by Claire
I have updated my debt balances and now I provide a rundown of my basic monthly expenses. I’m sure there will be places I can still cut but I have to say that looking at where I came from just 9 months ago, I’m pretty proud of what I’ve cut out on the homefront.
Today’s post will tell you what I pay to keep my household running and meet consistent monthly obligations. This does not include groceries or the incidental spending money I carry (which I have reduced as well).
I currently bring home $3282 per paycheck, every other Friday. Please bear in mind this will reduce after January 1 because of new withholdings for insurance and taxes and such.
Rent: $1795
Utilities: $150 (budgeted amount but it is running around $80-$100 right now, peaks near $300 in the summer. I have been rolling over the extra.)
Water: $50
Cell: $70
Internet: $32
Life Insurance: $32 ($500,000 policy)
Insurance (Renters and Auto): $75
After School Care: $195
Piano Lessons: $90
Gym: $25
TOTAL: $2,514.00
I will explain my automobile situation when my divorce is final.
My minimum credit card payments on the three outstanding debts totals $1070. I paid an additional $1,100 this month. I had way too much debit card bleed in the month of November (like $500 worth of bleed 🙁 ) It all comes from not planning, not being prepared and then just plain ol’ frivilous spending. I hope to do better in December. That’s going to be a challenge and not b/c I go crazy buying gifts but b/c things get SO busy with the kids, family AND at work (everyone wants settlement $ for the holidays) that I do not have time to plan well. That is the KEY and in these final days of November, as I’ve dissected my spending, I have to focus on planning for December!
So, taking the $2,514 and adding the $1,070 in minimum payments we have a total of $3,584. I have about $2,000 in my checking account right now and tomorrow is payday. I am currently hesitant to sink that into debt b/c of the divorce situation. That checking account money is separate from my emergency fund. I just moved it to an account that I do not have a debit card for b/c I am NOT doing well on the debit card front!!!
Now, talk amongst yourselves. 😉
Born and raised in Texas. I’ve at least driven through every state in the US courtesy of a roadtrip loving Dad.
I’m single with two children and a good parenting relationship with their father.
I am a “life is just half full of funny” kinda gal. Humor is my saving grace and I am thankful for it every single day. I have a strong Catholic faith and am thankful for that foundation.
I read a lot for a living but still enjoy a good book. I love biographies but in recent years have found the need for fun fictional books–sadly, for a long time I just didn’t enjoy fiction!
I love live theatre of any kind–from local productions to Broadway.
I love to scrapbook and pride myself in my kids’ albums.
I love being a mom but also love my career. I’m blessed to have found a balance allowing me to be at everything my kids need and want me to be at–while also having a career.
Favorite Quotes: Well behaved women rarely make history.
Behold the turtle. He makes progress only when he sticks his neck out. -James Bryant Conant
Wow. You’re really putting it out there for us. You’re going to get this debt paid off in no time. Good for you.
I do have to be honest here, I’m having a bit of paycheck envy right now. My pay check is about that same amount, except that I only get one per month. Of course, I don’t have rent or mortgage payments, either. My part of the household budget is $550 per month. This covers utilities, groceries, property taxes, maintenance and various other things.
I’m pretty sure you realize how blessed you are to have such an amazing income. My hope is that everyone who comments will be nice!
Thanks for your honesty Alice. I am very aware of how blessed I am to have the income I do and to have had the education opportunities I had. I am thankful I was raised by parents who didn’t have college degrees but drove home the importance. They equipped me both academically, emotionally, financially (you name it) to go straight from high school to college to law school without a break.
That said, we all have our crosses to bear. If only I had the same stability in my romantic relationships that I have in lifelong friendships, I’d be golden! As a twice married friend told me recently, “our man pickers are broken.” 🙂
“Now, talk amongst yourselves.”
That put a smile on my face this morning, thanks for that.
I think you are very brave to put all these numbers out there, not something I’d be brave enough to do.
I remember that you were blindsided AFTER you signed your rental lease, so your hands were tied with respect to your accommodation. However, once this current lease is finished, do you have plans to search out cheaper accommodation?
