Author Topic: Does my budget look right?  (Read 7018 times)

MrD

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Does my budget look right?
« on: October 08, 2012, 09:18:53 AM »
I am 23, just bought a house, I put in 23% of my income into my 401k. I make 61-67.5k a year. Net take home is ~2500 (w/o bonus). I split expenses 60/40 with my gf of 5 years.

If something is in ()'s that means that is how much the last bill actually cost. Some of these are estimates.

Mortgage - 800
Internet - 40 (27)
Cable - 55
Electric - 150 (149)
Water - 40
Natural Gas - 40
Web Hosting - 10
HOA - 45
Car - 112
Medical - 25
Contact Lenses - 40
Garbage - 15
Dinners out - 60
Gas - 60
Home Maintenance - 100
Car Insurance - 63
Gifts - 40 (covers birthdays/christmas etc)
Car Repairs - 25
Vacation - 25
Clothing - 30
Spending Money - 125
Golf - 125
Engagement ring - 150
ROTH IRA - 325

Obviously some of the things that I budget for are not monthly expenses, but I still put away money so when they a rise it is already taken care of.

How does this look for people on the outside looking in? I realize to most 125/month on golf might seem insane. To me it is my one hobby, it gets me out side, exercise, and it is really fun. Figured I would throw that out there.

Any advice/tips would be great!

Use it up, wear it out...

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Re: Does my budget look right?
« Reply #1 on: October 08, 2012, 09:33:34 AM »
Congrats on a solid savings rate!

Looks like your auto, all in, is about 10% of your take-home - still only $3K / year or so, but a place to look at for savings.

Why is your electric bill so high? Do you depend on electric heat or something?

Then it starts to get into picking nits - for example, I'd never pay $480 / year for contact lenses - my glasses cost me $30, and last approximately 3 years, so $10 / year...

gdborton

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Re: Does my budget look right?
« Reply #2 on: October 08, 2012, 09:41:43 AM »
What are you looking to achieve?  Are you saving for a purchase/goal, or just for retirement?  When do you want to retire?  Do you have any debt other than the mortgage?

Most of your expenses could be cut or reduced, but if there isn't a goal in mind do you think that you need to cut at all?

Will

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Re: Does my budget look right?
« Reply #3 on: October 08, 2012, 09:45:51 AM »
I see money for dinners out, but am I missing groceries? 

MrD

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Re: Does my budget look right?
« Reply #4 on: October 08, 2012, 09:47:33 AM »
Congrats on a solid savings rate!

Looks like your auto, all in, is about 10% of your take-home - still only $3K / year or so, but a place to look at for savings.

Why is your electric bill so high? Do you depend on electric heat or something?

Then it starts to get into picking nits - for example, I'd never pay $480 / year for contact lenses - my glasses cost me $30, and last approximately 3 years, so $10 / year...

My next payment isn't really due on my car for over 2 years, I am just getting it out of the way as I owe about 2k on it.

Electric is very high because the house is 2800 sq ft.

Glasses are just not an option for me, I always damage/lose/dirty them and it is so frustrating. Maybe I need to reconsider though.

MrD

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Re: Does my budget look right?
« Reply #5 on: October 08, 2012, 09:48:58 AM »
I see money for dinners out, but am I missing groceries?

Right now I have some temporary room mates who instead of paying rent/utilities buy all of our groceries. They are only living here for a couple of months though, so soon I will have to add that in. Although generally my groceries are very low because I travel for work every week.

MrD

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Re: Does my budget look right?
« Reply #6 on: October 08, 2012, 09:50:24 AM »
What are you looking to achieve?  Are you saving for a purchase/goal, or just for retirement?  When do you want to retire?  Do you have any debt other than the mortgage?

Most of your expenses could be cut or reduced, but if there isn't a goal in mind do you think that you need to cut at all?

I am really just looking to retire around 55-60. My only debt is my mortgage and my car (~2k). I was just curious if I seemed to have a pretty good setup, and generally the people here on MMM have pretty solid advice.

