My Budget Saving

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, :) .

MillionaireMan
 

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