How can I fine tune my budget? Want to be debt free once again

[surferdude]

Hi all,

here is my budget, I take in $2000 every other two weeks. I'm single and have no family to take care of except now I have a gf as an extra expense.

I'm not balancing my finances correctly to get out of debt.

Credit card 2 is @ 19%, CC 1 and 3 still @ 0% introductory rates.

My plan is to pay of CC 2 first, then CC1 & CC3. Then focus on the car pyt.

 

Your input is greatly appreciated, thank you!

 

Surferdude

 

adjustment deduct $11,528.11 doesn't include my $8,613.34 savings.

[jv01]

Cut your savings and apply it to credit card #2. Actually if you really do have $8600 in savings I would pay off CC2 with it right now.

 

$80 for a gym? Unless you live in an urban area of a major city and it's a NICE gym you can do better. 24 Hour Fitness is $30/month for a Sport membership and not much more for Super Sport.

 

What's the difference between "Time Warner" and "Cable/Internet"?

[surferdude]

Cut your savings and apply it to credit card #2. Actually if you really do have $8600 in savings I would pay off CC2 with it right now.

 

$80 for a gym? Unless you live in an urban area of a major city and it's a NICE gym you can do better. 24 Hour Fitness is $30/month for a Sport membership and not much more for Super Sport.

 

What's the difference between "Time Warner" and "Cable/Internet"?

 

 

 

- My goal is to reach 10k in savings then I will use the savings allowance for CC pyts. But JV01 you made me realize I'm loosing money on CC2 with the 19% so I will use my savings to pay off CC2.

 

- $80 is for my Martial Arts training it is my passion however, I will cut it off soon and go back to my $30 regular gym.

 

- "What's the difference between "Time Warner" and "Cable/Internet"?" thank you for pointing this double expense. I will adjust my balance sheet.

 

jv01 thank you for the reply.

[jv01]

- My goal is to reach 10k in savings then I will use the savings allowance for CC pyts. But JV01 you made me realize I'm loosing money on CC2 with the 19% so I will use my savings to pay off CC2.

 

When do the rates on CC1 and CC3 reset, and what do they reset to? You may want to pay CC3 off as soon as that resets. Also, I presume the minimum on CC1 will go up. Yes, this cuts into savings, but you plow back the CC interest you're not paying every month.

 

Also, as long as you can pay off your CURRENT monthly expenses in full, you want at least one zero-balance card to put those expenses on, so you're not paying interest on them.

 

- $80 is for my Martial Arts training it is my passion however, I will cut it off soon and go back to my $30 regular gym.

 

No problem with that at all, just wanted to make sure it was worth it. My gym membership was actually $90 back in Chicago, but most of the gyms around downtown are rather hoity-toity and that was the going rate.

[surferdude]

- My goal is to reach 10k in savings then I will use the savings allowance for CC pyts. But JV01 you made me realize I'm loosing money on CC2 with the 19% so I will use my savings to pay off CC2.

 

When do the rates on CC1 and CC3 reset, and what do they reset to? You may want to pay CC3 off as soon as that resets. Also, I presume the minimum on CC1 will go up. Yes, this cuts into savings, but you plow back the CC interest you're not paying every month.

 

Also, as long as you can pay off your CURRENT monthly expenses in full, you want at least one zero-balance card to put those expenses on, so you're not paying interest on them.

 

- $80 is for my Martial Arts training it is my passion however, I will cut it off soon and go back to my $30 regular gym.

 

No problem with that at all, just wanted to make sure it was worth it. My gym membership was actually $90 back in Chicago, but most of the gyms around downtown are rather hoity-toity and that was the going rate.

 

CC1 and CC3 reset a year from now. I will pay off CC2 since it's the only one with interest.

[njroadie]

 

I have examined your budget and put it in the “50/30/20” form. The 50/30/20 is a budget style made famous by Liz Weston, and she wrote about it in her book “The 10 Commandments of Money: Survive and Thrive in the New Economy.” I would urge you to read this book as it helped me on the way to financial success. In this budget, 50% of your monthly net income goes to needs, 30% to wants and 20% to savings.

 

The first thing I found upon looking at your budget was that your savings allocation was way too low. Instead of being $800 – 20% of $4000, you saved a mere $150. If you made the following cuts, you could be up to $750.

 

Take the $310 you had “left over” and put it into savings.

 

Go out to eat once less, saving $50.

 

Cut $50 from miscellaneous.

 

Cut $100 from going out.

 

Cut $30 from target supplies.

 

Cut $10 from gifts.

 

Cut $50 from clothing.

 

You duplicated cable on the budget, so this saved $30.

 

 

With all of those cuts combined with the money you were already saving and your extra money, you would be saving $750. This is very close to the ideal 20% number.

