Low Income Budget

Non-investing personal finance issues including insurance, credit, real estate, taxes, employment and legal issues such as trusts and wills
klarose
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Joined: Wed Jan 29, 2014 4:11 pm

Low Income Budget

Post by klarose » Wed Jan 29, 2014 4:22 pm

I'm new here, but I've been lurking for a while.

Just wanted to post my budget, and see if anyone has advise or feedback. It is slow going building up savings on a low income.

We are early 20's, no retirement savings yet. I will be opening a Roth IRA in the next few months.

No debts beside mortgage, $50,000.


Total Monthly Net Income is $2,660


Bi-Weekly Totals

My Check $470
---------------------
House $100
Tithes $50
Lunches/Spending $30
Phone/ Car Insurance $50
Gas $80
Savings $150

Remaining $10
______________________________

Of course other expenses usually come up and eat some of my savings money. :(

His Check $860
---------------------
Bills/House $300
Food $150
Gas $100
Car Insurance/Phone $40
Tithes $90
Savings/ Bill Overage $50

Remaining $130

Our remaining money goes to date nights, short term savings, and home remodeling.

Thanks!

ddunca1944
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Re: Low Income Budget

Post by ddunca1944 » Wed Jan 29, 2014 7:17 pm

I would suggest you post this on the forum below. You will probably get a lot more responses...

http://notmsnmoney.proboards.com/board/17/money

edge
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Location: Great Falls VA

Re: Low Income Budget

Post by edge » Wed Jan 29, 2014 7:19 pm

Just my opinion, but at your income level it is probably best to redirect those tithes to yourselves.

Quickfoot
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Re: Low Income Budget

Post by Quickfoot » Wed Jan 29, 2014 8:44 pm

My honest advice would be for both of you to consider joining the military you would both be stationed at the same location and an E1 receives 15k a year in compensation as well as health insurance and education and a growth path as well as a retirement plan. You likely could go in higher than an E1.

You need to increase income and you are young enough to have a good military career. My guess is you don't live in an area with a lot of upward mobility.

Short of that you've done a good job budgeting and appear to be maximizing your income good job on no debt!

Stonebr
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Re: Low Income Budget

Post by Stonebr » Wed Jan 29, 2014 8:51 pm

My investments started with $10 per week deposited to a savings account when I was in my 20s. After a year I had $520. That $520 is still compounding 35 years later.

Start small, and be persistent.
"have more than thou showest, | speak less than thou knowest" -- The Fool in King Lear

js2012
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Re: Low Income Budget

Post by js2012 » Wed Jan 29, 2014 9:33 pm

I think you should also hold back on tithing for awhile. How about putting it in savings for a year so you have cash on hand in case of an emergency? After one year, you'll have $600, I would then think about taking some of that and maybe tithing half if you really feel the need to.

I think the goal here is to get in a situation where your tithing isn't going to put you into real dire straits where you'll be living off of government assistance, then you won't be able to tithe at all. So, just be smart about it. And try not to touch the money that you are saving, it's a bad habit to get into.

Good luck!

Juniper
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Re: Low Income Budget

Post by Juniper » Wed Jan 29, 2014 9:36 pm

Welcome klarose.

Are your paychecks every two weeks or twice a month? If every two weeks your average monthly net is actually $2881.67 ((470+860)*26 paychecks / 12). But you may find it helpful to continue to base a monthly budget on 2/month paychecks, but recognize the two months a year where you'll receive three checks represent a chance to save $2660. That will help cover some of these things:

Do you have an emergency fund? As a homeowner at fairly low income, that's definitely something to focus on.
Are your cars in good shape? Carving out a small payment to yourself for a maintenance/replacement fund is probably necessary.
Do either of you have access to a 401k at work with any matching?
Are there any bills (like car insurance) that you are paying monthly that could be paid semi-annually or annually by setting aside money each month in a sinking fund account? By paying monthly there is usually an implicit finance charge.
Given how precisely you have the bills split up in the budget, are you keeping separate checking accounts? It might be easier to track the budget if everything goes into one bucket.

You probably will qualify for the Retirement Savings contribution credit -- http://www.irs.gov/Retirement-Plans/Pla ... -Credit%29

I admire your tithing. Along with the good it does for the recipients, the practice also reminds us that we have "enough". Although, I hope you are on the way to much more! :D
Pax et Bonum! - Juniper

cowboysFan
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Re: Low Income Budget

Post by cowboysFan » Wed Jan 29, 2014 10:02 pm

Your total gas bill ($360/month) seems like a lot. Can you trade in for a more fuel efficient vehicle? If you both work far from where you live, is it possible to join a car pool? If you're earning minimum wage, it seems like it could be worth it to get a job closer to where you live just to save on mileage.