Jamesqf

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Re: Does my budget look right?
« Reply #7 on: October 08, 2012, 11:14:05 AM »
Electric is very high because the house is 2800 sq ft.

What does the square footage of your house have to do with the electric bill?

I'd think you could shop around and find cheaper car insurance, maybe combine internet & cable (if you even need cable), but otherwise the only real problem I see is your idea that golf is a form of exercise.  If you enjoy it as recreation, fine, but I'd suggest checking your heart rate occasionally.  Unless you really push the walking between holes, I bet you'll find it's nowhere near an aerobic training rate.

(I have a similar problem with friends who insist that riding horses is exercise.  Sorry, but the only way I can get my heart rate up is to get off and trot alongside.)

MrD

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Re: Does my budget look right?
« Reply #8 on: October 08, 2012, 01:41:51 PM »
Electric is very high because the house is 2800 sq ft.

What does the square footage of your house have to do with the electric bill?

I'd think you could shop around and find cheaper car insurance, maybe combine internet & cable (if you even need cable), but otherwise the only real problem I see is your idea that golf is a form of exercise.  If you enjoy it as recreation, fine, but I'd suggest checking your heart rate occasionally.  Unless you really push the walking between holes, I bet you'll find it's nowhere near an aerobic training rate.

(I have a similar problem with friends who insist that riding horses is exercise.  Sorry, but the only way I can get my heart rate up is to get off and trot alongside.)

Generally the bigger the house the more energy it takes to cool it. Obviously it would be easier to cool a 100 sq ft area vs a 1000 sq ft area.

I consider golf exercise because it is and it promotes other exercise in my life. Working out and doing cardio helps my golf game, and as any golfer would -- I do anything that will take strokes off :)

freelancerNfulltimer

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Re: Does my budget look right?
« Reply #9 on: October 08, 2012, 03:00:37 PM »
Electric is very high because the house is 2800 sq ft.

What does the square footage of your house have to do with the electric bill?

I'd think you could shop around and find cheaper car insurance, maybe combine internet & cable (if you even need cable), but otherwise the only real problem I see is your idea that golf is a form of exercise.  If you enjoy it as recreation, fine, but I'd suggest checking your heart rate occasionally.  Unless you really push the walking between holes, I bet you'll find it's nowhere near an aerobic training rate.

(I have a similar problem with friends who insist that riding horses is exercise.  Sorry, but the only way I can get my heart rate up is to get off and trot alongside.)

Have you ever ridden a horse beyond a leisurely walking trail ride? Actual horseback riding, when done correctly is exercise. You use a lot of core strength and leg strength to stay on and upper body strength working with the horse's mouth. When I ride after missing even a week of riding I am incredibly sore. I'm more sore from riding than I am from running. Just like meandering at a slow pace doesn't compare to running, walking very slowly and not actually working at riding doesn't compare to a full hour of intense horse back work.

Jamesqf

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Re: Does my budget look right?
« Reply #10 on: October 08, 2012, 04:50:25 PM »
Have you ever ridden a horse beyond a leisurely walking trail ride? Actual horseback riding, when done correctly is exercise. You use a lot of core strength and leg strength to stay on and upper body strength working with the horse's mouth.

I wouldn't call my trail riding actually leisurely.  We tend to go for 3-5 hours at a time, and if conditions permit will do maybe 1/3 trotting and a bit of cantering.  Even the walking is usually fairly brisk, and I do have to spend a bit of effort holding her back from wanting to trot all the time.  (Which is nice, since I spent two years rehabbing her from a serious leg injury - the sort where the vet said she'd probably never be able to do more than hobble around the pasture.)

While I do find that there's some isometric work in the legs, it's just using particular muscles that don't normally get much use, and I'm trying to adjust my normal routines to strengthen those areas.  (But as with the OP, I'm exercising to ride better, not riding to exercise.)  I don't find that I use much upper body strength at all: maybe this wouldn't be the case on a different horse, but she needs only the slightest hints from me.

