Advice on my budget -Update #52, new question #53!

[Home'scool]

I have never, ever been good with money. My mother raised us to "spend spend spend!" and "enjoy life now because you never know when you will die!" Well, she died bankrupt and worrying about money all her life.

 

I don't want to be like that anymore. I was lucky that my husband made good money, but even then we together did not make good money choices. Now that I am getting divorced I want to do things the right way. I am 50 years old. When I retire at 65 I want to be financially secure. I don't have to be rich -- I just don't want to worry about money. So this is like a new start for me.

 

I have laid out my budget and I feel hopeful, but I am always afraid I will forget something or over/under estimate something.

 

Can y'all take a look and let me know what you think?

 

My scenario is this: I live with my sister. She does not charge me rent or property tax but I pay half the utilities. I am budgeting $2000 per month towards a "RENT" category - that is the low end of renting where I live. If the septic fails at any time I will replace it up to $20,000 (the house is about 30 years old.) If the septic never fails I keep all the money in the RENT account. I figure I will have that $20,000 covered in 10 months. We plan on living in her house for at least 5, probably closer to 10, more years so I am very lucky to live there rent free for at least 4 years even if the septic fails.

 

I will have half my ex's 401K and will have a small pension when I retire.

 

I also have been keeping track of my expenses for the last 4 months to get an estimate on what I am spending. I am including things like a vacation account and expenses for things like pedicures because I want to try to account for everything I need AND would like, but am I being stupid? Let's assume I start out with a zero bank account balance.

 

So, per month:

Rent (actually savings):   $2000

Groceries:                            500

Knitting (hobby):                    50

Auto Fuel:                            300

Clothing:                                75

Work Lunch:                        100

Propane :                             200

Electric:                                100

Wireless:                                40

Cable:                                     85

Pedicures:                              30

Trash:                                     20

Water :                                   10

Haircut:                                   40

Homeowners:                         10

Vacation Fund:                     400

Car Payment:                       350

Car Insurance:                      350

Car Maint.:                              50

Emergency $:                        200

Eating out/Movies:                 300

 

Total =                             $5,210

 

Between my salary and alimony I will have about $5500 coming in per month, giving me $290 wiggle room.

 

I know I have some silly things on there, like pedicures, or $160 for my haircut every 4 weeks, but if I am saving $2000 per month and setting aside $200 per month for emergencies and $50 for car maintenance should I tighten my belt and reduce the "fun" categories? $400 for vacation  - that would be a luxury from me to be able to take $4800 vacation every year.

 

See, I have no sense of "too much frivolous" vs. "enough of a cushion"!!!  Should I really buckle down the first 5 years and save save save and then loosen up?

 

Any advice?

 

Edited July 26, 2016 by Home'scool

[mommyoffive]

Hard to answer without some other info

 

Is this just for you?  Do you have kids?

 

How long is your alimony for?

 

Do you have an emergency fund?

 

This is your budget for the month?  Your car insurance is 350 a month?

 

Could you live any place cheaper?

 

Are you not saving for retirement?  Or is that already taken out?  

Edited July 25, 2016 by mommyoffive

[maize]

Your budget looks good to me. You're saving, planning for all necessities, and planning in things that you enjoy. That sounds like a balanced plan and I think you're good to go.

[HomeAgain]

Well, I don't believe in denying yourself everything, feeling resentful, and then blowing more than you should.  So definitely keep categories in there that you use.  The main point of a budget is twofold:  you want to tell your money where to go and you want to be able to plan for the future/meet goals.  And it's also flexible.  Right now you have $900/mo devoted to food (groceries, work lunch, eating out).  That's fine, but I'd put that all in envelopes so you know exactly how much you truly are spending.  Is it too little?  Too much? 

 

Also, sit down and make a list of your long term goals.  Where exactly do you want to be by 65, and are you getting yourself there?

[maize]

Ah yes, retirement savings would definitely be a priority. I'd open a Roth IRA in addition to whatever you might have through work.

[Ewe Mama]

How is the alimony actually going to arrive? If it's supposed to come directly from your ex, you should not count on it for your budget.

[SparklyUnicorn]

you must be loaded

 

LOL 

 

Really I can't possibly give advice on this.  $700 a month just for a car?!  That must be one hell of a nice car.

 

 

[Ewe Mama]

Are there children involved? Are you in a high COL state? I'm just looking at some of your numbers and scratching my head. As a family of 7, we are living on $4,000 per month and saving the rest. Are you planning to clothe your children on $75/month or is that just for yourself?

[SparklyUnicorn]

Oh no...pardon..that's $750 a month for a car if I count the maintenance.  Wow! 

[JanetC]

Is this your paycheck and alimony before taxes? If so, add a line item for income tax and various paycheck withholdings.