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joe8d
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Re: Low Income Budget

Post by joe8d » Wed Jan 29, 2014 10:26 pm

js2012 wrote:I think you should also hold back on tithing for awhile. How about putting it in savings for a year so you have cash on hand in case of an emergency? After one year, you'll have $600, I would then think about taking some of that and maybe tithing half if you really feel the need to.

I think the goal here is to get in a situation where your tithing isn't going to put you into real dire straits where you'll be living off of government assistance, then you won't be able to tithe at all. So, just be smart about it. And try not to touch the money that you are saving, it's a bad habit to get into.

Good luck!
+1. Consider volunteering your time instead of monetary tithing for the Church.
All the Best, | Joe

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carorun
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Re: Low Income Budget

Post by carorun » Wed Jan 29, 2014 10:46 pm

I would encourage you to look at your budget based on your combined income and expenses over a month. Use a 2 paycheck month as your baseline, since it sounds like you are paid biweekly, and just bank the "extra" checks.

I assume you are in a very low cost of living area judging by the house payment and mortgage balance. Congratulations! Your take home pay is good relative to those factors. I would encourage you to look at the gas bill though. Do you live in an old, drafty house that leaks heat through windows and doors? Try rolling up a towel to block heat loss around lesser-used doors. Close vents in the rooms you don't use every day. And maybe check out sealing your windows with Saran Wrap and a blow dryer, or buy some thermal curtains. Or, if this is car gas (can't really tell) maybe combine trips or bike more?

For the unexpected expenses, I would either plan for them monthly or create a slush fund line in addition to the savings line for the month. Slush, life happens fund, sinking fund- all the same concept- basically it's money set aside for near term expenses and NOT savings.

For investing, I would recommend a Roth IRA. Your tax bracket is minimal and you probably qualify for the savers credit. Max out 2013 first, then worry about 2014 later.

Good luck! You are on the right track!
Last edited by carorun on Wed Jan 29, 2014 10:47 pm, edited 1 time in total.

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bengal22
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Re: Low Income Budget

Post by bengal22 » Wed Jan 29, 2014 10:46 pm

joe8d wrote:
js2012 wrote:I think you should also hold back on tithing for awhile. How about putting it in savings for a year so you have cash on hand in case of an emergency? After one year, you'll have $600, I would then think about taking some of that and maybe tithing half if you really feel the need to.

I think the goal here is to get in a situation where your tithing isn't going to put you into real dire straits where you'll be living off of government assistance, then you won't be able to tithe at all. So, just be smart about it. And try not to touch the money that you are saving, it's a bad habit to get into.

Good luck!
+1. Consider volunteering your time instead of monetary tithing for the Church.
Great that you tithe. I would not think volunteering would be a supplement to tithing not a replacement. Continue to save and things will work out as you age.
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

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Whit
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Re: Low Income Budget

Post by Whit » Wed Jan 29, 2014 10:49 pm

Thank you for sharing this. It is inspiring.

Juniper gave you some excellent thing to think about.
1.) Do you have an emergency fund?
2.) Before you file your tax return look into the "Savers Credit". If I am reading your income correctly you could get 20% or 50% of the first $2000 you put in a IRA back from Uncle Sam, depending on your filing status.

I would add
3.) Set a goal to increase how much you save. For example if you can save $50/paycheck now, set the goal to be save $60/paycheck within 3 months.
4.) Think free whenever possible. A movie from redbox costs money, a movie from the library does not.

-Whit

timmy
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Re: Low Income Budget

Post by timmy » Wed Jan 29, 2014 10:56 pm

You are actually in a good spot.

1. Avoid non mortgage debt. It is poison, especially on a low income.

2. Either pay yourself first (or second of you tithe) or create/stick to a budget. Both approaches work. Pick one and stick to it.

3. You need to get your income up. Develop a plan to double your income (a made up number but it will shake up your thinking) in five years.

4. Create a glide path so that in five years you are saving 25% of your income.

Last, enjoy your youth! And best of luck...

Johm221122
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Re: Low Income Budget

Post by Johm221122 » Wed Jan 29, 2014 11:01 pm

Deleted
Last edited by Johm221122 on Wed Jan 29, 2014 11:17 pm, edited 1 time in total.

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frugaltype
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Re: Low Income Budget

Post by frugaltype » Wed Jan 29, 2014 11:13 pm

Quickfoot wrote:My honest advice would be for both of you to consider joining the military you would both be stationed at the same location and an E1 receives 15k a year in compensation as well as health insurance and education and a growth path as well as a retirement plan. You likely could go in higher than an E1.