Ugh Anon-
That is the current burning question for me b/c my housing is too expensive. Maybe because I am in the midst of uncertainty right now I can’t even think about moving. The lease terminates is September 2013. I can tell you right now I do not want to move my children out of this house. That’s an emotional pull right now b/c obviously I want some stability for them. I have been exploring renting out my downstairs (empty!) guestroom that has a full bath but only to family members I can trust. My niece may be in a position to pay $400-$500 per month in the next few months so that’s a possibility.
Yes, I was BLINDSIDED JUST HOURS after I signed the lease.
Well, maybe think of it as a hard decision you didn’t have to make. It is better for the kids to stay in the more expensive place, period. The decision was made for you for 12 month. If you had moved and started the divorce at the same time it could have been much more disruptive for them. Somethings are worth spending money on. Don’t stress about a decision that was made for you – that actually made life easier for the most important people in your life – your children.
Sandra,
I read this comment last night and it was just perfect! This decision was definitely out of my hands and so I have to rest easy that it is what was supposed to be! Thank you.
If it makes you feel better, our rent is $2900. But walking commute.
Thanks for laying out the details.
I’ve never gone thru a divorce, but I guess I’m not understanding why you don’t want to pay down the debt that you have until the divorce is final. Is there some chance you would have to pay alimony or spousal support? Or do you think that you’ll have a big lawyer’s bill to pay at the end and are saving the money to pay that? I’m sorry, I just realized how personal these questions are. If you don’t want to share that, I totally get it.
Great question Shannon. I am okay with sharing my thought process on that issue–sketchy as it may be. With the divorce pending there are some remaining unknowns. I do not have a lawyer’s bill, will not have to pay any kind of spousal support–thank GOD! But, I took a big hit on income taxes for 2011. It was not because of having to file “married, filing separately” but instead because the first draft Steve prepared was dead wrong. I mean dead wrong. Now, whether or not that was intentional or ignorance, I do not know. I just know I was misled again. So, I got professional help from a friend that did not charge me (another blessing!) I do know that I went into it thinking we owed $1000 and came out of it at a still unknown number but likely closer to $5000. IF he gets to be married to me as of December 31, 2012 I face having to file “married, filing separately” again instead of “head of household.” While that won’t be a HUGE dollar amount difference, I’m just feeling safe with a little cash on hand.
BUT, I just ran the numbers on how much of what I pay on these stupid credit cards that go to interest and that’s depressing BUT with the possibility of penalties and such with the IRS…well, I just want to hoard cash right now! It is totally a security thing until I am free like a bird!
ah ha. That makes total sense. And in theory you will know one way or the other how it’s going to go in a month or two. Holding onto the cash until you get that squared away makes sense to me!!
I have never had to pay in after filing taxes, but if I did, I would make that my top priority – I’d be more scared to owe the IRS than my credit card company (of course I’d pay the minimum balance to stay current). That’s just my opinion but I think you are on top of what actions you’ll take when that day comes.
Definitely on top of the issue and I have professional help to guide me. I’m not going to mess with the IRS and I absolutely, positively want to pay what I owe! Karma is karma but karma from trying to short change the government?! UH…NO thanks! I feel thankful that I did not file the return Steve prepared. I have NO idea what numbers he did present but I know he won’t get a CPA to look at his info like I did.
On top of it all he messed up the taxes? Oh dear!
I feel a bit uneasy when our relationship falls too much into specializations. But life is busy and it gets too hard for both people to be deeply involved in everything. But this episode of yours reminds me that this makes me uneasy…
wow, now that is a breakdown. I’m with Alice, you bring home more than my gross pay in a month (I make under 30,000). But this just proves that no matter your income, debt can get out of control with anybody.
oh and some utility companies will let you pay a set amount each month (your average over the last year). you should ask about that.
Another FABULOUS parting gift from Steve! When he moved out in August 2011, he opened a new utility account in his name. We reconciled and while we were communicating (but before he moved back in the house), my utilities were turned off!!! He never told me that he changed the account out of his name and didn’t put it in mine so even though the utility company TOOK my payment for September, the account was set to terminate b/c it remained in his name (and he had another account at his apartment) OMG, I had just about forgotten about this part of the nightmare! So, earlier this year–in July–when I was whining about how high my utilities were, readers suggested the budget plan you talk about here. I called and b/c my account was under one year old (October was a year in my name), I wasn’t eligible!!!! Thanks for the reminder. It is on the to do list. Lord, what was I thinking with this man?!?!? Smart, smart woman…dumb, dumb girl!