I don't say that it's not possible that some horse riding might not be exercise, just that this isn't, even though my friend that suckered me into it said it would be (and still says it is).  Maybe it's just perspective: for years I would go trail "riding" with her and her friends, except that I would walk & run while they rode.

justchristine

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Re: Does my budget look right?
« Reply #11 on: October 08, 2012, 06:08:08 PM »
If you are looking for cheaper contacts, try Coastal Contacts.  I've used them for a few years and they have great customer service.  Each year I shop around and they've consistently been the cheapest.  I also saved a bit when I switched brands to one that is a monthly lens.  The boxes are more expensive but I'm buying fewer of them.

sibamor

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Re: Does my budget look right?
« Reply #12 on: October 09, 2012, 11:11:47 AM »
At face value you are income>expenses.  You are trying to minimize your expenses as well plan for inevitable ones (car maintenance/holiday gifts); and of course tackling the debt. Kudos.

Try bracketing your expenses into larger categories and look at the sum/percentage of your income.

IE:

Housing: mortgage/interest/taxes/insurance/HOA/phone/utilities/trash/etc
Healthcare: glasses/dental/HSA/premiums/etc (some people roll this category into Housing or Miscellaneous)
Auto: Loan/Gas/Taxes/Insurance/Registration/Maintenance/ etc
Savings: Emergency Fund/ Wedding/ Travel/ Investing/ etc
Debt: Student Loan/ Personal Loan/ CC debt
Food/Entertainment: grocery/diners out/ date night/ movies/ booze
Miscellaneous: Household goods/ clothing/ club fees/ gifts/ surprise purchases

A good Non Mustachian distribution on percentages is the following:
Housing: 35%
Auto: 15%
Saving: 15%
Debt: 10%
Food: 14%
Household: 11%

* This is of course to show if you are living beyond your means.  If your Housing expenses are 50% then you are likely sacrificing from somewhere else.  The Mustachian way is to minimize all these categories except savings.


Also look at doing a breakdown by the 50/30/20 rule.

Does your budget reflect the following
50% of you Needs
30% of your Want
20% towards Savings

lhamo

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Re: Does my budget look right?
« Reply #13 on: October 13, 2012, 06:12:41 AM »
Congrats on a solid savings rate!

Looks like your auto, all in, is about 10% of your take-home - still only $3K / year or so, but a place to look at for savings.


Sorry, but am I missing something here?  Aren't these monthly, not annual, expenses?  If so then other than the 325 Roth IRA contribution it doesn't appear he is saving anything (2500 take home a month versus 2175 in monthly expenses plus 325 Roth IRA contribution).

It looks to me that you bought more house than you needed/could afford.  2800 is huge for  a couple without kids.  Granted you are sharing now -- how much are you getting in rent from those roommates?  but still, the house is roughly 30% of your takehome and you are only paying 60% of the mortgage if I understand correctly.

Does your girlfriend really need/want an engagement ring?  Important to some people, but those people usually aren't very Mustachian.  DH and I got the cheapest rings we could and got married at the courthouse.  Still together 16 years later. 

Depending on your partner's income, you might save money on taxes by getting married.  Courthouse marriage referenced above was on December 31, largely because I realized a couple of days after Christmas that we would save $4000 on my taxes if we got married before the end of the year (DH didn't have much income that year). 

Other than too much house and other questionable lifestyle choices (disposable contacts, engagement rings, eating out, golf) it looks like your other expenses are mostly reasonable.  But if you could free up a few hundred extra on the less important stuff and your partner could do the same, you might gain more traction.

twinge

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Re: Does my budget look right?
« Reply #14 on: October 13, 2012, 01:08:39 PM »
Quote
Sorry, but am I missing something here?  Aren't these monthly, not annual, expenses?  If so then other than the 325 Roth IRA contribution it doesn't appear he is saving anything (2500 take home a month versus 2175 in monthly expenses plus 325 Roth IRA contribution).

He's contributing 23% of his income to a 401k.

