Okay, I’ve shared the nitty gritty details of our current debts (and assets). I want to sincerely thank everyone for the incredibly insightful and kind comments so far. You’ve given me lots to think about (and lots to talk with my husband about!) As a side-note, I received a few questions about my employment situation. I’ll be sure to write a post about this for next Monday to give you some more information. But for right now, let’s dive into our current budget.
This is our budget, along with our actual expenses from the month of February:
Last Month Actual
|Gas Bill (natural gas)||75||22|
|Sprint – Cell Phones||150||155|
|Waste Management (trash)||35||35|
|Total Expenses||Expected: $3505||Actual: $3740|
Then there are our debt payments:
|Capital One CC||43||380|
|Wells Fargo CC||156||160|
|Sallie Mae Federal Student Loans||62||62|
|Carmax Auto Loan||469||469|
|Bank of America CC||37||37|
|Sallie Mae Dept of Ed Student Loans||0||100|
|ACS Student Loans||0||25|
|Mattress Firm Account||60||100|
|Total Debt Paid||$1413|
That takes our monthly expenses (including debt repayment) up to $5153. I also deposited $200 into my Capital One 360 Savings account (better some than none, right?), bringing the total expenditures from the month of February to $5353.
Clearly there are a few areas that need improvement. One big, glaring area is in electricity. I already got our bill due in March and it is significantly lower ($108). I think it was so high because it had been cold and we were using space heaters (our actual heater is total crap and basically doesn’t work). Its warming up here in Tucson, though, so now that we aren’t using space heaters I expect our bill to continue to drop a bit more. It tends to be a bit higher in summer (approx. $150ish), but should be in the $80ish range for the next couple of months while the weather is more temperate.
In terms of our cell phones – I’ve thought that this would be a good area to try to save money….only we’re locked into a 2 year contract that was just renewed maybe 4 months ago??? So we’d have to pay to bail on our contract and switch providers. Plus, it would mean giving up my beloved iphone. I think I’ll table this area of spending for the time being in favor of searching for other areas to cut back.
Regarding the cable/internet….having internet is a 100% necessity for me to work from home. The internet, alone, costs $55. We got a package deal for cable & internet for $85. When we first moved to our house (August 2013), we had not anticipated buying cable (we haven’t had it in years), but we live outside the city limit and we weren’t able to get any local stations at all (like ABC, CBS, FOX, etc.) Those are the only channels I really care about. We went and bought the biggest receiver Target sells and it still wasn’t enough power to get any local stations. So if we cut cable, we literally have NO TV at all (unless we watch DVDs). Since it only costs an extra $30/month, we went with the cable/internet bundle.
Even though I went a little over the budgeted amount for groceries, I feel like the $400 allotted per month is already pretty strict. Included in our groceries are all items you find at the grocery store (including toiletries, personal hygiene products, cleaning supplies, etc.), so its more than “just” food purchases.
Areas I’d like to target for cutting-back:
- Miscellaneous. This category includes cards and gifts for friends or family, parking costs (its free by our house, but costs money when I go to campus), any eating out or going out with friends, goods (such as shoes, clothing) and services (such as hair cut/color), and anything “extra” (like prescription costs, photo printing costs, etc.). Most of these expenses fall under the “eating out and/or going out with friends” category. This definitely needs to be cut back.
- Baby Purchases. Our daughters are enrolled in a 3-day-per-week at-home daycare. It costs $25/child/day (so $50/day) = $150/week. So, at a minimum, our baby purchases amount to $600/month. As a result, we almost always go “over” for other miscellaneous baby items – trip to the doctor, prescription costs, etc. I have been seriously considering cutting back to having them in daycare 2 days per week, for a savings of $200/month. It will put a bit more pressure on me to get work tasks done primarily during those 2 days (otherwise I have to work at night when they’ve gone to bed, and I prefer to have that be “grown up” time with my husband). I think this idea has been in the back of my mind for months, but posting on the blog has definitely made me a little more apt to pull the trigger and make this change. I need to talk to our daycare provider. What’s customary here? A two week notice? I have no idea!
- “Other”: I know I can make small cuts in various areas. For example, I want to switch to using primarily dish rags (instead of paper towels) to cut down that expense (which would be in our “grocery” budget). I’d love to hear other ideas from you all on ways to cut back. I also have a post planned to give you more examples of “little ways” that I’m trying to cut expenses at home. I think the hardest will be the eating out. Pre-babies, our biggest monthly expense was going out. We went out at least 2-3 times per week and easily spent $100 per night. So we already feel like our going out/eating out has been WAY scaled back. But when I look at my budget from last month I see multiple entries for eating out. The costs may have gone down (averaging about $40 per “night out” as opposed to $100), but there are still several unnecessary outings.
- Debt Repayment: Let me explain….I want to “UP” our debt repayment, but only for the credit cards. One of my student loans (Sallie Mae – Dept of Ed) is in deferment, so I owe nothing currently. Part of me is so scared to send nothing, though. Right now the interest, alone, is costing $350/month so even though my measly $100/month doesn’t even dent the interest the loan is accruing, I feel like I have to send something. But this is all a psychological issue of mine. The interest rate on my credit cards is still higher than the student loan’s APR. I have to get over my irrational psychological issue of paying nothing and transfer the $100 I’ve been paying monthly on the student loan over to my credit cards. I can deal with this loan when my credit card journey is complete. (Edited to add: A comment on this morning’s post pointed out the compounding of the interest, which really adds up quickly given the HUGE amount of student loan debt. Any math-minded people out there, give me advice!!! Does it make more sense to send nothing to student loans and more to higher APR CCs or do I really need to be paying at least the interest on my student loans to keep it from accumulating???)
And in terms of our earnings this month – we earned a combined total (after taxes) of: $5465. Since our income is variable we never really know exactly what our monthly income will be until the month is over, but it tends to hoover around the $5,000 range.
Just as an aside – My husband makes most of the money. However, I do not feel comfortable breaking down whom made what and where it came from. I am pretty sure I am not allowed to disclose my exact income (according to contractual obligations). So I’m just going to present a lump sum and that’s it. I think its irrelevant what came from whom, anyway (in relation to debt-paydown). I will post more about my job situation (and potential for me to increase my income) next Monday.
So when we take our February income ($5465) minus our expenses ($5353), we were left with a small excess ($112). What should I do with that money? Keep it in my checking/savings for monthly bills, transfer over to Capital One 360 Savings for more permanent savings, or throw it directly toward debt? Some combination of the three? In the past I’ve just left any excess money in my regular checking/savings account since there are, invariably, months where we come out a little short. I like to have a bit of a buffer in that account, but I suppose I could be more precise (e.g., start a sub-account of Capital One 360 called “month excess” that could be drawn from if we are ever short).
What’s your take on our budget? Where would you target for further expense-cutting and what would you do with any leftover money at the end of the month (keeping in mind our uncertain and variable income)?