What should I do with money?

**LexTysMommy** · 12-28-2007, 10:04 AM

If you all don't mind I would love some ideas about my budget and what to do with the money I have "leftover" each month. Any ideas how to cut my budget or where to put my money toward would be appreciated.Thanks! I have no EF, no savings, no credit card debt, pay everything in cash.

Income (fluctuates a little each month as I do daycare) $4000/mo.

Expenses:
-Mortgage $1205 (15 years at 5.75%)
-Electric $300 (winter) $100 (summer) I budget highest.
-Cable $69
-Home Phone $36 (basic and no long distance I use cell for that I need home phone for daycare rules)
-Cell Phone $60 (1000 minutes, 1500 texts)
-Water $25
-Internet $9
-Insurances (car and daycare and home) $87 month
-Gas $100 (about $25 a week)
-Groceries $200 ( feeds me, my 2 kids, and 7 daycare kids)
-Out to eat $100 ( at most)
-Misc ( walmart, art supplies, etc) $100
-Gymnastics for DD $25
-Bowling for kids $30

After all this it shows I will have extra $1600 a month. Then I need to pay these bigger things off.

-Taxes $3000 a year (can make 1/3 payments every jan,april,july)
-Ford $2275 left ( will pay off on 1/23)

**sunshine** · 12-28-2007, 10:19 AM

do you have an emergency fund? If not, I'd make sure you have at least 3 months expenses in an easily accessible account.

Then I'd start paying off the debts -- smallest to largest.

**Momof4cats** · 12-28-2007, 10:22 AM

Right off the bat, I'm not seeing anything for medical expenses or clothing. Unless clothing is under Walmart!

I would take $250 a month and set it aside for the taxes, so you won't be scrambling around each quarter to pay it. Because that'll be just the time the washer dies and the kids get sick.

I'd also like to see some money set aside each month for car repairs and household maintenance. After all that, I would save the rest as an emergency fund, until you have 3 to 6 months of expenses.

**McD** · 12-28-2007, 10:33 AM

Here are my two cents on some things that jump out at me:

Expenses:
(Electric $300-$100) Can you sign up for budget billing so there isn't such a big variation on prices over the months?

(Cable, Home Phone, Internet) Can you try and get these services bundled through the same provider? The reason I ask is that you are paying 114$ for the three combined. By bundling I am paying roughly 80 for internet, digitial cable, plus HBO and Starz. It may be something to check into.

**LexTysMommy** · 12-28-2007, 10:36 AM

Originally Posted by sunshine

do you have an emergency fund? If not, I'd make sure you have at least 3 months expenses in an easily accessible account.

Then I'd start paying off the debts -- smallest to largest.

I have no debts after I pay off the car jan 23rd, except my home. I think just plugging away for EF is what I should do. Or should I pay double for my mortgage?

Originally Posted by Momof4cats

Right off the bat, I'm not seeing anything for medical expenses or clothing. Unless clothing is under Walmart!

I would take $250 a month and set it aside for the taxes, so you won't be scrambling around each quarter to pay it. Because that'll be just the time the washer dies and the kids get sick.

I'd also like to see some money set aside each month for car repairs and household maintenance. After all that, I would save the rest as an emergency fund, until you have 3 to 6 months of expenses.

My medical is fully paid for, and we do not spend too much on clothing. I do not budget for it. Usually at school time, then a couple things throughout the year. Good idea with the taxes. Thanks!

**Kitten20** · 12-28-2007, 10:57 AM

I would save up a 3-6 mo. EF and then start paying double on your mortgage. What about a retirement or college fund for the kiddos?

**PrairieRose** · 12-28-2007, 11:16 AM

The EF should be #1 priority in my mind and then you should start paying extra toward the smallest debt you have (if that's the mortgage then that's the one). I'd start tracking it when you do that because it's so rewarding to watch the balance go down and figure every so often how much longer you have to go with a snowball calculator, etc... .. WTG, so far, so good!

**peanut** · 12-28-2007, 11:23 AM

Fund an EF up to 6 months worth of salary. Then put aside money for home repair/maintenance and medical as well as putting more on the mortgage.

Are you doing your own haircuts and making your own shoes?

Because I don't see anything for them in the budget either. I'm a bit concerned you don't seem to know what you spend on clothing, which I consider includes these items. You might be surprised at what it amounts to.

**frugal-fannie** · 12-28-2007, 11:39 AM

I would get a line of credit on the house for an emergency fund and hope you never use it and start paying 2/3 to pay down the mortgage and 1/3 to a savings/emergency fund. It depends also on how your job is. I have never carried an emergency fund, as jobs are not a problem in my field. If I lost my job , I could find one within 2 weeks, and my husband has stable employment for 23 years for city government, so odds of us both being out of work are slim to none.Also either one of us could cover our mortgage.If you are in a job that you could have a problem then carry an emergency fund.

**Denvergirlie** · 12-28-2007, 11:50 AM

I would set up an emergency fund - I like 6 months, but some are comfortable with only 3 months.

Then you need to save at least 15% of your monthly income for retirement for you. You can not take out loans for retirement, but your kids can always take out loans for college.

**birthgeek** · 12-28-2007, 12:10 PM

You seem to be doing rather well in general, way to go!

I agree with getting the EF set up, whether you choose 3 or 6 months or any amt in between is up to you. After that, 15% to retirement is a must, IMO - and then anything leftover after that can be extra to the mortgage.

I also agree with a clothing fund, even if it is small, as well as an envelope for those yearly tax hits, car tags, etc.

**LexTysMommy** · 12-28-2007, 12:52 PM

Haircuts are about $20 a year for me, twice a year. The kids have their dad cut their hair.

This year I probably spent about $100 on me for clothes. And $300 on kids. They get alot of hand me downs.

I like the idea of an envelope for this stuff ( haircuts, clothes, shoes) Thanks!

I think I will aim for $5000 for EF to start. And a retirement fund is good idea, since I am self employed, I have nothing set up for future!

**ktsmama** · 12-28-2007, 01:43 PM

Originally Posted by Kitten20

I would save up a 3-6 mo. EF and then start paying double on your mortgage. What about a retirement or college fund for the kiddos?

These were my exact thoughts.

**ironmaiden** · 12-28-2007, 01:57 PM

An emergency fund isn't only for getting laid off, it's for the water heater going, the car breaking, new furnace. Eventually you need a new roof, a new car.

What I do suggest is that starting January 1st, you carry a notebook with you and write down every penny you spend. And what about DH. Doesn't he spend a miscellaneous dime here and there? Is there really $1600 left at the end of the month?

As for throwing all the extra money at the house, a wise woman once told me "you can't eat the house". Her husband's family lost their farm during the Depression.
Even if you'd paid off some of the house early, you still need to make that monthly payment. So having a couple extra payments sitting in the bank could save you some day.