How to get budget below $100k?

[Derslickmeister]

I'm not sure what your objective is, ER or mom stay at home or just have a little more cushion month to month. Good to see you are actually able to say where your money goes. Personally I see a whole lot of fat in this budget. Of course I'm well past the advertiser's main demographic so I'm not into consuming on the level of a 30 year old.

• I see cable, internet, streaming, entertainment, and cell phone bills that can all be trimmed, a couple even removed due to redundant functionality.
• You are eating out way too much, of course most folks in Texas do as witnessed by all the packed restaurant parking lots I see every single day and night.
• Why do you spend so much on appliances and electronics? Are you not buying quality or are you one of those that always has to have the latest and greatest whatever?
• You home maintenance seems a little on the high side. Is this an older home or are you counting upgrades as maintenance?
• Clothing seems to be off the charts, is there some skinny clothes/fat clothes thing going on there or do you guys just like to shop? Maybe just into the latest styles?

I'm sorry if this sounds harsh, and if you really think this is harsh head on over to Mr. Money Mustache and read some of the case studies there That will definitely open your eyes to how to really cut a budget.

 

[MikeWillRetire]

My wife and I lived the two-income lifestyle with kids and daycare too. You'll find that it is hard to stay away from the "convenience costs" because you will be running back and forth to work, daycare, after school activities, etc. Based on our experience, if you are in careers with opportunities for advancement, your savings rate will increase each year, provided you don't expand your expenses. We went from a 5% savings rate when the kids were infants to a 35% rate as they became teenagers.

 

[valueplayer]

I would suggest a one year experiment. Cut discretionary to the bone, at least by 50% but 75% would be ideal. Like other people said I would also shop around rates of ins for your home and car. Last year I did this and it ended up cutting my bill in half with better coverage!

Tough it out for a full year, then sit down with your DW and reflect. Look at how much money you saved? Did you feel like you were totally deprived of a decent qol? I think you'd be surprised with the results. Good luck and great work tracking everything...the hard part is whacking everything.

 

[Mulligan]

I really doubt you are wasting money in any category , it just comes down to lifestyle expectations. Want vs need.

Lakewood, that was my initial thought also. Gumby had a money saver item, but only old curmudgeons like myself think that is a good way to save money. Most people would look at you like you have 3 eyeballs in your head if you mentioned cutting the budget there.
Rodi mentioned the easiest one that will happen in 5 years...Daycare goes away, unless private school is on the horizon. Take that down the road savings and dont let lifestyle creep eat that savings up. Dont people still get a nice tax break on daycare still? If so, some of that expense will be rebated back tax time.
If housing cost reductions are off limits, you are really left to the crumbs of clothes and eating out unless some nice near normal MC lifestyle comforts are cut.


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[imoldernu]

I try not to give advice.... Here's my comment from an older thread.

Posting this here, as it's personal, and not either a recommendation or a request for validation... Just a bit more of "FRUGAL".

STUFF WE DON'T SPEND MONEY ON

Life Insurance
New Clothing
Haircuts
Hair styling
Pedicures/manicures
Beauty products
Movies
Concerts
Sporting events
Restaurants (more than $8 meal)
Books
Music
"New" Computers (since 2002)... all refurb or reclaim
Software... (Twice in lifetime.. total $30) all other "free"
Car maintenance labor... all DIY except 3 times for major repairs
Brand vs. Generic foods
Premium meat or fish
Financial Advisor
Lawyer
Chiro/Massage/Tan etc.
Tatoos...
New Home Decor.. (all resale)
Cars.. since 1998...
Car Wash and wax... since 1989
Premium TV channels
New Bikes or Exercise equipment
Sporting goods
Cruises (so far)
Group trips
Flying (Airlines)
Lodging (more than 3 star)
Premium Gasoline
Tools (already have more than I'll ever use, including welders etc.)
Housekeeper
Carpet Cleaning
Window/Gutter/Furnace etc. Cleaning... all DIY
Premium booze/wine...
Jewelry
Organic foods
Brand sodas
Painting, remodeling
Weapons
Subscriptions (AARP only)
Gambling
Banking or Credit Card Fees
Appliance or Electonics insurance
Eye Glasses... except for $1readers (since 2000... maybe eye test this year.)
Pets... (except bird feed)
Healthcare maintenance... exercise equipment, pool, advisor etc... (all included in our senior community membership. (no fees)
Pest control... DIY
Only "fee for" is Activities Association (FL).. $6/year

.... for starters...