[Home'scool]

I am assuming  my retirement will be the $2000 that I will be saving a month, plus half my husbands 401K, plus half his Social Security, plus my small pension (maybe $400 a month).

 

I am hoping to retire at age 65. I am assuming the alimony will stop at age 65 (we haven't worked out all the details)

 

We have two children, ages 21 and 19. They will still need financial help but that will be split between my ex and me.

 

I budgeted the car insurance at $350 only because right now we are paying for the car insurance for both our children. That will change in a few years.

 

If I had to rent, $2000 is probably the lowest I would go without having to move someplace I did not feel safe. I feel so blessed I can live with my sister (it's actually an in-law apartment) but I budgeted $2000 because that is the least I would to spend if I was not able to live with her.

 

 

 

Edited July 25, 2016 by Home'scool

[Home'scool]

you must be loaded

 

LOL 

 

Really I can't possibly give advice on this.  $700 a month just for a car?!  That must be one hell of a nice car.

 

The car is relatively new (it's a 3 year old small SUV) but I drive 45 minutes each way to work and have to account for winter months, so I wanted a reliable safe car.

 

And the other $350 is for insurance but both my ex and I pay for our 2 kids car insurances too. That will change in a few years.

[SparklyUnicorn]

if you scale back you could retire now and pick up a craft and make a few bucks at craft fairs

 

I suppose someone might tell me the same though.  Scale back and eat Ramen and live in a tent. 

[Rebel Yell]

It seems to work on paper.

 

You have several categories that you could reduce or eliminate in an emergency, such as dinners out/pedi/movies/vacaction/cable/knitting (I bet you have a HUGE stash- all my knitting friends do 😄) Also, once your car is paid off, maintain it as long as possible and free up that money, as well.

 

Good luck!

[SparklyUnicorn]

The car is relatively new (it's a 3 year old small SUV) but I drive 45 minutes each way to work and have to account for winter months, so I wanted a reliable safe car.

 

And the other $350 is for insurance but both my ex and I pay for our 2 kids car insurances too. That will change in a few years.

 

ohhh the kids' insurance...that explains it!

 

I pay about $70 a month for car insurance for two cars. 

[SparklyUnicorn]

I agree on paper it looks very doable and responsible. 

 

 

[Home'scool]

Are there children involved? Are you in a high COL state? I'm just looking at some of your numbers and scratching my head. As a family of 7, we are living on $4,000 per month and saving the rest. Are you planning to clothe your children on $75/month or is that just for yourself?

 

The $75 in clothing is for me BUT I tried to round UP all of my figures so that I wouldn't lay out a budget that was unrealistic. I don't usually spend $75 per month on clothes but I would rather budget for that, put the money aside, and then have extra if I need it.

 

I do have two daughters, ages 21 and 19, so they still will need some financial support. And yes, I do live in a high COL area.

[Arcadia]

Is your car new?

We paid higher for car insurance before the car loan was paid off but it is about $1k per year.

[Miss Mousie]

Personally, I'd put the amount for vacation into your emergency fund at least until your emergency fund covers 6 months of expenses (including the rent that may never be rent).  At 5200/mo, six months = $31,200; at a savings rate of $600/mo., it will still take you nearly 4.5 YEARS to amass that much money.  Plan on staycations until you're stable.

 

Aside from starting the IRA that a PP mentioned, I'd throw nearly everything extra into emergency funds. 

 

 

 

 

[TranquilMind]

I've always been really good with money.  If you want my honest advice, here is what I would do:

Ditch the pedicures. You can do that yourself.

 

Ditch the expensive, frequent haircuts.  I've done everything from high end salons to Great Clips.  I have been using Great Clips for years now and the cut is just as good. 

 

Save that money and buy an inexpensive but decent used car at an estate sale.  They happen all the time.  The last one I was at sold a beautiful older car with hardly any mileage since the owner was 94 for under 3 grand.  Do this and eliminate car payments. 

 

Groceries seem high for one person but maybe you are feeding several.  Do you have an Aldi's or Trader Joe's?  Cheaper there.

 

I rarely buy any clothes, but when I do, it will be maybe at most twice a year at Clearance sales after the season.  Buy that way.  Online you can get fabulous deals.  I just hit a sale at Steinmart yesterday and bought my husband about 10 things for $100.  One shirt was $3.00.  Try doing that, if you shop more regularly.  It is a rare day that I pay full price for anything.

I'm very interested in this 20 grand for septic replacement.  I could get mine replaced here for about 6 grand.  Shop that around! 

 

Do you have any ideas for anything you could make or sell?  Many people make a good living selling stuff online or on Craigslist or Etsy. 