You need to increase income and you are young enough to have a good military career. My guess is you don't live in an area with a lot of upward mobility.
Following the above recommendation, either or both of you could wind up dead or disabled, and for the OP, well, if people don't know what it's like to be a woman in the military nowadays, they haven't been paying attention.

I understand why you are tithing, but I would cut those amounts in half until you are on a stronger financial footing.

Are you saving energy costs as much as possible - cfls, not leaving unnecessary lights on, and so on.

Do you have health insurance? My guess is you would qualify for the Obamacare subsidies which might make it zero cost to you. Without insurance, one significant medical issue, even a broken arm, and your budget gets clobbered.

How much home remodeling are we talking about here? Can you go with lower cost but still nice options, or do more do it yourself stuff?
Last edited by frugaltype on Thu Jan 30, 2014 5:33 am, edited 1 time in total.

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William4u
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Re: Low Income Budget

Post by William4u » Thu Jan 30, 2014 12:08 am

Since you are young and healthy, EDUCATION is the best way to increase lifetime earnings. The world needs nurses, for example, of every gender (and it pays many, many times what you make). There are many other jobs out there. The best investment in your twenties is to get a higher education. Talk to your local public or community college. The more education, the better (the right bachelors or masters would give many opportunities).

klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 1:12 pm

Oh dear. I realize a lot of the people here make a lot more money than me, so it seems like I am living in the poor house. But that isn't so. I live in a very low cost of living area.

Lots of questions! I will try to answer all of them.

Believe it or not last year at this time we were living on about $1,800 a month, but since then have gotten raises and found a new job. We are doing pretty good with our income, for our area. We are in the higher end. Neither of us make minimum wage. My husband makes double the min.

We won't be joining the military. I am completing a degree in Website Design this year. And I do supplement my income with freelance work (I didn't count it in my figures), which hopefully will be picking up since my degree will be done and I have more experience.

I know not everyone agrees but tithing is the first thing that comes out of our check, and we won't be cutting back. We have plenty of money to tithe with.

The gas is for our cars. We live out in the sticks, my job is 15 minutes one way, husbands is 30 minutes. Can't cut back.

We both have paid off, decent cars. Mine gets over 30 miles per gallon.

We have health insurance. We have an emergency fund. No 401ks offered at jobs.

I will be putting $1,000 into a Roth IRA within the next week or two and we will get $250 back on our taxes for the savers credit. Then we will continue to add to it for the rest of the year.

There is no way we will be maxing it out though. That would be a HUGE amount of our income. Close to half.

I'll try to continue answering questions.

denovo
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Re: Low Income Budget

Post by denovo » Thu Jan 30, 2014 1:16 pm

If you could combine the expenses and income from both her and him it would make it easier to analyze.
"Don't trust everything you read on the Internet"- Abraham Lincoln

klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 1:23 pm

We bought a 100 year old farmhouse, and gutted the entire thing down to studs and have completely redone in less than 2 years with cash. We are down to little stuff such as trim, and buying furniture and decorations. We have done 99% of the work ourselves.

We will be saving for bigger remodeling in a year or two as well as soon as we get a large EF and begin our retirement savings.

Here is our monthly combined budget. $2,660


House Payment & Utilities $800
Food $300
Tithes $270
Lunches/Spending $60
Phone/ Car Insurance $180
Car Gas $360
Savings $300
Savings / Bill Overage $100
______________________________
Remaining $280

investingdad
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Re: Low Income Budget

Post by investingdad » Thu Jan 30, 2014 1:40 pm

We don't tithe but I would say that if it's important to you, you should continue to do it...contrary to other advice you may receive.

may pop
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Re: Low Income Budget

Post by may pop » Thu Jan 30, 2014 1:51 pm

I agree to keep tithing.

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BL
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Re: Low Income Budget

Post by BL » Thu Jan 30, 2014 2:11 pm

I will be putting $1,000 into a Roth IRA within the next week or two and we will get $250 back on our taxes for the savers credit. Then we will continue to add to it for the rest of the year.
You could look into putting the max for saver's credit into the Roth by using it as your emergency fund. You can withdraw without any cost if you need it. You might lose the saver's credit if you withdraw during that year, IIRC.

It sounds like you are managing quite well.

klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 2:16 pm

BL wrote:
I will be putting $1,000 into a Roth IRA within the next week or two and we will get $250 back on our taxes for the savers credit. Then we will continue to add to it for the rest of the year.
You could look into putting the max for saver's credit into the Roth by using it as your emergency fund. You can withdraw without any cost if you need it. You might lose the saver's credit if you withdraw during that year, IIRC.

It sounds like you are managing quite well.
We have thought about that. But I just don't feel comfortable investing all our cash in case of a market downturn or something.

