General Question

livelaughlove21's avatar

Does this budget break-down seem alright?

Asked by livelaughlove21 (15623points) September 10th, 2012

Some of you may have read in some of my prior questions that my husband and I are buying a house. We’re 22, I’m a college student, and he’s what you’d call the bread-winner. Our loan was approved and we should be closing on the house this Friday.

I worked up our budget on a Word Document awhile back because I’m notorious for worrying, especially about money, and it all seemed to add up. I guess I’m getting the jitters because it’s getting so close, so I wanted to see if y’all think this looks like it will work out fairly smoothly.

I actually rounded up on the bills and down on the income, just to be safe, but let’s just assume this is all correct. In a pinch, we could easily cut the cable and trash service, but this is a standard month for us. My husband gets paid once a week, but I’m worried that even if we can afford it on paper, we may not have enough for certain bills when they’re due. It’s got me up all night thinking about it. My husband is certain we can do it, but I just want some input.

Here it is:

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21 Answers

gailcalled's avatar

It looks fine except for no contingency fee for surprises. And there are always financial surprises in everyone’s life.

You might feel better by cutting the cable and the trash and (a few other small things if you can find them) for six months and start a little savings account.

I don’t see any medical insurance.

Is you husband the actual wage earner or just what you’re calling him? Can you pick up some cash by baby sitting or helping a neighbor out?

I congratulate you on your careful planning. Do you have family to borrow from in a real pinch?

I always did my budget on the back of a piece of scrap paper. It worked just as well as a Word Document.

Good luck with the house. It’s all very exciting.

P.S.:I just took another look and realized that the $400 allocated for food was weekly. Over $1200/month for food for two people is a lot of money. Surely you can pinch a few pennies here.

livelaughlove21's avatar

@gailcalled The income I put on there was our net income, after taxes/insurance/etc. The contingency fee that I included is listed as “extra” money. In other words, we won’t see that as extra until we have some money saved up for a rainy day. Never know when a car might break down.

Yes, he’s the actual wage earner. I go to school full time, but I get a $500 check each month from family out of state, which I included in the income. In December, I’ll start working part-time again (it’s impossible this semester – and that’s why there’s a separate column for after 1/1/13), but luckily our first mortgage payment won’t be due until November 1st.

As I said, I rounded up on certain things. Our cable is closer to $70/month, and his gas expenses will be cut in half when we move – we’ll be 5 minutes from his job. That’s $140 right there. Plus, I put him as bringing home $800/week for three weeks and $500/week for one (they have a “volunteer” week where he gets 40 hours as opposed to 60+) but he’s actually bringing home $1000/week for three weeks and $650/week for one.

It’s just got me worried because we don’t have anything saved up. We tried, but circumstances didn’t allow it (it’s a long story) and this happened really fast. Starting immediately, there’s no more meals out or new clothes or anything for a long while.

We don’t have family to borrow from unfortunately – they don’t have much money at all. I just hope it all works out. I’m excited to get in the house, but this is so stressful! I can’t stop those what-ifs (what if he loses his job? what if the car broke down? what if one of us became ill? etc), but you cant live your life based on those, or you’d never do anything. If we find we are way too strapped for money, we will rent out one of our extra rooms. I graduate in a year-and-a-half and things will be much easier after that once I’m working full time. We just need to get there. :)

gailcalled's avatar

OK. Deep breath.

You have your safety net, it seems, with the spare rooms. (And the fudging.)

Try not to get into a flap. That serves no purpose and won’t prevent the banana peel or the mouse from chewing through your AC ducts in your car.

abundantlife's avatar

Yes I can relate to your situation. We were also in the same pedigree last year when we shifted. But the way you break your budget. I think you are going to be fine.

Tropical_Willie's avatar

The extra money should be going into a automatic deposit savings account, also a favorite charity should be listed for a monthly payment.

Budget looks good.

