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How to get budget below $100k?
Old 05-08-2015, 10:09 AM   #1
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How to get budget below $100k?

We are 30s DINKS with DS on the way. Obviously people live on less than $100k of expenses but I don't know how to do it. This table is based on last year's actual spending. We could cut several items in the discretionary section and get another 10 or 20k out of it but then we're spending 80k which still seems like a lot. Moving to a cheaper house doesn't seem feasible right now. Am I missing something?

Code:
Discretionary
 5,000  Clothing
 4,000  Dining Out
 4,000  Donations
 2,500  Personal Care (hair, nails)
 4,000  Gifts
 1,000  Entertainment
 5,000  Travel/Vacation
 1,000  Electronics
 1,000  Home Furnishings
27,500  Subtotal
Code:
Semi-fixed
   500  Appliances
   800  Cable/Internet
 1,560  Cell Phone
 1,500  Electricity
   250  HOA Dues
   600  Natural Gas
   400  Streaming services
 1,400  Water & Sewer
   750  Dry Cleaning
 2,500  Gasoline
 7,000  Groceries & supplies
 3,500  Costco
20,760  Subtotal
Code:
Fixed
14,424  Mortgage (P&I only)
 4,000  House Maintenance
 8,500  Property Tax
15,600  Daycare
   500  Car Maintenance
   250  Car Registration
   200  Car Tolls and parking
 1,400  Insurance Auto
   400  Insurance Flood
 3,000  Insurance Health
   500  Insurance Dental
 2,400  Insurance Homeowner's
   200  Insurance Umbrella
   200  Dentist
 1,000  Doctor
   200  Prescriptions
52,774  Subtotal
 
101,034 Grand Total
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Old 05-08-2015, 10:23 AM   #2
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Your budget is not unreasonable, the main areas I see that could be cut if saving money for early retirement was a priority would be in clothing,gifts and dining out, all could reasonably be cut in half adding $6,500 to your savings rate. Your house is also at 29% of your spending, if that is a decision that has been made as being worthwhile and unassailable then I think there will not be a lot to do otherwise.
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Old 05-08-2015, 10:39 AM   #3
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I think you've pretty much identified what expenses you can easily cut. You've got a lot of funds going towards discretionary expenses so just start there. Saving $10-20K a year is pretty significant.

On the semi-fixed expenses, Costco + Groceries is $10.5K. Can't really comment on utilities. We rent in CA so electricity and gas seems normal to me. Can't comment on water and sewer since that's included with our rent.

On fixed expenses, for insurance, you might want to check if you can get better rates.
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Old 05-08-2015, 10:49 AM   #4
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I just want to compliment you on the excellent job of tracking and organizing your spending patterns.
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Old 05-08-2015, 10:52 AM   #5
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You might be able to save in the daycare department. I know a couple who hired an 18 year old aupair from Mexico City instead of doing daycare. They give her room and board and a small stipend per month. That setup works well for them because they have an extra room in their house. I have heard of people getting nannies from Europe, too. I have also heard of families going together and sharing a babysitter. If you are in a college town, there would be a great resource of flexible schedules and education majors.
It also looks like your doctors bills will be increasing - congrats on DS! Diapers and baby formula also cost a small fortune. (buy at Costco and save) Get ready!
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Old 05-08-2015, 10:52 AM   #6
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If cuts were easy, you'd probably would have done them already.

So, if you are serious about reducing your budget, it'll take some commitment and resolve to make some changes.

I'd look at the discretionary portion of your budget:
5000 on clothing seems like a lot to me
2500 personal care also

Are you sure you aren't double dipping on things like electronics/appliances/home maintenance - seems like there would be some overlap there.

Maybe less dining out?
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Old 05-08-2015, 10:56 AM   #7
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To me, $4000 in donations would be off that list immediately.
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Old 05-08-2015, 11:03 AM   #8
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I agree with Running_Man on clothing, gifts and dining out. The latter looks like about $100/week for the two of you which seems as if it could be lower. For a couple with no kids yet, gift spending seems high. I also wonder if the electronics might be more of a one-time deal than every year. Costco seem an odd category. What do you spend at there that isn't covered under other categories?
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Old 05-08-2015, 11:10 AM   #9
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I really doubt you are wasting money in any category , it just comes down to lifestyle expectations. Want vs need.
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Old 05-08-2015, 11:20 AM   #10
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Two other forums to look at: MrMoneyMustache, EarlyRetirementExtreme.

To go to the level either of these advocate would be a major lifestyle change. But, just reading thru them will show you that you have lots of options. If nothing else, reading thru the posts and blogs will at least get you out of the "automatic" spending mode that most people get into. We are creatures of habit and we learn to spend in certain ways and never seem to recall that we got along fine before paying for all these luxuries. You trade work time and/or money for all those items on your list, are you getting back enough in return? Do the purchases really make you happier?
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Old 05-08-2015, 11:20 AM   #11
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At least you know where you're spending, that's essential to start.

Trimming spending from $100K/yr would be pretty easy unless you live in a very high COL city. But no one can make meaningful suggestions for you, it depends on your personal priorities. If you want to compare your spending vs averages, there are endless examples online (just one How The Average U.S. Consumer Spends Their Paycheck ) - maybe extrapolate from averages, from there the choices are entirely yours.

First world problems...
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Old 05-08-2015, 11:23 AM   #12
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I agree with the others. Clothing, Personal Care, Gifts, Dining Out can be cut.