 

[Throwdownmyaceinthehole]

You might want to look at it from a different angle. Take your priority - which is savings, off the top of your income. Then learn to live on what's left over. If you don't have the money your expenses/needs won't expand to cover non essentials. We were a double income, but we made ourselves live on one income and saved the other.

 

[nash031]

You might want to look at it from a different angle. Take your priority - which is savings, off the top of your income. Then learn to live on what's left over. If you don't have the money your expenses/needs won't expand to cover non essentials. We were a double income, but we made ourselves live on one income and saved the other.

This is a great idea and what DW and I do. I projected what I wanted to have saved by 42, and worked backwards assuming 3% real growth between now and then. Then we figured out how to save the goal amount. In fact, we're doing better than we planned in terms of savings rate (and the return is cooperating - subject to change at any moment...)

 

[Al18]

You're discretionary expenses seem very high. I live in a high cost of living area in the Northeast, have no kids and when my wife and I were working full time, our discretionary expenses were $16K less per year than yours. Also, your groceries expense is 35% higher than mine. What is the $3500 Costco expense?

 

[soupcxan]

We're basically living on one income, but I still think we could do better.

Donations - We give less than 1% of our income away so I'm not too fussed about this as long as we're both employed.

House - We bought it in the low $400s. There's not much that's significantly cheaper in Houston that works for both of our commutes. I don't see us moving until DS starts school, at the earliest. And yes, HCAD sucks.

Furnishings - We're not re-decorating for style, we're young enough that we're still accumulating furniture for the house. E.g. a couple of the bedrooms have beds but no dressers or nightstands in them. That is not a priority, but eventually we want to have a couple of pieces of furniture in there. And for this year I just bought a crib and changing table.

Maintenance - I estimated 1% of the houses purchase price. Won't be that much every year, the next major thing to go will probably be the AC/furnace which will be a couple grand.

Appliances - Ours are new so don't expect any repairs/replacement in the near term but I figure eventually they'll start to need work.

Groceries - I know this is too high but can't figure out where the money is being wasted. Most of our shopping is at Wal-Mart.

Costco - I started a separate thread a few months ago and most of the replies said my Costco bill wasn't out of line. Coffee beans, paper products, steaks, fish, wine ($10-15/btl), beer, fruit, sparkling water, nuts, cheese, etc. But yeah, you go in there and can't get out for less than $150 per trip.

Daycare - The nannies we've looked at have been +$2k/mo versus $1,300 for daycare, so doesn't make sense for only one kiddo. I'm sure there are cheaper nannies if you don't pay taxes or ask questions about immigration status.

Clothing - More DW's spending than mine, though I do buy dress shirts and slacks for the office as stuff wears out. DW has to wear suits which cost more. Jeans/polos not allowed for either of us at work. But yeah, we could cut here if we tried.

Personal care - I get a $15 haircut once a month. The rest is DW. I have offered to cut/color her hair but she has declined.

Dining out - We could cut here if we packed our own lunches during the week. We don't always have time for this with work but could definitely do it a few times a week.

Gifts - This is 80% DW. She comes from a very large family and there is always a wedding, baby shower, graduation, birthday, etc.

Cell phone - We both "need" smartphones with data for our jobs (no, our jobs don't reimburse us for them). Of course, if I didn't want the latest and greatest iphone, this could be lower.

Insurance - We just switched carriers and saved +$1k/year. But I don't see it getting any cheaper in the near term.

Electronics - This is all me. I love my computers/gadgets. And digital cameras are a hobby of mine.

Cable/internet - This is just internet service for $50/mo + taxes. We don't have cable TV, just Netflix/Hulu.

Vacation - We're not exactly staying at the Ritz in London but yeah, could be cheaper.

 

[FUEGO]

[B]Discretionary[/B]
 1500  Clothing
 1000  Dining Out
 500  Donations
 600  Personal Care (hair, nails)
 1000  Gifts
 500  Entertainment
 5,000  Travel/Vacation
 500  Electronics
 500  Home Furnishings
[B]9,600  Subtotal[/B]

[B]Semi-fixed[/B]
   300  Appliances
   600  Cable/Internet
 800  Cell Phone
 1,500  Electricity
   250  HOA Dues
   600  Natural Gas
   200  Streaming services
 1,400  Water & Sewer
   750  Dry Cleaning
 2,500  Gasoline
 5000  Groceries & supplies
 2000  Costco
[B]15,900  Subtotal[/B]

[B]Fixed[/B]
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
[B]52,774  Subtotal[/B]
 
[B]78274 Grand Total[/B]

Here's my proposed budget for you!