Claire, you are definitely doing the right thing by stashing your cash. If there is an unknown sum in taxes you may or may not owe it is vastly better to be safe than sorry. The instant the storm is over you can transfer those funds, pay towards your debt and get right back on track. I’m in a similar situation. My husband and I were doing great on our debt snowball until he got laid off. Now instead of extra on debt we are stashing anything we can in the emergency fund. Once he is employed again we plan to take our emergency fund back down to $1000 and put the additional we saved towards debt reduction. Best of luck to you!
Thank you Gina Mae! Life has so many twists and turns!
I keep picking up on the debit card bleed and realize how much of a problem this actually is for me, and probably others…When I first got married, my number one rule was no ATM card. Cash back from paychecks at the bank and checks for gorceries…after 13 years of marriage we opened a new checking account which came with this handy dandy “check card”…I use it for groceries and cash…and feel happy that Im not using credit cards…but debit cared bleed caused you to use credit cards for things you would usually use your savings and researves for….Big mess….I’m trying to find the courage to cut it up..but I never have cash…its just a mess…Hang in there…thanks for the update…!
Thanks for the breakdown! You deserve credit for laying it out for all of us to chew on! I think you will be able to break your debt down faster and faster! Keep up the good work!
Thanks scarr. It felt good to share!
Thank you for sharing numbers Claire! I know it’s hard to put out there, something I’m ashamed to do myself. My husband and I are barely bringing in that much money per month – combined – that you make in two weeks! Of course our expenses are smaller. 🙂 Once you get on a good, solid budget, you should be able to wipe your debt out in no time! Oh and debit cards are evil!!! Very tempted to cut ours up.
I’m actually okay with sharing numbers. Any hesitancy to do so is pure time management. It takes a lot of time to input the info and get my brain around it. It helps that I have a great budget spreadsheet, but still…it’s more time consuming than my usual “Dear Abby” writing. 🙂
First thing increase your life insurance. Being a single parent changes everything, also make sure you have a will and any money from the insurance, God forbid you need it, will go into a trust for the kids.
And the IRS scares me-guess because my mom was a irs agent- so I hope that you are divorced before the 31st. Also make sure its down that you are claiming the kids or if you are splitting them.
Good luck
I have additional life insurance through my employment as well as a policy held by my parents and my ex-husband (the children’s dad). I am definitely well insured. I don’t want to announce the total amount here in case some weirdo (or Steve!) sees dollar signs!!!
I do not have children with Steve so there are no issues re: claiming kids.
Thanks.
Oh I forgot to mention…I have an updated will. I’m an attorney! If I don’t get that done someone really needs to kick me in the a**! I’ve had a will since I was 25 years old. Even more important with kids of course but yes, I am good on that front too.
I can’t believe how many people do NOT have wills. Everyone, EVERYONE needs a will, power of attorney, advanced directives and any other possible legal document that will help the people you love better deal with your death.
I would have been super disappointed if you didn’t have one, since you are a lawyer 😉 also, I think it’s a great example you are setting for your kids!
Agreed scarr! And those documents are so readily available these days. And in Texas we can have a “holographic” handwritten will. There’s no excuse!
Nice sharing, wow! Now that you’ve declared your income (gutsy but awesome), it looks like you will be able to pay this debt down soon(ish)!
I suppose your rent is high but I wonder if the readers would feel the same if it was a mortgage payment? Have you thought about buying? I’m in the process of building a house with a mortgage of about $275,000 and with a little HOA payment, my mortgage should be 1600-1700. My checks are still less than yours (2500) but I have no kids. I’m increasing my payments by give or take 550 to be 5 miles from the office and in a more urban, less car dependent area. I was just wondering. It would be a nice tax deduction once you get your credit paid down and $10,000 or so saved.
