Theoretical Finances.. help me out!

[zCypher]

Right now I'm still in school (obviously, since I posted my schedule in a previous thread), but in the near future I won't be, and I'm thinking ahead right now. In about two years if I go with the plan I have, I will be starting at $35k/year salary and depending on how much I like my field I will consider taking some certifications to add on to it, but that's all ifs and buts for now. What i'm thinking about, is what life would be like with KahlanAmnell and I's combined salaries when we're both out of school and living on our own (if things go that way.. ). I like to contemplate/ponder things a lot and this just happened to be crossing my mind, so I decided to bust out the old calculator.

What I want YOUR help for is seeing if I've missed anything important as far as expenses are concerned? I want to be as prepared as possible when the time comes for moving out, living on my own, finances, etc. I'm assuming KahlanAmnell will make $50k/year with a university degree. She may make less and then move up after some time, or start there, or higher.. I don't know, but i'm just using that figure so I can have a ballpark idea of what things could be like given that scenario. So with a total yearly income of $85k, I wanted to minus the taxes as well. $50k/year would be taxed more than $35k right? Would it be fair to assume $50k would be reduced to $40k and $35k reduced to $30k? Or would it be worse? more like $50k down to $35k and $35k down to $25k?

In any case, I want to work everything down to a monthly level so I can subtract all the monthly expenses and see what kind of tangible monthly income we would be left with.

Here are the things I've subtracted so far:
Assuming we are at $5833/month :
$1200 month rent - fair assumption?
$1200 month for two car payments - fair?
$200 month for heating - fair?
$800 per month for food for two people - generous/fair assumption?
$30/month phone, $50/month + $50/month for two cell phones and $75/month for HIGH speed net - fair?
$208/month for car insurance for both cars - fair?
$416 for car registration/plates/etc - fair?

I think this leaves us at $1412 left per month.

What do you think and what did I miss other than furnishing the apt/house?

 

[Scarpozzi]

To be honest with you, you're figuring this stuff out way too far in advance. Plus, you're assuming that your lifestyle is going to start out at a certain level. If I were you, I'd take things slow and not assume that you'll be spending that much cash on car payments and rent. I know a lot of people that have gotten in over their heads these days because the job market has too many instabilities. Just wait and see where you are in a year. Remember that you should have 6 months of your living expenses...including rent saved up in the bank, just in case.

 

[zCypher]

Originally posted by: Scarpozzi
To be honest with you, you're figuring this stuff out way too far in advance. Plus, you're assuming that your lifestyle is going to start out at a certain level. If I were you, I'd take things slow and not assume that you'll be spending that much cash on car payments and rent. I know a lot of people that have gotten in over their heads these days because the job market has too many instabilities. Just wait and see where you are in a year. Remember that you should have 6 months of your living expenses...including rent saved up in the bank, just in case.

Thanks for the input, Scarpozzi. I do agree with you that I'm figuring this stuff out way too far in advance, but like I said I just like pondering/contemplating and I like to have an idea of how things could be, even if they don't turn out that way. This is more just for fun than anything else at this point.

I assumed that much cash on car payments and rent to be safe and to see how much money we'd have in the worst case scenario, so then getting a car and rent payment 1/4 of that would be a huge bonus and there'd be plenty of money to throw around and/or save up.

 

[UltraQuiet]

I agree with Scarpozzi but I will say two things 1. I think your tax burden may be a little low and 2. WHERE IN THE NAME OF ALL THAT IS HOLY IS THE SAVINGS PLAN??? Max out whatever savings/investment plan your employer offers. Jesus Tap Dancing Christ I have to tell you kids everything.

 

[Mister T]

ditto...

max the 401k's and Roth IRA's buddy....

and forget the 600/month 3 series

 

[zCypher]

Originally posted by: DaveSohmer
I agree with Scarpozzi but I will say two things 1. I think your tax burden may be a little low and 2. WHERE IN THE NAME OF ALL THAT IS HOLY IS THE SAVINGS PLAN??? Max out whatever savings/investment plan your employer offers. Jesus Tap Dancing Christ I have to tell you kids everything.

LOL DaveSohmer... I just wanted to see what income would be left after all EXPENSES! I DEFINITELY want to save moula! And I have no idea what savings/investment plan my employer at the time in the future will have! I won't be employed by who I am now, so I can't say! Right now all I have is 4% vacation pay, which, at working part time, is very low.

But if I have $1412 of extra tangible income, couldn't I save $800/month or more, invest some, do whatever.. stuff like that? Obviously I'd research the options in more detail when I know how much money I'll be dealing with.

Originally posted by: Mister T
ditto...

max the 401k's and Roth IRA's buddy....

and forget the 600/month 3 series

Contrary to what my post may have mislead some of you to believe, I would not jump on to buying an expensive BMW as my first real automotive investment. Bimmers don't really do it for me, but I'd want an actual affordable/reliable car as my first car. What I'd probably do is buy a honda/nissan/toyota as a daily driver and buy an old muscle car and fix it up as a hobby.

 

[Zenmervolt]

Currently about 50% of your income goes towards some sort of tax. Most of that is either sales tax or some sort of hidden tax (like the gasoline tax) though so I think your estimates for after-tax income are in the right ballpark at 40k and 30k.

ZV

 

[RalphWiggum]

Yah, I think you are trying to figure out things too far in advance. Its a good thing I guess, but so much can change that applying numbers now are almsot meaningless. You assumed that both of you would instantly have jobs, that is a pretty big assumption I think... But, I'll try to help you out with some things oyu missed.