We will be putting in at least $1,000. I may see if I can scramble and find some more though. I was wrong above. We will be getting 20% back on whatever we put in. That would be nice to get a 20% return just for saving money. Next year we may be too high of an income to claim it.

investingdad
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Re: Low Income Budget

Post by investingdad » Thu Jan 30, 2014 2:21 pm

klarose wrote:
BL wrote:
I will be putting $1,000 into a Roth IRA within the next week or two and we will get $250 back on our taxes for the savers credit. Then we will continue to add to it for the rest of the year.
You could look into putting the max for saver's credit into the Roth by using it as your emergency fund. You can withdraw without any cost if you need it. You might lose the saver's credit if you withdraw during that year, IIRC.

It sounds like you are managing quite well.
We have thought about that. But I just don't feel comfortable investing all our cash in case of a market downturn or something.

We will be putting in at least $1,000. I may see if I can scramble and find some more though. I was wrong above. We will be getting 20% back on whatever we put in. That would be nice to get a 20% return just for saving money. Next year we may be too high of an income to claim it.
You need to get past this mindset. There WILL be a market downturn, I guarantee it. And then there will be a recovery. And so it continues.

I started investing for retirement at 22. Your goal here is not to invest for one year from now, or five years, or twenty years. Your goal is to invest for 40 years out. You should treat any money you invest as hands off until you're 60 and not worry about market ups or downs.

I was making 33K a year when I was 22, less than you if I did the math correctly. This was 1995 so there's obviously a difference in purchasing power. But even so, I still adopted the mindset of investing no matter what the market was doing.

caklim00
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Re: Low Income Budget

Post by caklim00 » Thu Jan 30, 2014 2:43 pm

I'm not an expert with tithing, but should the OP calculate 10% after essential costs? I mean if the OP has a catastrophic repair that takes Net Income after all costs (taxes, expenses) for a given month negative, but OP still be expected to contribute 10% of Net Income after taxes?

I know someone that was dedicated to tithing and its one of the reason that things will be tight as he moves into retirement. Again, not criticizing it, just know the realities. Wouldn't it be better to contribute more one you are more affluent?

klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 2:46 pm

You need to get past this mindset. There WILL be a market downturn, I guarantee it. And then there will be a recovery. And so it continues.

I started investing for retirement at 22. Your goal here is not to invest for one year from now, or five years, or twenty years. Your goal is to invest for 40 years out. You should treat any money you invest as hands off until you're 60 and not worry about market ups or downs.

I was making 33K a year when I was 22, less than you if I did the math correctly. This was 1995 so there's obviously a difference in purchasing power. But even so, I still adopted the mindset of investing no matter what the market was doing.
I understand that. I know I'm saving for the long term. But I don't feel comfortable putting my Short Term Emergency Fund in the IRA that is for long term. That is what I am saying.

DSInvestor
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Re: Low Income Budget

Post by DSInvestor » Thu Jan 30, 2014 2:51 pm

Roth IRA can be used to hold part of your emergency cash reserve. Just invest that part in something very conservative like Vanguard Short Term bond index VBIRX. If an emergency arises, you tap the Roth IRA (contributions can be withdrawn tax free penalty free). If no emergency arises, you have taken advantage of contribution space and received max savers tax credit.

In 2008 when stock funds were down -30% to -60%, Short Term Bond Index gained 5%.
Last edited by DSInvestor on Thu Jan 30, 2014 2:55 pm, edited 1 time in total.
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klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 2:53 pm

caklim00 wrote:I'm not an expert with tithing, but should the OP calculate 10% after essential costs? I mean if the OP has a catastrophic repair that takes Net Income after all costs (taxes, expenses) for a given month negative, but OP still be expected to contribute 10% of Net Income after taxes?

I know someone that was dedicated to tithing and its one of the reason that things will be tight as he moves into retirement. Again, not criticizing it, just know the realities. Wouldn't it be better to contribute more one you are more affluent?

This all may be true. But I am of the mindset that, if I can't tithe with what money I am given now, what is to say I will tithe when I get more. It is just a difference of opinions. I will continue to tithe.

I'm not living off the government, or eating ramen noodles daily. Truly I am happy and comfortable at my income.

Trying to double my income in the future just seems pointless to me. I can't even imagine what I would use all that money for, except to put it in the bank and sit on it. I'd be perfectly happy if my income grew only another $500 a month over my life time. I go out to eat, I live in a good home, I drive a fairly new car.... Anything else to me is just "extra." Sure I don't wear fancy clothes, and I have to save for a while to go on vacation. But money does not equal happiness to me.

Maybe bogleheads isn't the right forum for me. lol. I am never going to be a millionaire or make over $100k a year.

