Hello all,

I will have all my credit cards paid off by spring for the first time in 10 years ($34K down to ZERO)!!! So I am trying to come up with a budget so I don't put myself back in that situation; I also want to start contributing to my retirement and savings/investment account. My vitals...

AGE: 28
TAKE HOME PAY: $3630 per month

HOUSING Josh's Bills
Mortgage or rent $1,200
Phone $65
Electricity $50
Gas $50
Water and sewer $20
Cable/Internet $100
Waste removal $20

TRANSPORTATION Josh's Bills
Vehicle payment $767
Bus/taxi fare $0
Insurance $85
Licensing $0
Fuel $200

FOOD Josh's Bills
Groceries $200
Dining out $100

PETS Josh's Bills
Food $30
Medical $15
Grooming $0
Toys $10

SAVINGS OR INVESTMENTS Josh's Bills
Retirement account $200
Investment account $200

TOTAL = $3312
LEFTOVER = $318 for entertainment/frivolous spending.

I also usually get back $3000-$4000 on my income taxes and that will be split 50/50 between my savings/ and Roth. So I will be putting ~$4000 towards my Roth per year and ~$4000 into my savings account. Is this too little?

Now this is my projected budget in the Spring; right now I am putting every cent towards my credit cards and renting from a friend of mine for $350 per month. I do own a house ($850 per month), but it is currently rented to cover the mortgage. In the spring when my revolving credit is paid down to zero, I either plan on buying a house or renting a house/condo/townhouse. If I rent, I could probably cut my housing payment down to $1000.

I am just in the prelim stages of putting together this budget and I know I could be ALOT more frugal, but I am trying to be realistic. I could sell my truck since the payment is so high, but it is at 0% financing and once it is paid off in 3 years, should last me for a long long time.. 10-15 years without a vehicle payment.

Any guidance or suggestions are welcome! Thanks!

-Josh

There's your first problem. Every month you're paying interest on your own debts, meanwhile you overpay your taxes by $300 a month and give the government a massive interest free loan? Why on earth would you do that? That's not rational. First thing you need to do, make a realistic estimate of your tax liability for the year, and adjust your withholding accordingly, aiming to pay the correct amount. Just ask your employer for a W-4 form to adjust that.

Based on what you said, if you simply avoid lavishly overpaying your taxes, that'll free up maybe $300 a month, so apply that to your debt, savings, or Roth IRA. Or buy Savings bonds or treasury bonds -- if you are hellbent on doling out your cash to the government, at least be paid interest for it like the Chinese and the Saudis get.

If you don't trust yourself not to spend that extra money, then have it direct-deposited or immediately transferred out of your checking account into the investment account when you get paid.

I understand that, however right now I am just going to leave it as is for 2 reasons. 1) I am on commission and make 75% of my money over the summer; so it is really nice come February to not have to worry about owing and to have the money as a cushion when I am not bring in money home. 2) I don't really get all bent out of shape giving the government a loan, it is worth the piece of mind as I said above.

-Josh

An extremely easy way to get started is to keep making the exact same credit card payments, but into a savings account. Treat it as another bill that must be paid.

Also what is your car loan rate? That payment is astronomical.

Its 0%. I know it is, but if I just pay it off it will last for a long long time. Rather than selling it and getting a 5 year old truck for $500 a month and then trading it in 5 years down the line and getting another payment. I would just like to pay it off and keep it for a long time. Especially since its at 0%. I have been mulling over selling it for a quite a while... but knowing my personality and my truck is kinda of a hobby; I decided to keep it.

Ok, I was just wondering if it was something like 7%.

The good news is; I actually got a great price on it and am not upside down. Once it is paid off in 3 years it will still be worth $25K or so. If things got tight; I could offload it anytime before that and break even or sell it for more than what I owe depending on how far it is down the payment schedule.

Perhaps next time you DO buy a vehicle, you don't really need a gold-plated Land Rover!!! (or whatever)

Yes just what kind of truck is worth $25k AFTER 3 years?????

Perhaps you should leave the sarcastic comments to yourself. My truck is wayyy more useful than a gold-plated Land Rover.