Groceries/Supplies/Costco seems like a good area to investigate a little closer. For the two of us we spend about 6k on groceries / toiletries / paper goods. I shop items on sale and almost everything in my fridge was a sale item (except for milk and eggs, which I buy at Aldi so they are already lower priced).

Big Kudos for the tracking and planning for the future.
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Old 05-08-2015, 11:24 AM   #13
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Quote:
Originally Posted by ArkTinkerer View Post
Two other forums to look at: MrMoneyMustache, EarlyRetirementExtreme.

To go to the level either of these advocate would be a major lifestyle change. But, just reading thru them will...
... make your hair stand on end.
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Old 05-08-2015, 11:30 AM   #14
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Compare your expenses to the Consumer Expenditure Survey and see where you might be willing to cut back.

Books and web sites on minimal and sustainable living had a lot of good suggestions for us. Going green felt good and shaved a lot off our annual expenses.

Focus on recurring expenses and the ROI of your time for each potential cut. Making your own yogurt isn't going to save as much as maybe opening even just one one credit card a year with 50K travel points and prepaying insurance or a property tax bill to meet the minimum spend requirements. A lot of the ideas on some of the extreme forums are low payback cuts.

One of our projects for this month is opening two credit cards (one for us and one for one of the kiddos where I am an authorized user) for ~110K in combined travel points.
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Old 05-08-2015, 11:41 AM   #15
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Look to your Cell phone.

I use a Go-phone (flip) and autoload $25 on it every 3 months (just so the previous money carries over; I almost never use the phone, so I have a huge balance.) With taxes, etc, it runs to $27 every 3 months. So my cell phone bill for the year is $108.00. It could be even less if I just filled the phone only when I need it.

My young wife has a smart phone that runs $32.58 per month, which is $390.95 per year. (T-Mobile). She has never run out of data.


That's a thousand bucks worth of savings right there.
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Old 05-08-2015, 11:43 AM   #16
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Look to your Cell phone.

I use a Go-phone (flip) and autoload $25 on it every 3 months (just so the previous money carries over; I almost never use the phone, so I have a huge balance.) With taxes, etc, it runs to $27 every 3 months. So my cell phone bill for the year is $108.00. It could be even less if I just filled the phone only when I need it.

My young wife has a smart phone that runs $32.58 per month, which is $390.95 per year. (T-Mobile). She has never run out of data.


That's a thousand bucks worth of savings right there.
Good suggestion. We went through every expense looking for ideas like that and it added up to huge amounts off our annual run rate and shaved years off our retirement date.
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Old 05-08-2015, 11:47 AM   #17
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Originally Posted by Midpack View Post
At least you know where you're spending, that's essential to start.

Trimming spending from $100K/yr would be pretty easy unless you live in a very high COL city. But no one can make meaningful suggestions for you, it depends on your personal priorities. ...
Agreed. It's really hard for me to comment on specifics, different people value things differently. I think the OP needs to look at each line item, and really consider what value they get from it, and consider alternatives. Maybe ask for specifics on certain items, but for example - dining out - what could anyone say that you don't already know? Dine out less, go to cheaper places, use coupons, learn to cook better? All those probably already occurred to you, and you know the trade-offs.

I'll take a stab at one specific item, but it will just point out the 'different strokes' issue:

DW and I spend about $110 per year for two cell phones, less than 1/10th your bill. We have VOIP for home ( ~ $18/month IIRC). But that doesn't mean you can do that. I have a dumb phone (actually, I have a smart phone hand me down, but I only use it on wi-fi in the house, if at all), I make about 5 minutes of calls/texts a month, DW about 10x that. But we stay in that $ range with T-Mobile Gold plan pre-paid.

Don't know what else to say.

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Old 05-08-2015, 12:06 PM   #18
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Congratulations for being focused on spending and saving at this stage of your life!

I would concur with taking a serious look at discretionary. Personally I wouldn't skimp on donations or vacations, but all the rest look high to me. It's a mindset change that you don't need new sheets/towels/curtains/bedspreads/end tables every few years, for example. Same with clothing - shop at Goodwill or consignment stores, buy fewer pieces of quality classic clothing that last for years. For the kids, especially when young, I bought more than half of their clothes at garage sales or outlet stores.

I would not skimp on daycare - high quality child care is worth every penny. Just make sure you are getting what you are paying for (NAEYC accreditation for example).

Good luck!
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Old 05-08-2015, 12:26 PM   #19
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I love Entertainment books for dining out. Buy one meal get one free and you don't have to prepay in advance for a voucher like you do with Groupons. It might depend on the area, but we have a choice of many restaurants we really enjoy listed on the Entertainment site.
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Old 05-08-2015, 01:05 PM   #20
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Discretionary
Proposed / Existing
300/5,000 Clothing - All you really need is new underwear, aren't your closets full enough?
0/4,000 Dining Out - Who dines out but fools?
0/4,000 Donations - No.
200/2,500 Personal Care (hair, nails) - Get a buzzer and fire the nail and hair people.
0/4,000 Gifts - Not happening. What am I the golden goose?
0/1,000 Entertainment - Netflix will have to suffice.
0/5,000 Travel/Vacation - Nix this money sink.
0/1,000 Electronics - You don't need the new iJunk.
0/1,000 Home Furnishings - Why? Old is good enough and still works.
500/27,500 Subtotal

I just saved you $27,000 and I haven't even begun on the rest of the categories.
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