Needing help with my budget.

[AnW819]

DH and I both have jobs now (I start Thursday) so I want to get a budget in line. I do not know exactly what we will be bringing home but I know we will bring home AT LEAST what I am putting. I am 100% sure on that, but it will most likely be more, but I always budget under what we bring home anyway so the extra can be saved. I am going to be following the DR plan. Any help would be appreciated.

DH's monthly pay:$1400
My monthly pay:$1000
Total: $2400 monthly take home

Bills:
Car Insurance: $105/mo
Gas: $160 (roughly. DH drives 40 minutes to work, and I will be working 20 minutes away. Any extra every month I plan on putting in an envelope encase we happen to need extra gas sometime or if gas prices go really high)

Food: $300

Comcast & DH cell: $125/ mo. (We are in contracts with both. We pay 1/2 the comcast bill. Dad pays the other 1/2)

Dad: $200 (we pay some $ to my dad for electric and water)

Emergency Fund: $500 (Goal is $1000)

Blow Money: $240 ($30 a week for the both of us...If we have doc appointments or need clothes it will get taken out of this)

Move out fund: $600 (want to save $2400)

TOTAL LEFT OVER: $170 a month

Let me know what you want and ill let you know what I want!


So there it is. Now in my situation, I decided to add blow $ in our budget so there is money if we want to do something so we do not take it out from our other bills. I have never budgeted spending money...advise? Should we do this? Or no?

Do any of the amounts seem high? Should I alter anything?

After I get my Efund in 2 months, that $ will start to be $ to pay debt. We owe a total of $6000 in debt. After the Moving out fund is done, that money will be a car fund because DH's car is in bad shape.

So lots of help would be appreciated!!!

[AnW819]

Oh I also wanted to ask, if our paychecks are more than we budgeted what would be the best thing to use this on? The EF, or Debt?

Also wanted to add, the reason why I have a move out fund before paying off debt is because I cannot stay here long enough to pay off debt first (if that makes any sense!)

[AnW819]

Let me know what you want and ill let you know what I want!

I have no idea where that came from, I did not type that. LOL. I think maybe I copied it into here by mistake...just wanted to let you all know encase you get confused, LOL.

[nodmicks]

Oh I also wanted to ask, if our paychecks are more than we budgeted what would be the best thing to use this on? The EF, or Debt?

Also wanted to add, the reason why I have a move out fund before paying off debt is because I cannot stay here long enough to pay off debt first (if that makes any sense!)

If you get extra $ work on that EF first. It has saved me many times!

As far as the blow category goes I would set up a separate medical fund and clothing category that can slowly build up. It might be (at least for me) to say oh I have $120 a month in "blow" category and no dr bills etc and spend it when the next month you could get hit with multiple clothing bills or medical bills. I would make the blow category defined by a number only for blow type items

Same with clothes. That way the $ is there when say you need a really good pair of shoes or your coat gets destroyed.

I set $30 aside for clothing monthly and $50 for medical. It just builds up. Good thing too because after not having dr bills all year we just got one for DS that our copay is 320. Had that money not built up I would have had to take it from the EF.

Hope that makes sense.

[Greebo]

If you plan to follow the Ramsey plan, then it's important to follow the baby steps. The baby steps are in a specific order to help you ensure you do not stumble while on your road to financial peace. Each step should be taken IN order - no step taken BEFORE another is complete.

Step 0 is to establish your properly prioritized budget - you're well on the way - but it will probably take a few months for you to iron it out completely. If you've never used a budget before, well - it'll be a bit of a rough ride for a month or two.

So step 1 is to get your Baby Emergency Fund set in place - $1,000 in a safe place. $1,000 is for REAL emergencies - not the pizza guy at the door, not an oil change for the car - but for things you ABSOLUTELY have to pay for and that without the money you'd have no choice but to go into debt again - or further.

After you have the baby EF, you start working your debt snowball in Baby Step 2, in order of smallest to largest. You pay the minimum amount due on everything EXCEPT the smallest debt you have. That gets every extra penny you can throw at it. When it's paid off, you take that money plus the minimum for that debt and apply it to the next largest. This way you start a snowball effect - every payment to the next debt is larger than the last, growing as you make progress.

If you will list your debts - who they are owed to, the balances, the payments and the interest rate, that'll help us see a better picture of your finances.

[Greebo]

Agree with nodmicks - MEDICAL IS NOT BLOW MONEY.

You should establish a sinking fund or an envelope for medical - what you do is figure out how much you expect to spend on medical needs for the year. THen divide that amount by the number of pay periods in your budget. For example, if you and DH are paid bi-weekly, you would divide your medical needs by 26, and that gives you M - the medical money you need.

