are the balances of these accounts?

[Tyler54121]

sarahsmc22,

Thanks for the reply.

Appreciate the feedback on both counts:
1) I've thought long and hard about the charitable contributions, but I think that what I'm doing is best.
2) Unfortunately, our state (Georgia) is not so helpful with Medicaid (they didn't expand that coverage here). I don't believe we qualify, but I will double check on this. Our healthcare costs through healthcare.gov are already subsidized quite a bit.

Good call on putting the other accts into assets, I'll update the OP shortly.

[Thegoblinchief]

Is the $100 a month recurring health issues or just how it has a averaged out?

Increasing your income is the best option here. What field is your wife in?

[Tyler54121]

Thegoblinchief,

The $100 is for reoccurring expenses. Luck of the genetic lottery. They were higher at one time, but have now gone down to $100 per month. Wish I could lower this cost most of all.

My wife's degree is in Anthropology/Sociology. Due to medical condition, she is looking for a job that is not super high stress( and pays decently). Unfortunately, most jobs in our area are high stress & pay very low.

I have picked up a few jobs here and there mystery shopping and sometimes sell things through Craigslist & Ebay. (This income fluctuates tremendously and is hard to capture but I will work on putting a figure to it - perhaps $25/month. . .). I also need to factor in my credit card rewards.

[superone!]

My head just exploded when you said you only are paying $375 in rent! I'm really envious! (My 1/2 of my rent is $800..)

But seriously, you two seem like you are doing really well. I second that it is possibly overly generous to be giving 10% of income to charitable contributions. Maybe kick it back to 5% until your wife finds a job? (also shout out to a fellow social scientist!)

[Tyler54121]

superasya,

The rent is a huge blessing! The apartment's condition is not very good, but, for the price and location (I am .5 miles from work and walk everyday and we frequently walk to the grocery store that is .25 miles away!), is unbeatable. It is a crazy low rate that my church has given me as a part of helping me to fund grad school. I used to have a truck I drove, but sold it a while back to go down to one vehicle. Too much temptation w/ vehicles to have a clown car habit.

Thanks for the feedback on the charitable contributions as well. And thanks for the shout out for my wife! I'll be sure to let her know.

[homeymomma]

Current Monthly Expenses:

Rent including water: $375.            Incredibly low! Wow!
Charitable Contributions: $210.        Would be my first to cut because it's such a large amount, but I hear you if it is a nonnegotiable tithe.
Gas & Electric (averaged): $120.      Seems pretty reasonable but maybe could be lower if you're in a temperate climate.
Internet Access (Comcast...unfortunately!): $45          Any other options where you live?
Auto Insurance: $40.     Seems good
Auto Repairs: $20 (budgeted).   Comment below
Grocery Expenses: $100.    Wow. Really low, congrats. Possibly worth increasing a bit to make it easier to cut down on eating out?
Clothing: $20.     Comment below
Healthcare costs: $350 ($250 for subsidized insurance through healthcare.gov and about $100 for prescriptions/Dr. visits)      I'm sure you've already done a ton of homework, but I've heard of free discount prescription cards and the like that could maybe help?
Student Loans: $85.     
Gas: $50 (this is probably a bit high of an estimate . . .probably closer to $40.).    Seems great!
Mobile Phones: $30 (2 on Republic Wireless w/ money saved for future replacements).  Great!
Apartment Improvements (furniture & decor mainly): $20    Comment below
Dining Out and Entertainment (neflix included): $50.     Seems reasonable, but maybe not in conjunction with personal funds as well.
Computer Repairs: $8.33.        ?
Travel & Vacation Fund: $100.    This is very high while you have debt and are not maxing out even a Roth IRA.
Grad School Costs (mainly books & gas): $50.      Why is this gas separate from your other gas category?
Car Replacement Fund: $50.     Is your car on it's last legs?
Personal Funds (for fun for myself and wife): $60.       Again, in conjunction with an eating out/entertainment fund, a travel/vacation fund, gift fund, apartment improvements, and clothing fund, this strikes me as odd.
Gifts: $15.     Comment below
Roth IRA Deposits: $375.      You have a single Roth in your name, I assume? You're not quite maxing it. Maxing this and a second in your wife's name would equal if not surpass your loans in terms of priority.