DSInvestor
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Re: Low Income Budget

Post by DSInvestor » Thu Jan 30, 2014 2:58 pm

klarose wrote:Maybe bogleheads isn't the right forum for me. lol. I am never going to be a millionaire or make over $100k a year.
You are in your 20s. You have the benefit of time (40-50 years) to allow your savings and investments to compound. I think there's a very good chance that you'll be a milliionaire one day even if your income never breaks 100K.

“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.”
― Albert Einstein
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stoptothink
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Re: Low Income Budget

Post by stoptothink » Thu Jan 30, 2014 3:07 pm

caklim00 wrote:I'm not an expert with tithing, but should the OP calculate 10% after essential costs? I mean if the OP has a catastrophic repair that takes Net Income after all costs (taxes, expenses) for a given month negative, but OP still be expected to contribute 10% of Net Income after taxes?

I know someone that was dedicated to tithing and its one of the reason that things will be tight as he moves into retirement. Again, not criticizing it, just know the realities. Wouldn't it be better to contribute more one you are more affluent?
If the OP is of the same faith as am I, that's not really an option. We tithe 10% regardless. Sounds like they have made other concessions so that tithing does not get in the way of their goals, my wife and I have done the same. In our eyes, there are some things more important that extra retirement savings.

surfstar
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Re: Low Income Budget

Post by surfstar » Thu Jan 30, 2014 3:13 pm

Increasing your take home pay is a way to open up opportunities - you could save it and retire early, you could gift more, work part time and volunteer the rest, etc. There are many productive things to come of earning more (I'm saying this as a Boglehead that is likely in the 'low end' of earners here). Don't consider more money as a bad thing, but as a freedom that allows more choices.

scone
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Re: Low Income Budget

Post by scone » Thu Jan 30, 2014 3:16 pm

This isn't about getting rich. At all. It's about protecting yourself and your loved ones from catastrophe, such as very prolonged bouts of unemployment, serious illness while unemployed, a ferocious rate of inflation, or a depression.

You never lived through the 70s. You can't imagine what it feels like to have the value of your little stash of cash virtually wiped out in front of your eyes. And then lose your job.

Alternatively, ask people what it was like to live through the Depression. People died.

Many of the Bogleheads, including me, have been through some or all of these scenarios, and that's a big reason why we save a lot more than you seem to think is necessary. It's one thing to be happy on a low income, it's another thing to put your head in the sand and pretend that bad things only happened in the distant past, to other people.

Charity begins at home. Secure your own future, and you will be in a far better position to help others, rather than needing help yourself and straining limited charity resources, when disaster strikes. Which it will, sometime in your life.

"He who has ears to hear, let him hear."
"My bond allocation is the amount of money that I cannot afford to lose." -- Taylor Larimore

klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 3:27 pm

I'm sorry. I didn't want to turn this into a tithe debate. I work for a non-profit. So charity is how I get paid. I'm not open to stop my tithing.

I don't think there is anything wrong with money at all. I just will never be one who tries for those big corporate jobs so I can live in a big house in the city. There is nothing wrong with that, it just isn't me.

Of course I would like to increase my take home pay. But right now this is what I have to work with. I figure I'm about as low as I can make now. Pay will go up with time and more experience. I am just wondering if my budget looks okay for someone who makes the income I do. Any pointers?

YttriumNitrate
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Re: Low Income Budget

Post by YttriumNitrate » Thu Jan 30, 2014 3:33 pm

klarose wrote:Trying to double my income in the future just seems pointless to me. I can't even imagine what I would use all that money for, except to put it in the bank and sit on it. I'd be perfectly happy if my income grew only another $500 a month over my life time. I go out to eat, I live in a good home, I drive a fairly new car.... Anything else to me is just "extra." Sure I don't wear fancy clothes, and I have to save for a while to go on vacation. But money does not equal happiness to me.
Right now it seems like your finances are doing okay, but more income would useful if you two are planning on having kids...especially useful if one of you would like to stay home with them.

klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 3:39 pm

YttriumNitrate wrote:
klarose wrote:Trying to double my income in the future just seems pointless to me. I can't even imagine what I would use all that money for, except to put it in the bank and sit on it. I'd be perfectly happy if my income grew only another $500 a month over my life time. I go out to eat, I live in a good home, I drive a fairly new car.... Anything else to me is just "extra." Sure I don't wear fancy clothes, and I have to save for a while to go on vacation. But money does not equal happiness to me.
Right now it seems like your finances are doing okay, but more income would useful if you two are planning on having kids...especially useful if one of you would like to stay home with them.

Your right. We are putting kids on hold for a few years. I wouldn't be comfortable having kids, especially more than one on our income. Within a couple years, we will have saved more, gotten more raises, and hopefully I will be doing freelancing full time, or have found a better job.

