Anything wrong with my budget?
Hi all,
can you help put me the two and two together? i’m married w/ 2 preschool kids looking for a good home in north county inland. Single income in a low 100k w/ no debt. My budget looks like this (image attached), which put house price i can afford no more than 490k, no hoa/mr and 30% down. We’re looking for 2k sqft and like the 4s ranch area, but there’s nothing at this price level. Are those ppl living there just making way more or is my budget too conservative? (i’ve not updated the tax pct to account for mortgage interest deductible, not sure how much it’ll save.) Thx for ur input!
February 21, 2012 @ 12:04 AM
For 490K with 30% down (a
For 490K with 30% down (a 343K first trust deed at 3.75%), my spreadsheet puts out $2,507 in total monthly cost of ownership (PITI + Maintenance set-aside), plus I’d need ~193K cash to close (including down, closing costs, and rainy day fund/remaining savings). So to me, that looks a little more like 30% of income going to housing.
For retirement, we’ve been maxing the 401K and Roth(s), and skimping on the college savings for now. (We plan to make up for it later, possibly by skimping on retirement; as a friend of mine says, you can take out a loan for college, but not for retirement. Also, there’s that whole higher education bubble that needs to work itself out in the next 15 years, hopefully…)
Otherwise, things seem to add up reasonably. However, discretionary is mighty small, and general, non-tax-deferred savings is missing entirely (is that accurate?). Are you comfortable skimping on the charity component if times get tough?
February 21, 2012 @ 12:19 AM
no hoa/mr
unfortunately, if you’re looking in the 4S area, you will be hit for hoa/mr anywhere from 200-500 per month. look at the older homes (before 2000) if you want to avoid huge MR fees.
February 21, 2012 @ 12:47 PM
I haven’t seen anything in
I haven’t seen anything in the 4SR area in your price range. Prices came down quite a bit over the years but I still don’t see anything at your price range in that area.
I’d have the same question wanting to know what you all have included in “Living”. When budgeting, better to break down your categories more so you can get a clearer idea. Quicken is great for that and the graphs it produces.
I assume for your “living” you’re including things like Groceries, dining out, dry cleaning, gym, etc.
I didn’t know if you were budgeting child expenses like clothes, toys, entertainment, etc. in that “Living”. It’s hard to tell. I also have 2 pre-school aged kids and we spend quite a bit in a separate category we call Kids. In “Kids” we further break it down for Toys, Education, Clothes, etc.
I agree with the others that your discretionary budget should be increased. Also, I didn’t see any Travel/Vacation budget planned. Do you not take any vacations or travel? If you do, better to budget for that as well.
Here are the things we have on our budget:
-Mortgage or Rent
– Property taxes if you own
-Phone (Land line and Cell phone, blackberry, etc)
– Utilities (gas, water, electricity, cable, internet, etc)
– HOA fees (if you own vs. rent)
– Maintenance and repairs (if you own a property)
– Car payments
– Car insurance
– Auto Fuel each month for each car
– Registration fees for your car each year
– Maintenance on your car to include car washes and oil changes
– Home/rental insurance for your property
– Life insurance
– Health insurance premiums
– Dental insurance premiums
– Medical/Dental expenses (what insurance won’t cover)
– Prescription medications
– School expenses for kids (tuition, stuff for school, ballet classes, etc)
– Babysitter expenses
– Clothes for kids and yourself
– Toys for kids
– Dry Cleaning
– Health club / gym
– Beauty (hair salon for hair cuts, color, nails, make up, etc)
– Extracurricular activities dues/fees
– Entertainment (movies, theatre, plays, Seaworld, Zoo, concerts, sporting events, etc — TONS of stuff to do with kids here)
– Magazine/newspaper/Ipad subscriptions
– Dining out at restaurants
– Grocery budget
– Retirement savings contributions
– Kids college fund savings contributions
– Charity/donations
– Travel / vacation expenses
– Federal/State/local income taxes
– Any revolving debt payments you might have
– Bad habit type stuff (alcohol, smoking, etc — this doesn’t apply to me but it does for many people)
– Emergency savings fund for any major health issues
– Non reimbursed office/work expenses and supplies
February 21, 2012 @ 3:15 PM
Thanks!
I put the following
Thanks!
I put the following under Living:
– Children needs
– Children education
– Groceries
– Dining out
– Entertainment
– Clothes
– Incidental
I used to itemize more but after a while it’s hard to keep track of smaller things. The American Express year-end summary helps me a great deal grouping the expenses together.
February 22, 2012 @ 1:34 AM
latenightsd
Do you really only pay 18% in taxes, wow I’m left wondering how. Other than that my budget looks comparable and no we can’t afford 4S ranch either, that’s why we bought an older house with no HOA/Mello Roos.
February 22, 2012 @ 6:04 PM
latenightsd wrote:Thanks!
I
[quote=latenightsd]Thanks!
I put the following under Living:
– Children needs
– Children education
– Groceries
– Dining out
– Entertainment
– Clothes
– Incidental
I used to itemize more but after a while it’s hard to keep track of smaller things. The American Express year-end summary helps me a great deal grouping the expenses together.[/quote]
Ah, ok that explains why your “Living” is so high. Definitely check out Quicken. It’s great. It takes a while to get used to inputting everything but totally worth it and very helpful with great reports. I started doing this out of college and still have it all tracked each year so I can see where the money is going.
Just make sure you budget enough for the kids portion of your budget. I saw where you said your wife likes to buy educational toys, etc. We’re the same way. Both our kids have their own Ipads and it’s a GREAT educational tool. Plus always buying them toys/games, etc. I also underestimated what pre-school here runs. Next year when both our kids are in pre-school we’ll spend $2,000 a month only in pre-school. I’ll be VERY happy once Kindergarten starts!
February 21, 2012 @ 12:16 PM
I’d suggest going to
I’d suggest going to census.gov. Check out the demographic of the zips you’re looking at.
I suspect low $100ks is low for the hood. In irvine that would put you right on the median income, granted that’s not irvine but I suspect similar.
Other items on the budget, what is living? Sounds funny but it is a big expense bucket.
Auto seems low. Are you factoring replacement costs.
Other savings from the 401k or college fund?
Planned housing expense looks good but 0% discretionary is scary
February 21, 2012 @ 3:35 PM
Good suggestion. I couldn’t
Good suggestion. I couldn’t find the right keyword for census.gov, but clrsearch.com provides excellent demographics summary.
February 22, 2012 @ 4:00 PM
What do you mean?
$100K
What do you mean?
$100K taxable AGI,
Family of four.
Effective income tax of probably 7%.
Effective State probably 4%
FICA 7.65%.
18%.
That are the real taxes people pay.
February 23, 2012 @ 9:12 PM
web calculator
I tried plugging in your numbers into CNN money’s home affordability calculator. Based on the “conservative” estimate, you could afford a loan around $400K and a house in the $500-600K range. I bet that most piggs would think that too “aggressive.”
http://cgi.money.cnn.com/tools/houseafford/houseafford.html