make my budget

help me make my budget!

help me make my budget!

Way back when, long before I started this blog, I thought I knew personal finance.  I thought I had a pretty good grasp on it.  I do, but, actually after starting this thing, I realized that a whole lot of people know a whole lot more than me.  And that’s a pretty gnarly (albeit humbling) realization.  So, with your help, I’ve decided to put that collective knowledge to good use.  That’s right- I’m giving you all a chance, and hoping you will help me make my budget.  The thing is, my budget doesn’t look too bad right now.  But, it can look better.  So, if you’re willing, I would love your help in traveling down that yellow brick road to wealth (more like a Wizard of Oz reference, with wealth being the wizard.  Not a Beatles reference- IMHO, they’re over-rated).  I don’t want any detours on the road to riches, so guides are welcome.  If you’re game, you can comment on what you think my budget should look like, write a post on your own blog, email me (and I’ll post it on the sequel to this), tweet it to me (if it will fit) or send it via facebook.  You can make a small part of it, or all of it.  Tell me how much to contribute to my Roth, or 401(k), or where to park my savings.  What I should keep, and what I should cut.  It’s up to you.  I’m in your hands here.  So, without further ado, here are my household’s vital stats.

  • Income: $82,867.20.  This is pre-tax, and likely with bonuses, overtime, and side hustles, closer to $85-90k.  Tennessee does not have any income tax, so all taxes paid are Federal.
  • Mortgage: $434 monthly.  Our outstanding total is about $42,000.
  • Dogs: 2 of them.  We have two dogs, and prefer not to feed them any food with by-products, and recently began feeding them raw for about $80/month.
  • Car Insurance: $750 annually.  We make semi-annual payments on this, in March and September.
  • Credit Cards: $0.  Boo-yah!  I love writing that we have no credit card debt.
  • Student Loans: $0.  See above.
  • Utilities: $135 monthly (high end estimate).  This includes water, sewer, trash, and electric.  It’s lower during the summer, and would be lower except for the nasty cold winter we’ve had.
  • Internet: $55 monthly.  Kinda need internet.
  • Entertainment: $16 monthly.  Netflix and Hulu+ are the culprits here.
  • Transportation: $180 monthly.  This is about the minimum of what we need to spend on gas for transportation costs to and from work and school, with gas costing about $3.50/gallon.
  • Food: $350.  You can play with the food budget.  Maybe we spend less, or maybe more?  We like organics, if you’re interested.  This includes all meals, eating out, which we do rarely, and cooking at home.

So, there you have it.  Make my budget.  How much should we each contribute to our employer sponsored 401(k) plans?  We both have to contribute a minimum of 5% to get the company match.  How much should we be putting into savings?  How much should we be contributing to a Roth IRA, and how should we do it?  Weekly, monthly, quarterly, annually?  Where should we keep our savings?  How much should be in our emergency fund?

Some things to keep in mind:

  • Sales tax is about 9.25% here in Nashville.
  • We are planning on moving in 2 years and purchasing a home.
  • I would prefer to have some liquidity, were the market to crash.  That’s a sale I would like to take advantage of.
  • We enjoy traveling.

That’s it.  Have at it.  Thanks for all of your help!

Let me know how you would make my budget!

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Comments

  1. Interesting concept! You have a lot of income left over because your mortgage is so low – $80,000 or even more. I would increase entertainment a bit, I’m sure you have to spend some on clothes, gifts, etc. You could probably max out your retirement accounts, still have some left over to invest and go on a trip every year.
    Daisy @ Add Vodka recently posted…What I Watched, Read, and Listened To: Food EditionMy Profile

    • We do have some entertainment cut out for our budget, but we’re pretty big homebodies, so it doesn’t take too much to keep us entertained. I’ve been looking more at maxing out the retirement accounts, or at least contributing around $35k to between both the Roth IRAs and the 401(k)s. And, if done right, a trip can be made on the cheap without feeling too cheap! Thanks for the feedback Daisy!