Discretionary expenses were easy to cut. Semi-fixed less so, and I didn't do anything to the fixed expenses since I'm assuming there's not much wiggle room without changing the housing situation. There's probably a lot of fat you could cut there, since you're at ~$2500/month or $30,000/yr on housing alone.

I took out a little over $20,000. It shouldn't be crazy deprivation, but will require adjusting to a new normal (clothes, dining out, hair/nails, etc).

I also noticed you neglected a sinking fund or depreciation amount for periodic auto replacement. Maybe your cars are brand new so you will keep them forever (or a decade or two at least)?

 

[Gumby]

Cell phone - We both "need" smartphones with data for our jobs.

I'll respond, since this is an issue I brought up. And my response is "really?" Let me suggest that none of us is as indispensable as we assume. We do not need to be constantly connected.

I am still working. I am available all day long on my office computer. When I leave my office and spend an hour driving home, I am unavailable, and rightly so -- it is dangerous and illegal to use a cell phone while you are driving. When I get home, I check my email again and usually check it again a few times over the course of an evening. It is almost never the case that something can't wait until the morning. And if it can't, well there I am on my fully equipped home computer.

 

[Jack_Pine]

I'll respond, since this is an issue I brought up. And my response is "really?" Let me suggest that none of us is as indispensable as we assume. We do not need to be constantly connected.

I am still working. I am available all day long on my office computer. When I leave my office and spend an hour driving home, I am unavailable, and rightly so -- it is dangerous and illegal to use a cell phone while you are driving. When I get home, I check my email again and usually check it again a few times over the course of an evening. It is almost never the case that something can't wait until the morning. And if it can't, well there I am on my fully equipped home computer.

Disagree, I am in IT, we use smart phones for system access 7/24.

 

[MikeWillRetire]

For a two-income family in their 30's, the ideal situation is to have jobs with advancement potential. If so, your savings rate can increase over the years as long as you keep your expenses in check. You can keep your cell phones and cable tv, etc. If your jobs don't have advancement potential, and raises only keep your head barely above inflation, then you will need to cut your expenses as others suggest.

 

[Bogie]

One thing we have started doing is attending estate sales. It allows us to enjoy spending a little but getting a lot of value for our money. Case in point, with all the rain here is Tx we are seeing a lot of mosquito problems and found a working mosquito magnet for $10. Sure beats spending $300 or so.

 

[hnzw_rui]

Cell phone - We both "need" smartphones with data for our jobs (no, our jobs don't reimburse us for them). Of course, if I didn't want the latest and greatest iphone, this could be lower.

Electronics - This is all me. I love my computers/gadgets. And digital cameras are a hobby of mine

Question, does the monthly cellphone bill include subsidies for your phones? If so, $130 sounds about normal. If not, consider prepaid plans such as Cricket Wireless. Cricket is a subsidiary of AT&T so you get pretty good coverage. For 2.5GB each phone per month, it's $70 total. For 5GB each, it's $90 total.

I hear you on the electronics. My yearly budget for that is $1-2K and I've had years where it went up to $5K (usually when I have lots of overtime). I'll forgo vacations but not my tech.

My yearly clothing budget is $0 and hair cut is just $50 a year. I did spend quite a bit on a new wardrobe last year though because of a promotion. Prior to that, it's just old jeans and shirts.

 

[Bamaman]

We're basically living on one income, but I still think we could do better.

Donations - We give less than 1% of our income away so I'm not too fussed about this as long as we're both employed. Don't you go to church? 1% is much too low.

House - We bought it in the low $400s. There's not much that's significantly cheaper in Houston that works for both of our commutes. I don't see us moving until DS starts school, at the earliest. And yes, HCAD sucks. Houston's one of the two least expensive housing markets in the U.S. You could have spent much less for a perfectly decent house and just driven another 15 minutes to work.

Furnishings - We're not re-decorating for style, we're young enough that we're still accumulating furniture for the house. E.g. a couple of the bedrooms have beds but no dressers or nightstands in them. That is not a priority, but eventually we want to have a couple of pieces of furniture in there. And for this year I just bought a crib and changing table. We inherited more and more furniture as relatives aged. Before that, we were shopping thrift stores and auctions for great furniture for very little money.

