Oh, that's how much I spend?
This weekend my wife and I are going to have a serious meeting of the minds and implement a new budget in our househould. After reading on a few sites I ran into the article about the 60% Solution. I believe it originated on MSN Money. If I new how to do cool links I would add it HERE. In simple terms it's making sure that 60% of your gross income goes to your "Committed Expenses". This is Rent, bills, insurance, grocery - the necessities to not have collectors calling you. The other 40% is divided into 4 - 10% catagories. Short term savings, long term savings, retirement savings and fun money. It seems to be the most functional and, honestly, the easiest to follow budget plans. So we are going to give it a shot for the rest of the year. Our meeting will be to modify it to our needs.
First, I am not a big fan of financial plans that use your gross income. I don't have my gross amount to spend. So, I am going to adjust the numbers to work off of my net income. I will guarantee the 60% will not work. Also, I am in sales so I don't have a consistent monthly income. Some months are better than others, so that is another matter to contend with. We typically try to live off our salaries and my commission check is cream. Or "shoes", as my wife puts it.
I have 3 six-month goals. I will be adding them onto NCN Network as soon as I figure that out. First goal - down payment. I am looking at 5% for a down payment. We are shooting for additional 5% gift from our parents. More on that later. Second - $1000 emergency fund. We are almost there. Third - eliminate all credit card debt. We are currently riding around $5,000. Most of this is from our wedding. Hey, it was a nice wedding and these are the consequences.
The million dollar question - "Is this attainable?" As I mentioned before we had a budget. Its only function was to make sure that our income was more than our "committed expenses". No savings plan, repeat, no savings plan. The honest truth - we have $800 in savings. No retirement plan, no IRA's, no investments. Our motto has been "Living on Love" or "Sweat Equity". That and a nickel will get us, well, nothing these days. Really, I feel like I truly have my life long partner, so everything else is about finding the way to be as happy as possible together. BMWs and beach houses aren't free, are they?
We do a decent job of saving all our receipts. So, last night I entered every receipt for the last two months into a spreadsheet to see what numbers we have to work with. We wrote down what we thought we spent and what we would like to have our new budget look like. You know to see where we would have to make sacrifices. I quickly loss my appetite. Side bar, this could be the new weight loss fad - finances before dinner. In the catagory of Food which holds groceries, fast food and eat in dinners: we were 400% higher than we thought we would budget. Gas and travel expenses (which my wife argued should hold trips to Starbucks) was 125%. Lastly and the hardest to catagorize is Fun Money. It holds everything from vitamins to ridiculous bar tabs, but mostly golf and salons. It was another 300% more than we were going to budget.
Good news - we have something to work with. We both know exactly where to we can cut out the fat. Bad news - what the heck were we thinking. How do two people who feel like they are being frugal flush so much money down the toilet? I don't know but to answer the question, is it attainable? - it is.
This is what I am going to present to my wife. Taking 30% of our net income and throwing that towards the 3 goals. First, fill the emergency fund. Second, determine whether I should pay off the credit card first or save for the down payment first. My initial thought is to do both. I am going to open an ING or HSBC account for our DP savings. There is a lot of conflict info out there that says go both ways. We will have to see what is possible and what is attainable. We have a small time frame for the DP, due to our lease ending. We already pay our CC early and at least 2x the minimum due. The interest rate is not entirely out of hand considering my past credit problems.
One day I will have to rant about the in-laws and the dissappearing wedding gift (cash). Lesson learned - don't adjust your finances for something that hasn't happened yet. Or simplier yet, don't spend money you don't have. I thought I would have learned that by now!!
Wish me luck.
First, I am not a big fan of financial plans that use your gross income. I don't have my gross amount to spend. So, I am going to adjust the numbers to work off of my net income. I will guarantee the 60% will not work. Also, I am in sales so I don't have a consistent monthly income. Some months are better than others, so that is another matter to contend with. We typically try to live off our salaries and my commission check is cream. Or "shoes", as my wife puts it.
I have 3 six-month goals. I will be adding them onto NCN Network as soon as I figure that out. First goal - down payment. I am looking at 5% for a down payment. We are shooting for additional 5% gift from our parents. More on that later. Second - $1000 emergency fund. We are almost there. Third - eliminate all credit card debt. We are currently riding around $5,000. Most of this is from our wedding. Hey, it was a nice wedding and these are the consequences.
The million dollar question - "Is this attainable?" As I mentioned before we had a budget. Its only function was to make sure that our income was more than our "committed expenses". No savings plan, repeat, no savings plan. The honest truth - we have $800 in savings. No retirement plan, no IRA's, no investments. Our motto has been "Living on Love" or "Sweat Equity". That and a nickel will get us, well, nothing these days. Really, I feel like I truly have my life long partner, so everything else is about finding the way to be as happy as possible together. BMWs and beach houses aren't free, are they?
We do a decent job of saving all our receipts. So, last night I entered every receipt for the last two months into a spreadsheet to see what numbers we have to work with. We wrote down what we thought we spent and what we would like to have our new budget look like. You know to see where we would have to make sacrifices. I quickly loss my appetite. Side bar, this could be the new weight loss fad - finances before dinner. In the catagory of Food which holds groceries, fast food and eat in dinners: we were 400% higher than we thought we would budget. Gas and travel expenses (which my wife argued should hold trips to Starbucks) was 125%. Lastly and the hardest to catagorize is Fun Money. It holds everything from vitamins to ridiculous bar tabs, but mostly golf and salons. It was another 300% more than we were going to budget.
Good news - we have something to work with. We both know exactly where to we can cut out the fat. Bad news - what the heck were we thinking. How do two people who feel like they are being frugal flush so much money down the toilet? I don't know but to answer the question, is it attainable? - it is.
This is what I am going to present to my wife. Taking 30% of our net income and throwing that towards the 3 goals. First, fill the emergency fund. Second, determine whether I should pay off the credit card first or save for the down payment first. My initial thought is to do both. I am going to open an ING or HSBC account for our DP savings. There is a lot of conflict info out there that says go both ways. We will have to see what is possible and what is attainable. We have a small time frame for the DP, due to our lease ending. We already pay our CC early and at least 2x the minimum due. The interest rate is not entirely out of hand considering my past credit problems.
One day I will have to rant about the in-laws and the dissappearing wedding gift (cash). Lesson learned - don't adjust your finances for something that hasn't happened yet. Or simplier yet, don't spend money you don't have. I thought I would have learned that by now!!
Wish me luck.
posted by Larry at
10:57 AM
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