Also, when I made half as much, I paid down student loans with an IRA distribution that was inheritance from my grandmother. The estate’s trustee was negligent and didn’t take takes out so I had $19,000 in federal tax liability in 2008 and a few thousand for the state. After counting for payroll withholding, I owed $12,500 and took out an Installment Agreement with the IRS (which I just paid off – yay!). It took 3.5 years and I paid an extra $1000 in interest and penalties. Oh and I bought my current house before I knew about this bill. My reason for bringing this up is that honestly, the IRS was really easy to work with. I think they were shocked when I was nice to them, and frankly, I expected it to be far more painful. If any readers are ever in a situation where they really can’t pay the entire bill, don’t be afraid to work out payment arrangements.
Meghan,
I could not be in a better area of town for the price. I am less than 5 miles from the office and the neighborhood is truly ideal for the kids. Buying a house sounds absolutely unappealing to me–but for the tax deduction. And I’m just not convinced yet that I should buy a home solely for a tax deduction. Once the dust settles I plan on sitting down with my friend the CPA to explore other deductions. Once the kids leave for college, I see myself in a very urban, downtown setting condo type arrangement. BUT all of this is too much for me to digest right now. I feel like the only decisions I should be making is what I’m eating for breakfast right now!
The IRS has been wonderful to deal with so far. Everyone is extremely pleasant and perhaps my very open sharing about my personal situation helps. I know they will work with me and that I have options. Congrats on paying them off recently!!!!
Also in the current budget negotiations in congress, everything is on the table. The mortgage interest deduction costs your fellow taxpayers twice what the welfare system does.
I wouldn’t count on it lasting.
I’m sorry, but how does the mortgage interest deduction “cost” fellow taxpayers?? It’s this kind of backwards thinking that makes me shake my head.
I agree with you that they will take it away. See what happens when they do. Less incentive to purchase homes and the middle-class being taxed even more.
Cathy C. – mortgage tax deductions cost the American people real money. That tax deduction reduces the amount of taxes those people pay. Many people who have kids as well as a mortgage deduction effectively pay zero in taxes because of all of the deductions.
So many people have in their minds that we are so burdened by paying taxes, but a huge portion of them actually pay nothing. When you get a large tax return at the end of the year that is equal to what you paid in for the year, you just paid no taxes.
Exactly, the deduction reduces our AGI and therefore what we would otherwise pay. It’s not backwards thinking that says it’s a handout; it was supposed to be a handout to incentivize the middle class to become homeowners. I take the credit as do others to the tune of about 80 billion in tax loss for the government a year. I think it exempts me from about $4000 in taxes? It’s one of few middle class credits that doesn’t phase out at high income levels and there is no cap. That said, getting rid of the credit entirely is not on the table. Doing so would decimate the housing and the economy. I wouldn’t be surprised to see it capped (above what we are spending on housing anyway) or see it capped as part of an overall cap on deductions (meaning that having a house and kids and etc that would normally leave a household with no tax liability..ahem part of the infamous 47% may have to pay something – you could consider it a loss of any number of credits that they take. In truth, the rates are so low that I won’t have a ton of interest to write off. Low interest rates reduce the deduction…
Alice – while I may agree with you that mortgage deductions are not an answer to fiscal problems, to say that people who receive child credits or mortgage deductions end up not paying any taxes is false. People still pay state and local taxes on all of the things they buy and they still pay income taxes. And it is not just the middle class that takes advantage of the mortgage credit, this is a credit utilized across the board by everyone.
Well yeah but we are just talking federal. We all (most) pay state/local/sales tax. I’d prefer that everyone above the poverty line pay something in federal too. I think most Americans (minus those who pay nothing now) agree about that.
Well, I guess we can agree on this if we’re talking about making those who are working and paying NO taxes have to start ponying up some $$$ by eliminating the mortgage interest deduction, but what about those of us who already pay over $20,000 per year in taxes?? We have a very low interest rate on our house, but the interest still adds up to $14000 and if they eliminate that, we will be taxed an additional $4800 per year. It’s the one freaking break we get on our taxes since our one child is an adult now.
We get ZERO tax refund. Nada. Zilch. We end up paying a little every year. We are considered middle class. We are not the evil “rich. What about people like us???
Good thought about getting a renter in the basement. I think you’ll find it worth it to go scorched-earth to do what it takes to get out of debt faster. Once that’s accomplished, you’ll have all the flexibility you could want in your budget. Just make sure to charge enough money to cover rent plus increases in utilities, food, etc.