A 4 door diesel. This is for a 2004 with 50K miles.

Ford F-350 Diesel Dually by any chance?

TS

Nah, its an 07 Chevy 2500HD Duramax; 4 door LT.

Well, I was close. Friend has a Ford F-350 with a payment just a few bucks more than your payment so that's where the guess came from. Hubby has a 2000 Chevy 3500 dually and you are right they are a lot more useful than a gold plated Land Rover. We also have equity in our truck and can still sell it quickly and make a profit, even in this market. We had horses, why did you get yours?

TS

I had atv's and dirtbikes; sold the atv's but still have the dirtbikes. My friends and I travel all over the country (Idaho, Oklahoma, Michigan, PA) just last year. So I bought it to tow with. I get over 18mpg towing with it vs. my buddies 11mpg in his v-8 half ton. Of course when I bought it; diesel was cheaper than gas.

I owe $33,800 on it after this months payment and NADA shows a trade-in value of $34,300; so every payment after this I will be right side up in the loan.

Being a diesel it will hold its value a lot better than a gasser or worse yet an SUV. People still need to pull heavy loads for business; farm; hobbies, etc where a diesel is a necessity. Plus I have the option to run bio-diesel in the future which I am reading up on.

Ours is a 7.4L V8 gas engine and we get about 18mpg on the highway also. Now in town it's about 12mpg and that sucks. Hubby always talked about trading it in for a diesel but that has stopped lately. We have about 3K in equity in it right now and would have more if we got the body damage repaired, it's only cosmetic and doesn't affect the way it runs so we haven't bothered. We actually had about 5K in equity when we bought it. But diesel trucks do last a lot longer. The truck he traded in was a diesel and had almost 400K miles on it.

You might want to look up the aricle Motorhead Messiah that Fast Company wrote a few months ago. It talks about getting 60mpg out of diesel trucks. Hubby says it should work but I have no clue.

TS

Clothing?
Renter's Insurance?
Auto maintenance?

Clothing I would take out of my "discretionary" income. I wear jeans and a t-shirt to work; so I maybe spend a couple hundred a year, if that. Truck is new and under warranty; maintenance might be $200 a year on oil changes and fuel filters; but that would come out of the $300 that is left over every month. But if you budgeted them in, it would knock $33 off of my monthly leftover. Concerning renter's insurance; I don't have much at my buddy's house, but I should probably get it to cover my tv, computer and bed ; so another $10 a month I would guess.

Great catches though; I will adjust my budget accordingly.

I have gotten as high as 25mpg unloaded doing 55; if I do 68mph, I get ~20mpg. The 18 was loaded with a trailer. You are getting great mileage with a gasser and with diesel prices, I would sit tight if I were you. I would have never bought a diesel if it was $5 a gallon and a dollar more than gas; that being said I have already taken the big depreciation hit and I LOVE the diesel power

Medical expenses (health insurance, prescriptions, co-pays)?
Gifts (birthday, Christmas, etc.)
Movie rentals, concerts, music, other entertainment?

I used to have $300 in our budget "left over" for incidentals. After 3 months of spending closer to $550, I had to redo it. Going to try $400 this time and see if we can do that.

What's done us in? In those last 3 months we've had to buy clothes, a ton of chemicals to fix the pool (you don't have that, but it's an additional expense for us), treating my FIL to dinner and breakfast when he came in to help DH installing new flooring, I had a couple extra lunches out at work (usually do the frozen dinner thing), haircuts, gifts (let's see, there was Mother's Day, Father's Day, my mom's b-day, a high school graduation...), gas for additional trips in town...

You're only one person, we're two, so you may be able to do it. Just keep an eye on the extras, and be prepared to adjust if necessary. It was amazing to see where it went, it's all those little things you don't think of that add up.

Love the truck, my ex husband has a 2001 D/A Crew that still gets 20mpg with 190K on it empty.... Miss that truck more than I miss my ex husband

Couple things to think about

I dont' see an emergency fund anywhere. I see funds that you can't use very easily- retirement, investment. Your best bet is to get a couple of months of expenses into an account like a high yield savings- of course, they are no where near the % they use to be, but even an online acct getting 3.5 or whatever is better than nothing.