MrD

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Re: Does my budget look right?
« Reply #15 on: October 16, 2012, 03:11:01 PM »
Congrats on a solid savings rate!

Looks like your auto, all in, is about 10% of your take-home - still only $3K / year or so, but a place to look at for savings.


Sorry, but am I missing something here?  Aren't these monthly, not annual, expenses?  If so then other than the 325 Roth IRA contribution it doesn't appear he is saving anything (2500 take home a month versus 2175 in monthly expenses plus 325 Roth IRA contribution).

It looks to me that you bought more house than you needed/could afford.  2800 is huge for  a couple without kids.  Granted you are sharing now -- how much are you getting in rent from those roommates?  but still, the house is roughly 30% of your takehome and you are only paying 60% of the mortgage if I understand correctly.

Does your girlfriend really need/want an engagement ring?  Important to some people, but those people usually aren't very Mustachian.  DH and I got the cheapest rings we could and got married at the courthouse.  Still together 16 years later. 

Depending on your partner's income, you might save money on taxes by getting married.  Courthouse marriage referenced above was on December 31, largely because I realized a couple of days after Christmas that we would save $4000 on my taxes if we got married before the end of the year (DH didn't have much income that year). 

Other than too much house and other questionable lifestyle choices (disposable contacts, engagement rings, eating out, golf) it looks like your other expenses are mostly reasonable.  But if you could free up a few hundred extra on the less important stuff and your partner could do the same, you might gain more traction.

I think you missed the part where I said I contribute 23% of my pre-tax to a 401k. Also the engagement ring is something she really wants and I know that when I am 55 and retired instead of maybe 54.6 and retired I won't even think about it. Plus we will surely be married in the next 2 years and by then our combined incomes will be around 115k so all we will be well :). Thanks for the input on other areas as well.

JohnGalt

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Re: Does my budget look right?
« Reply #16 on: October 16, 2012, 05:40:28 PM »
Glasses are just not an option for me, I always damage/lose/dirty them and it is so frustrating. Maybe I need to reconsider though.

Have you considered LASIK?  I had it done a few months ago and it was totally worth the $3,000 I spent and I wasn't spending anywhere near $40/mo on contacts.

At $3,000, saving $40/mo is a 6.25 year payback period and that's ignoring the convenience benefits and contact cost inflation. 

MrD

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Re: Does my budget look right?
« Reply #17 on: October 17, 2012, 06:40:39 AM »
Glasses are just not an option for me, I always damage/lose/dirty them and it is so frustrating. Maybe I need to reconsider though.

Have you considered LASIK?  I had it done a few months ago and it was totally worth the $3,000 I spent and I wasn't spending anywhere near $40/mo on contacts.

At $3,000, saving $40/mo is a 6.25 year payback period and that's ignoring the convenience benefits and contact cost inflation.

LASIK has always kind of worried me, from what I have read more than likely you will have to go back in for a readjustment at some point in your life. Did you do a plan where you have unlimited adjustments?

JohnGalt

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Re: Does my budget look right?
« Reply #18 on: October 17, 2012, 09:39:57 AM »
Glasses are just not an option for me, I always damage/lose/dirty them and it is so frustrating. Maybe I need to reconsider though.

Have you considered LASIK?  I had it done a few months ago and it was totally worth the $3,000 I spent and I wasn't spending anywhere near $40/mo on contacts.

At $3,000, saving $40/mo is a 6.25 year payback period and that's ignoring the convenience benefits and contact cost inflation.

LASIK has always kind of worried me, from what I have read more than likely you will have to go back in for a readjustment at some point in your life. Did you do a plan where you have unlimited adjustments?

No - but I don't expect to have to go back in for at least 10 years.  My vision hadn't changed much over the last 10.  At $300/ yr, I still come out ahead over buying glasses/contacts during that time frame but really, the convenience/quality of life improvements alone would be worth paying twice that to me.  And, with the way prices dropped over the previous 10 years, it may even be less expensive if I have to get it done again down the line.