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My wife and I spent 5500 last month

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dxkj

Lifer
I thought I would toss this out since every once in a while I get some good financial advice from this board.

Married. I work 170 miles round trip from work, make 46k a year + 10% bonus (so 50.6k total) Wife is in grad school, 70 miles round trip, just started, and makes about 10k gross, plus paid tuition at her school (assistanceship/fellowship type thing) We just moved into a house recently, put down 10%, have 2 car loans (2nd one is due to us moving far away from work and needing something reliable)



Currently Financed:
House- 135k @ 5.5%
Car1- 9k left @ 3.9% (3 years)
Car2- 17.8k @ 6.25% (5 years)
School loans- ~ 40k @ 3% (deferred)
School loans- 10k @ 5% (deferred for now, mine due soon)
Credit card- NONE financed, i just use them as a tool, cash back, miles, etc

Assets:
~ 7k in XoM stock
~ 13k in savings accounts

Monthly

Mortgage Payment----$765
Property Tax-----------$250
Home Insurance-------$100
PMI----------------------$50
Car insurance----------$180
Utilities-----------------$275
Car Gasonline+toll----$500
Bryan School Loan-----$183
Car Loan1--------------$293
Car Loan2--------------$345
Cable/Internet---------$100
Grocerie----------------$250
Cellphone+Vonage----$53
Dinner/Lunches out----$150
Entertainment----------$50

Total $3544

(2000 one time payment for down payment on a car)

Combined Monthly income is about $4100 NET if you count my semi annual bonus spread across the months (which i can manage)

So we are planning on putting some of our savings to paying off/ahead on the 6.25% car loan, but we also plan on keeping a chunk of that for emergency budget...

We have some 401k and Retirement savings. My company does not match 401k, but I am 33% vested each year until Fully vested after 3 years. I have currently 0% going into 401k because of how tight we are with my wife now going to grad school.


Any advice from anyone on this, besides the obvious (get a better job, closer to work). Ive done the math and

House- $1540 for utilities/mortgage
Cars- $1318 (neccessary evil at this point)


 
paying down the car loans is good. 5 year loans on cars should be avoided. if you can't pay cash for cars, then do 3 years max and try to pay them off early with bonues/side jobs.

stay away from CC debt. don't pay the SL's down until other debts are gone (like the car payments), as some SL interest is deductible for most people

you are better off than the vast majority. you are fine

what is the question?
 
Your auto and homeowner's insurance is awfully high. You live WAY too far from where you work. Why 2 new cars instead of used? Are you home enough to make the cable/internet worth that much money?
 
I'm 21 and still live at home. My parent's have good, long term jobs. I have a job I've been at for 4 years. My only debt is a $2,000 credit card bill, $15,000 of which is for my college tuition.

I will likely leave my job to finish my last year of college and my parents will support me even more.
 
Originally posted by: Bryophyte
Your auto and homeowner's insurance is awfully high. You live WAY too far from where you work. Why 2 new cars instead of used? Are you home enough to make the cable/internet worth that much money?
Click to expand...

The first car is 1 year 3 months old now

The second car I got new because I was stupid 🙂.... I wanted a car with 100k bumper to bumper warranty, and because of the 170 mile commute i didnt want a used car that could be unreliable... overall it was not my finest decision, but I have a car i REALLY like, it gets better mileage than the beater i was driving that kept breaking down, and I got it for 4500 below sticker price, so I at least dont get socked horribly on the first year depreciation


Car insurance is 180 a month for 2 cars with full everything, and im 23, wife is 24


I might be telecommuting 1 day a week so the phone./ccable is a neccesity, and as for cable, we use DVR and make the most of the time we have when we do watch tv ;P
 
Originally posted by: spidey07
start contributing to your 401k immediately

the sooner you start the better.
Click to expand...

Seems like I dont have much room to play with currently though? Im only 300-500 above my budget in income monthly
 
Originally posted by: Pantoot
My company does not match 401k, but I am 33% vested each year until Fully vested after 3 years.
Click to expand...

If they don't match the 401k, what is the vesting schedule for?
Click to expand...

They explained it as such...


They take my yearly salary, and stick it into a money market or mutual fund or something, and whatever they clear on that each year they put into an account for me??


Im really not sure how it works.
 
I wouldn't pay down anything. You're barely getting by as is. I'm very impressed with how frugal you are though. Congrats to you and your spouse.
 
