My husband and I are reformed spendthrifts and we're trying to start building our 'staches! The situation is a little complicated, but any advice/ suggestions/ face punching is welcome! This is extremely lengthy and I apologize for that!!! Advice is GREATLY APPRECIATED though!
We're both 26 and we're basically starting from scratch here. We are both on board, me probably a LITTLE bit more on board than Mr. Evakatharina. We messed up our taxes, ended up owing about $4000. But we didn't have it, had to borrow from my mom, it was an unpleasant situation we never want to be in again.
Over the past few months we've paid off the small amount of consumer debt we had on credit cards (around $1500) and started actively keeping a budget to help us fix our bad habits. We have a budget on mint that we've been good about sticking to.
What we would specifically like advice on is our budget (where to improve), and advice on how to prioritize the extra money we'll have for paying debt and investing. We've worked very hard to pull a system together and we've done really well so far, but we want to do better and we're struggling to get the big picture on what to do with the money that we now have to save. I've arbitrarily targeted wanting to get to 50% savings of our take-home pay.
Here are the numbers:
Debt:
$17900 student loan debt (average interest approx 6%)
$3500 bank of mom @ 0% interest and unlimited time to repay
Assets:
$2099.81 cash in the bank
1 car worth about $1500 - '98 Volvo, reliable car, around 200,000 miles on it
Income (net pay after taxes): $6300
$4200 income #1 - mine
$900 income #2 (approx, varies a bit month to month) - his
$1200 income #3 (also variable, this one by season) - his
Monthly expenses:
$750 rent
$150 car insurance (going to reduce this by a lot after insurance covers a repair being made this weekend)
$250 gasoline
$450-500 train travel
$380 gas & electric
$50 Internet
$55 directv (I know... We're trapped in a contract for another year, at which time we'll be replacing this with a $9 Netflix bill)
$280 groceries
$160 eating out
$150 pets
$25 personal care items
$25 misc household items (example: I used this money this month to replace a broken coffee pot... I like to keep this in the budget because those little things always creep in)
$316 minimum student loan payments
$200 mom loan
_________
=3241-3291 basic spending
That puts us pretty close to 50% savings (where I'd like to be), and at a glance it looks easy to get the budget where it needs to be...
But...
Some curveballs:
- Right now we don't have health insurance. I will get health insurance through my job starting later this year. Cost/month $910 for the two of us. We don't have the savings to make a cheaper, high-deductible plan a good option for us. That's a big chunk of our money though that would be available for savings. For me only it's around $300... Is there a way to get just him insured for less than $600 a month? We are both healthy. We are active and eat a very healthy vegetarian diet.
- gasoline can only be reduced by a minimal amount right now. The vast bulk of that expense is necessary work related driving for income #3. (Dog walking- he has to drive house to house.)
- to reduce gasoline use, I suggested a scooter for him to drive to work and save us a huge amount of money (probably 1/3 of what it is now). He is NOT INTERESTED. He's paranoid that it would be dangerous. I would be okay with getting rid of the car completely and then also being able to save a ton off of insurance too, but like I said, he is not having it.
- to buy a new (used) fuel efficient car that he would deem "Safe enough" (to be a little fair... He does A LOT of driving...) we'd probably be looking in the $5000-$8000 range and we just don't have the money yet. The car is old and when we do end up replacing it, we'll definitely look for something more fuel efficient, but replacing it immediately doesn't seem like an option. Open to suggestions here.
- we want him to keep the dog walking job that requires all the driving because it's good income, especially in the summer, plus it's fun. He gets to be outside all day walking dogs.
- we use the car very infrequently for personal things. We can walk almost anywhere, and I'm working on convincing Mr. Evakatharina that biking would be a good way for us to get around town, specifically to the grocery store.
- train travel expense is another one that looks like an easy target, but isn't. I take the amtrak from Virginia to New York every other week for my job. Some months the cost is even lower, around $400, but the cost varies seasonally so best to leave a safety margin to account for high prices around the holidays.
- I want to keep my job (income #1) for a variety of reasons: 1) it is our largest and most reliable income by a lot, 2) only job that we can get benefits through, 3) the pay is easy more than double what I would get at any other job with my current skill set, (if i could even find another job!) 4) this is the big one- I only work every other week!!!! It is an awesome schedule!!!!!! (I am employed as a live-in nanny, but there's a second nanny who alternates weeks with me).
- long term caveat: I am a nanny. The kid I am nanny for is not going to always be a kid. When she's old enough, I'm going to need a new job, and I might have to go to school for a couple years to get some job skills. No other nanny job is going to be even remotely comparable pay either.
- we're currently eating out 1-2x per week. I would be fine with dinners out as a special treat maybe once a month, but the Mr. eats out with his mom and considers those times to be "special traditions". Sometimes I convince him to invite her over to eat at our house instead, but he's pretty inflexible here. He's reading the responses to this though so if someone who isn't me suggests it he might be more likely to listen. ;)
- I'm very open to ideas for upping our income. I have A LOT of free time and I'm working on some projects that might eventually make me a little money, but maybe not (I have an etsy shop, and I've just started a design blog). The Mr. has only little free time, but he has writing and copy editing skills. I think he could make money as a freelance writer and/or copy editor. I have casually suggested, but his reaction is "oh yeah... That might be nice..." (no intent to act on it)
- I get a $10,000 Christmas bonus each year, more like $6000 after taxes but its something.
- we have tried to lower the pet budget, but with 2 cats and 1 dog, we've been unsuccessful. Short of switching them to bargain basement food (this is not something I am willing to do AT ALL. Non-negotiable for me to feed them well.) it is very difficult to spend less than this after food, litter, flea prevention, and yearly vet check-ups. We do all their grooming at home and I love them very, very much.
AND THEN!
Once the budget is ironed out.... What do we do with our extra money, and in what order??? I have some ideas, but I'm struggling to get the big picture and pull together A Plan. What I want to do:
- pay off student loans
- open Roth IRAs for each of us
- start investing in index funds
- save for a new car
- save for a house down payment
- emergency fund- we'd like to keep around $3000 cash in the bank- we have credit cards as backup if we really need it. We're more inclined to do things with extra money than let it sit.
- anything else We should be thinking about???
We're both going to be reading the responses! Hah hopefully at least one person got through this whole post and will take a minute to offer some advice! :)