 

 

[Miss Mousie]

The $75 in clothing is for me BUT I tried to round UP all of my figures so that I wouldn't lay out a budget that was unrealistic. I don't usually spend $75 per month on clothes but I would rather budget for that, put the money aside, and then have extra if I need it.

 

 

 

This is great.  It's exactly how a budget should be made, IMO. 

 

Nine hundred seems high for clothing for a year ... what if you include the $30 pedicure in the clothing budget?  Or just do it yourself maybe every other time?

 

Sorry, I'm not trying to suggest you eat ramen and live in a tent (LOL, Sparkly), I'm just trying to get you to a secure position as quickly as possible, and then when you have breathing room you can add back more fun stuff.

 

Oh - I don't recall seeing a line for cell phone - you may need to add that, if applicable.

[Home'scool]

This is great.  It's exactly how a budget should be made, IMO. 

 

Nine hundred seems high for clothing for a year ... what if you include the $30 pedicure in the clothing budget?  Or just do it yourself maybe every other time?

 

Sorry, I'm not trying to suggest you eat ramen and live in a tent (LOL, Sparkly), I'm just trying to get you to a secure position as quickly as possible, and then when you have breathing room you can add back more fun stuff.

 

Oh - I don't recall seeing a line for cell phone - you may need to add that, if applicable.

 

Cell phone! Yes, I forgot that!

 

And I do want to get into a secure position as quickly as possible. I like going on vacations but I am just as happy with stay-cations too. I just figured, again, put the money aside for it and if I don't use if for vacations I have it for other things.

[Bambam]

I don't know that I would count the $2000 toward rent you could be paying as savings. You may have to replace the septic. Okay, but what if there are other major problems with the house you and your sister are living in? Will she expect you to help cover the costs (thinking new roof, new water heater, new refrigerator/washer/dryer/heat pump/central air, plumbing issues, etc)? What about renters insurance for your stuff? I would definitely include some money to a retirement account. I'd be hesitant to count any income until I saw it coming it regularly, and then I think I wouldn't necessarily count it always being there.

 

Will you help with property taxes? 

 

 

[Guest]

Having read no replies:

I would reduce the vacation fund by at least $100 for at least a year or two and beef up "emergencies" category. I don't see anything at all for medical emergencies, prescriptions, co-pays, dental, vision care, but I don't know what your health care circumstances are and how much/what you need to fork for. we just finished paying $2,500+ for repairs to DS' teeth due to a mouth trauma - and that was about half-price because we had it done at the dental school.

I would also reduce the entertainment/eat out category for a while at least, to have a more-secure emergency fund. It is something you simply have to be disciplined about; if you know you will be out and about when lunchtime rolls around, bring a cooler and a lunch. Plan inexpensive fun times (netflix, family movie night) so you don't feel as deprived.

I actually don't think it is necessary to eliminate the pedicure budget, but if/when you skip the pedi or just do your own at home, move that money to emergency fund.

 

The best, best, BEST book I ever read that helped me understand money in the proper perspective was Your Money or Your Life by Joe Dominguez. This book has been revised and I'm not a huge fan of the Vikki person who revised it, but Dominguez was the most real dude. My attitude towards money changed permanently and for the better due to this book. If you just try to force yourself to manage money counter to your attiudes, you will have just as hard a time as someone who just tries to stop eating cookies through "willpower." Much better to change the underlying attitudes about money.

 

Good luck! :)

[Um_2_4]

I would also set an emergency fund aside in case that alimony does not appear each month in full and on time. Before I did a vacation. Also set some money aside for future housing options. Buy a condo or whatever. And $20k does seem high for septic. I would shop around BEFORE you need it.

[Arcadia]

Cell phone! Yes, I forgot that!.

I was assuming yours is paid/reimbursed by the employer.

 

Another thing you might want to include is the maximum annual out of pocket cost for your medical and dental insurance. I think my family max out our out of pocket twice so far in 10 years.

[JanetC]

I am assuming my retirement will be the $2000 that I will be saving a month, plus half my husbands 401K, plus half his Social Security, plus my small pension (maybe $400 a month).

 

Your retirement savings might evaporate if the septic fails or if your sister dies?

You may need to (a) have life insurance on your sister that covers your rent if you can no longer depend on her (b) have some sort of agreement to have equity in the property equal to the amount you invest in the septic system so you get your savings back when the house is sold.

 

Since so much of you financial future is contingent on making that system last, you might even budget for regular septic inspection and maintenance!

[maize]

I am assuming  my retirement will be the $2000 that I will be saving a month, plus half my husbands 401K, plus half his Social Security, plus my small pension (maybe $400 a month).

 

I am hoping to retire at age 65. I am assuming the alimony will stop at age 65 (we haven't worked out all the details)

 

 

 

OK, I strongly advise putting at least some money into a tax advantaged retirement account--again, Roth IRA would be a great place to start, or Roth 401K if your employer offers that. Is there any retirement savings matching program through your employer? You want something in an investment account, an index fund or two usually works fine. Money just sitting in a bank is excellent for emergencies but will lose value over time because of inflation.