$50,000 in student loans and you're only making 50 grand a year? Wow, that's insane. How did that happen? We ended up with about 20k in student loans from 6 years of my husband being in school (through MSEE), and that was for a family of 4 with very little outside income through those 6 years.
 
Originally posted by: dxkj
Originally posted by: spidey07
start contributing to your 401k immediately

the sooner you start the better.
Click to expand...

Seems like I dont have much room to play with currently though? Im only 300-500 above my budget in income monthly
Click to expand...

well I think you are pretty far overstretched. If you can't contribute to a 401k then that is a clear indicator.

A home will need certain things (furniture, repairs, lawncare, big bills in the winter) so I didn't see any mention of maintaining the house.

I'm just saying be careful before making radical changes. Especially if you have just been in the house 1 month.
 
Originally posted by: Bryophyte
$50,000 in student loans and you're only making 50 grand a year? Wow, that's insane. How did that happen? We ended up with about 20k in student loans from 6 years of my husband being in school (through MSEE), and that was for a family of 4 with very little outside income through those 6 years.
Click to expand...

My wife and I went to the same school, 24k a year.. so thats


24k*4 + 24k*4 = 192k for our combined school costs


Between scholarships (we were both smart) work study, paying off during school, and she got some help from her parents, its about 50k.... 142k less than it cost... I think that is a pretty decent amount 🙂
 
Originally posted by: Naustica
I wouldn't pay down anything. You're barely getting by as is. I'm very impressed with how frugal you are though. Congrats to you and your spouse.
Click to expand...

We used to be more frugal.... used to not have any car payment, and lived each of us, 5 miles from work... budget was $2200 a month then
 
Refinancing the Car#2 would save you about $15 bucks a month, if you went with someone like PenFed. Over 60 months that would be an extra $900.

"Donate" to the national military family association for eligibility.

4.5% APR* Up to 60 months $10,000 - $100,000

[Edit: I would also watch your house's equity very closely, and either refi or use a home equity to pay down the PMI asap. (assuming that mortgage rates don't go crazy.) At least you can deduct the interest on a home equity loan, the PMI is just wasting money. ]
 
Originally posted by: spidey07
Originally posted by: dxkj
Originally posted by: spidey07
start contributing to your 401k immediately

the sooner you start the better.
Click to expand...

Seems like I dont have much room to play with currently though? Im only 300-500 above my budget in income monthly
Click to expand...

well I think you are pretty far overstretched. If you can't contribute to a 401k then that is a clear indicator.

A home will need certain things (furniture, repairs, lawncare, big bills in the winter) so I didn't see any mention of maintaining the house.

I'm just saying be careful before making radical changes. Especially if you have just been in the house 1 month.
Click to expand...

Thats why we are keeping some of that 20k for emergency (The XoM isnt a retirement fund, its just there to be cashed out whenever)

I could contribute 200-300 to a 401k, I just fear for breathing room 🙂 It is also very likely that my wife will be making more than I have estimated for her, will just depend. We are good on furniture, we own all we need for lawn care, I have calculated the gas to a verage out for winter (its currently 10 dollars a month)

The house is older but recently updated, if things come along that need money, thats what the emergency funds are for... and that is also why im tempted to not put a TON of money towards the car loan
 
Income > expenses, and debt is not outrageous. Thus you are better off than most Americans.

Some numbers stick out like a sore thumb though. They may be justified (I don't know your driving record for example). I'll just point out what looks odd.

1) Home Insurance. That is about double what I pay for roughly the same house value. Are you paying for more than you need on the home insurance? What about a higher deductible (I assume it is low giving you expensive insurance costs, correct me if I'm wrong). You seem to be able to easilly afford a $1000 bill if it came, so a $1000 deductible seems about right for you.

2) PMI. While it isn't too bad, can you see if you can get rid of it? For example, suppose you put $5000 into Car#2. You'd save $27 a month in interest on that car loan. But if you put $5000 into your house principal, you'd save $23 a month in interest and might just also save $50 a month in PMI. Total: $73 a month in savings. If this is possible, it is by far the best return on investment I see in your situation.

3) Car insurance. Again it seems a tad high. You might consider a higher deductible. Or shop around if you and your wife have good driving records. $150 a month seems more reasonable.

4) Utilities. That seems really high. Is there a reason it is $275/month?

5) Eating out/entertainment. Spend more. You are doing well off, and so you should enjoy yourself. At <5% of your total income, you can spend more here and not even notice it on your budget yet you'll enjoy life so much more.