Maintenance - I estimated 1% of the houses purchase price. Won't be that much every year, the next major thing to go will probably be the AC/furnace which will be a couple grand. A/C's will cost you more like $4K each, and everyone needs to setup a savings account to accrue replacements.

Appliances - Ours are new so don't expect any repairs/replacement in the near term but I figure eventually they'll start to need work.

Groceries - I know this is too high but can't figure out where the money is being wasted. Most of our shopping is at Wal-Mart. We start shopping at Aldi's, and finish at other groceries buying only sales items. Walmart's groceries are too expensive. Big Star puts yesterday's steaks out every morning at 10:30 at $2 off minimum. We mainly eat chicken and pork--cooked on the grill.

Costco - I started a separate thread a few months ago and most of the replies said my Costco bill wasn't out of line. Coffee beans, paper products, steaks, fish, wine ($10-15/btl), beer, fruit, sparkling water, nuts, cheese, etc. But yeah, you go in there and can't get out for less than $150 per trip. Stay out of Costco's and it'll be like a pay raise. I'm a member, but seldom go in there except for a specific item.

Daycare - The nannies we've looked at have been +$2k/mo versus $1,300 for daycare, so doesn't make sense for only one kiddo. I'm sure there are cheaper nannies if you don't pay taxes or ask questions about immigration status. Shop around churches for better daycare programs.

Clothing - More DW's spending than mine, though I do buy dress shirts and slacks for the office as stuff wears out. DW has to wear suits which cost more. Jeans/polos not allowed for either of us at work. But yeah, we could cut here if we tried.

Personal care - I get a $15 haircut once a month. The rest is DW. I have offered to cut/color her hair but she has declined.

Dining out - We could cut here if we packed our own lunches during the week. We don't always have time for this with work but could definitely do it a few times a week. We only eat out once per week. And we always took our lunches when we worked. The money we would spend on eating out takes us on vacations to far off foreign lands.

Gifts - This is 80% DW. She comes from a very large family and there is always a wedding, baby shower, graduation, birthday, etc. We seldom have such gifts, as a product of being retirement age. It's the thought that counts--not the amount spent. It can be cut back.

Cell phone - We both "need" smartphones with data for our jobs (no, our jobs don't reimburse us for them). Of course, if I didn't want the latest and greatest iphone, this could be lower. The average high line phone costs $621. I bought a smart phone for many times less than that.

Insurance - We just switched carriers and saved +$1k/year. But I don't see it getting any cheaper in the near term.

Electronics - This is all me. I love my computers/gadgets. And digital cameras are a hobby of mine. I'm also a photographer, but you don't need a new camera every year.

Cable/internet - This is just internet service for $50/mo + taxes. We don't have cable TV, just Netflix/Hulu.

Vacation - We're not exactly staying at the Ritz in London but yeah, could be cheaper. We're spending our vacations camping out in the mountains, and the grandkids absolutely love it. We have not been "to the beach" in 25 years. For $5K, we'd spend it in Europe.

Good luck to you in your lifestyle changes. We lived much farther below our means than you guys to finance our early retirement (58 yrs. old.) Changes can be easily done without reducing your quality of life.

 

[daylatedollarshort]

Here's my proposed budget for you!

I might change the numbers around a bit but what you laid out is the same order of magnitude of cuts with what I would suggest, too, if the goal is ER or to be able to go to one income.

When we did our budget smack down we kept the house, actually upgraded the cars (newer with latest safety features, better repair records and MPG), kept the home improvements (we'll get the majority back when we sell the house), kept the restaurants and cultural activities but found cheaper avenues and cut out a lot of the depreciating and/or overpriced consumer goods and services.

 

[jollystomper]

One suggestion about the clothing. Where do you shop? DW and I have found very nice clothes, from business to casual attire, at thrift stores. You can find clothing that has never/been barely worn (e.g. someone buys something the wrong size and never got around to returning it and ended up donating it). The person who tipped us off to the best stores in our area are multi-millionaires, but do a lot of shopping at those places.

If you cannot stand that thought, there are plenty of other bargain places to find nice clothes. Low cost does not always mean bad quality.

 

[Spanky]

We're basically living on one income, but I still think we could do better.

You are doing fine!

 

[soupcxan]

Houston's one of the two least expensive housing markets in the U.S. You could have spent much less for a perfectly decent house and just driven another 15 minutes to work.

I'm guessing you haven't spent 2 hours/day in Houston traffic...