Every 2 weeks, you put $M into the envelope for medical. Once that money is IN the medical envelope, it STAYS there. You don't use it for anything but medical, and you don't pay medical expenses from anything but that envelope. If you ever think you need more in that envelope, BOTH of you agree on the use of that money or the change you plan to make.

Also I never asked - is DH on board with you?

[AnW819]

Like always, such great advise!! Thanks so much!!

I have to run to go to my work so I will have to respond when I get back. I will post my debts on my credit report. The only debts I have are the ones on my credit report right now so there are no interest rates.

DH is definitely on board with me, but he always believes that he should be able to have a bit of fun to (spending money).

[Greebo]

Having a little money to enjoy is fine, as long as you can make your payments. When we have a clearer picture, we'll be better able to judge what's fitting.

[AnW819]

Alright here we go. My credit report. This is the only debt I have. DH's only debt is on his credit report to. They total around $6000.

This is just mine:

Tmobil: $663 -Collection Account
Capital One: $890 -Charged off Sept 2009
Chase CC: $1610- Charged off Sept 2009
Fairmont Medical: $174- Collection Account
Eastern Account System (not sure what this is??) $318- Collection Account
Eastern Account System #2- Paid and closed. Still on there?
John Barry & Associates (not sure what this is, thinking medical?)- $63 Collection Account
LAW OFFICE OF M.N.KAY PC (Not sure what this is??) $208 Collections as of October 2009 which was like last month, and I have no idea what this is.

Total: $3926 (more than I thought since the last time I checked...)
So that is mine.

[AnW819]

Having a little money to enjoy is fine, as long as you can make your payments. When we have a clearer picture, we'll be better able to judge what's fitting.

DH is also having a hard time understanding why we need an emergency fund before anything. I am all for it, but he thinks we should pay off our debt first.

One thing I am worried about is DH and I have to get an apartment withen 8-12 months. My credit is so bad (in the 400's) that I or he will not get approved and I do not think we will have a co-signer...so I really need to get my credit up. If I pay 1/2 of this off within the next couple months, how soon do you think I can see me score rise?

I also forgot to add, I do have a lot of $ owed to medical bills. I ignore the letters and phone calls. I know this is wrong, and I need to answer and I am going to start! Only 2 of the bills are on my credit report as of now...

[Greebo]

Gonna reorganize this a bit in priority order.

Refresh my memory - how long are you able to stay with Dad?

DH's monthly pay:$1400
My monthly pay:$1000
Total: $2400 monthly take home

So this is all net, right? After taxes, I mean.

The big priorities
#1) Food: $300 - $2,100
#2) Lights: Dad: $200 - $1,900
#3) Car Insurance: $105/mo Gas: $160 - $1,635
#4) Roof: $0 for now - $1,635
#5) Essential clothing $100/month - $1,510 - I do mean ESSENTIALS

The second level priorities:
Comcast & DH cell: $125/ mo. - $1,410
Medical fund: $100/month - $1,310 - may adjust this later
Sinking Fund - the "catchall" for unexpected budget items - Start at $200/month - reduce over time. - $1,110

Optionals:
Blow Money - $20/wk = $180/month - $930 - I can hear DH screaming already - this is what I get. See below though...

After this you have $930/month left over. You should, therefore, have your Baby Emergency Fund in place no later than the end of 2009.

After you have the BEF, you should be able to KILL these debts. With $900/month left over, you're SEVEN MONTHS from being completely out of consumer debt. If Dad will put up with you for that long. Then you can go find an apartment for ... lets see you're in Jersey right? Well - still - a 1BR you should be able to get for less than $1,000 a month - so 2 months after debt free you should have security deposit and 1 months rent in hand.

All of the above is subject to change - you and DH have to AGREE on this plan and this budget.

Now, lets talk debts - in payoff order...

John Barry & Associates (not sure what this is, thinking medical?)- $63 Collection Account get this verified first

Fairmont Medical: $174- Collection Account

LAW OFFICE OF M.N.KAY PC (Not sure what this is??) $208 Collections as of October 2009 which was like last month, and I have no idea what this is.get this verified first

Tmobil: $663 -Collection Account

Capital One: $890 -Charged off Sept 2009

Chase CC: $1610- Charged off Sept 2009

Eastern Account System (not sure what this is??) $318- Collection Account Get this verified first

Eastern Account System #2- Paid and closed. Still on there?
Thats ok - closed debts will stay on for 7 years.

For the ones to get verified, you should write to them and request they prove the debt (I'll get you a sample letter if someone else doesn't beat me to it). Keep copies and send these requests certified mail return receipt requested. Keep the receipt with your copy of the letter. If they refuse or fail to prove the debt, you dispute it with your credit reports. Otherwise you pay it.

