Reply to If I make 112k income...how much should my rent be?

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[quote=Anonymous][quote=Anonymous]OP here I am working out on a possible budget to look like this:

Rent: $2200
Utilities: $100
Car payment: $450
Car Insurance $100
Gas: $100
Groceries: $600
Cellphone: $180

So total: $3780.

I will have to decrease my retirement contributions so I have more wiggle room.[/quote]
I'm a big proponent of putting as much as you can into retirement contributions, but you're probably right.  $25k on a $112k income is a lot; you're basically living on an $87k annual salary—which can be done, but sure as heck isn't easy in DC.

But if you do have to lower your retirement contributions, try to reduce them as little as possible.  At your 22% federal marginal tax rate and 5.75% Virginia marginal tax rate, every $1000 you stop putting into savings is going to increase your taxes by $277.50—meaning you only get $722.50 for that $1000 drop in retirement contributions.  (This assumes your contributions are non-Roth.  If they aren't, changing them all to traditional contributions will cut your taxes and increase your monthly net income.  You'll have to pay tax on more of your income when you retire, but that's not your problem right now.)  [/quote]

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