Assets:
2007 Hyundai Accent - $4,000
Roth IRA: $8,150 (through betterment w/ 100% stock allocation)
I don't have a 401k match plan at work :(.      Neither do we. So annoying. But since you're not maxing your Roths yet, I wouldn't stress about it right now.
Car Fund: $75.01
Vacation Fund: $50.02
Clothing Fund: $40.01
Home Improvement: $25.01
School Funds: $125.05
Gifts: $20.01
Spending Money Fund: $55.75
Rainy Day Fund: $201.99
Entertainment Fund: $25.00

Ok, here's what I would do. Combine all of these (are they separate accounts?) in a single "emergency fund," set at whatever number you would need to feel comfortable. 3? 6 months of your expenses? (Consider you only have 1 income) Stop putting money aside for tiny and specific things like clothes and gifts and spending money. Give yourself $100-150/mo miscellaneous spending, to cover things like that. You can carry it over if you feel like you need a "spendable" cushion. Shop thrift stores, etc.

Liabilities:
Student Loans @5.6% interest - $40,000 .      This interest rate is high for a student loan. This is the only reason I would say it's up to you whether the loan or maxing your Roth is your first priority.

Specific Question(s):
I am mainly looking for areas where I am doing well and where I can improve. Thanks!

I think you're doing well but you're mistaking careful budgeting with being careful with money. There are a lot of unnecessary categories in your budget. I don't think you should cut out everything that is fun/entertaining/whatever. But it's easy to give yourself permission to spend money you shouldn't really be spending if you've "budgeted" for it.

The good news is that it's all up from here when your wife does find a job. Would she consider something out of her field until something better comes along? Even being a greeter at Walmart is better on your wallet than sitting at home for a year. Another thought- you mentioned a church. Could she do a volunteer position or something there that could turn into paid work or offer networking possibilities? Could she do part-time childcare? Elder care to relieve someone with an elderly relative at home for a few hours? Anything she could find quickly and wouldn't feel too obligated to would be great while she looks for something in her field. Good luck! Tell her good luck in the search! I can't imagine how frustrating that would be.

[swick]

More thoughts on charitable contributions - it is a deeply personal and touchy subject. Have you spoke with your pastor? It sounds like if you are getting subsidized housing through your church then you have a deep connection. You should speak with your spiritual adviser and see what your options are.

Many churches have other needs that can be met more effectively for both parties by volunteer work - especially in the areas of professional services. If your wife could volunteer it would look better on her resume as far as keeping busy and contributing to the community and it may also introduce her to the contacts she needs that will land her a job.

[SDREMNGR]

Your costs are pretty good.  You should focus on increasing income.  Both you and your wife.  Have a can do attitude and be willing to do whatever it takes.  I appreciate good attitude and smarts over experience.

[BZB]

A little brainstorming for your wife to make contacts for future job prospects:
If she has an anthropology/sociology degree she is probably good at research and writing. Could she volunteer her services as a grant writer? Do you have any museums or zoos in your area? Universities and community colleges also have special projects that could use a part-time or volunteer grant writer. This kind of work could lead to full-time employment if you meet the right people.

Here are some tips if she specialized in archeology or soils analysis. Medical problems might make it hard to travel and do field work as a "shovel bum", but she might be able to do lab work and analyze artifacts. Find the company that does the most cultural resource management in your area (any development such as new buildings or road construction that gets federal funds must have archeological and biological survey done beforehand, so there has to be a company doing that work). She could see about working in their lab. If she's good with computers and maps, in the future she could learn GIS skills that are very handy for jobs in cultural resource management. Community colleges often offer those classes.

Not related to anthropology, but here is an example of a strategy that could lead to a "desk" job: I have an acquaintance who found a full-time position by first volunteering at a hospital to help with a breast cancer research study. She helped with the intake of information from the study participants. The study was grant funded and they couldn't pay her but after less than a year of volunteering she proved her work ethic and made enough connections at the hospital to find a good job at a nearby research institution.

[fxsts12]

Great job on managing your budget so well. I recommend that you do not fund your IRA completely until your rainy day fund gets past $500 and you establish a decent line of credit if you haven't already whether it is through credit cards, a bank, or family. You don't need capital if you have access to capital. The more access you have, the less rainy day fund you need. You may need the the capital to relocate when you do change jobs.

[Tyler54121]

homeymomma,

I went ahead and took your advice to consolidate all the small accounts into one account. It is now an emergency fund of $649.11.
The only reason I budgeted that was was actually to prevent overspending. I find that If I have a general account where I can spend anything rather than a designated one, then I actually tend to spend more. Putting them in designated accounts caused me to actually spend less and each of those accounts was nicely growing. Perhaps I just need to track each dollar so I can see it that way? I may try out the $150 miscellaneous spending each month and see how that goes.