 

[Aiming_4_55]

Soupcxan - You and spouse make decent $$, if you enjoy your lifestyle, don't sweat it, enjoy life within reason. Once the little one comes, you will adjust the budget a good few times is my experience.

Some additional thoughts:
Discretionary - all discretionary can be reduced by 25% for 3 months and see if you can. If you are successful reducing, after 6 or 12 months, reduce again. It's what you value more, saving or enjoying.

Semi-fixed
500 Appliances - is this replacement? can you get a warranty from utility co?
800 Cable/Internet 1,560 Cell Phone - have you shop around? I get unlimited minutes/tests and 2 G of 4GLTE for about $50/month)
1,500 Electricity - CFL bulbs, reduce use of A/C by a few degrees...
750 Dry Cleaning - look out for specials, Groupon or Living Social discounts
2,500 Gasoline 7,000 Groceries & supplies - look for more sales and discount brands

Fixed
14,424 Mortgage (P&I only) - any room for a refi to a lower rate or converting to a 15 year mortgage?
4,000 House Maintenance - anything you can do yourself or warranty?
15,600 Daycare - is this private home daycare or commerical daycare?
500 Car Maintenance - anything you can perform?
All Insurance - continue to "shop" for a better rate every 2 years

 

[photoguy]

Soupcxan - it's definitely possible to reduce your spending from 100k even in a HCOL area. Our typical yearly expense was 70-80k (in san jose, includes property tax) depending on how much travel we did. We don't have kids but our mortgage was about the same as your mortgage+daycare.

Looking at individual items, we were lower on pretty much everything in you listed in discretionary and semi-fixed except for travel & electronics. You've gotten lots of suggestions on what to reduce but I think it's important to cut iteratively and reassess after a while. We never felt deprived and most things we cut out were just not that important for us. Keep in mind that given your high income, a substantial cut in your living expenses might have only marginal impact on time to reach whatever net worth goal you have.

 

[rayinpenn]

Apologies ...can't live on under $100k? You're kidding right? We don't need to tell you where the fat is - you already know. What you're looking for motivation to stop giving $4k in gifts etc, Your on the consumer treadmill ...time to get off.


Formula to brown bag your life
1. No $4 cups of coffee
2. No getting nails done.. My haircuts cost $13 including tip every 3 weeks
3. We get pizza or Chinese every Friday ... 20 bucks...that's it. Unless there are leftovers that have to be eaten.
4. We buy on sale and clip coupons
5. Unless you have to wear a suit each day your clothes budget is too high
6. House repairs? Did you ever hear of YouTube? It is awesome.

Exactly how much do your sneakers cost? Mine were like $40.
Do you have an emergency fund?



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[Ally]

I've worked 31 years in child care and I would cut lots of places before making a change in your arrangements just to save money. If you and your children are happy, then I would look to dining, clothes, gifts and other discretionary spending to save.


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[Totoro]

Consider looking at it from a different angle.

First off, paying off the mortgage principal is not an expense in my book. It is saving/investment. I know from a cashflow perspective it doesn't look that way, and you need to plan for it, but it's not spending. So you spend maybe more like 65k vs. 78k.

Fixed/semi-fixed is meaningless, as no cost is truly "fixed", just a bit harder to change.



Categories at highest level you might sooner go with this (your spend level approx. in brackets).

• Housing (20k) - excluding principal payment (13k?)
• Transportation (5k)
• Healthcare (5k)
• Communications (1.5k)
• Food (6k)
• Travel (5k)
• Everything else (22k) - includes daycare (16k) and costco (2k)

You can certainly go 10k lower, e.g.:

• A 6k food bill for two can be halved, while still eating healthy (i.e. don't eat rice&beans every day)
• Your communications cost can be reduced with 33% - Don't go for a top of the line smartphone, and keep it for 4 years instead of 2.
• Travel: hiking in a tent vs. flying to hotels.
• Tune down the gift giving. Give meaningful, not high amounts
• Buy clothes when you need them. Easily -50%.

But let's be honest, your biggest buckets are housing, transportation and daycare. Together they kill your budget (41k / 65k).

Now you say most of these costs are fixed, I beg to differ. You can move closer to work (get rid of one car), change jobs, move closer to family (reducing daycare), work parttime or from home, get a more economical car, ..

None of this is easy and a big step, but as long you won't touch those three categories drastically, you are pretty much stuck at your current spend level.

My two cents.