Critique my budget please (pay, taxes, transfer, credit)

[Fedupwiththis]

First, Hi.. new to the forum I always come across it when googling things so I figured it was time to join...
So I don't have many people in my life that are very good with money, so I'm always trying to base everything I do financially on what I read on the internet. So before I get a financial planner, I figured I'd post and see what the general consensus is for my budget/future.

Quick background: My wife and I are both 30, just bought our first home. We have a base salary that nets about $7,700 a month. In addition to this I get commissions that net average around $1,800 a month. I only budget using our base pay because the commissions can fluctuate so much from $500-$3000. Any additional income beyond the budget is currently put toward paying off about $6,000 in credit card debt at 15% and we have about $30k of student loans at 6%.

BILLS
House M/T/I $2,820
Cable $150
PSEG $215
Water/Sewer $80
House Maintenance $100
Car 1 $270
Car 2 $250
Ezpass $280
Car Gas $250
Car Maintenance $75
Car Insurance $145
Groceries $400
Life Insurance $55
Cell phone $100

CREDIT CARDS/DEBT
My Amex $35
My Chase $30
Her Amex $35
Joint Chase $140
Student loans $400

EXTRAS
Clothing $100
Future children $250
Eating Out/order in $250
Lunches $300
Gifts/extras $350 $1,250

RETIREMENT/Debt Paydown
$800

Total outgoing - $7,780


The $800 for Retirement/debt is me "paying myself first". This currently goes toward credit cards. We both have secure jobs, her for the state and me for a small successful business where I'm needed to keep the business afloat. For this reason we only keep about 6 months worth of bills in Savings.

Now the bad part is we have almost nothing saved toward retirement. Our focus since coming out of school has been debt pay down and saving for a down payment on a house. My hope is that once the credit cards and student loans have been paid off in about 3 years I'll have an extra $800 from the retirement budget, $640 from credit card/ student loan minimums, and my $1,800 average commission I can start investing. That totals $3,240 a month. If I invest about 90% of that ($2900) at 6% over the next 30 years I'd retire at 60 with $2.7mil which by then I figure will have the same buying power of about $1 mil today. My wife will also have a state pension which should leave us comfortable.

I just get worried because we don't yet have children and like I said I have nothing saved for retirement yet, and some months my commission is only $500. And our budget is already maxed. I like to think I'm in good shape, but I guess just looking for reassurance.

Also, how much would you honestly say a child costs over the first 3 years?

[SaucyAussie]

Looks like you're in debt up to your eyeballs. Is that a 30 year mortgage?

[Fedupwiththis]

Yes it is a 30 year mortgage. We live in NJ so unfortunately purchasing a nice house that isn't a starter home in a very safe area with great schools is going to be $400k+ and $10k+ in taxes, I looked for probably 6 months before we pulled the trigger on this house.

I have a few friends that purchased smaller starter homes. Now they have children NEED to move and are kinda stuck. Buying and selling a home is VERY expensive. We chose to up the price of the house a little rather than needing to move in a few years once we started having kids.

My one friend bought a smaller starter house for $280k. He put $30k into it over the years. His closing costs were probably almost $4,000. Moving costs in and out would likely top $2,000. 6% Realtor commission would be around $18,000! and he'd have to pay closing costs again on a bigger house $5,000. All in he'd need that house to have increased in value $59,000 over 5 years just to break even!!! He got it appraised and it came in WAAAAY lower than he had hoped for so now hes stuck unless he wants to take a huge loss. My wife and I decided not to do that, the purchase price of the house was 33% less than what the bank approved us for.

[Mary2014]

It looks like you are paying the minimum on each of your credit cards each month -bad idea. And perhaps you are still using these credit cards every month?

The first thing I would do is use every penny of each monthly commission to pay off the credit card debt. And don't use the credit cards to pay for current expenditures.

About the only expense I could justify is to buy a program like Quicken to track every penny you spend each month so you know exactly where your money is going. I did not see anything in your budget for things like medical insurance or copays, HOA fees if you have one and there are probably a lot more things you have missed.

Don't use credit cards unless you can pay them off in full every month. And forget spending on gifts/extras until the credit card debt is no more.

I am OK with it taking a while to pay off the student loans and car loans - but, stop using the credit cards until you can pay off the cards in full every month.

[jotucker99]

Eric,

Your main issue here is that you bought WAY TOO MUCH house. Could you have not found a property that's under $200k in a nice area? That's where a lot of the issues are coming from here, if that House/Mortgage related payment was no more than $1,000 or $1,500 you would be so much better off right now.

In addition:

- Cable can be cut using a streaming service and a RoKu box.

- What is EzPass? Is that toll? That's $280 a month? Why?

- What type of Life Insurance do you have that's $55 a month? You guys are 30, you can find policies that are about $10 a month each for your age on Term Life.

- How about move the cell phones to a Boost Mobile and pay about $30 - $35 a month each?

- Are the student loans private or federal?

- For the credit cards, do you guys have bad credit? Can you qualify for one of those promo balance transfer deals by opening a new card and moving the balances there to reduce down the interest paid?

- Why are you spending $250 a month on "future" children? Explain that?

- You are paying $550 in total to eat out and have lunch, I would buy more groceries to lower these costs and not eat out as much. You guys would lose some weight and be more healthy in the process .

But yeah, the main problem is the House payment dude. You guys bought way too much House.

[Fedupwiththis]

Great advise and we no longer use the credit cards, this was in part due to my wife going a little crazy getting ready for the wedding last year and putting all the little stuff on the card. I actually do mention how the $800 in the current budget is geared toward paying off the credit cards and that the commissions are also focused on that as well until the cards are payed off. Then I'll focus on paying off the 6% student loans and some investing for the future.

[flyonpa]

Does your Deductions from your paychecks include any 401K 403b contributions?

[Spazkat9696]

Your cellphone is only $100? Are you sure about that? I'd get rid of the cable and put that toward a credit card. Start with the one with the smallest balance and pay every extra bit you have toward that card to pay it off while making the minimum on the others then move to the next card. Most importantly stop using the cards. You can also call about different repayment plans for your student loans. What's PSEG? What's the 250 for future children is that going into an account? I'd put that toward debt and start packing my lunch.

[dpm1]

Your both in too much car and your food budget is too high. 300 dollars in lunches a month when you already spend 400 in groceries? Do you have a kid? If no why do you have life insurance?

You need to cut back. Fortunately you have plenty of places to do so.

[Caltovegas]

You mentioned earning from commissions. As your in sales already get a Life/Health insurance and sell insurance or annuities part-time. There are many organizations that will contract you on a part-time basis. Another option is to market Legal memberships on a part-time basis. This way you can supplement those $500 months.

Knock down the debt and save and invest. To also get some great real world vision visit the retirement section in this forum. They speak real life over there. People are living it.