 

And people often end up with more expenses in retirement than they expect.'

 

I guess if your x has a large 401K that may be all you need, but given that your situation allows you to save I would absolutely do so.

[Annie G]

I am assuming  my retirement will be the $2000 that I will be saving a month, plus half my husbands 401K, plus half his Social Security, plus my small pension (maybe $400 a month).

 

I am hoping to retire at age 65. I am assuming the alimony will stop at age 65 (we haven't worked out all the details)

 

We have two children, ages 21 and 19. They will still need financial help but that will be split between my ex and me.

 

I budgeted the car insurance at $350 only because right now we are paying for the car insurance for both our children. That will change in a few years.

 

If I had to rent, $2000 is probably the lowest I would go without having to move someplace I did not feel safe. I feel so blessed I can live with my sister (it's actually an in-law apartment) but I budgeted $2000 because that is the least I would to spend if I was not able to live with her.

 

Are you planning to withdraw from the 401k at a 'safe' withdrawal rate of 4% a year?  You don't say how much your husband has in the 401K at this point. 

 

Alimony is going to last 15 years and you're working?  That seems like a sweet deal.  From what I hear in my area, alimony is for just a couple of years until the woman can get back into the workforce and support herself.  Alimony is taxable, right?  Do you already have that figured in?

 

You will receive half your husband's ss benefits if you do not collect until full retirement age. If you take it earlier it will be permanently reduced. So your full retirement age is 67, and if you take it at 65 you will receive 41.7% of his benefit. 

 

Does your sister resent you living there rent free while living as well as you do? Maybe she doesn't mind at all but something to keep in mind if the relationship becomes strained. 

 

What about health care? Both premiums and out of pocket expenses. 

 

Do you have access to a 401K at work? If not, can you open a regular IRA? Do you have access to an HSA to dump money into for future health costs? Lowering your tax liability while saving money for the future will really help. 

 

Good luck- you have a great start since you already tracked four months' worth of expenses. 

[Storygirl]

You mention several times that you still need to give your daughters some financial support. I don't see that in your figures. I also think your food budget is high, unless you are regularly feeding your sister and your daughters as well as yourself. I spend about $750 per month on groceries for a family of six. If you have been tracking your grocery bill, and it really is that high, I think you could cut that expense quite a bit.

 

Your priority seems to be retirement savings, but that is not reflected in your budget, either. I wouldn't count on the $2000 for retirement, because it is easy for other things to come up that will require you to dig into that fund. Make sure you put your savings in a separate account so that you don't end up spending it.

 

I think it's great that you are making a plan!

Edited July 25, 2016 by Storygirl

[heartlikealion]

We made a small budget list recently. I'm trying to remember what we put down... and this comes to mind, which I don't see on your list.

 

Health insurance

dental ins.

life ins.

renter's insurance?

 

Possibly another category like misc. (I don't know what to call it but like random stuff, back to school supplies or whatever. Maybe shopping category but not specific to clothes)

 

Are things like toilet paper, toothpaste, etc. included in your grocery shopping (like if you buy all that stuff at one store)?

[Kalmia]

The area she lives in may not have proper soils for a conventional septic system. It may require sand mound septic systems that cost significantly more as they truck in massive amounts of sand and gravel to build them above the ground. I think they start at 20,000 and can be much more.

[Kalmia]

double post

Edited July 25, 2016 by Kalmia

[TranquilMind]

The area she lives in may not have proper soils for a conventional septic system. It may require sand mound septic systems that cost significantly more as they truck in massive amounts of sand and gravel to build them above the ground. I think they start at 20,000 and can be much more.

 

Ugh. That sounds awful.  We are connecting to city sewer here so I guess I don't have to find out. 

 

[bettyandbob]

Are you sure alimony will be indefinite? I have not heard of anyone getting more than 5 years of alimony no matter how long the marriage. 

[Ethel Mertz]

I didn't see a category for gifts. It might be helpful to have one for whichever winter holiday you celebrate, birthdays, and other such occasions.

[SereneHome]

Coming from someone who has done finance/budgeting for a living for over a decade and who has been doing personal finance for longer....

 

Don't look at your budget on a monthly basis - look at it annually.  Look at the big picture.

 

Don't look at actual numbers, but a % of your total income.  It will show a much more clear picture of where you are.

 

Don't count on your expenses going down in a "few years".  It is completely irrelevant to your financial picture today.   Budget and forecast based on today's numbers.