50k would be reduced to closer to 35k than 40k. And I think 35k would drop to around 28k.

You forgot car gas costs, other utilities, household items (toilet paper, towels, trash bags), health insurance if you are going to need it, homeowners insurance maybe... Repaying any students loans if needed...

Oh yah and you forgot to include "fun", which is quite priceless..

As for rent, where do you live and whats the normal price for housing? What kind of cars are you planning on getting? You also need to remember that when you first rent an apt, you need to drop a security deposit, and usually the first and last month of rent all at the same time. That's about all I can think of for now... Have fun.

 

[radioouman]

Let's see....
Assume that 1/3 of your gross income goes to taxes. Then you'll both want to contribute toward your company 401k's if that is an option. Otherwise, you'll want to put money away each month.I think that starting out at $50k/year is a very generous. I graduated in engineering, and didn't start out there. What the heck... I started at $42k, and graduated in May. I had one of the highest offers right out of college.

My guess is that the two of you will start out around $80k/year if you are lucky and both have decent jobs in decent paying fields. 24k of that will go to taxes. That leaves $56 per year, or $4667 per month. That just about eats up the remainder of your $1400...

Now I think that you are looking at this way too early also. Be flexible later on, and be responsible with your money, and it will all work out fine.

Oh ya. Take 10% of the money that you bring home and give it to yourself. You'll want to buy everything once you are making money, so limit yourself to 10%. That's important.

 

[zCypher]

Originally posted by: RalphWiggum
Yah, I think you are trying to figure out things too far in advance. Its a good thing I guess, but so much can change that applying numbers now are almsot meaningless. You assumed that both of you would instantly have jobs, that is a pretty big assumption I think... But, I'll try to help you out with some things oyu missed.

50k would be reduced to closer to 35k than 40k. And I think 35k would drop to around 28k.

You forgot car gas costs, other utilities, household items (toilet paper, towels, trash bags), health insurance if you are going to need it, homeowners insurance maybe... Repaying any students loans if needed...

Oh yah and you forgot to include "fun", which is quite priceless..

As for rent, where do you live and whats the normal price for housing? What kind of cars are you planning on getting? You also need to remember that when you first rent an apt, you need to drop a security deposit, and usually the first and last month of rent all at the same time. That's about all I can think of for now... Have fun.

Thanks RalphWiggum. I did fail to list gasoline costs although I do know about it. It's actually pretty expensive here right now at over 80 cents per litre. I'm assuming most household items that you mentioned won't be a massive expense. As for rent, where I live well it kind of varies. The house I live in now is worth over $260k canadian (yes I live with my parents still), and it's medium-large sized for the area. Residential, close to train/bus transportation, close to college, pretty close to malls, etc. You get a shietty small apartment for $300-400cdn/month, but once you reach $600-800 you get something decent from what I've heard and seen.

 

[Scarpozzi]

Originally posted by: DaveSohmer
I agree with Scarpozzi but I will say two things 1. I think your tax burden may be a little low and 2. WHERE IN THE NAME OF ALL THAT IS HOLY IS THE SAVINGS PLAN??? Max out whatever savings/investment plan your employer offers. Jesus Tap Dancing Christ I have to tell you kids everything.

I'm lucky because my employer actually has a pension plan available that's equal to 10% of my salaried income....and I don't have to pay a dime. Of course, I'm matching that in my savings account as well, so I'm at least putting away a little bit of green for a rainy day.

It's good to plan ahead to an extent. Just keep in mind that starting salaries vary greatly depending on how well you interview and where you live. Look at housing in advance and sacrifice your quality of living to get your feet on the ground. Trust me, it will pay off in the long run. I've got a friend that lives in a so-so house, and drives a crappy car, but he has around $500,000 in the bank just because he's racked up any extra material possessions in the last 10 years... We can all learn from that....but I don't wanna.

 

[BooneRebel]

$1200 month rent - fair assumption?
$1200 month for two car payments - fair?
$200 month for heating - fair?
$800 per month for food for two people - generous/fair assumption?
$30/month phone, $50/month + $50/month for two cell phones and $75/month for HIGH speed net - fair?
$208/month for car insurance for both cars - fair?
$416 for car registration/plates/etc - fair?

You're high on a few things. $600/month per car for two cars? owie. $800/month for food is way high unless you're eating out. Buy groceries and eat in and you can cut that by 75%.

It's good to plan ahead, but the main thing to remember is to live within your means. Stay away from consumer debt. Buying a house is much better than renting in the long run. And if you can afford $14K a year in car payments, why not buy a car outright instead of paying finance charges?

Once you get the housing nailed down, figure out a percentage of the remainder to put away into savings. Pay yourself first, then worry about paying for the other niceties. Your choice of automobile probably has more to do with the flexibility you have with your income than anything else, so choose wisely. Don't strap yourself for cash and you should do great.

 

[zCypher]

<--- is waiting for KahlanAmnell to comment

 

[KahlanAmnell]

Originally posted by: zCypher
<--- is waiting for KahlanAmnell to comment

 

[KahlanAmnell]

Oops, kinda messed up that post. Anyway your assumptions seem to be pretty accurate, although it's hard to try and plan all that out from now. I mean we still have another 3 years till I finish university so that leaves lots of time for fluctuations in rent and such, so we'll just have to see how that works out