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William4u
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Re: Low Income Budget

Post by William4u » Thu Jan 30, 2014 3:54 pm

Hi. I want to be as polite as possible, and I certainly do not want to be rude, but I feel I must say something about your "Web Design Degree."

These degrees come almost entirely from for-profit "colleges," and the degrees are almost always not worth the paper they are printed on. Below I have posted a hyperlink that discusses this in some detail. I encourage you to read the article, which gives an example of someone who realizes this sad fact after spending much time and money on the degree. For better or worse, the only degrees that have real value are from non-profit schools, which include most private and public colleges and universities (including all public community colleges).

I also have a number of friends in the IT industry, and (before I read your post) they told me that there were essentially no jobs for people with "Web Design degrees" (in rare instances, they said that there is very low paid secretarial work for people with these degrees, but the work is something that most anyone with a high school degree might get).

I hate to be the bearer of bad news, but I thought that it would be important for you to know these things. I wish you all the best, and hope you can more forward in your education.

http://www.aaup.org/article/high-price- ... uq3a_ldU1Y

klarose
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Re: Low Income Budget

Post by klarose » Thu Jan 30, 2014 3:58 pm

William4u wrote:Hi. I want to be as polite as possible, and I certainly do not want to be rude, but I feel I must say something about your "Web Design Degree."

These degrees come almost entirely from for-profit "colleges," and the degrees are almost always not worth the paper they are printed on. Below I have posted a hyperlink that discusses this in some detail. I encourage you to read the article, which gives an example of someone who realizes this sad fact after spending much time and money on the degree. For better or worse, the only degrees that have real value are from non-profit schools, which include most private and public colleges and universities (including all public community colleges).

I also have a number of friends in the IT industry, and (before I read your post) they told me that there were essentially no jobs for people with "Web Design degrees" (in rare instances, they said that there is very low paid secretarial work for people with these degrees, but the work is something that most anyone with a high school degree might get).

I hate to be the bearer of bad news, but I thought that it would be important for you to know these things. I wish you all the best, and hope you can more forward in your education.

http://www.aaup.org/article/high-price- ... uq3a_ldU1Y

I am getting my degree from a local public community college. So I didn't spend a ton of getting it. In fact I've cash flowed all the expenses so I will be graduating debt free.

I chose that degree because it was something I enjoyed doing. I don't expect it to make me rich. But it is something I can do freelance from home, and still make some side income.

Thanks for your concern though.

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bengal22
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Location: Ohio

Re: Low Income Budget

Post by bengal22 » Thu Jan 30, 2014 4:25 pm

stoptothink wrote:
caklim00 wrote:I'm not an expert with tithing, but should the OP calculate 10% after essential costs? I mean if the OP has a catastrophic repair that takes Net Income after all costs (taxes, expenses) for a given month negative, but OP still be expected to contribute 10% of Net Income after taxes?

I know someone that was dedicated to tithing and its one of the reason that things will be tight as he moves into retirement. Again, not criticizing it, just know the realities. Wouldn't it be better to contribute more one you are more affluent?
If the OP is of the same faith as am I, that's not really an option. We tithe 10% regardless. Sounds like they have made other concessions so that tithing does not get in the way of their goals, my wife and I have done the same. In our eyes, there are some things more important that extra retirement savings.
+1. tithing is 10% of gross. I would never feel comfortable recommending to someone to stop tithing(not giving but tithing).
"Earn All You Can; Give All You Can; Save All You Can." .... John Wesley

denovo
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Re: Low Income Budget

Post by denovo » Thu Jan 30, 2014 4:38 pm

klarose wrote:We bought a 100 year old farmhouse, and gutted the entire thing down to studs and have completely redone in less than 2 years with cash. We are down to little stuff such as trim, and buying furniture and decorations. We have done 99% of the work ourselves.

We will be saving for bigger remodeling in a year or two as well as soon as we get a large EF and begin our retirement savings.

Here is our monthly combined budget. $2,660


House Payment & Utilities $800
Food $300
Tithes $270
Lunches/Spending $60
Phone/ Car Insurance $180
Car Gas $360
Savings $300
Savings / Bill Overage $100
______________________________
Remaining $280
For utilities, you can reduce the costs of keeping your home at proper temperature, by checking your insulation and doing some patch work DIY.
For food, and home products, consider bulk purchasing which may give you a per unit discount for non-perishable items.
If phone means cell phone, check to see if you can get a discount using month to month resellers like net 10.
Car gas seems kind of high.

Imo, for saving you are eligible for a savings tax credit when you file it loos like.
"Don't trust everything you read on the Internet"- Abraham Lincoln

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Clearly_Irrational
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Re: Low Income Budget

Post by Clearly_Irrational » Thu Jan 30, 2014 4:51 pm

Food costs are amazing, great job!

