Critique my budget, please. Need to increase retirement savings.
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Anonymous
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HHI = $145k. No debt other than mortgage. We have a strong emerg fund but only ~$100k in retirement savings (early 30's). Saving about 8%/year towards retirement so I know it needs to increase.
Current net monthly = $8400 after medical and 401k Expenses: - $2500 PITI - $1000 groceries/food - $500 utilities, cell phones - $160 biweekly cleaning - $1300 daycare for one infant - $250 gas/car insurance/life insurance - $400 shopping/gifts/charity - $100 pet - $300 health-related expenses (copays, pharmacy, gym) - $400 extra (travel, home repairs, etc) |
Anonymous
| The easy cuts would be groceries and shopping. Can you try cutting groceries back to $750? Seems fairly easy. Shopping to $200. That alone would give you $450 extra. Are you willing to get rid of the cleaning? Everything else seems fine and not negotiable. |
Anonymous
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I think utilities would be an easy cut too. We've really bundled up this winter and used electric blankets and got our heat below $100.
$100 pet seems like a lot too. Is that food? I agree with grocery being a lot too. |
Anonymous
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We have a similar income ($137K) and mortgage ($2800) but no daycare. I'd say overall you are not spending recklessly or anything but small cuts in a few categories can make a big difference.
1. $1000 does seem awfully high for food. Ours is about half, but I mostly cook all week. Are you getting a lot of prepared food? Take-out? Can you cook on weekends and freeze? Should be able to cut back at least 20% on this category. 2. $1300 daycare. Are you using a FLEX plan for this or otherwise writing this off on your taxes as a childcare credit? 3. $400 for shopping/gifts seems pretty high. Can you cut back here. Not sure why charity is lumped in with this category. But overall, can you knock off $50-$100 a month off this category? 3. $300 for health-related expenses. Same question as childcare. Do you have a FLEX plan at work where you are using pre-tax money to pay for this? If not, you should. Remember that every dollar you put toward your 401K is pretax so it reduces your tax liability, so even a $350 monthly savings on expenses can mean you can put maybe $500 more per month to your 401k. When we do our finances, we like to max out retirement first and then we feel free to spend the rest. I think a lot of people normally adjust to their income. Us included. So if we increase our 401k and IRA savings to the maximum, we feel we have permission to spend the rest as we like. If we didn't maximize retirement, we'd still be tempted to spend everything we make. So my advice is to try to see if increasing retirement savings off the top means that you can adjust your budgets naturally to what you left to work with. Good luck! |
Anonymous
No college savings for said infant? |
Anonymous
Looking at your budget, it is pretty obvious where you can save money if you really want to. Cut out the cleaning all together. Reduce groceries by $200, reduce shopping by $100, eliminate the gym, reduce your extras (you include travel, which if you really want to save, could be cut). I think you can easily increase your savings by $700ish just by making the above changes. |
Anonymous
NP here. I don't think there's anything wrong with putting off college savings for a young, young child in an effort to boost one's retirement savings. |
Anonymous
| How many adults/children? |
Anonymous
And I don't think there is anything wrong with cutting it out altogether. |
Anonymous
| Your family spends too much money on food.Steak daily? |
Anonymous
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OP here. Thanks for the replies so far. In answer to questions:
We are a family of 3. I only posted our expenses, not savings. We do net extra, so we save for college & some for retirement. I'm shocked that folks think ~$1k/mo is a lot for food. This includes all groceries, household goods (diapers), alcohol, lunches and (affordable) restaurants. I am a bargain shopper too and no, we rarely eat red meat, so if you have ideas for how to do this, i would welcome them. We don't always spend $100/ mo on the dog but I would estimate $1200 a yr with food, meds, vet and occasional boarding. I agree I could cut the shopping, but lately it seems like we've had a million gifts to buy! |
Anonymous
Unless you change this type of ridiculous thinking you'll forever be wondering why your finances aren't in the shape you want them to be. |
Anonymous
I would suggest making travel, home repairs, etc. part of your savings plan. You shouldn't have $400 for those expenses AND $400 for shopping, etc. It seems like close to $1000 a month is flying out the door on extras and that could be reigned in. Your health expenses are high too, not sure how much of that is the gym. We are in the same ballpark as you and had to choose btwn cleaning and the gym (we chose cleaning). If you are not using a low-cost cell carrier, switch to one. |
Anonymous
| Wait, you net 70% of your income after taxes, 401k, and medical? |
Anonymous
That's a dumb thing to say. Do you think you can show up to your friend's wedding without a gift? Or a gift for $25? |