My budget & saving
Posted by Frugal on April 17th, 2006
I’m going to use a household wage income of $100K for tabulating this budget, since it’s an easy round number, and it’s also quite close to my salary. I’m estimating taxes that are due to the wage income, using my 2006 tax calculator.
|
item |
amount |
comment |
|---|---|---|
|
Mortgage |
1270 |
|
|
Homeowner due |
165 |
Includes the insurance for the condo. |
|
Electricity |
45 |
|
|
Water |
25 |
|
|
Trash |
13 |
|
|
Gas |
55 |
|
|
Local Phone |
16 |
|
|
Cell Phone |
7 |
I pay just $3.21 each for my two cell phone. |
|
Long Distance Phone |
20 |
Mostly it’s international calling cards. |
|
Cable/Satellite |
17 |
Most vanilla plan because I can’t get clear TV signals. |
|
Medical Insurance |
127 |
Covered thru my employer. |
|
Car Insurance |
45 |
Only pay about $540 a year for two old cars, liability only. |
|
Gasoline |
160 |
My round trip work commute is 15 miles. My car has about 20 miles/gallon. |
|
Car Maintenance |
40 |
Oil changes + prorate for changing brake + 30K/60K miles service. |
|
Travel/Vacation |
220 |
Annual of $2600, mainly for flying back home to visit parents. |
|
Food |
360 |
Include modest dining out (with two small kids, it’s hard.) |
|
Baby(1) expense |
100 |
milk powder/toy/etc. |
|
Preschool |
440 |
3 half-days of preschool + karate class. |
|
Wife’s allowance |
300 |
I don’t dare to comment here. |
|
Cash Usage |
80 |
God knows where I spent these dollars. |
|
Charity |
31 |
My baseline contribution as a Childreach sponsor. |
|
Miscellaneous |
100 |
Reserving $100 for anything else. |
|
Federal Tax |
363 |
Tax can increase very fast with additional income or without 401k/IRA contribution. |
|
State tax |
202 |
|
|
City tax |
20 |
|
|
Social security tax |
487 |
Annual salary cap at $94200 for 2006. |
|
Medicare tax |
121 |
|
|
Property tax |
225 |
|
|
401k |
1250 |
Annual limit is $15000. |
|
Spousal IRA |
333 |
Annual limit is $4000. |
|
ESPP |
1250 |
Employee stock purchase plan, maximum amount of $15000. |
Since my monthly wage is about $8333, and the total sum of all items is $7887. My cashflow is only $446. However, my actual saving needs to include the green items above. My annual pre-tax savings are $15000+$4000 = $19000. My after-tax savings are $446 cashflow * 12 months + $15000 ESPP * ( 1 / 85%) = $23000. The 85% comes from 15% discount from the market price of my company stock. Including more than $3000 of principal paid down towards my mortgage balance, my after-tax saving is actually about $25000. Therefore, my total annual savings is roughly $19K + $25K = $45K. Both pre-tax and after-tax savings can vary, depending on other additional sources of income such as interest or capital gain. In the past couple of years, I have hit the phase out limit of spousal IRA, due to a higher adjusted gross income (AGI), and ends up having less pre-tax savings, but more after-tax savings.
Last note about my budget. I have been noticing my utilities have permanently gone up by some 15 to 20%. I’m not sure if it’s because there are 2 more kids in the house, or if it’s because of inflation. Also, my wife tends to spend more when I spend less time with her. She needs to make up the emotional happiness thru material happiness. It definitely PAYS (thru less spending) to make my wife happy, 
.
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May 7th, 2006 at 7:30 am
This seems nice… but I don’t know anyone except for CEOs that make $100K/yr like you do.
May 7th, 2006 at 10:14 am
Wealth is really relative. The city that I work at has a median household income of more than $120K/yr, and the 2000 sq ft regular house that I really want to buy is costing $900K. At some point, life quality is more than important than money.
June 17th, 2006 at 8:40 pm
Sorry to ask a question that might seem stupid but where are you possibly paying that little for gas, water, electricity in a given month? How come internet doesn’t factor in? Your using a computer right now. What about items such as clothing, reading material, homeowners insurance…I dunno, seems like you left a lot of stuff out… Where do you live? Maybe I should read the site more before asking so many questions, but if you could answer then please do…
June 17th, 2006 at 9:34 pm
There are good questions. Definitely possible that I left something out.
Part of the reasons for my low utility bills is that my home is small, and in California, we don’t need to heat the home (if at all).
My water is usually $17 to $25.
My electricity is usually $20s to $80s if it’s really hot.
My gas (natural gas) is $20s to $50s.
My company pays for my internet access, so it’s zero.