Gas costs look pretty high, what's the deal?

ddj
Posts: 97
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Re: Low Income Budget

Post by ddj » Thu Jan 30, 2014 4:52 pm

klarose wrote:We bought a 100 year old farmhouse, and gutted the entire thing down to studs and have completely redone in less than 2 years with cash. We are down to little stuff such as trim, and buying furniture and decorations. We have done 99% of the work ourselves.

We will be saving for bigger remodeling in a year or two as well as soon as we get a large EF and begin our retirement savings.

Here is our monthly combined budget. $2,660


House Payment & Utilities $800
Food $300
Tithes $270
Lunches/Spending $60
Phone/ Car Insurance $180
Car Gas $360
Savings $300
Savings / Bill Overage $100
______________________________
Remaining $280
BL wrote:

It sounds like you are managing quite well.
+1
klarose wrote:I am just wondering if my budget looks okay for someone who makes the income I do. Any pointers?
I'd like to ask for clarification on a couple things:

1) You mention that you have an emergency fund, and you also say "as soon as we get a large EF." What is your goal EF? If it is not there, set your $$ goal, and contribute $$ until you get there.

2) You've got "savings 300", "savings / bill overage 100," and "remaining 280": what are these? To me, it looks like you've got $680/mo (a handsome sum) to do your bidding each month. My advice for this money: make it automatic. Whether some goes to checking/cash, some goes to EF, some goes to the "Home Remodel Fund," and some goes to retirement, set up automatic transfers and let the machine hum. Then, reassess every few months. Ask: "Can more go here?" "Should less go there?" "Do I need an 'Anticipating a Baby' fund?"

3) I also live in a low cost of living, rural area. Your expenses look similar, though somewhat more frugal than mine (I too have outsized Car Fuel costs). Do you think there's room in one of those categories for cuts?

4) Start thinking (or continue thinking) about your long-term financial goals. Do you have an IPS? (http://www.bogleheads.org/wiki/Investme ... _statement) That can be a helpful way to put down in writing your goals. It sounds like you already have some in mind: tithe x%, maintain EF of $x, to which you're working on adding: contribute to retirement x%/$x.

Again, well done. Keep plugging away!

Comment: funny/irritating that tithing is oft advised here as a "first to go" item, even though you've said in no uncertain terms, "it stays in the budget," even in light of your relatively-healthy financial footing (no high-interest debt, >20% of income available for non-consumptive goals).

MathWizard
Posts: 3000
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Re: Low Income Budget

Post by MathWizard » Thu Jan 30, 2014 4:53 pm

I applaud what you are doing, and certainly do not believe you are at the wrong place at bogleheads.
Many of us tithe. I think that the comments suggesting not tithing were more out of concern for you than
being against charity.

You are not in the poorhouse by any means, and I think that things will improve for your financially in the future provided
some catastrophe does not happen. Unfortunately those things do happen, and you just have to be prepared for them.

I wish you the best of luck, and good luck with the ROTH IRA, and make sure you get a low expense ratio.

allenneal99
Posts: 28
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Re: Low Income Budget

Post by allenneal99 » Thu Jan 30, 2014 4:58 pm

klarose,

I don't see any issues with your budget. I would suggest maybe breaking it down a little further on the expenses, if they apply to you, by delineating:
- home insurance (if any)
- property/home taxes (if any)
- utilities
- internet
- pet costs (if any)
- home repairs (rough guesstimate)
- memberships/fees/dues
- groceries (unless you eat out a lot)

I would also suggest considering a Traditional IRA instead of a Roth IRA. I suggest because, if you qualify for it, a) you and your significant other do not seem to have a 401k or other retirement plan, and b) this could offer some near-term tax benefit to you/both--you are at the income level where you may be able to fully deduct it from your taxes (consider it an employer match, but from the government). Check with a tax expert first. However, there is nothing wrong with putting your money in a Roth (or both when you can afford to). But consider the money untouchable for decades either way.

Put emergency fund money into a different type of account like a regular savings and pretend the retirement fund stuff doesn't even exist, except for contributions.

I think you are on the right path. I was once close to your income situation about a dozen years ago, except I had a lot of credit card debt, vehicle loan debt, and small student loan to contend with. I eventually climbed out of the debt and started a vigorous savings plan.

Your tithing doesn't hinder you at all. I have tithed and donated money going back to when I had a minimum-wage job. It's been somewhat of a psychological boost to me because since I've tithed/donated money I've never had a lack of funds--and this includes 3 bouts with layoffs over the past 14 years. I always had enough to tithe without ever breaking the bank.