 

Don't micromanage your categories too much - work lunch +eating out + grocery...  Food is food.  Haircuts +pedicures = personal services.  Add it up and consider if it makes sense % wise of your total income.  Does it still make sense?

 

These are just a few things that come to mind. 

 

 

[Ausmumof3]

Most of what I noticed has already been said. Is there a category for medical expenses? Even basic pharmaceuticals.

 

What happens if something happens to your ex or he doesn't pay? Do you have some kind of back up? Are you going to be able to manage living with your sis long term? If you do have to move out will you need to buy furniture and stuff? what about general expenses like paper etc. do you have tech needs that will need replacing in time (for work or schooling)?

 

I like the advice about not micromanaging the categories as this is a trap I fall into but it's helpful to think about which category they come into.

 

I wonder if you could think about the pedicures as a three or six monthly splurge. I understand not wanting to cut back on your hair styling etc as it can impact on self image a lot if they are important to you but if you could out a little bit extra into the emergency fund for the first year then you can enjoy them later without so much worry.

[StephanieZ]

What about home furnishings, etc? Replacement mattress sets, couches, TVs, computers, linens, kitchen things, lawn furniture, etc. Think over the last year or two of expenditures . . . For me, browsing my Amazon history or walking through my house helps me see what I've bought  .. .  It's a LOT. I spend Much more on household stuff than clothes, for sure. 

 

And gifts for the kids -- weddings, trips, electronics, car helps, flying them home for visits, future grand baby spoiling? You need a line item for those shared expenses and/or gifts. I know these items were big in my parents' spending for their lifetimes, and I expect it to be the same for me. 

 

2000/mo for 15 years at 7% earnings would end up with about 600k+ if it's pretax (tax preferred retirement account) or 500kish if it's post-tax (not a retirement account), so be sure to get it in a retirement account if you can. 

 

Be sure to allow for housing once you are retired. You may want to plan to move to a low COL area upon retirement barring a lucky financial happenstance. Most folks try to own their home outright before retirement, and your free rent will be great, but you aren't paying into a home . . . So, you're going to have major housing expenses for ever . . . If you took out 5% a year of that 600k (a rough conservative estimate of advisable withdrawal rates), that'd be 30k/yr, which won't even come close to covering JUST an inflation-adjusted rent comparable to the 2k you'd budget right now . . . So, anyway, just think about housing. So, your SS and 401k and Pension income will need to be quite significant to cover all your other expenses AND rent.

 

I think you're on the right track. I'd say, make your budget, track it, use it, tweak it . . .and do your best to make it accurate and get a solid record of your spending for 3-6 months, and then invest in a couple hours with a fee-only financial planner to tweak your goals, choose investment strategies . . . and understand if you are on track for what your goals are. 

 

[Garga]

I have never, ever been good with money. My mother raised us to "spend spend spend!" and "enjoy life now because you never know when you will die!" Well, she died bankrupt and worrying about money all her life.

 

I don't want to be like that anymore. I was lucky that my husband made good money, but even then we together did not make good money choices. Now that I am getting divorced I want to do things the right way. I am 50 years old. When I retire at 65 I want to be financially secure. I don't have to be rich -- I just don't want to worry about money. So this is like a new start for me.

 

I have laid out my budget and I feel hopeful, but I am always afraid I will forget something or over/under estimate something.

 

Can y'all take a look and let me know what you think?

 

My scenario is this: I live with my sister. She does not charge me rent or property tax but I pay half the utilities. I am budgeting $2000 per month towards a "RENT" category - that is the low end of renting where I live. If the septic fails at any time I will replace it up to $20,000 (the house is about 30 years old.) If the septic never fails I keep all the money in the RENT account. I figure I will have that $20,000 covered in 10 months. We plan on living in her house for at least 5, probably closer to 10, more years so I am very lucky to live there rent free for at least 4 years even if the septic fails.

 

I will have half my ex's 401K and will have a small pension when I retire.

 

I also have been keeping track of my expenses for the last 4 months to get an estimate on what I am spending. I am including things like a vacation account and expenses for things like pedicures because I want to try to account for everything I need AND would like, but am I being stupid? Let's assume I start out with a zero bank account balance.

 

So, per month:

Rent (actually savings):   $2000

Groceries:                            500

Knitting (hobby):                    50

Auto Fuel:                            300

Clothing:                                75

Work Lunch:                        100

Propane :                             200

Electric:                                100

Wireless:                                40

Cable:                                     85

Pedicures:                              30

Trash:                                     20

Water :                                   10

Haircut:                                   40

Homeowners:                         10

Vacation Fund:                     400

Car Payment:                       350

Car Insurance:                      350

Car Maint.:                              50

Emergency $:                        200

Eating out/Movies:                 300

 

Total =                             $5,210

 

Between my salary and alimony I will have about $5500 coming in per month, giving me $290 wiggle room.