For internet,besides Comcast, the only other option is AT&T. It gives slower speeds for the same, if not higher, prices. I've thought about switching to Comcast's $20.00 a month 3Mbps plan, but have 25Mbps for $45 which was the best deal they would offer me. Used to have it for $30, but I couldn't get them to give that offer again, unfortunately. Anyone have experience on a 3Mpbs plan? Netflix run okay?

On the healthcare, a medical condition requires expensive medications. So, if we changed the insurance, it would require actually more $'s, unfortunately.

We actually have 2 Roth IRA's. One in each of our names as this allows us to get the maximum value out of the Saver's Credit. Also, I know there are varying perspectives on this, but I was using my Roth IRA as an emergency fund as well. . . I have a high risk tolerance. But i'm open to changing my opinion.

My SO is pretty much open for almost any job. Doesn't have to be in her field of study. Her last employment (at our church) was actually terminated due to her medical condition so she took about 6 months to recover and then has been hunting for about 1 year. It was a difficult transition as we lost quite a bit of income. She still does volunteer frequently, but nothing has come to fruition from it yet. Child care jobs are currently one that is of particular interest so we are hoping something can come of that soon.

Thanks for your comments!

[Tyler54121]

blahblah,

My SO is already volunteering some, but could definitely pursue more opportunities. We'll look into that for sure.

We hear you on the detriment of a long period of unemployment. The main difficulty has been that she was even denied a job working for almost minimum wage at a frozen yogurt place due to being too qualified. Most jobs either say you are too qualified or under-qualified (1 to 2 yeas experience required) it seems. Child care is the one we are devoting the most effort to at the moment.

Thanks for the suggestion of a dental hygienist. We'll be sure to investigate this option.

I hear you on the insanity of the charitable contributions. I've thought long and hard about it. In my heart of hearts, I believe to be the right thing for me to do. I put a high degree on faithfulness in all things and believe it is best for both myself and others. It's not financially hurting me in my opinion either. (For instance, I've had donations of over $15,000 for my seminary education currently. . .far more than I have ever given to my church.) I do recognize this is crazy from a purely secular viewpoint.

[Tyler54121]

SDREMNGR,

We are definitely working on increasing income. Thanks for the comments.

[Tyler54121]

BZB,

She is definitely good at research and writing and was one class short of a double major with English as the 2nd. She could volunteer to be a grant writer for sure. We actually know someone that used to be one that is a very close friend. We do have 2 very small museums in our area, but there hasn't been any availability there thus far in any capacity.

[Tyler54121]

fxsts12,

Thanks for the encouragement. I just created an emergency fund out of some other designated funds that will meet the greater than $500 criteria. I have about $60,000 in credit card limit, a $1,500 line of credit at my bank, and plenty of family to fall back on as needed. I haven't had a rainy day fund so that that I can put more in the Roth IRA. Now, with a few changes, the plan in to max out my Roth and put some in for my wife as well. Changes are reflected in the OP.

[GregO]

I've thought about switching to Comcast's $20.00 a month 3Mbps plan, but have 25Mbps for $45 which was the best deal they would offer me. Used to have it for $30, but I couldn't get them to give that offer again, unfortunately. Anyone have experience on a 3Mpbs plan? Netflix run okay?

That's what my internet has been for the last year: 3Mbps with Time Warner.  It has been plenty fast and we haven't had any problems streaming HD movies.  If you look up IPDaley's superguide on internet, he actually suggests 3 Mbps for most users.  I'd recommend downgrading and saving the $25/month.  Even if it doesn't work out, they will always let you go back up...

[swick]

BZB,

She is definitely good at research and writing and was one class short of a double major with English as the 2nd. She could volunteer to be a grant writer for sure. We actually know someone that used to be one that is a very close friend. We do have 2 very small museums in our area, but there hasn't been any availability there thus far in any capacity.

Besides grant writing, your wife might want to look into corporate fundraising - especially if you have lots of museums and non-profits in the area. The idea is to create a sample package of targeted fundraising letters - go to the non-profits and ask them if they have need of someone to do their fundraising. Maybe it is for operating expenses, maybe it is for a specific project they have in mind, or perhaps she suggests a project.

Most non-profits are stretched to the limit with resources (including volunteers to do fundraising) Sell the whole package, the letter writing, contacting the business, doing any required follow-up for a portion of the $ raised. Anywhere from 20-50% depending on the project. It is a win for the non-profit, since they wouldn't have had that money in the first place and a win for your wife who gets paid for her efforts - and usually paid very well. She can work on her own time and schedule while she is job hunting or turn it into a full time career.