  2. I could come up with a breakdown, but ultimately, you are the best judge of how your money should be spent. Saving for retirement is important, but then so is enjoying your life today.
    Moneycone recently posted…10 Must-Have Tools For The HomeownerMy Profile

  3. Okay, so I don’t know much about 401ks, but I’d definitely split your remaining income between your savings towards a downpayment and maxing out your IRA. Maybe not 50/50, but whatever makes sense to you! You’ve got an awesome mortgage payment and congrats on having no consumer debt!
    Mintly @ MintlyBlog recently posted…My Favorite Tool for Debt ManagementMy Profile

  4. I’m not sure I’m the best person to advise you on this, but I’ll give it a go. Note that I’m Canadian, so I only know the overall categories of your retirement vehicles, not the specifics.

    Your expenses are really low, which is awesome, especially with your salaries being able to mostly stay in your pockets (because of the low taxes). I think that I’d just put the 5% in your 401k for the company match, and try to max out your Roth (assuming they’re similar to the RRSP and TFSA here in Canada). That way your tax implications are lower in the future.

    I also know that Roth contribution room doesn’t roll over, so trying to max those each year could be advantageous to you. So $11,000 for two maxed out Roths, plus 5% to employer (around $4-5,000) and whatever their match is. Then you can slowly work at buying into the market within your 401k as the time goes on, but this could also give you some liquidity for the potential of a downpayment in the future.

    So I guess if it was me I would do this: Get your EF number (I’d saying 10k cause it’s just so easy to remember and would cover you easily for over 6 months) and give yourself the year (if you’re patient). Do the same thing for your Roth at 5500/12 x 2 ($458 per month x 2), and just start plugging away at it.

    If my understanding of the retirement vehicles doesn’t make sense, don’t shoot me… I was trying :)
    Alicia recently posted…Handling Criticism.My Profile

  5. Wow, your mortgage is NOTHING. Jealous!
    Stefanie @ The Broke and Beautiful Life recently posted…Four Reasons Races Make Better Investments than Gym Memberships.My Profile

  6. I think you left a digit off of your mortgage. That’s some low cost of living. Max out all your retirement accounts with a mix of stocks and vanguard bond fund.. BND To Take Advantage Of Sales.
    charles@gettingarichlife.com recently posted…The Advantages Of YOLO In Your FinancesMy Profile

  7. Looks like I need to do something like this to keep my expenses in check.
    Ken Atodahl recently posted…simo fxMy Profile

  8. Ooohhh, my favorite kind of fun!

    Ok, my thoughts:

    Income: Killin’ it!
    Mortgage” O. M G. ! Nice work.
    Internet: Call around. We’re paying $40 for life because we lowered the speed for 3Mbps DL.
    Entertainment: $16 is cheap, but not as cheap as $0. We follow shows using Hulu.com and show websites and don’t watch too many movies (though you can get Redbox coupons for free movies all the time)
    Everything else: Looks good.

    Big gaping hole in your plan: You don’t have a goal.

    Budget advice is hollow without a list of your priorities and goals. I apologize if that is explicitly stated elsewhere, but if I don’t know what you want, how can I tell you where to put your money?

    Assuming you take home about $5k a month and only spend $1,300, you can save almost 75% of your income. According to MMM’s post here:

    http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/

    if you stay at this rate and don’t expect a lifestyle increase, you can retire in as little as 7 years (assuming you follow this stock series and invest well: http://jlcollinsnh.com/stock-series/ )

    But if you have other goals, then put your money there. You have enough to max out all pre-tax retirement accounts and then some, so you’re set. My only change would be to invest in a Traditional IRA (not roth) for the tax savings now, as in retirement, if you’re spending is still this low, your tax rate with be MUCH lower. But Roth isn’t a horrible option either if you want to leverage the bet that taxes may be higher later. Who knows.

    Now just figure out what your big goals are :)

    Thanks for the fun budget exercise.
    Jacob recently posted…Used Cars Are Not Money Pits. New Cars Are.My Profile

    • Thanks for the links Jacob. You’re totally right, I don’t have a real goal, outside of saving for the down payment on our next home, but to be honest, we are pretty much there on that one. I’ve lately been giving a lot of thought to early retirement, so I do appreciate you sharing. We contribute to both employer sponsored 401(k) plans as well as the Roth IRAs. Part of that reason is that we don’t have a real plan for retirement, so I need to firm one up.

  9. HowIsItPossible says:

    what about mobile phone costs?

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  1. […] the interweb.  I only managed to get two posts up this week- Monday I asked for some help in making my new budget (since Mrs. Impersonal Finance got a pretty big raise) and Wednesday she wrote about how we used to […]

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