Pandora's avatar

Do you mean gas for the cars or gas for the home?
You are missing water and home insurance.
I don’t know if the cable bill includes the internet.
In primarily setting up your home you will pay about 200 to 500 for lots of little things.
(curtain, blinds, connecting electric and cable for the first time and gas and water) vacuum cleaner, shower curtains. I know that isn’t in your question because its only a one time deal, but I just figured I would let you know if you didn’t think about it yet. I use to rent apartments and I would get some many young couples that never budgeted for those things in the initial move in or who actually thought it was automatic and things where magically switched over to their names.
It all seems there except for maybe the first 3 things I mentioned. Don’t think as the last bit as extra money . Think of half of it as savings for now till you make more and build your savings.
Oh, does the mortgage already include your home insurance and taxes?
Oh, best of luck. Once you settle in things will sort themselves out. I remember how stressed I was too. The good thing is that you usually don’t have to pay the first months mortgage till one month after you move in so you have some time to get on your feet. Better still if your realtor got the sellers to give you some money at closing.

LuckyGuy's avatar

I did not see your home heating bill. Do you live in a warm climate and don’t need it? Heat can easily be $2000/year if you live in western NY.

CWOTUS's avatar

My main question is: Why would anyone with Microsoft Office figure a budget in Word, and not Excel or Access? (Okay, I realize that no one but me would even consider Access. Fine.) That makes me question the whole process.

I don’t have time to look at the numbers themselves now; maybe later.

wonderingwhy's avatar

If you’re driving a lot you should add in the cost of maintenance on your car(s) unless your doing it yourself.

Also, you might want to consider a small, but budgeted, set aside for minor emergencies like a temporary but expensive prescription, lost phone, service call for an appliance, unexpectedly high bill one month, surprise trip to home depot, etc.

You should also decide where the extra is going – is it primarily spending money, is it savings, is it both. If it’s savings you should consider setting aside some amount for random purchases and just treating yourselves. That seems to help a bit in setting expectations down the road.

livelaughlove21's avatar

@Pandora It means gas for the cars. Gas for the house I included in the electric bill. Similar homes had electric bills of around $130/month with $50/month gas during the summer and pretty much the opposite or less during the winter, so I just included both (even though they are billed separately). I figured if the bill runs high one month, my overestimating will come in handy.

The water bill is included in the document (due on the first of each month) and home insurance is included in the mortgage/escrow. Also, we already have all of the things you mentioned that goes into moving into a new home. We’ve bought quite a bit for it already, and we had a lot from our last house we were renting. But we did take those things into account. :)

@LuckyGuy We live in South Carolina. It rarely goes below freezing here, and winter weather lasts for about two months. Plus, we like it cold in the house. So that’s included in the electric/gas bill I listed.

@CWOTUS I’m confused at why you would respond if you had no intention of answering the question. I prefer Word and the math is right, so I felt there was no need to use excel just for this. It was intended to go on our fridge so we could see what bills need to be paid and when. I wasn’t looking for feedback on what program I chose to use or whether the addition was correct, so I’m not sure which “process” you’re questioning.

LuckyGuy's avatar

@livelaughlove21 I think @CWOTUS was just making a suggestion. I too would have done it in Excel so I could change one number and be confident everything added correctly. But you do whatever is right for you. You are both wise to consider and spend the time doing this analysis.
I am so jealous of your utility bill! Does that include air conditioning? Our A/C bill is zero since we don’t have it. OTOH, if I did not heat with wood, it would take about 800–850 gallons of heating oil to keep the house at 65F. At $4 per gallon that is $3200 per year or $260/month year round on the budget plan.
Did you include home owner’s insurance or is that included in your mortgage?

The IRS uses around 50 cents per mile for auto expenses used for business. That supposedly rolls all the expenses into one number. The rate changes every year and whether it is travel for medical, or volunteer work. But, but for budgeting purposes, you can probably just look at the miles you drive and multiply by $0.50. That will include tires, brakes, oil, gasoline, depreciation and vehicle replacement.

livelaughlove21's avatar

@LuckyGuy Yes, that is both air and heat, depending on the time of the year. We were paying $250/month at our last house, which was a trailer with serious insulation issues. The house we’re moving into is brand new, so we asked the realtor about the bills in similar homes in the neighborhood. And yes, the mortgage includes insurance (PMI and hazard) and taxes.

wundayatta's avatar

Why do your total bills decline $2000 per month in January? Why does income increase $500 a month in January? Where is the $2000 a month in January excess accounted for?