 

I know I have some silly things on there, like pedicures, or $160 for my haircut every 4 weeks, but if I am saving $2000 per month and setting aside $200 per month for emergencies and $50 for car maintenance should I tighten my belt and reduce the "fun" categories? $400 for vacation  - that would be a luxury from me to be able to take $4800 vacation every year.

 

See, I have no sense of "too much frivolous" vs. "enough of a cushion"!!!  Should I really buckle down the first 5 years and save save save and then loosen up?

 

Any advice?

 

You need to go to a financial planner about opening a Roth IRA or opening a 401K through work.  Very important. 

 

So, you need a category where money goes into the Roth or 401k.

 

In your necessities you have: $4005

And in wants you have: $1205

 

That's a LOT of money toward wants. 

 

These are the wants:

Knitting

work lunch

cable

pedicures

haircuts

vacation fund

eating out/movies

 

The only want that might wiggle into the need category is the haircuts and probably the knitting.

 

Other than that, everything else can be either entirely eliminated or cut way back on.  Here's how I do it:

 

I get my clothes at the thrift store or on the sales rack at Kohls.  And I go to the thrift store on 1/2 price day. If the thrift store just won't work for some reason, then shop for sales only.  Never, ever, ever full price.  Ever.  Ask for gift cards to clothing stores for presents (if you have the kind of family that asks you, "What would you like for Christmas?" In some families, asking that is considered rude.)

 

I have a very expensive hobby in photography, but I wait and only buy things once in a blue moon.  I mean, like once every 3 years.  I just use what I have.  Can you use up what you have for a time and stop buying any new knitting supplies? 

 

My dh makes his own lunches for work and I used to do the same when I worked.  Can you eat leftovers or make sandwiches or easily reheated soups for lunch each week?  DH makes a stew or soup or something every Sunday and it lasts all week.  For me I'd get sick of that and would make a few stews/soups and freeze them so I would have an assortment to choose from each day.

 

We ditched cable for Netflix.  MUCH cheaper.  The only time I miss it is when I want to watch ice skating.  Then I buy access to the skating separately.  Still cheaper than cable.

 

Pedicures, never had one and you can do it at home.  If you must have them for the relaxation, then ask for gift cards for birthday/Christmas and only go if you have a gift card.

 

Haircuts, I cut my own as much as I can, getting a decent cut about 3 times a year.  Can you do that?  Get a good cut from time to time and trim yourself?  Or just let it grow out between cuts?

 

Vacation: this one has become an unexpected burden to me.  My parents live 2500 miles away and it only works for us to fly to them and it's much more expensive than I am happy about.  Before we started visiting them, vacations were just simple things near home.  Maybe 2-3 nights at the beach that's in driving distance.  Scale back on vacations.

 

We go out to eat about once or twice a month.  This is hard for us.  We love eating out.  But it becomes too expensive.  Can you plan when you'll go so you have that sense of anticipation and don't end up stopping to eat out constantly. 

 

Movies are always matinees or $5 Tuesday.  It's like a dream--two theaters around here show all their movies, all day long for just $5 a ticket on Tuesday.  If there wasn't $5 Tues then it would always be matinees.  I haven't seen a movie at night in years.  I only go to see movies in the theater that really need to be seen on a big screen: adventure movies usually.  Love stories are just as good a few months later at home with Netflix.

 

 

 

 

 

I agree with another poster that you can't just stop cold turkey.  But I think you have entirely too many wants on your list with entirely too big of price tags.  Your mindset is NOT where it should be.  You are still operating under the spend, spend, spend mindset.  Spending $1200 a month on wants, is a bad financial choice. 

 

You need the $20,000 in the bank and then forget about that.  That is NOT your money.  That is the septic's money. 

 

After you have the $20,000 socked away and forgotten, then you need to have 6-12 months savings for necessities in case you lose your job.  That would be the $4000 for needs times 6 ($24,000) or times 12 ($48,000). 

 

You also need to be saving above the $24-48k for retirement.

 

You have a lot of saving to do, so you need to cut out some of those wants.  Don't go cold turkey and don't cut them entirely.  I could cut them cold turkey or entirely because that's my mindset.  For you, just cut waaaaaay back.  Like, I mean, super way back.

 

 

Here's how I can have the mindset about saving.  See, for me I don't see going without as a burden.  I see it as a challenge.  I want to know what is the absolutely minimum I can get away with spending and I love (LOVE) seeing the money in the bank go up.  I am highly motivated by that number and I love the challenge of seeing how far I can stretch things.  How long can I go before I break down and eat out?  How can I get the best deal on a new shirt?  I find it very gratifying to save my money. 

 

Other people feel like they're destitute or are a "loser" because they can't buy stuff. 