The homeowner insurance is included in the homeowner due or HOA fee, and I don’t need to separately insure.
I don’t spend a lot on books/magazines/music CD or clothing. I read mostly lots of news from internet which are way too much of readings already. The new age musicians that I follow haven’t had much new CDs out. My clothing? As long as they are not worn out, I keep wearing them. Since I’ve got $80 cash & $100 for miscellaneous per month, it should be more than sufficient (plus baby toys maybe). My wife does spend on stuffs, and I allocate $300 for her.
I barely buy stuffs for myself, since I don’t feel any needs. Not even computer or electronic gadgets. You can say that I’m a boring person in that regard. The most that I spend is probably music CDs, maybe 1 CD a month, and that’s just $17 a piece. And maybe I buy a book or two a year, and just 1 magazine. I can’t read that much anyway, with my two small children keeping me extremely busy.
These are all real numbers. Maybe you can let me know what I missed.
June 17th, 2006 at 10:00 pm
Oh, I think I forgot about my stock newsletter subscriptions. I just started them this year. But I can pretty much lump them under my investment expenses instead of my regular budgets. Their costs compared to my portfolio is minimal.
June 24th, 2006 at 8:44 pm
Marriage is not the best thing to do if you want to save money. Just think how much money you could save if you never got married or had children. You said yourself that your wife likes to spend lots of money.
Women and kids tend to tie a mans hands down, take away a mans ambition and take up a lot of their time. Men could be spending that time making more money.
June 25th, 2006 at 12:01 am
To Joe P.
I didn’t mean that my wife spent all of her allowance. Allowance is exactly what it means, an allowed amount but not necessarily a spent amount. How much she saved on those, I don’t keep track because it’s hers, but for sure my wife doesn’t spend all $300 a month.
While it is certainly true that a family man (or woman too) cannot be as ambitious as staying single, it’s simply one of the choices in life that you make and you compromise on. If a person wants to have a higher personal achievement in life, then definitely he or she should get married later, or not get married at all.
And I certainly don’t know why I should be making more money if it’s not for my family. If I don’t have a family, I may just find a place with low expenses and retire right now with what I have already. I don’t know why everyone is making more money for. But I know I make more money for a better and more secure future for my wife & my kids.
I never regret about having a family for a second. I love them, and I definitely love them more than my money. Staying single is also good. It’s just a personal choice.
July 20th, 2006 at 12:29 pm
Updated my gasoline cost from $135 to $160, and re-do all the numbers. This is to reflect the current $3.xx gas price.
July 31st, 2006 at 9:41 am
Looks like a good budget. Hopefully I will accumulate 1 million+ when I reach 33. My long term goal is to retire at 45. Right now, I am saving about 1,500 a month. I just need to start earning more.
I would like to exchange links with you.
July 31st, 2006 at 9:39 pm
I never dreamed of retiring at 45. Part of the working besides earning money is giving back to the society by performing one’s work & duty. I think for that reason alone, I will not retire at 45.
September 6th, 2006 at 8:39 am
I certainly have to agree with you, frugal. FMF always highlights small financial facts. One of those facts is that you tend to earn more money if you are married and/or have a family. I think men need motivation for success. For many, this doesn’t come without a family for which to be responsible. There is a certain aspect of being a male that can limit you financially if you do not have a strong motivation, like a family. For instance, if I had no family, I would probably be happy doing things with my hands that paid me enough to live comfortably at a much lower expensed lifestyle. Personally, if I had no family, I would probably move to a big city where I could make a large nominal salary, but live way below the average standard of living just to save. However, if I never had a financial motivation to begin with, I would probably have tried to get a job at one of the auto factories that are now going the way of the dinosaur.
What would be amazing is if you could pull that kind of salary and live in an area like I do. It seems like your expenses are about the same as mine, total, but I do not live in a cramped place. It would allow you to live a more comfortable life (especially if it makes your wife more comfortable), and still get the same rate of savings, or better.
September 6th, 2006 at 10:00 am
Thanks Dus10 for your comments. I have been thinking of moving to other places for a long time. But due to many reasons, I still cannot do that. It is definitely possible for me to get roughly the same base salary at other location. Certainly, it would have been a good move. Unfortunately, my wife cannot take the heat in Texas. And I have not been able to convince my wife about the price of weather. Depending on how you look at it, the weather can be priceless, or it can be without a price (meaning $0 value) too.
September 20th, 2006 at 10:07 pm
Interesting I do have a few questions…
1> I earn about the same as you have here and have similar deductions and also max out 401k, however, my fed tax is way way higher than yours…(Like 4 times as much) is this correct?