Now in your situation, I would not suggest you try to settle these - because you have the ABILITY to repay them all within a year, and you're young, your income is only going to go up as you gain experience and financial discipline. Call it stupid tax, pay it, and never do it again.

Finally - the sinking fund...

I started you at $200 month set aside "just in case". This $200 should be used for budget items we've missed - like Oh dang the dog needs a vet fund. Every month add $200 to this envelope/fund, up to an extra, oh, call it $500 for now. Anytime you have to USE this sinking money, consider whether the expense is a one time only thing, or something that will come up from time to time, or regular.

If it's time to time or regular, you need to make a NEW budget item for it.

After about 3-4 months cut the sinking fund back to $100/month and if you ever get more than $500 in it, stop putting money in it, and use that money for the snowball.

[Greebo]

DH is also having a hard time understanding why we need an emergency fund before anything. I am all for it, but he thinks we should pay off our debt first.

Because every 7 years on average, an emergency happens. It could be a blown transmission, a broken leg, or something. It's called a rainy day fund, and here's the thing - IT IS GOING TO RAIN. Maybe not today, maybe not tomorrow, but IT WILL RAIN.

Having an emergency fund allows you to pay murphy when he shows up - otherwise he'll move in to your spare bedroom and start rearranging your furniture and eating your food.

One thing I am worried about is DH and I have to get an apartment withen 8-12 months. My credit is so bad (in the 400's) that I or he will not get approved and I do not think we will have a co-signer...so I really need to get my credit up. If I pay 1/2 of this off within the next couple months, how soon do you think I can see me score rise?

Your score will start to go up as you start to pay off these charged off debts - but I want to stress that this isn't as important as you think. Yeah, an apartment COMPLEX may not approve you - but there are lots of landlords out there - check craigslist, the paper, drive around - there are lots of apartments and you will find one who will take you. You may need a security deposit and first+last months rent, but you'll find one. Your credit score will fix itself over time - but understand that a credit score is an "I LOVE DEBT" score. It only goes up by having lots of credit and using it and paying it faithfully.

Considering how much good debt has done for you so far, do you really think a good credit score should be a top priority?

I also forgot to add, I do have a lot of $ owed to medical bills. I ignore the letters and phone calls. I know this is wrong, and I need to answer and I am going to start! Only 2 of the bills are on my credit report as of now...

Ok if these are active, you need to address these first. Leave the sleeping dogs lie until the active debt is dealt with.

When they call, or when they write you call them, and say, "We just got jobs, we're going to be paying you as soon as we can, please be patient" and you pay them smallest to largest with your snowball.

[AnW819]

I feel like I should be paying for all this advise. I am a bit overwhelmed right now, so I am going to take a few minutes, re read all of this and then comment.

Thanks so much for your help!!!

[AnW819]

Because every 7 years on average, an emergency happens. It could be a blown transmission, a broken leg, or something. It's called a rainy day fund, and here's the thing - IT IS GOING TO RAIN. Maybe not today, maybe not tomorrow, but IT WILL RAIN.

Having an emergency fund allows you to pay murphy when he shows up - otherwise he'll move in to your spare bedroom and start rearranging your furniture and eating your food.


Your score will start to go up as you start to pay off these charged off debts - but I want to stress that this isn't as important as you think. Yeah, an apartment COMPLEX may not approve you - but there are lots of landlords out there - check craigslist, the paper, drive around - there are lots of apartments and you will find one who will take you. You may need a security deposit and first+last months rent, but you'll find one. Your credit score will fix itself over time - but understand that a credit score is an "I LOVE DEBT" score. It only goes up by having lots of credit and using it and paying it faithfully.

Considering how much good debt has done for you so far, do you really think a good credit score should be a top priority?


Ok if these are active, you need to address these first. Leave the sleeping dogs lie until the active debt is dealt with.

When they call, or when they write you call them, and say, "We just got jobs, we're going to be paying you as soon as we can, please be patient" and you pay them smallest to largest with your snowball.

Gonna reorganize this a bit in priority order.

Refresh my memory - how long are you able to stay with Dad?


So this is all net, right? After taxes, I mean.


After this you have $930/month left over. You should, therefore, have your Baby Emergency Fund in place no later than the end of 2009.

After you have the BEF, you should be able to KILL these debts. With $900/month left over, you're SEVEN MONTHS from being completely out of consumer debt. If Dad will put up with you for that long. Then you can go find an apartment for ... lets see you're in Jersey right? Well - still - a 1BR you should be able to get for less than $1,000 a month - so 2 months after debt free you should have security deposit and 1 months rent in hand.

All of the above is subject to change - you and DH have to AGREE on this plan and this budget.

Now, lets talk debts - in payoff order...