 

I don't' know how you feel, but I think Quill's book Your Money or Your Life would be good for you to read.  It can help you shift to seeing saving as a challenge and something fun to do vs a burden.

[heartlikealion]

You need to go to a financial planner about opening a Roth IRA or opening a 401K through work.  Very important. 

 

So, you need a category where money goes into the Roth or 401k.

 

In your necessities you have: $4005

And in wants you have: $1205

 

That's a LOT of money toward wants. 

 

These are the wants:

Knitting

work lunch

cable

pedicures

haircuts

vacation fund

eating out/movies

 

The only want that might wiggle into the need category is the haircuts and probably the knitting.

 

Other than that, everything else can be either entirely eliminated or cut way back on.  Here's how I do it:

 

I get my clothes at the thrift store or on the sales rack at Kohls.  And I go to the thrift store on 1/2 price day. If the thrift store just won't work for some reason, then shop for sales only.  Never, ever, ever full price.  Ever.  Ask for gift cards to clothing stores for presents (if you have the kind of family that asks you, "What would you like for Christmas?" In some families, asking that is considered rude.)

 

I have a very expensive hobby in photography, but I wait and only buy things once in a blue moon.  I mean, like once every 3 years.  I just use what I have.  Can you use up what you have for a time and stop buying any new knitting supplies? 

 

My dh makes his own lunches for work and I used to do the same when I worked.  Can you eat leftovers or make sandwiches or easily reheated soups for lunch each week?  DH makes a stew or soup or something every Sunday and it lasts all week.  For me I'd get sick of that and would make a few stews/soups and freeze them so I would have an assortment to choose from each day.

 

We ditched cable for Netflix.  MUCH cheaper.  The only time I miss it is when I want to watch ice skating.  Then I buy access to the skating separately.  Still cheaper than cable.

 

Pedicures, never had one and you can do it at home.  If you must have them for the relaxation, then ask for gift cards for birthday/Christmas and only go if you have a gift card.

 

Haircuts, I cut my own as much as I can, getting a decent cut about 3 times a year.  Can you do that?  Get a good cut from time to time and trim yourself?  Or just let it grow out between cuts?

 

Vacation: this one has become an unexpected burden to me.  My parents live 2500 miles away and it only works for us to fly to them and it's much more expensive than I am happy about.  Before we started visiting them, vacations were just simple things near home.  Maybe 2-3 nights at the beach that's in driving distance.  Scale back on vacations.

 

We go out to eat about once or twice a month.  This is hard for us.  We love eating out.  But it becomes too expensive.  Can you plan when you'll go so you have that sense of anticipation and don't end up stopping to eat out constantly. 

 

Movies are always matinees or $5 Tuesday.  It's like a dream--two theaters around here show all their movies, all day long for just $5 a ticket on Tuesday.  If there wasn't $5 Tues then it would always be matinees.  I haven't seen a movie at night in years.  I only go to see movies in the theater that really need to be seen on a big screen: adventure movies usually.  Love stories are just as good a few months later at home with Netflix.

 

 

 

 

 

I agree with another poster that you can't just stop cold turkey.  But I think you have entirely too many wants on your list with entirely too big of price tags.  Your mindset is NOT where it should be.  You are still operating under the spend, spend, spend mindset.  Spending $1200 a month on wants, is a bad financial choice. 

 

You need the $20,000 in the bank and then forget about that.  That is NOT your money.  That is the septic's money. 

 

After you have the $20,000 socked away and forgotten, then you need to have 6-12 months savings for necessities in case you lose your job.  That would be the $4000 for needs times 6 ($24,000) or times 12 ($48,000). 

 

You also need to be saving above the $24-48k for retirement.

 

You have a lot of saving to do, so you need to cut out some of those wants.  Don't go cold turkey and don't cut them entirely.  I could cut them cold turkey or entirely because that's my mindset.  For you, just cut waaaaaay back.  Like, I mean, super way back.

 

 

Here's how I can have the mindset about saving.  See, for me I don't see going without as a burden.  I see it as a challenge.  I want to know what is the absolutely minimum I can get away with spending and I love (LOVE) seeing the money in the bank go up.  I am highly motivated by that number and I love the challenge of seeing how far I can stretch things.  How long can I go before I break down and eat out?  How can I get the best deal on a new shirt?  I find it very gratifying to save my money. 

 

Other people feel like they're destitute or are a "loser" because they can't buy stuff. 

 

I don't' know how you feel, but I think Quill's book Your Money or Your Life would be good for you to read.  It can help you shift to seeing saving as a challenge and something fun to do vs a burden.