6) If you don't get employer matching, forget the 401k. With stocks at a 4-5 year high, the chance of beating 6.25% (car #2) in the next year is slim. You are better off with a guaranteed 6.25% than a gamble that probably won't pay much more in the best case senerio.

7) What is that XoM stock? Do you expect >6.25% returns in the next year? If not, sell it, pay off Car#2, then buy XoM back later.

8) $13k cash. Sure it is good to have an emergency fund. But I think you can survive with 2 months expenses if you think you have a stable job. Thus, $7k in savings will do you fine for now until you are less in debt. That frees up $6k for debt reduction.
 
Originally posted by: dullard
Income > expenses, and debt is not outrageous. Thus you are better off than most Americans.

Some numbers stick out like a sore thumb though. They may be justified (I don't know your driving record for example). I'll just point out what looks odd.

1) Home Insurance. That is about double what I pay for roughly the same house value. Are you paying for more than you need on the home insurance? What about a higher deductible (I assume it is low giving you expensive insurance costs, correct me if I'm wrong). You seem to be able to easilly afford a $1000 bill if it came, so a $1000 deductible seems about right for you.

2) PMI. While it isn't too bad, can you see if you can get rid of it? For example, suppose you put $5000 into Car#2. You'd save $27 a month in interest on that car loan. But if you put $5000 into your house principal, you'd save $23 a month in interest and might just also save $50 a month in PMI. Total: $73 a month in savings. If this is possible, it is by far the best return on investment I see in your situation.

3) Car insurance. Again it seems a tad high. You might consider a higher deductible. Or shop around if you and your wife have good driving records. $150 a month seems more reasonable.

4) Utilities. That seems really high. Is there a reason it is $275/month?

5) Eating out/entertainment. Spend more. You are doing well off, and so you should enjoy yourself. At <5% of your total income, you can spend more here and not even notice it on your budget yet you'll enjoy life so much more.

6) If you don't get employer matching, forget the 401k. With stocks at a 4-5 year high, the chance of beating 6.25% (car #2) in the next year is slim. You are better off with a guaranteed 6.25% than a gamble that probably won't pay much more in the best case senerio.

7) What is that XoM stock? Do you expect >6.25% returns in the next year? If not, sell it, pay off Car#2, then buy XoM back later.

8) $13k cash. Sure it is good to have an emergency fund. But I think you can survive with 2 months expenses if you think you have a stable job. Thus, $7k in savings will do you fine for now until you are less in debt. That frees up $6k for debt reduction.
Click to expand...

1) That covers all possible damage, loss, eating, of my wife's 12k engagement ring that she wears daily

2) Good point! Thank you🙂 I never thought of that, and that is the reason why I made this post!

3) 2004 and 2005 car, with all coverage, but I agree, I plan on shopping again and seeing if I can get it down to $150

4) That is estimated because i havent been there long yet
Water/Sewage $50 Gas $75 (averaged out for summer vs winter months)
Electricity $150

5) We used to only spend $50 for eating out a month and entertainment was option, by bumping it up to $150 a month we thought we were splurging 🙂

6) Thats what I was thinking, but I really know very little about that

7) Exxon Mobile, has a 2.x % dividend, and has returned well in the last year, but I was considering this our "emergency money" IE. I could sell the stock if we had an emergency, since it is probably a better return than the 3.3% savings account i am currently in


8) Yeah I was thinking 20k combined (counting XoM) so we would keep at least the XoM in there... Also forget to mention a few other small things that would add up to another 1k or so in savings (too many bank accounts)


Thanks!
 
Originally posted by: Pantoot
Refinancing the Car#2 would save you about $15 bucks a month, if you went with someone like PenFed. Over 60 months that would be an extra $900.

"Donate" to the national military family association for eligibility.

4.5% APR* Up to 60 months $10,000 - $100,000

[Edit: I would also watch your house's equity very closely, and either refi or use a home equity to pay down the PMI asap. (assuming that mortgage rates don't go crazy.) At least you can deduct the interest on a home equity loan, the PMI is just wasting money. ]
Click to expand...


Yeah, I considered doing a piggy back but I plan on being below the 20% amount within a few years.... assuming the market keeps going how it is.

 
I have the option of refinancing the loan for 5.8% instead of 6.25, but the cost of $160 to refinance eats up all the savings (we were planning on putting 8k more into it,_

ah well
 
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