If you want to squeeze more money out of your budget, you could make a family game of getting the utility bills down by at least 30%. We did this growing up, and in addition to saving money, it has saved SO many environmental resources. Your water bill seems high – sometimes it’s helpful with kids to set 3 minute or 5 minute shower rules. I’m so glad – financially and environmentally – that my parents helped make it second nature for me to take quick showers (they aren’t for relaxing and just letting the water fall on me for no reason), to turn off the faucet while I’m brushing my teeth, to turn off the water while scrubbing dishes, etc.
Also, might at least worth considering dropping the piano lessons. Music lessons are a huge luxury.
I thought my water bill was a little high too Margot! It includes all the fees like sewer and trash and whatever but I do still think we can do something to reduce our consumption. This is a great challenge for the kids. Thanks.
I knew the piano lessons would make some scrunch their nose (as it did mine). If I had the time I would teach DD myself. I’m pondering this one.
Thanks!
I live up in the DFW area, and my bill is usually $30, with every 5th month being $50. I live by myself, so I don’t think $50 for 3 people is that bad…since it includes the trash and sewage (so does mine).
I live in southern California where minimum rent is $1700 for a two-bedroom apartment , so I don’t see $1700 as unreasonable. I still would increase the emergency fund to cover unemployment for any reason (illness,etc) . I’m pretty much a suze Orman fan on that front. But also have you ever read Dave Ramsey’s view on giving every dollar a name when you receive your paycheck? That might help with the debit card bleed. Thanks for being so honest in sharing. I think you are doing great.
Claire, you’re doing great job, girl!
I think your utilities are very reasonable. We are a family of 5 and on ‘budget billing’ and we pay $265 a month for gas/electric, water is about $60 a quarter. I have gotten the bge bill down from close to $300 a month. I won’t compromise using the gas dryer to dry my clothes b/c, as you know with allergies, the worse thing you can do is hang your sheets/clothes outside. My allergy prone kids would never sleep.
As for the rent, home ownership is sometimes not worth the headache. Maintaining the sticks and bricks is expensive. Appliances break, roofs leak, if the kiddos are happy and you see potential income in your rental, stay put. Ownership doesn’t make a house a home.
When I started my budget I was a puritan. It didn’t contain anything extra-nada-nothin’. It completely backfired every month. Those ‘extras’ you talked about from your debit card. look at them and really see if they are ‘extras’ or are some of them necessities.
Include in your budget:
Line item for clothes and shoes (maybe not every week but every few months)
Car Maintenance/gasoline
Line item for celebrations-You are buying kiddos Christmas and birthday presents?
Warranties/Plans: AAA, Gym membership,auto warranties
Medical-Braces for kiddos, copays, etc…
Recreation-Allocate a reasonable amount every paycheck. We allocate $25 a paycheck for our family of 5. Sometimes we use it, sometimes it gets rolled over…
I don’t keep a checkbook any longer b/c I do my budget on Excel. I check my balances twice a day-morning and night–no surprises. I keep $200 extra in my checking to cover problems. My small saving account is for emergency funds. Everything else is my debt snowball.
Get it all out on paper or a spreadsheet. Extend your budget for 6 months, (and then a year) see it all out and you’ll be amazed with how much debt you’ll pay, but also what other expenses you have forgotten.
You’ve come along way!
Did you mention your food budget? This is our biggest expense, especially with work lunches and too frequent trips to sbux.
I think your budget looks quite reasonable. If you can deal with the debit card bleed, you’ll be right on track.
As Dave Ramsey says, in a budget, every dollar gets planned every month. I agree with the other reader who is encouraging you to account for your other expenses in the budget.
I did not include groceries in what I have shared so far. I really appreciated Chris’ comment outlining some specific areas I need to include. Right now all of those are falling under the umbrella of “spending money.” I see that to have it so vague is dangerous but I am struggling with dealing with the details, if you will. It helped tremendously to see Chris spell those out for me and I am at a “spell it out” phase right now. I will tell you that I budget $100 per week for groceries and usually come in closer to $80 and then roll the $20 over. I’m trying not let November define what my eating out and “incidental” budget is because I was off course. I am very strict about eating out for lunch though so I don’t have a lot of bleed there (except for November). All of this is to say, I’m going to add these line items ASAP.
fair enough. we struggle with how much detail to put in the budget. whether you break out every line item or not, i think putting every dollar of income in the plan somewhere – even if it’s just savings or debt reduction or spending money, will help you get there.