Your next decision should be once you have some money in your Roth IRA or Traditional IRA, where to put it? You can keep it in cash/money market until you get to a comfortable level to invest in something. I would suggest you put it all in Total Stock (VTI or VTSMX - Vanguard Total Stock Market) -- learn what they are and the difference between the two first. And then just ignore it, but keep adding to it every year.

I wish I had invested like this in my 20's. I flipped/flopped between all types of different types of investments (no-load mutual funds, etf's, loaded mutual funds, individual stocks, bonds, etc.) until I read many books and did more research and decided what my allocation needed to be and what to put money in for the long and short term.

Congratulations on having an interest/desire for web design. I am in the same field except on the web development/programming side. Web design is a legitimate skill so don't underestimate it or take it for granted. There will be a lot of opportunities that will open up to you because of it. I work with many good web designers and they enjoy what they do and none of them are ever financially strapped by any means.

stoptothink
Posts: 4402
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Re: Low Income Budget

Post by stoptothink » Thu Jan 30, 2014 5:45 pm

Clearly_Irrational wrote:Gas costs look pretty high, what's the deal?
$360/month for gas...I wish. My wife has had several weeks where she spent $150 on fuel and she drives a 30+mpg subcompact. She regularly drives 750+ miles in a week for work, only part of which is subsidized by her employer ($200/month gas stipend). Gas for us is close to $500/month, quite a bit more than food.

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William4u
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Re: Low Income Budget

Post by William4u » Thu Jan 30, 2014 6:04 pm

klarose wrote:I am getting my degree from a local public community college. So I didn't spend a ton of getting it. In fact I've cash flowed all the expenses so I will be graduating debt free.

I chose that degree because it was something I enjoyed doing. I don't expect it to make me rich. But it is something I can do freelance from home, and still make some side income.

Thanks for your concern though.
Excellent. I was concerned, but it seems that you are on track.

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cfs
Posts: 4154
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Location: ~ Mi Propio Camino ~

Re: Low Income Budget

Post by cfs » Thu Jan 30, 2014 6:25 pm

Leaders, good morning/afternoon/evening

I N S P I R A T I O N A L

Klarose, thank you for all you do and thank you for the good display of PMA (positive mental attitude).

A comment about this one: "Maybe bogleheads isn't the right forum for me. lol. I am never going to be a millionaire or make over $100k a year."

The Lord helps people like you, and a few years from now I will be reading your Boglehead post on how you broke the 100k glass ceiling and how you made your first million.

Philippians 4:13

Thanks for reading.
~ Member of the Active Retired Force since 2014 ~

Savvy
Posts: 261
Joined: Sat May 05, 2012 3:09 pm

Re: Low Income Budget

Post by Savvy » Thu Jan 30, 2014 6:36 pm

Klarose - welcome to the forum! You will find lots of knowledgeable folks here.

Can you or your significant other look for a part-time job to boost your income?

I understand that you are not eager to earn a crazy amount of money, but think of it as savings for when you do have kids in the future.

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Clearly_Irrational
Posts: 3087
Joined: Thu Oct 13, 2011 3:43 pm

Re: Low Income Budget

Post by Clearly_Irrational » Thu Jan 30, 2014 6:41 pm

klarose wrote:Maybe bogleheads isn't the right forum for me. lol. I am never going to be a millionaire or make over $100k a year.
Even people who make $45k a year need to retire at some point, the same principles apply just with less zeros.

berntson
Posts: 1366
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Re: Low Income Budget

Post by berntson » Thu Jan 30, 2014 7:26 pm

How much are you spending specifically on phones? My wife and I use google voice for all of calls and don't have cell phones. Being in a rural area, you may need them for safety. If you have monthly plans, you could consider switching to pay-as-you-go phones instead. I would think you could get your combined monthly phone bill down to $20 or less.

Putting money in a ROTH IRA doesn't mean you have to put it in stocks. You could just leave it in a money market account. Or put it in CDs. You can also always get the original principle for any reason without penalty. So in an emergency, you can always get your money out. In the mean time, you get a bigger savers credit and don't miss out on contributing to your ROTH.

My wife and I also tithe, but we're piling up the money with the rest of our portfolio, keeping track of what it earns. A few years down the road, we'll contribute all the money and the earnings from it in one shot. That will give us a significant tax refund.

cowboysFan
Posts: 290
Joined: Sat Jan 25, 2014 1:46 pm

Re: Low Income Budget

Post by cowboysFan » Thu Jan 30, 2014 7:32 pm

It seems you're spending a lot on housing. A $50k mortgage even with 0% down and a 15-year mortgage runs about $350/month for principal and interest according to zillow's calculator. Even adding on taxes, insurance, and utilities, I'm not sure how you're getting to $800/month.

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