Why don’t you put money into savings that you can’t touch each month? Open an IRA, or if you still need emergency money, at least set up a fund for your retirement, even if it is only part of the existing savings account. But you could purchase spdrs or something as a savings instrument.

livelaughlove21's avatar

@wundayatta That’s a typo. I thought I fixed that before I did the print-screen, but apparently not. The bills will stay the same. Income increased $500/month because I’ll begin working again and that is about what I’ll be bringing home.

Right now we have a savings account that we transfer money into if we have any extra. We will be both opening an IRA or similar retirement fund once I graduate and we have more money to spare. Right now, though, we want to focus on making sure all of our bills are paid and we aren’t dead broke. We’ve got a good 40+ years to save for retirement.

gailcalled's avatar

You can also keep the heat really low (like I do…55˚ in bedroom and 62˚ in the rest of the house) during the cold weather. Wear warm clothes (layers) and snuggle more. (I use my cat, Milo, as a heating pad for as long as his patience holds out.)

wundayatta's avatar

@livelaughlove21 It is really worth socking away every possible penny now, while there are 40 years for it to earn compounded earnings, then to back end your retirement savings, when they only have a few years to grow. Seriously, if you do the heavy lifting now, you will lead a much easier life later.

But yes, you gotta cover expenses now. A revised budget would be nice because I’m a little confused. Are you saying income goes up and expenses go down in Jan? What expenses go down? Or what am I missing?

CWOTUS's avatar

You didn’t think the advice to do this in Excel was helpful? For one thing, taking ten minutes to do that would have shown the hole in your budget at the middle of every month (assuming biweekly income, as is common these days), or play with the payment dates very, very easily to readjust.

I don’t doubt your math skills, but I doubt Word’s.

livelaughlove21's avatar

@wundayatta No, expenses stay the same and income goes up. The only revision that needs to be made to the document is a 2 at the beginning of the post-January bills.

@CWOTUS He gets paid weekly, as stated in my original question. What I didn’t find helpful is that you didn’t answer the question I asked and stated you “didn’t have time” to do so. Nothing wrong with being busy, but I’m not sure I would have bothered responding if it were me.

redhen4's avatar

When I do a budget I try to compare present and future to see how it all lays.

When I bought my house I made sure the mtg. pmt. was $50 or less than rent-I knew I could afford that, especially with any wage increases for the future.

That was 13 years ago. I now make $4 an hour less and still am able to make my payment.

As for retirement, I strongly suggest you put in something. Even though I started putting away in my late 20’s, 4 years ago when I wasn’t working for a year and had high Cobra payments, I went through half my retirement funds. Prior to that, I needed to put away about $300 a month in order to live the same lifestyle when I retired. Now at 55 I cannot put away that kind of money, at least not till I get credit cards paid for (I’m not frivolous on cards-medical, dental bills, auto repairs and a new door are on those cards.). I did research and found a card with 22 months no interest. That gives me another year from now to get it all paid for. I saw you have Care Credit. I did/do too and used it for 12 mos interest free for the last dental bill, paid off $2000 in 10 months.

redhen4's avatar

I forgot! Nice job! To be 22 and concerned about money, spending and buying your own home? A lot of people older than you don’t think about those kinds of things.

Also, when I moved to AZ from Ohio there was so much different. I found out everything I could on prices of auto insurance, plates, heating & cooling. I made sure I added in everything I could.

Cruiser's avatar

I can assure you that you would not have gotten approved for that loan had you not met fairly rigorous scrutiny of our mortgage industry so if you stick to your budget you will be fine. Do be smart about gift giving until you get more cash on hand so make gifts or send a message that your house is your gift to each other and family and friends.

Don’t be too proud to shop at Goodwill as if you do you can wear some of the nicest clothes money can buy at less than $4.00 per item. Also, DO become a member of as you can a LOT of things you will need for FREE as people there give stuff away they’d rather not throw away. I have a killer baby grand piano in my living room a church simply wanted to get rid of! Oh…and the leather couch…and I just was given a gorgeous men’s black wool P coat!

Also be on the same page with your spouse about credit card use as that is the fastest way to going under and in a hurry! Congrats and enjoy the new home!

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