For the ones to get verified, you should write to them and request they prove the debt (I'll get you a sample letter if someone else doesn't beat me to it). Keep copies and send these requests certified mail return receipt requested. Keep the receipt with your copy of the letter. If they refuse or fail to prove the debt, you dispute it with your credit reports. Otherwise you pay it.

Now in your situation, I would not suggest you try to settle these - because you have the ABILITY to repay them all within a year, and you're young, your income is only going to go up as you gain experience and financial discipline. Call it stupid tax, pay it, and never do it again.

Finally - the sinking fund...

I started you at $200 month set aside "just in case". This $200 should be used for budget items we've missed - like Oh dang the dog needs a vet fund. Every month add $200 to this envelope/fund, up to an extra, oh, call it $500 for now. Anytime you have to USE this sinking money, consider whether the expense is a one time only thing, or something that will come up from time to time, or regular.

If it's time to time or regular, you need to make a NEW budget item for it.

After about 3-4 months cut the sinking fund back to $100/month and if you ever get more than $500 in it, stop putting money in it, and use that money for the snowball.

About apartment complexes--DH and I have been looking just out of curiousity to see if there are any places to rent with just a landlord and we cannot find any for the life of us. We checked craigslist and papers, and everything. We found a few that said credit check and no cats. I can't get rid of my cats. I just can't so that is why I am worried about it.

My dad will let us stay here for 8-12 months. He might let us stay longer, but I don't know if I want to be here that much longer, lol.

Our pay that I posted was after taxes.

I am very excited about the plan you have helped me with. It all looks great and I am excited to start working on it. I really think by this time next year we can be debt free with some savings and an EF which would be awesome!!!

and LOL @ Blow Money - $20/wk = $180/month - $930 - I can hear DH screaming already - this is what I get. See below though...

DH is gonna have a fit, haha. Oh well!

[Greebo]

Sample debt verification request. Long version. Would need to be modified for those that are based on findings on your credit report.

Your Name
123 Your Street Address
Your City, ST 01234

ABC Collections
123 NotOnYourLife Ave
Chicago, IL
Date:

Re: Acct # XXXX-XXXX-XXXX-XXXX

To Whom It May Concern:

This letter is being sent to you in response to a notice sent to me on September 30, 2002. Be advised that this is not a refusal to pay, but a notice sent pursuant to the Fair Debt Collection Practices Act, 15 USC 1692g Sec. 809 (b) that your claim is disputed and validation is requested.

This is NOT a request for “verification” or proof of my mailing address, but a request for VALIDATION made pursuant to the above named Title and Section. I respectfully request that your offices provide me with competent evidence that I have any legal obligation to pay you.

Please provide me with the following:

• What the money you say I owe is for;
• Explain and show me how you calculated what you say I owe;
• Provide me with copies of any papers that show I agreed to pay what you say I owe;
• Provide a verification or copy of any judgment if applicable;
• Identify the original creditor;
• Prove the Statute of Limitations has not expired on this account
• Show me that you are licensed to collect in my state
• Provide me with your license numbers and Registered Agent

At this time I will also inform you that if your offices have reported invalidated information to any of the 3 major Credit Bureau’s (Equifax, Experian or TransUnion) this action might constitute fraud under both Federal and State Laws. Due to this fact, if any negative mark is found on any of my credit reports by your company or the company that you represent I will not hesitate in bringing legal action against you for the following:

* Violation of the Fair Credit Reporting Act
* Violation of the Fair Debt Collection Practices Act
* Defamation of Character

If your offices are able to provide the proper documentation as requested in the following Declaration, I will require at least 30 days to investigate this information and during such time all collection activity must cease and desist.

Also during this validation period, if any action is taken which could be considered detrimental to any of my credit reports, I will consult with my legal counsel for suit. This includes any listing any information to a credit reporting repository that could be inaccurate or invalidated or verifying an account as accurate when in fact there is no provided proof that it is.

If your offices fail to respond to this validation request within 30 days from the date of your receipt, all references to this account must be deleted and completely removed from my credit file and a copy of such deletion request shall be sent to me immediately.
I would also like to request, in writing, that no telephone contact be made by your offices to my home or to my place of employment. If your offices attempt telephone communication with me, including but not limited to computer generated calls and calls or correspondence sent to or with any third parties, it will be considered harassment and I will have no choice but to file suit. All future communications with me MUST be done in writing and sent to the address noted in this letter by USPS.

It would be advisable that you assure that your records are in order before I am forced to take legal action. This is an attempt to correct your records, any information obtained shall be used for that purpose.

Best Regards,

Your Signature
Your Name

For a credit report item you'd start with:
This letter is being sent to you in response to an item on my credit report with .