I know you can get your contributions to your Roth whenever you want, but you dont want to be tapping an investment or retirement fund for monthly expenses, should something happen.

You have nothing for insurance copays or deductibles- are you insured? If not, up that savings acct. if you are, you might want to think about an FSA...

Because I have am obsessive compulsive, my budget is literally all inclusive. There is not an expense that is not budgetted- right down to kids field trip/school picture money. I know what it costs me per year (pretty close ) and have that total divided by 26, and sitting in an account. When those pop up, I write a check and move the money over.

There is nothing listed for dirtbike stuff- maintenance, replacement fund etc. I'm going to assume you spend some cash on that hobby. Which of course, is cool but you have to budget for it. Just routine maintenance on those bikes can get expensive, and with the price of fuel going up etc.

There is also nothing budgetted for your travels with the bikes.

One trap to avoid, is thinking that you will cover all of this other stuff with your 'slush' fund. Realistically, can you do this? Is $300 enough a month for everything else? Clothes, travel, truck stuff, bike stuff, and everything else that comes up?

I understand your tax withholdings, a lot of people are very quick to say- stop giving uncle sam a loan, however if your not going to use that extra $50 a month wisely, its just as smart to let him keep it, and then use it for investments when the time comes. A good point would be that once you get a Roth set up or investment account, you change your withholdings and go direct contribution each pay period. Instead of giving that $50 to the government, set it up to come right out of your checking account. You wont use it, and you wont miss it.

It wasn't until my current job that I used my withholdings to my advantage, I have to say that being a single mom and getting a ton of tax breaks made it nice to get 6K in February. Now I have the understanding of why I don't want to do this, and invest that money accordingly. However, like I said, had I changed my withholdings 2-3 years ago, I wouldnt have saved the extra money. I'm at a point now where I am. If your not, no biggy...you will be at some point...

I do want to commend you for being as young as you are and thinking about this. i was your age, only 4 years ago, and my budget/credit was not something I was all that concerned with. Money came in, and money went out. No clue where it went to, and i ended up filing Chapter 7 just earlier this year. MANY of my friends are clueless when it comes to there money. Hell, when I was 28 or even 30, the last thing I was concerned with was credit. Stupid mistake I wish i hadn't made.....

Good luck!

Brandy

wow, thanks Brandy for the great reply and compliment on the truck (you even know the Duramax/Allison abbreviation ). You brought up a lot of expenses that I didn't account for and just brushed into the "slush" fund as you put it. Its hard to bring myself to be that exact; when just 6 months ago I charged everything and let it fall where it may Of course that got into $34K in credit card debt and since January I have paid it down to $12,900 ! I should have that paid off by February and at that point will start putting into an emergency fund.

I guess at this point I should go through my finances with a fine tooth comb so I can make sure all of my expenses are accounted for. Stuff like insurance copays, I am not sure how to handle... I mean I never go to the doctor so I don't want to make them a monthly expense; however I did wreck my bike in Idaho last year and had to go to the emergency room which cost me $100 and a few $20 doctor visits there after. So should I just pull that out of my "emergency fund" and then pay it back? Haircuts, a few beers at the bar, maintenance stuff for the bikes; weekend trips to go riding, insurance etc. I think I was being a little naive to assume the $300 leftover a month would cover that stuff.

I will do some tweaking in Excel. Thanks!

-Josh

spent a TON of time on a Duramax website (dieselpage) back in the day... I think correctly it would be an 01 D/A CC (not crew like I said earlier)...hehehehe

It's possible, that you really can fit that all into the monthly slush fund, but I think it's important to be aware of it. Not everyone is as compulsive as I am. One thing that might work for you- for 30 days, keep exact track of what you spend, and what you spend it on. I get a dunkin donuts coffee every morning on the way to work, and another on my way home- thats ONLY 5.02 per day, BUT...it's 20 bucks a week (4 day work week). Adding that up I was suprised to see I spend 80 bucks on coffee just to/from work. I actually have a line in excel that says "DnD" My beer money is in my entertainment line.