2> What about groceries? is this included in your food? thats a pretty small sum
3> What about a beer out with the lads, cinema, museums, etc etc…all those expenses that add up
4> How about maintenance for the home and the odd luxury (TV, hifi etc) surely you cant live 9 years without treating yourself a little or is the $100 a month all you need?
September 20th, 2006 at 10:20 pm
#1: 4X? Are you single? Do you have 2 kids like I do? Do you have home mortgage interest for deduction? Check your tax in my tax calculator for 2005 or 2006. 2005 is accurate to down to the last cent as far as I can test it. The tax number that I quoted is counting potential tax refund already.
#2: $360 should be about right. Maybe a bit less. If you cook your meal, I think it’s about $2 to $3 for lunch/dinner, and maybe $0.50 to $1 for breakfast. That’s about $6 per day * 2 adults * 30 days = $360. Probably need to up it by a little. Haven’t done my budget for a long time.
#3: My kids are too small, and just can’t do anything. Haven’t seen a movie for 5 years. Barely rented a video once in a while.
#4: I have home association due which covers most of the exterior. Haven’t bought much electronics except cameras & videocam for recording my kids. If it aint’ broken, I usually don’t replace it. For all the electronics so far, I probably only replaced my cameras before they are broken. I’m not into a lot of material enjoyment. I love music and books. Bookstore is my favorite place, but usually I can only flip 3 pages before my kid or baby get impatient with me.
September 20th, 2006 at 10:40 pm
The significant difference is that i file single without dependants, everything else seems the same…i guess you get a whopper of a tax break for having a family :-/ I didnt realize it was such a drastic change.
September 20th, 2006 at 10:47 pm
Yes, single people pay a lot more taxes at the same income level. Suppose you get yourself a wife, and your wife also works, your tax rate will be almost averaged with your wife when filing married. In my case of $100K household income, it’s like I’m taxed at the rates for $50K income twice for me and my wife. That’s why it’s pretty low.
November 3rd, 2006 at 6:52 pm
How is it possible to lower your cell phone bill?
November 3rd, 2006 at 11:45 pm
Just clicked on the $3.21 for cell phone in the table or $2.54/mo for cell phone on the left column.
January 5th, 2007 at 9:27 pm
How do you get your wife to only spend the $300 a month. I can’t get my wife to walk out of Target for less than that! I’m lucky is she spends less than 3X that a month! I’m not at a million yet, but I’m almost 3/4 there. If I could get her to spend $300/mo, I’d probably be there in a couple of years!!!!
January 6th, 2007 at 3:18 pm
Jeff,
$300 only for her personal stuffs, none of any household-related items.
But I can see that your family is definitely spending a lot more than mine. Not counting any big purchases for electronics or travels, I cannot even remember the last time that I walk out of a store with a bill more than $300.
I bet that you can get there in maybe 5 years if you are saving as much as I am saving. Money is about spending it now or later, just a personal choice.
January 14th, 2007 at 1:54 am
What investment publications / stock newsletters do you currently purchase and read?
January 14th, 2007 at 2:16 am
Use google search to search on my site. Here it is.
http://www.1stmillionat33.com/2006/06/stock-newsletters-are-they-worth-it/
January 21st, 2007 at 1:46 pm
Where did you get a cell phone for $7.00 per month? We currently pay around $59 for two phones, although if my stepdaughter calls or texts my husband a lot, it’s sometimes $70 or more.
January 22nd, 2007 at 8:33 am
I’ve switched to T-mobile prepad. It’s 10 cents a minute. If you don’t use cell phone a lot, it’s a great way to save some money. My cell phone post is at the left column, and you can google search my site on the right for more info.
January 29th, 2007 at 4:28 pm
Are you counting your condo as an asset, or did you sell it for the amount you listed?
In other words, are you a millionaire in cash, or including property assets?
I’ve noted that some of the research firms compiling family wealth never include housing assets.
If you’ve achieved $1mm by age 33, what is your next goal?
January 31st, 2007 at 1:41 am
Fred,
I do include my home as my asset, and price the value of my condo conservatively, and also with 5% sale commission pre-taken out. I think when homes cost less than $20K, it was probably okay not to include the home. When the homes cost a million, it makes a huge difference in whether you have $0 in equity or a million dollar in equity.
My next goal? My goals are modest: moving to a bigger home, sending kids to good college, having a comfortable retirement. I’m just like any of you.
April 17th, 2007 at 5:58 pm
How much money do you get from your ads and sponsors on this website
?
April 21st, 2007 at 7:37 am
Old’un,
So little that I am considering shutting this site, and spend time with my family instead.
Closing comments on this old post now.