What % of income to apply to debt..

**Preston** · 08-15-2007, 05:52 AM

While going through our past 3 months of budget (thanks to quicken) I have noticed that despite having some unexpected bills (i.e. high electric bill and car needed a brake job) we are consistently having about 50-55% of our income leftover to apply toward our debt.

Is this a good amount or is there somewhere we can trim the fat?

Here is our current monthly budget:

Cumulative Income: $3400

Mandatory Expenses:

Rent $700
Gas: $225
Cell: $85
Electric: $80
Groceries 200
Medical: $75
Misc $50
Student Loan $80

It's just the two of us.

**TheRootedNomad** · 08-15-2007, 07:01 AM

I don't see alot of places to trim. Some of your categories look very similar to mine. I do want to pose a couple of questions though for you to think about.

1) Do you have a car? The gas amount makes me think you do and I'm wondering about the car insurance fees. We take out monthly and envelope that amount ahead of time so when the bill comes in we can just pay it.

2) Do you have an emergency fund of any sort? Even though you're income is generous for what you're mandatory bills are I would want to make sure I had a back up in case anything happened to that income.

If you've got an emergency fund I'd be throwing everything I could on the debt myself. Good luck!!!

**frugalfarmwife** · 08-15-2007, 10:58 AM

Honestly? Throw every extra penny you can at the debt to make it go away! It's amazing how inventive you can get with frugal ways and how fast you can conquer the debt.

I go through weekly and after bills are paid and savings added to I leave a bit in checking for the rest of the week and apply the rest to our mortgage. The girls at the bank know me really well

I'm often in there 2-3x a month paying extra, even a tiny bit really cuts the interest down.

kj

**Cricketlegs** · 08-15-2007, 05:14 PM

So long as your are adding to you Emergency ans savings fund then I would hit it HARD!

**Preston** · 08-15-2007, 08:00 PM

[QUOTE=TheRootedNomad;753213]
1) Do you have a car? The gas amount makes me think you do and I'm wondering about the car insurance fees. We take out monthly and envelope that amount ahead of time so when the bill comes in we can just pay it.

2) Do you have an emergency fund of any sort? Even though you're income is generous for what you're mandatory bills are I would want to make sure I had a back up in case anything happened to that income.

QUOTE]

1) We have two. Our 6 month premium is $256 so about $43 a month. I just pay it when it comes in and it is in the budget for the month it appears. It would be around $175 for 6 months, but I had a couple moving violations last year that the insurance company just found out about. We do our best to cut gas expenses -- her job is the halfway point to mine and usually 3 days a week our schedules are close enough that we can carpool in. We're using my car.. although the mileage isn't as good it is older and has more miles on it so we are trying to squeeze as much life out of it as possible. After that most likely we are going down to one car.

2) I have no emergency fund as of right now, but I do have a $3000 reserve line of credit attached to my checking account JUST IN CASE. I am working on getting an emergency fund. by putting $25 from every paycheck into savings. So it adds up to $100 a month. It's currently only at $400, but it is better than nothing.

Using a program like quicken really helps see the reality of everything and plan ahead. I know consistently I will have at least $1000 a month leftover to apply toward debt.

**Jenna** · 08-15-2007, 09:02 PM

What are your debts like? the APR's and utilization %'s?

Also, how are your retirement accounts?

**Denvergirlie** · 08-16-2007, 12:17 PM

Right now 57% of my income goes to debt repayment, I'm totally cool with this.

this year I have paid $4K to a lawyer to take care of a legal matter, paid off a credit card that was $8K at the beginning of the year and also knocked off another $2K in debts and it's only August!

I will be debt free a year from now and then my 57% will go into a different fund, the land fund.

Don't begrudge your debt repayment, just focus on getting rid of it all together.

I was able to cut my bidget only so much to make such strides in debt repayment. The rest came from doing odd jobs to throw extra cash at the debt. So the 57% is from my "normal" job, but I add a great deal more of that from doing odd jobs.

Keep the faith and keep working on it and it will get better. I remember a time not to long ago where I was scared to get the mail because I didn't have the money to pay any of those bills. Now I'm thrilled when I write out checks to pay down the bills, it's all a matter of attitude.

Good luck!

**Preston** · 08-17-2007, 07:52 AM

I'm comfortable with this amount too. I don't really have much in terms of emergency funds, but my bills are getting paid and we should be out of debt by Jan 2009. That's a hell of a goal.

I crunched the numbers and found out that May 1st I was $55,000 in the hole, and now I'm near $44,000. Of course, a lot of that was because I received $7500 in back pay because my previous employer was very poor about payment. Still owe me $3800, which I should be seeing within the next week or two.