 

Haha I like the way you think. We set a Christmas budget and I was like, "Challenge accepted" LOL I love finding bargains. And I don't know if this helps the OP but sometimes I benefit from using apps or websites to earn gift cards (ie. Shopkick, Swagbucks). Doesn't help often, but for some things here and there it does. Knocks off $5 on an Amazon purchase, etc. Online shopping with coupon codes plus depending on your payment method possibly cash back or airline miles is nice.

 

When possible I try to combine trips to save on gas. We usually go to the grocery store once a week so try to wait til grocery day to do more buying.

[mommyoffive]

I would have more questions about your ex's 401k.  How much is it?  I mean you don't have to tell me how much it is.  But have you run the numbers to know how much half of it is?  How much you could withdraw from that in retirement?   

 

Do you know how much his ss would be?  

 

I would want to know exact numbers on that. 

 

Also what if your ex stops contributing to his 401k?  Or doesn't work and that effects his ss?  

 

 

[Arcadia]

I would make a feasible budget ignoring alimony and then dump the entire amount of alimony received into an emergency funds account. My paternal cousin is a conscientious alimony payer but some of my friends' ex weren't.

 

Also what if your ex stops contributing to his 401k? Or doesn't work and that effects his ss?

If OP's ex stops work for whatever reason anytime in the near future, her alimony would be the first "income" to be impacted.

 

ETA:

I mean the ex may not have any spare money to pay after unemployment benefits if OP's ex should become unemployed.

I have a male relative who live hand to mouth, he would need financial help from his ex-wife instead if unemployed.

Edited July 26, 2016 by Arcadia

[StephanieZ]

 

 

If OP's ex stops work for whatever reason anytime in the near future, her alimony would be the first "income" to be impacted.

 

Not necessarily.

 

A friend of mine is paying "lifetime" alimony to his ex. They were married 20+ years. He's a nice guy, so he might not have fought it much. The only time it ends is when he or his ex dies. 

 

 

In any event, OP should rely on her attorney's guidance on these issues. 

[Guest]

Really, saving 30-50% of your income is what I'd aim for. Ex'a retirement or not it would behoove you to have your own investments, especially given how young you still are. If financial security is what you aiming for, you will get that the fastest and best with keeping the gap between your income and spending as wide as possible.

Edited July 26, 2016 by Arctic Mama

[SereneHome]

Just wanted to add one more thing.  You need to  look at your budget the way people look at "diets" - is it something you are going to do short term (like loose some weight for a wedding) or long term?  If it's long term, it has to be a life style change and it has to be about priorities.

 

What is your first priority?  Save or not spend too much?  Bc those are two completely different things.

 

What is your end goal? 

 

If it's to save - then your budget has to start with that.  If it's not to spend too much - then it is completely different.

 

Also, (and may be that's the conservative side of me) I would NOT be including alimony in your "income" for budget purposes.   

 

HOWEVER!!!   I would consider setting up a consultation with a CPA to do a rough estimate of your taxes bc alimony is taxable.  And based on your budget, you won't have anything to itemize, will have to use a standard deduction and might be hit with a tax bill come next April. 

 

 

[TechWife]

I haven't read through all of the responses, but here are some things I am not seeing: 

 

medical insurance

dental insurance

prescriptions

co-pays

medical deducible (we keep ours in savings until we need it)

 

renters insurance (optional, but might be worth it if you have any high value electronics or jewelry)

 

I'm so grateful your sister is being such a blessing to you! 

 

[StephanieZ]

I would have more questions about your ex's 401k.  How much is it?  I mean you don't have to tell me how much it is.  But have you run the numbers to know how much half of it is?  How much you could withdraw from that in retirement?   

 

Do you know how much his ss would be?  

 

I would want to know exact numbers on that. 

 

Also what if your ex stops contributing to his 401k?  Or doesn't work and that effects his ss?  

 

RE: The SS -- She won't know that until he's done working and is retired . . . but she can get a good estimate on the SS website if she hasn't already done that. 

 

RE: 401K -- I'm sure her "half his 401K" is half of his CURRENT monies. It wouldn't have anything to do with future contributions. In fact, I'm sure the settlement includes an actual re-titling of her half into her own name, so it will belong just to her and have nothing to do with her ex. 

 

(My mom was a divorce lawyer, lol. The odd things I know . . .)

[idnib]

Just looking over my expenditures to see what you may have left out. Maybe you need a shopping category?

 

 

Replacement electronics (computers, cameras, phones, chargers, etc)

 

Toiletries/makeup/perfume/hair products

 

Gifts for birthday, holidays, etc

 

Books/audiobooks

 

Medical/dental, maybe life or disability insurance depending on your kids' situations

 

Newspapers/magazines

 

Mailing/shipping

 

Fines/fees

 

Charities/donations/political

 

Small appliances like electric toothbrushes or hair dryers

 

 

[regentrude]

On glancing over your budget, I see no provisions for health insurance/medical expenses.