 

With this newfound money for savings, open an E*Trade account and put $200 into an IRA monthly. This will give you $2400 in an IRA after one year. Put $200 into a savings account. Pay off $350 of your debts per month and after one year you will have no credit card debt. While paying off your current credit card debt, make no more debt.

 

If you get a raise, don’t spend it. Save the extra money you have or make larger payments on your credit card debt.

 

Under the 50/30/20, your budget should be $2000 musts. Under my categorization you have $2300. Attempt to cut this extra $300. Perhaps switch to wearing glasses instead of contacts, saving $70.

 

Your wants should be 30%, $1200. You are doing well here, and only have $1210 in wants – before the cuts. However, I found you were spending too much on going out, clothing and miscellaneous. With the proposed cuts, above, you should be under the 30% mark.

 

As I have said previously, you are not saving enough. But if you try hard to live frugally and follow a strict budget, you should be able to save much more money.

 

To summarize, after one year following the 50/30/20 budget you will have:

 

Credit cards paid off and an extra $100 due to not making the payments.

 

$2400 more in savings

 

An IRA worth $2400 – may be slightly more or less depending on the market

 

 

Good luck!

 

 

[seattleguy1968]

Sell the car, if you can - get a used $2,000 car instead.

That way, save the monthly car payment and reduce your car insurance down to liability-only.

[Beachgal]

I have examined your budget and put it in the “50/30/20” form. The 50/30/20 is a budget style made famous by Liz Weston, and she wrote about it in her book “The 10 Commandments of Money: Survive and Thrive in the New Economy.” I would urge you to read this book as it helped me on the way to financial success. In this budget, 50% of your monthly net income goes to needs, 30% to wants and 20% to savings.

 

The first thing I found upon looking at your budget was that your savings allocation was way too low. Instead of being $800 – 20% of $4000, you saved a mere $150. If you made the following cuts, you could be up to $750.

 

Take the $310 you had “left over” and put it into savings.

 

Go out to eat once less, saving $50.

 

Cut $50 from miscellaneous.

 

Cut $100 from going out.

 

Cut $30 from target supplies.

 

Cut $10 from gifts.

 

Cut $50 from clothing.

 

You duplicated cable on the budget, so this saved $30.

 

 

 

With all of those cuts combined with the money you were already saving and your extra money, you would be saving $750. This is very close to the ideal 20% number.

 

With this newfound money for savings, open an E*Trade account and put $200 into an IRA monthly. This will give you $2400 in an IRA after one year. Put $200 into a savings account. Pay off $350 of your debts per month and after one year you will have no credit card debt. While paying off your current credit card debt, make no more debt.

 

If you get a raise, don’t spend it. Save the extra money you have or make larger payments on your credit card debt.

 

Under the 50/30/20, your budget should be $2000 musts. Under my categorization you have $2300. Attempt to cut this extra $300. Perhaps switch to wearing glasses instead of contacts, saving $70.

 

Your wants should be 30%, $1200. You are doing well here, and only have $1210 in wants – before the cuts. However, I found you were spending too much on going out, clothing and miscellaneous. With the proposed cuts, above, you should be under the 30% mark.

 

As I have said previously, you are not saving enough. But if you try hard to live frugally and follow a strict budget, you should be able to save much more money.

 

To summarize, after one year following the 50/30/20 budget you will have:

 

Credit cards paid off and an extra $100 due to not making the payments.

 

$2400 more in savings

 

An IRA worth $2400 – may be slightly more or less depending on the market

 

 

 

Good luck!

 

I'm not familiar with Liz Weston's book specifically, but I'm a big fan of All You're Worth by Elizabeth Warren (she established the Consumer Financial Protection Bureau). What's interesting is that Warren's book also has 50-30-20 recommendations. Since I have not read the Weston book, I'm not certain if they're identical but they sound similar.

 

General comment: The recommended allocations are what to shoot for, but often cannot be immediately implemented if someone is in substantial debt--not the case with the OP, however. Ideally, budget planning starts with the first paycheck out of school.

 

I disagree with posters who say to rob savings to pay for the current CC debt. Not paying credit cards in full each month, and then not having enough savings or some kind of substantial emergency fund is what often leads to disaster when life happens--job loss primarily, but other circumstances also. Always, always live somewhat below your means and pay yourself first (savings, investments). I've never heard anyone of any age say "I've got too much money in savings and investments." That's just my opinion, however.

 

I very much like the advice of njroadie. Follow this and you'll be in great shape.

 

Note: I JUST NOTICED that this thread is very old! However, I'm still posting this in hopes that it might help someone else.

[wooper]

Old, but a lot of usefull information. Thanks for bumping.