Help analyze my situation

[luke]

I need help analyzing my situation to see if anybody has ideas where I can cut/save/invest.  I'm early 30's, no retirement or investments yet.  Below is my situation:

$44,000/year salary
No car payment
$30/month car insurance - Best rate I've found
About $400/month in groceries
House+insurance+taxes=$800/month - can't rent around here for less
Work 22 miles from home
Cell phone $150/month
No television service
Internet $29/month - need for job
Eating out, gas station runs, etc $400/month during the past three months
$6800 credit card
Wife has about $15000 in student loans, she is a stay at home mom but does photography on the side.


Here's my plan so far.  Eliminate eating out and gas station snack runs, been doing it about a week.  Ran calculations and we spent $1300 over the past three months on fast food and snacks from convenience stores.  That kills us.  My work will give me a cell phone to use for free.  I plan on getting out of my Sprint contract and getting my wife a prepaid phone.  Any suggestions?  I think we spend too much on groceries.  This past week I challenged my wife to only spend $20 for the whole week in groceries.  Well, I was able to get it done with $23.  I don't think we can do that each week as I extremely limited our menu, but I think $35-40 is within reason.

As for the credit card and loans, any ideas?

[Kira]

Here's my plan so far.  Eliminate eating out and gas station snack runs, been doing it about a week.  Ran calculations and we spent $1300 over the past three months on fast food and snacks from convenience stores.  That kills us.  My work will give me a cell phone to use for free.  I plan on getting out of my Sprint contract and getting my wife a prepaid phone.  Any suggestions?  I think we spend too much on groceries.  This past week I challenged my wife to only spend $20 for the whole week in groceries.  Well, I was able to get it done with $23.  I don't think we can do that each week as I extremely limited our menu, but I think $35-40 is within reason.

As for the credit card and loans, any ideas?

The first thing I would ask is how much you are actually putting into savings/investments right now. That's a very different number for most people than the number that "should" be left over. Do you have a 401k? If you have a good handle on how much you have left over, up your 401k contribution and use some of that extra money there. Since that's pre-tax money, the amount deposited into your 401k is more than you'd get in your paycheck on the same income.

The second thing I would ask is whether your wife is on board with this $20 a week in groceries plan. It sounds like you are very gung ho and excited to start making changes, but you are part of a team and your teammate needs to have her opinions taken into account too. I also see a lot of people who are very excited at first, and make a lot of cuts, and then backslide because the change is just too much all at once. From the budget you have given us, you are not living large now, so make sure you talk to your wife about these changes before you decide they're happening!

Few other questions:
Where did the cc debt come from? Is that recent?
Also, can you separate out the gas station runs from eating out - with a 22 mile commute, I am betting most of that is gas.
Do you feel like you waste money on groceries that you don't need or do you eat high quality foods which run up the grocery cost? $400 a month for 3 people isn't great but it isn't noticeably horrible either.

[luke]

I don't have a 401K yet, but my employer matches and I am going to start one next week.  The $20 for a week of groceries was just a challenge to see if we could cut back and still survive, we did.  Realistically I think $30-$50 is more realistic.

The cc debt was just random stupidness, and none in the past year.  We have stopped using it.

The gas station runs that I spoke of weren't gas, they were snack runs.  A coke and candy bar here, a six pack there, bag of chips, etc.  It was all snacks.  In terms of groceries, we don't eat expensive food I think we just don't plan correctly.  If we planned our meals for the week, and used coupons we could probably do it for half.

[Kira]

Oooh yeah if that is all snacks, that needs to stop post haste! Not good for your health, much more so than the effect on your budget.

I think your budget doesn't look bad, but not knowing how much you have left at the end of each month, I'd start your 401k at 10 or 15% and see whether you feel the pinch - if not, bump it up another 5% each month!

[willn]

Very cool! I'd crush the debts first, I wouldn't facepunch you for putting in the match to the 401k but with the budget cuts you are doing and the basically obscene credit card and student loan debt you have I'd get those off the balance sheet ASAP, before retirement.  You'll see some disagreement here but what works for a lot of people is do get very focused on one aspect.  Debt is an emergency in the MMM world--especially credit card debt and car loans.

Based on your 44k I'm estimating you can throw 1500 month at the debts and so you'd be done in 15 months.  Then you're at zero and can start building!

If you do throw say 3% to get the 401k match you'd only take a month longer so its probably worth it to get the free money.

The photography thing has potential.  If you can ramp up marketing for that I have a feeling you could easily add 500-1000 / month.  And if you can get a side job or sell some stuff I bet you'll get through the debt in less than a year.