The reason I made my budget the way I did was to prevent going back into debt. I knew what got me where I was, which mainly was from the divorce and going back to school full time, but I had lived a life of financial luxury while married. The price of something didn't matter. Money was just money. Well that worked great, until the cash flow was eliminated I know that if I tried to just budget the big stuff, it would be the little stuff that screwed me up again.

For instance, I know that this winter both of my daughters will need new snowboards/boots/bindings. They are both on year 3 with this set up and have outgrown them. It's not a major expense, like rent, but it's going to cost me close to $600 to replace them. Had to budget that somewhere..

In my excell set up, I have a ton of 'sheets', that all talk to one another. computer wise, there is different 'accounts' for each major expense. Student loan sheet, orthodontist sheet, FSA sheet, replacement SUV sheet, emergency fund sheet, etc etc I dont have different REAL accounts for them. If that makes sense. I use a local bank for a savings/money market account that is basically my slush account with a debit attached. I use Fidelity for my checking account, with direct deposit, that is my real account for bills, and then I have an ING with whats starting my emergency fund. My local branch 'sheet' says there is 3200 in that account, which is correct, but it's not all available for slush. Broken down out of that is savings for a downpayment on a new suv next year. Trying to get 10K to put down before I buy (REALLY want an FJ)

My thought on an emergency fund is that it is to be used when a purchase has to be made. sorta like life and death. this can't wait, and must be purchased. The fridge craps out. I blow ANOTHER transmission in my Durango (I'm on number 4 and I promise you I dont do it on purpose ) All expenses that must be made, but aren't in the real budget. Don't get me wrong, there is truck repairs as a line item, but not transmission rebuilds...huh maybe i oughta change that

You had said that your pay is different dependent on the time of year. I'm going to assume you have a 12 month budget set up? Not just monthly? That was the most rewarding part of setting mine up, to see where I will be 12 months from now. Pretty neat to think that you can pay off this debt, and actually have an account with money in it, earmarked for something. Never had to do it before, so doing it now was well, sorta liberating?

The thing is your single, and young. You have the world by the um well. If you can figure out what budget works for you now, you will be much better off than most of our peers in this age group in 20-25 years. Hell, you'll be better off than most by just having a budget and using it.

good luck, and sorry I'm so 'long winded'

Brandy

to your diesel interest and your commitment to your budget!

Young??? I feel like I aged 15 years in the past 2 years haha. Up until I was 27, I felt like I had all the time in the world; now I am planning out my spending habits for the next 30 years and feel like I don't have enough time to accomplish it all. AND wishing I started when I was younger and really wish I would have been better with my money when I started making good money!

I started using Mint.com and just have one credit card I use now and PIF every month. It is a real eye opener as to where my money goes. So I plan on watching that for the next couple months and hopefully make a more realistic budget based on my "actual" spending and not my "perceived" spending.

btw, don't your fingers hurt?

[/quote]


Young??? I feel like I aged 15 years in the past 2 years haha. Up until I was 27, I felt like I had all the time in the world; now I am planning out my spending habits for the next 30 years and feel like I don't have enough time to accomplish it all. AND wishing I started when I was younger and really wish I would have been better with my money when I started making good money!

I started using Mint.com and just have one credit card I use now and PIF every month. It is a real eye opener as to where my money goes. So I plan on watching that for the next couple months and hopefully make a more realistic budget based on my "actual" spending and not my "perceived" spending.

btw, don't your fingers hurt?
[/quote]

LOL no, I type pretty fast.

I checked out mint, but didnt really like it, I'm sticking with excel my real budget and money for my registers.

I hear ya about starting out. I started out once, back at 17, with my now ex husband...starting out for the 2nd time now at 32, and it's a real eye opener!

Good luck to you!

Brandy

I am also a member of dieselplace.com with the same name i use on here....my payments are very close to yours and i got to 0% too We think alike because I want to pay mine off and keep it also. I got a suncoast tranny in mine with a ppe on 300hp it is fun pulling away from the new vettes in a good ole boy truck

muhahahahhahaha luv it

never found dieselplace.......... but Im probably mudnuri everywhere...well except that one jeep place, where some fool took my name

Brandy