Why do you say “Talk amongst yourselves.” while you keep commenting amongst the readers. Is that an inside joke?
I really enjoyed this blog site in the past. However, I don’t find the inspiration or innovation in your/Claire’s turn at the blog – it seems to be about more personal issues and full of oversharing that one day might be regretted, rather than debt reduction.
I am interested in a “Blogging away debt” blog and can find one other places – and I will check in again when the next writer comes up for his or her turn.
P.S. Does the former writer with the baby (Becca?) ever do a check-in? I would be interested in reading a debt-free report.
Is there any idea when a new blogger will take over?
ANNONYMOUS! (Interesting) Hi that will be when Claire finishes her debt payoff!
I wish soon! The previous blogger never paid off her debt right? So why should we wait for this one? I’m tired of the snarky replies to commentors and little ‘jabs’ in the entries towards readers. Many readers here reached out to identify with Claire, only for her to follow up with a holier than thou attitude. I’m over it.
I am not able to underastand, how this blog is working. Are bloggers coming one by one to reduce their debts? This post does not seem to be anything related to debt, it is more of a personal story and i think everybody faces the same.
Apparently there are a lot of people reading this blog who have never been through a divorce or if they have, they weren’t subject to someone who was irresponsible. Am I saying that the debt is all Steve’s fault? Absolutely not. But when a spouse is financially irresponsible (e.g. (not) filing taxes) and/or isn’t on board with getting out of debt, that changes the whole ball game. Claire has had to take a break from focusing on her debt reduction to deal with the rest of her life. Once her divorce is final, she can focus on what the rest of you think she should be blogging about. Give the girl a break people! And again, if it’s not your cup of tea, go out into the blogosphere and find one that is. The rest of us will be here to support Claire through her journey.
I used this really great bugeting software called YNAB…It will help you lay out your budget for food, clothing, monthly bills, debt repayment, etc.
It’s awesome!
I love reading your blog…Keep going! You are doing great!
You know, I equate getting out of debt with the movie Matrix. You have a choice to take out another credit card and continue to spend and splurge and live a life that is false and flimsy OR you wake up and take action.
Claire is taking action. This is a process for her.
I remember when I did my first few budgets and couldn’t understand why I wasn’t winding up with no money and 3 days to payday. It’s a process.
It took awhile for me to learn the ropes for cash flowing everything. I learned that the debit card is just as tempting as a credit card…and that I can use an envelope system for everything except gas (because with little kids it’s easier to pay at the pump).
I also learned that it’s better to buy everything at one store than splitting things between Walmart and Safeway…even if I save a little. I do coupons but pretty much buy everything at Safeway. Hubby and I have learned that Costco is too tempting for mega splurges.
We have learned our weaknesses. Claire will too.
I have learned that snow flaking keeps me going and makes me honest. So, there is a process we all must go through. What Claire does today may change through experience.
BUT she is going to be a stronger woman because she is going through the process of getting her financial house in order.
Very inspirational and empowering!
Hey Claire,
Thanks for putting all of that out there! That took some guts (in my opinion).
You’ve probably mentioned this before, but are you also doing any pre or post tax 401(k) type contributions? What about pre tax spending accounts (health care or dependent care)?
-Matt
p.s. I know people have different opinions on this, but $25/month for a gym membership isn’t a waste if you are getting good use out of it. There are simply certain things that can’t be done as home as effectively or without purchasing a fair bit of equipment (weights, etc.).
There are big intangible benefits to working out as well. I know my overall health and stress levels have improved considerably since I started seriously working out again a couple of years ago.
Hi Matt-
Thanks! It felt good to get that info out there and it was very helpful as well. I do contribute the match amount of 6% to my 401K. I just added flex spending for childcare and medical to begin January 1. I’m very worried about taxes for 2012 and of course in the years to come so I’m trying to do all I can! I’m hitting the gym so I’m feeling pretty good about the $25. It is a big savings over my previous yoga budget.