Budget Evaluation & Financial Advice (pay, taxes, debts, rate)

[stargirl007]

Hi everyone. I originally posted around a year ago (original thread: Another one of these: what next for my finances?). I want to see if I am on somewhat the right track and if anyone has any ideas on how we can continue to improve.

I am 27 years old and my husband is 31.

My yearly salary is $67,500 base + commissions. On track to make $120,000 - 130,000 this year, a bit less than last year. My husband's salary is $48,500.

Assets:

$94,000 in my checking / savings accounts
$9,800 in husband's separate checking

$26,200 in my 401K
$15,000 in husband's 401K

I save 15% of my income to my 401K ($6,800 + $1,700 Employer Match = $8,500 YTD). My husband is saving 7%. Regardless, I am maxing my 401K as I receive a $4,500 match from my employer when I do.

$213,000 home (we owe $170,000).

Debts:

$14,000 in student loans (3 loans with interest rates between 5 and 5.35%)
$170,000 mortgage
$22,500 - loan for husband's car
$451 / mo - my car lease - up in March 2018.
$3,500 - Discover IT card, balance left of new HVAC unit we purchased in February. 0% interest until July 1, paying equal payments until then.

Monthly Budget:

Typical monthly income fluctuates between $7,000 to $10,000 take home. $6,300 guaranteed take home from base salaries after our 401K contributions.

Mortgage - $888
Property Taxes - $325
Home Insurance - $100
Student Loans - $160 (minimum payment)
My Car Lease - $451
Husband's Car - $400 (this includes an extra $25/mo payment - 3.9% - 68 months left)
Car Insurance - $180 (3 cars total, we also have a truck for hardware / misc household trips that we own outright)
Mobile Phones - $100
Water / Sewer / Trash - $70
Electric / Gas - $100 - 200 - fluctuates on month
Internet - $47
Lawn Service - $60
Entertainment - $50 - 75
Groceries - $600 - 800 (includes household supplies, alcohol, dog food)
Gasoline for Cars - $150
Restaurants / Eating Out - $100 - 150

The biggest room for improvement is probably the grocery category. We have been spending around $150-200 in alcohol per month. We are starting to try and cut back on that.

At this point, I am really not sure what to do. Paying off my student loans is the obvious, and I've been throwing around $1,000 extra a month at those. I could save money in anticipation for my car purchase in late 2017 / early 2018 (I know I want to turn my lease in and buy something to keep long-term next time. I do not want to buy out the lease.).

But I feel like I am sitting on a considerable amount of liquid cash at this point and am going to end up losing if I don't put it to work for me somehow.

[jms493]

Real simple.

Write 3 checks - 1 for $14,000, 1 for $3,500, and 1 for $22,500.That will leave you 60K in cash and savings. Not sure why there is a "Separate husband cash account" That is unnecessary.

You Budget looks ok...the food budget should be separate from household items. Easier to figure out exactly how much u spend on food.

Your husband is behind on 401K. Tell him he needs to put 15% away as well...maybe throw $5500 in a Roth IRA as well.

No kids I suppose.

[stargirl007]

Originally Posted by jms493

Real simple.

Write 3 checks - 1 for $14,000, 1 for $3,500, and 1 for $22,500.That will leave you 60K in cash and savings. Not sure why there is a "Separate husband cash account" That is unnecessary.

You Budget looks ok...the food budget should be separate from household items. Easier to figure out exactly how much u spend on food.

Your husband is behind on 401K. Tell him he needs to put 15% away as well...maybe throw $5500 in a Roth IRA as well.

No kids I suppose.

We just got married in early April so still trying to combine finances. I still want to keep that checking account separate since it is at a local bank here so can have flexibility of ATM, etc if needed. All of my finances are at a bank my mom works at in my hometown. I am still not sure that I want to give all of that up and move everything to something more local.

No kids.

I should probably look into the IRA option for the both of us honestly. I made too much last year to contribute the full $5.5K so I didn't bother to open one last year. Terrible excuse, but it is also pretty confusing to figure out how much you could contribute. But it seems this year I will be making a bit less and could make a contribution.

[jms493]

You are married now...you can contribute to a ROTH IRA.

Here are the income limits.

Single
Full Contribution - Up to $117,000
Reduced Contribution -$117,001 to $132,000


Married Filing Jointly
Full Contribution - Up to $184,000
Reduced Contribution - $184,001 to $194,000

[jms493]

If you are going to keep that cash in savings then there is no reason not to pay off all the debts. Do that first. Start off your marriage debt free aside from the house.

[wheelsup]

Roth IRA has no income limits. Backdoor it.

[GeoffD]

I echo the underfunded 401(k). The husband should be doing 15% and hers should be far higher than $6.8K/year if her gross pay is $120K+. Both doing their after-tax savings in a Roth makes huge sense.

My only comment is they have pretty large automobile expenses. They appear to have fallen into the "too much car" trap. $450 lease and $400 loan. 3 vehicles to register, inspect, maintain, and insure. Ditch the truck and buy/rent a small trailer for the Home Depot runs. Unless the OP has clients in the car, they probably should rethink that when the lease is up.

I hope the $94K in "checking/savings" is at least earning the 1% Ally Bank rate and not the 0.001% local brick & mortar rate.

[hml1976]

Originally Posted by jms493

Real simple.

Write 3 checks - 1 for $14,000, 1 for $3,500, and 1 for $22,500.That will leave you 60K in cash and savings. Not sure why there is a "Separate husband cash account" That is unnecessary.

You Budget looks ok...the food budget should be separate from household items. Easier to figure out exactly how much u spend on food.

Your husband is behind on 401K. Tell him he needs to put 15% away as well...maybe throw $5500 in a Roth IRA as well.

No kids I suppose.

This is great advice.

[stargirl007]

Originally Posted by GeoffD

I echo the underfunded 401(k). The husband should be doing 15% and hers should be far higher than $6.8K/year if her gross pay is $120K+. Both doing their after-tax savings in a Roth makes huge sense.

My only comment is they have pretty large automobile expenses. They appear to have fallen into the "too much car" trap. $450 lease and $400 loan. 3 vehicles to register, inspect, maintain, and insure. Ditch the truck and buy/rent a small trailer for the Home Depot runs. Unless the OP has clients in the car, they probably should rethink that when the lease is up.

I hope the $94K in "checking/savings" is at least earning the 1% Ally Bank rate and not the 0.001% local brick & mortar rate.

Thank you. I will see if I can get him to make an adjustment.

$6.8K is what I have contributed year to date with my 15% income contribution to my 401k.

I need to look into opening the Roth. Likely from Vanguard but would need to take a look unless anyone has specific recommendations there.

[FrugalPete]

Originally Posted by stargirl007

Thank you. I will see if I can get him to make an adjustment.

$6.8K is what I have contributed year to date with my 15% income contribution to my 401k.

I need to look into opening the Roth. Likely from Vanguard but would need to take a look unless anyone has specific recommendations there.

You seem to keep ignoring the best advice on here, which is to take that cash and pay off those 3 debts. No reason to have that much cash sitting around earning >1% with those still lingering. Not only is it better financial because if the interest rates, but you will feel like a new person when those debts gone.

Do it yesterday!