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Design-a-Budget

July 31st, 2011 at 06:31 am

OK, everyone, let's play "Design-a-Budget."

In this game, Patient Saver gets a Job Offer and then begins to wonder how she'll divvy up her small pot of gold her employer gives her.

Below, she lists her monthly net income and monthly expenses. Note that her expenses are grouped according to whether they are ESSENTIAL or discretionary.

There's a small amount of discretionary money available at the end of each month, and the amount depends in part on what exact salary Patient Saver (PS) can negotiate, but it will likely only be a difference of $4,000 at most.

If you can picture about 20 individual boxes, each labeled with one of my expenses, and consider my meager paycheck as Monopoly money, would you divvy it up about the same? How would you tweak where the money goes?

Remember, these are monthly expenses, so if I had an expense that happened once a year, like a $150 furnace cleaning, I would divide that number by 12 to get the monthly cost.

Net Monthly Income
They told me the salary would be "low 40s," so I'm making my calculations here based on a low of $40,000 and a high of $44,000.

Using an online paycheck calculator, I came up with the following:
$40K a year with 5% deducted for 401k contributions: my monthly net would be $2492.

$44K a year with 5% deducted for 401k contributions: my monthly net would be $2717.

Monthly Expenses, Fixed and Essential:
(Note: All essential monthly expenses are based on recent historical data becus PS keeps meticulous records of how she spends, so these numbers are pretty accurate.)

Mortgage and property taxes: $1146
COBRA: $165 (this is estimated based on what HR told me the company pays for your health coverage)
Food: $200
Electricity: $66
Heating oil: $65
Sewer (usage fee and loan): $60
Homeowners insurance:$56
Gas for car: $45
Phone and Internet: $44
Car insurance: $35
Water: $15
Borough taxes: $14
Car tax: $7
Dump sticker: $7
Minimal car maintenance: $3
Total: $1928

Not essential, but still important expenses I want to budget for:
Healthcare out of pocket: $37 (mostly routine co-pays but leaving a few hundred extra for something unforeseen)
Furnace cleaning: $12.50
Chimney cleaning: $12.50

Grand total so far: $1990

With a $40K salary, I'd have $502 left over each month; with $44K, I'd have $727 left over each month.

Here's how I'd like to use a bit more of that money:

Put $200 a month into mortgage prepayments.
Set aside $30 a month for dining out/entertainment. This could allow me to eat lunch out twice a month with a friend, or perhaps one lunch out and several movies. Or any other combo adding up to $30 a month.

That still leaves me with between $272 and $497 left over each month. At this point, I probably wouldn't try to budget any further. I suspect that I will go over my $200 a month allocation for food, for instance, and there are always expenses that don't fit neatly into my categories. Like, I like to buy bird seed to feed the birds, especially in winter. From time to time I need to buy ink cartridges for my printer. A small amount of clothing, like undergarments. And stuff like that.

But I'm just curious, if you've followed me this far and you had limited funds to spend, would you make your allocations any differently? Would you, for instance, do away with the 401k contributions entirely? Or the mortgage prepayments? Or put money aside for some non-discretionary item I haven't listed?

9 Responses to “Design-a-Budget”

  1. Ima saver Says:

    I would probably put away some money for pet expenses. Of couse, both my dogs have to get groomed, so that adds up. Also, I put away money for christmas and gifts to my granddaughters. (birthdays)

  2. PatientSaver Says:

    You know, I totally overlooked that expense when I calculated my essential expenses. I do track cat expenses (food and vet) separate from my own food, and it usually runs about $65 a month.

  3. retire@50 Says:

    you should probably put something away for unexpected life expenses - maybe $50/month. Things like small appliances breaking, plumbers, car repairs etc. Does your health insurance cover dental? That might need another $10/month depending on how often you get your teeth cleaned. I would keep both the 401K and mortgage prepayments if you can, but would maybe build up a cushion first for emergencies or another job loss before starting the mortgage prepayments.

  4. Petunia 100 Says:

    I would build up my cash savings some before I started prepaying the mortgage, or perhaps split the $200 between mortgage and savings.

    I would not skip the 401k contributions. I know your savings are already healthy and should grow some more before retirement, but I would not skip them anyway. Especially if there is a match to be had.

    I know your mortgage balance is low and you are probably antsy to just be done with it. But really, you could be done with it anytime. You could sell taxable investments and/or pull contributions from your Roth and pay it in full.

    How long is left to go on your mortgage? Your sidebar says 15 years, but that seems like a long time for a balance under 29k.

    But all in all, I think your budget looks good!

  5. crazyliblady Says:

    How about contributions to an IRA or Roth IRA?

    Home owner's association dues (if that applies to you)?

    AAA membership? I consider this to be absolutely indispensible. It has saved us hundreds of dollar in tow fees over the years and I have also lower hotel bills with it.

    Car maintenance and repair?

    Cell phone (if you have one separate from the Phone/Internet listed)?

    Work related expenses, such as attending conferences, special clothing, parking tags at your work, etc.?

    Visits to a salon, nail technician, spa, massage therapist?

    Credit Card Payments?

    Student Loan or Other Loan Payments?

    And I agree with the other posters. I would definitely pump $50-$100 into an emergency savings account to cover appliances, cars that break down, deductible for insurance, etc.

  6. PatientSaver Says:

    Petunia, I'm only in year 16 of a 30-year mortgage. But i've paid off enough that if i make just regular payments, I'll have it paid off in 4 more years.That's becus i've been making prepayments from the start.

    I think you're right about building up emergency fund, as i used my emergency fund to pay for the vinyl siding job so I basically have just a thousand or so left in my checking. If i need more to pay bills next month, i'll have to cash out some taxable investments.

  7. CB in the City Says:

    That is about what I make. Here is how I spend it:

    Rent - 1110
    Utilities (including phone) - 212
    Vacation/Travel - 156
    Business Expenses - 104
    Gifts/Charity - 104
    Groceries - 103
    Insurance (Auto & Renters) - 74
    Furnishings/Equipment - 71
    Gas - 56
    Entertainment (Includes Netflix) - 56
    Eating Out - 54
    Personal - 36
    Medical/Health - 35
    Fees/Services - 35
    Clothing - 27
    Vet/Pet Supplies - 26
    Car Repair/Maintenance - 22
    Household Supplies - 18
    Miscellaneous - 8

    I routinely save $125 a month and also whatever is left over at the end of the month.

    This does not count what is taken out of my check for medical, taxes, etc.

    Hope you get the job!

  8. debtfreeme Says:

    Just a couple of questions:

    why do you need cobra if company pays for health insurance? Or is there a vesting period before they pay your insurance?

    is 45 a month realistic for gas for car? Do you set aside anything for routine maintenance with a 12 year old car? (I save $100 a month for repairs and $150/month for a down payment as well as insurance)


    clothing? even a small amount set aside into savings, like $25 a month (which is what I do).

    a smaill slush fund for those months when you find good deals to stock up and go over your grocery amount
    misc 410 a month to cover those small things (toner, birdseed, animal treats etc. )

  9. PatientSaver Says:

    No, I won't need COBRA once I get on their plan. Imeant to put "health insurance," not COBRA. Yeah, I guess I've left out a lot of likely costs, like cat food, car repairs, clothing. I will have a small amount left over each month, but i was trying to pin down a regular savings plan before I allow myself to spend it on other stuff.

    I did also forget to factor in a small amount of freelance income I'll likely make. Hard to say how much, but i'm guessing a few thousand.

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