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One comment about insurance shopping. It's not just about the price. I happily pay a bit more to USAA for my insurance because I know that when I have a problem, when I need the insurance company to help me, they will take care of it.
Insurance is nearly always a situation of 'you get what you pay for.'
I don't think I read anywhere about OP asking how to cut his/her expenses...
He might not realized some of his expenses seem high and can be brought down with a simple phone call. I don't agree with telling him to cut some out, everyone has their wants. But like the car insurance, it just seem so high.
Thanks everyone for the advice on several different areas. To explain the current situation, we are currently joining two families so some of the numbers are guesses.
We do have about $8,000 in cash, so I could pay the credit card off at this time. It is however all 0% so at this point I've left it in the savings/mutual funds for the time being. The car payment is an issue owing 21k, but again it's 0% and I plan on having the car until it dies. The other car has 115k on it, so who knows how long it will be good to keep. I like the idea of buying good used cars and running them. However the dependability/warranty of new cars (especially with the price of slightly used cars at this time) made me recently buy new and plan the same for other car.
Cell phone I would love to cut back, but I'm stuck in contracts currently. Also I need the tether capability of my current phone, and Verizon has the best service in the area by far. I currently am grandfather into unlimited data and plan on keeping that until they pry it from hands (last month I used ~13gbs to give an example).
Cable cost was just to put in just as an idea. I currently am a cord cutter using Roku/Plex combination. I use a high power HDTV antenna and as long as our new location receives a signal I'm sticking with it. I plan on spending ~$50 for internet hopefully.
Insurance costs I'm sure will go down, or so I hope. That number is just our current premiums added together. I'm sure joining on one policy will bring the price down. I just wanted to shoot high on all the numbers. I'd rather do that then be surprised with reality and stuck.
Gas we are stuck with. Unfortunately we live 45 miles away currently and our jobs are even further in the opposite directions. I work for the state government and got transferred and my attempts for the past year on finding a new job have been fruitless. Hopefully in the future we can get closer jobs. For now however we are trying to purchase in the middle. To get the gas budget I took the commute miles x 5 days a week, and the divided it by our currently tracked gas mileage. I'm using $3.50 as a price, but considering changing it higher.
Electricity, I have no clue if that's a good budget or not. My last residence was a 1500 sqft condo, and all my places have been one level. My normal electric cost there was $150. I'm worried about adding a second or third story to a house and the cost associated.
Groceries, I think my budget is good there. Unfortunately, or fortunately for fiance sake we only have the two children 50% of the time. So 50% we are just feeding two.
Water/sewer, many of the areas we are looking rely on septic/wells. What should be budgeted in your opinion if we do locate to a place with water/sewer?
Emergency fund we do not have built in. College savings is taken out of check, along with retirement funds.
Happy to hear any and all advice.
Also forgot to include that we are looking at getting a USDA loan, 0% down and include the 2% fee into the mortgage.
There's no way you should spend 225,000. First of all, I don't know how they are getting $1300. Unless you live somewhere where the property taxes are $1000 a year and home owners insurance is nearly free, I don't see how your payment with taxes and insurance would only be $1300.
The reason you qualified for that much money is because the only thing the lenders takes into account is your debt - so the car payment and credit card payment. What other obligations you have in terms of daycare, cell phones, etc.
I agree that some of your expenses are unusually high - like the car insurance and electric bill. When you do look for a house, ask about the average electric bill. Make sure it's not $250!
I also don't see any room for maintenance, yard stuff, deodorant and toilet paper from Walmart, medical payment, etc. Where's the misc category?
If I am understanding your situation correctly, you are getting married and moving in together this combining your household. I'm assuming your budget is your joint income. I would take the rent you are paying and the rent she is paying and add it together. That is the total you are paying now. That is the amount you should aim for in your mortgage. Obviously, you are each independently paying your bills with this number, so it should work together.
If you can't find a house in the price range of the mortgage you can afford, then keep renting. If you think you can afford more, start setting that amount aside each month and live like that for 6 months. If you can't make it - then you'll know and without the nightmare of having a house you can't afford:-)
Quote:
Originally Posted by jdougal
I was just pre-approved for mortgage in the 225,000+ range. Now that I came home and set up a budget I don't have a clue how that's even close to be possible.
Total income is $70k, My co-signer has $0 debt, I have $21,000 car loan at 0% and $9,000 credit cards at 0% for a year. We are budgeting now for a new car because her car is on its last leg, so that's "future car". Grocery budget is based on standard for 4 person family.
Cable -$150.00
Car -$375.00
Car insurance -$250.00
Cell Phone -$170.00
Credit Card -$75.00
Daycare -$300.00
Electric -$250.00
Future Car -$200.00
Gas -$451.84
Groceries -$520.00
Mortgage -$1,300.00
-$3,841.84 total bills
$3,200 Monthly income
To me this doesn't seem doable at all, why on earth would I be approved for anywhere near that much? Realstically what could be afforded?
I was just pre-approved for mortgage in the 225,000+ range. Now that I came home and set up a budget I don't have a clue how that's even close to be possible.
Total income is $70k, My co-signer has $0 debt, I have $21,000 car loan at 0% and $9,000 credit cards at 0% for a year. We are budgeting now for a new car because her car is on its last leg, so that's "future car". Grocery budget is based on standard for 4 person family.
Cable -$150.00
Car -$375.00
Car insurance -$250.00
Cell Phone -$170.00
Credit Card -$75.00
Daycare -$300.00
Electric -$250.00
Future Car -$200.00
Gas -$451.84
Groceries -$520.00
Mortgage -$1,300.00
-$3,841.84 total bills
$3,200 Monthly income
To me this doesn't seem doable at all, why on earth would I be approved for anywhere near that much? Realstically what could be afforded?
Perhaps this is something that should have been done before you went to see about being pre approved for a mortgage.
Personally I would not even think of purchasing a home until all debt outside of monthly necessities is paid off.
Have you considered what you will do if an emergency repair comes up? How will you manage to pay for that? Unexpected medical issues can happen as well and end up with extended job loss, etc.
Insurance costs I'm sure will go down, or so I hope. That number is just our current premiums added together. I'm sure joining on one policy will bring the price down.
I found the only way to lower insurance costs is to totally change companies every 2 or 3 years. Your current insurance company won't cut you a deal compared to what you can get by switching. The difference is too big.
Regarding the gas issue. One of you should agree on a commute and live close to one job. It makes more sense for the more gas efficient car to have the commute. Your gas will be cut down considerably when you are only paying for one commute rather than two. Plus in case of emergency, car breakdown etc, it will be easier to share one car temporarily if you are close to a job.
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