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[pats12]

Hi there,

On earlier threads I noted I'm paying down CC debt. I'm trying to make myself budget. If you have any advice on how to better manage, I'm all ears. I feel like this budget is pretty realistic for me, but I wonder if I am not doing something correctly.

Just for clarification, my spouse pays bills not listed here that are associated with our home (repairs, insurance, utility bills) and car insurance and half of the childcare. I used round numbers for easier figuring. I have no car payment since I own mine, but I do have a newborn so groceries also includes diapers, formula etc. (for now).

Take home $1900  (after health insurance is out out and 10% going to retirement) every two weeks. I am getting the full company match on my retirement account and also have an IRA. I'm trying to follow the advice of saving at least 10% of my income for retirement. I only started funding my retirement at age 33 so I feel like I am playing catch up.

1st - averages out to $1830, and I usually do have about $50 left from this paycheck when I've spent it. I usually put it in a savings account, but sometimes it goes for random life expenses like birthday presents.

Mortgage $1200
Groceries $160
Gas $100
Lunch or coffee out $100 (but spread through whole  month...I give myself $25 a week "fun" money as an allowance)
Random medical bills for baby that insurance doesn't cover $100 (we always have these...we are still getting some in from the hospital too)
Student loan $170


15th ($1860)
Daycare $300
Emergency fund $200 (We don't have one at all)
Credit card debt $1100
Groceries $160
Gas $100

[scampster]

One thing I noticed right away is that you should probably be topping up a small emergency fund before paying all that credit card debt. I think the recommendation is $1000, so in one month you can have that and then stop putting in the $200/month. People also have varying opinions on paying into retirement before paying off your debt - I think it is dumb to give up the matching, but not everyone agrees.

[pigou]

I'd suggest contributing to the retirement fund up to the amount that is matched. That's "free" money that is going to exceed the amount you pay in interest on the debt. Since there's a cap on how much is matched, you cannot make up the matching you miss now once you have paid off the debt. I'd also recommend not saving in any non-matched account. You may feel like you're falling behind, but you really aren't... you're not going to get the kind of return you're paying in interest on your debt, so every contribution you make there costs you money. You're much better off catching up with those contributions after you have paid off the remaining balance.

Furthermore, I'd kill the emergency fund and use what you have in there (as well as the monthly payments) to pay off your debt. There's no reason to keep money in an emergency fund while you have credit card debt... if an emergency comes up, you can put that expense on the credit card just as well as you can use the emergency fund's balance. Is the savings account you mention (for the $50 left from the paycheck) the same as the emergency account? If not, I'd take whatever money is on there and use it to pay off debt as well. Same principle as with the emergency account.

$320 on groceries is pretty frugal... are you sure this is realistic? If so, I don't think you can cut it any further with a baby. $100 to spend on anything is also quite reasonable, as without that you might not be able to stick to the budget.

Good luck!

[clean]

Please get a copy of Dave Ramsey's Total Money Makeover.  There are budget forms in the back. 

[aristotelian]

What are you asking for? It looks like you already have a budget.

I would stick with your 401k match, but hold off on the IRA until your credit card debt is paid off.

I don't get the "1st" and "15th" thing. Just make a budget for the whole month. Also, why are you budgeting separately from your spouse? Better to have a comprehensive picture of the finances.

It looks to me like you don't have much wiggle room in this budget. What about home phone, cell, and internet? What about clothes and other basic expenses that don't fall under "groceries"?

[punchnpie]

I'm a FB fan of Dave Ramsey and the other day he came out with a budgeting aid. This is a general idea on how your income should be distributed - once you plug in your own numbers, you can see if you are over or under the accepted averages and where you can move money around:

charity 10%
savings 5%
housing 25% (Dave's not dumb, he knows many people live in locales where they spend more than 25% on housing, but if he prefers that you don't.)
utilities 5%
trans 10%
medical 7%
remainder is available for other stuff 

(see: http://www.daveramsey.com/specials/mytmmo-new-years-2012 You can plug in an approximate income to see the difference in numbers)

I can tell you from experiences with relatives that it is important to pay yourself first. They will always say that they can't find 5 or 10% to save, but then they run into emergencies and have nothing to fall back on (and as I've had to tell them, the First National Bank of the Cornfields is closed). The same goes for tithing or giving to charity. Do it, even if you are making those pennies squeal. You will still have the money you need.

Regarding the $320 for groceries. I buy for 2 adults and go back and forth between the USDA low cost or moderate budget (see example at: http://www.cnpp.usda.gov/Publications/FoodPlans/2010/CostofFoodOct10.pdf). I could afford more, but I get pretty much whatever we want at $350-400 a month for groceries. It's doable.

[pats12]

Great suggestions everyone...thanks...these really helped me do some fine tuning.