Tuesday, July 24, 2012

Reworking the budget

So I severely undershot the budget in a few ways. Before Child 2, I was making 5.1K and we were paying about 4.6K in expenses. I imagined I would have enough money to just add Child2's daycare to take up the rest of that $500-600 and then add $300-400 on in new rent. I sat down and recrunched all the numbers - which I had been too busy to do for a few months. It was scary.

Instead of our $5,400 I imagined, we were spending $6,400!

Salary $9,500/month - $6,400/month expenses = $3,100 - $1,600 minimum loan payment - $1,300 savings = $200.***

At that rate it would take us 16 years to pay off the loans. (20 years without the extra $200 a month in payments) It would also cost another $150,000 in interest.

*** I ignore our FSA reimbursements in these calculations because we weren't filing them regularly and two months we spent over $7,000.

Where did the budget go so wrong? Even though we spent less than $30 a month eating out, we were still spending $920 on tolietries and food. I even estimated a little down on this number since alot of the moving expenses were included in this. Also, the personal expenses included clothes, hair, car, and dog expenses. We spent at good $100-200 dollars/month on the dogs alone between end of life care and dog sitting. I splurged right before Child2's birth and got my hair colored -$150. We spent alot on 'onetime' wedding expenses $450, which some people would put as part of 'entertainment.' We ended up on some charity mailing list and ended up giving away $450 in charity a month.

So I did some more number crunching. Our income went down from $10K because of our FSA's. We should get about $500 back per month. The dog expenses are gone which will decrease our personal expenses. While we aren't buying more apartment equipment anytime soon, I know something would certainly always come up and plan accordingly. (Look, our microwave just burned out, $50 at Walmart!) I recognized I needed to set aside money for holiday and birthday presents for the year - that is $900 of our monthly new onetime expense budget of $300/month.

Here's how things look now.

Actual Monthly expenses
New Monthly Budget (JaneMD salary 4.9k )
Rent + gym + housecleaning $1188
Cellphone + internet $160
Car lease $190
Home/car insurance $125
Daycare $670-770
Utilities $160
Car Gas $150
Groceries/Toiletries $800-1000
Personal expenses $500
Charities/religious $400
Onetime expenses $300
Bank autosave feature $42
Total budgeted monthly expenses $4685
Actual spending $6405
New budget $5680

Our new budget decreased by $750 from actual expenses. Little things have changed. I got an employer discount on our internet. Our phones will be someday paid off, dropping that expense by $25. I watch our grocery bill like a hawk and move things into appropriate categories, like the microwave. We have an upcoming vacation to see our families, which is already budgeted for ($500), but I'll be coloring my hair with my mother (savings of $140). I also made our FSA reimbursements a major part of our budget, thus making sure they always get filed.

Salary $9,500/month + FSA $500/month - $5,650/month expenses = $4,350 - $1,600 minimum loan payment - $1,300 savings = $1450. 

At that rate it would take us under 8 years to pay off the loans and save $60,000 in interest.

A message from HubbyJD: I appreciate my wife, JaneMD, and all of her hard work at our budget and finances, especially since she does my accounting for free. I want to be financial independent and get all our loans paid off. I do draw the line at the beer austerity measures that she has recently enacted. Someone please tell her I can buy 2 twelve packs a month of Guinness.


  1. Under 8 years??? How awesome is that!!! Good for you doc!!!!!
    -Nurse Frugal

  2. I found you through No More Harvard Debt and am now going through your backlogs! I am pre-med right now and am trying to keep my loans down so that I can graduate with less money to owe so it's nice to see you document what you're doing after the fact.

    The message from your husband totally cracked me up. I've said similar things to my husband (since we're saving up to have a baby) and I thought it was reasonable. Now that I read it from someone else, it sounds crazy! If you can color your hair for $140 (I'm so glad I don't dye my hair now!) I think he can get $35 worth of beer! haha Our poor husbands most definitely think we're crazy.