jefunds
Contributing Member
Cash: $ 7.44
Posts: 33
Joined: 03 Apr 2005
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| Help Making A Budget |
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I need to buckle down and make a budget.
Salary-wise I am doing very well for someone my age. I contribute 12% of my salary to a 401k before tax with a company match on the first 8%. The problem is that I am unable to save beyond that. I cannot build a liquid cash account. The bonus and tax return checks come and go. Every year I find that I am just paying for vacation an credit card bills with these extra checks.
My problem is spending habits. They are very bad and my wife has the same bad habits. I need help making a household budget.
I've read up on the software such as Quciken and MS Money. Should I get one of these programs? Is there a better way to go?
Heeeeeeeelp!!!!!!!!!!
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Sun Apr 03, 2005 8:07 pm |
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xboxundone
Senior Member
Cash: $ 67.83
Posts: 796
Joined: 19 Sep 2004
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Glad to hear you are trying to move forward and nail down your budget here are a few articles that may interest you...
Are you afraid of a budget
http://www.investingpub.com/news-4.html
Budgeting Part 1: Creating a family budget
http://www.investingpub.com/news-42.html
Budgeting Part 2: Living on a family budget
http://www.investingpub.com/news-43.html
One thing I would suggest off the bat is open and IRA and take your 401K down to only the company match and contribut the other 4% to an IRA as you won't have the taxes or penalties if oyu need to access the money not to mention no tax when you pull it out as long as you meet the criteria...
Last edited by xboxundone on Sun Apr 10, 2005 7:22 pm; edited 1 time in total |
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Mon Apr 04, 2005 12:09 am |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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Do you have Excel (or any spreadsheet program)? I use that for my financial schedule...it is easy, programmable. I use Quicken for everything else.
Make a spreadsheet to include all of your income and all of your expenses, and then all of your investment vehicles. Subtotal each of the three categories. Next, account for taxes. Finally, add them all together to see what you have left. Increase your investments from the left over money and budget the rest. Limit your fun money to what is appropriate and worthwhile.
"Expect me when you see me."
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Mon Apr 04, 2005 3:09 am |
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jefunds
Contributing Member
Cash: $ 7.44
Posts: 33
Joined: 03 Apr 2005
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Thanks for the links xboxundone. Thats also an interesting thought about the 401k, IRA contributions.
As far as IRA's go, would you suggest a Roth IRA?
Rolo, I currently do use a very basic Excel spreadhseet that I created to keep track of my monthly bills. I'm not interested in using Quicken for bill pay. Is it worth the investment just for budgeting purposes? Or should I just stick to my spreadsheet?
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Mon Apr 04, 2005 1:15 pm |
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xboxundone
Senior Member
Cash: $ 67.83
Posts: 796
Joined: 19 Sep 2004
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quote:
Originally posted by jefunds
Thanks for the links xboxundone. Thats also an interesting thought about the 401k, IRA contributions.
As far as IRA's go, would you suggest a Roth IRA?
Rolo, I currently do use a very basic Excel spreadhseet that I created to keep track of my monthly bills. I'm not interested in using Quicken for bill pay. Is it worth the investment just for budgeting purposes? Or should I just stick to my spreadsheet?
Budgetting i would stick to excel and yes go with Roth IRA 
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Mon Apr 04, 2005 1:41 pm |
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jefunds
Contributing Member
Cash: $ 7.44
Posts: 33
Joined: 03 Apr 2005
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Ok, I'll try and modify my spreadsheet to get a bit more detailed.
I currently have two credit cards with balances. One has a balance of $5900 with a 2.9% for the life of the balance. The other has $5000($3000 of which is the payment for a cruise and I have the cash for) with an APR of 6.9%. Should I pay down the balances first? or save first?
Another question is what is the best choice for keeping an emergency fund? I see alot of talk about ING accounts.
A bit off topic, but how true is that free magazine website? Can you really subscribe to those mag's without ever having to buy a subscription?
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Mon Apr 04, 2005 2:04 pm |
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jefunds
Contributing Member
Cash: $ 7.44
Posts: 33
Joined: 03 Apr 2005
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Sorry if I am being very inquisitive. I just recently found this website and have so much to learn.
Is there any websites that I can find some good examples of how I should set up my spreadsheet?
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Mon Apr 04, 2005 2:32 pm |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by jefunds
I currently have two credit cards with balances. One has a balance of $5900 with a 2.9% for the life of the balance. The other has $5000($3000 of which is the payment for a cruise and I have the cash for) with an APR of 6.9%. Should I pay down the balances first? or save first?
It depends. Will your investments earn more than what you are paying in interest? If not, pay the loans. If so, chip away at the loans lightly and invest heavily. In this market, I would say pay off your 6.9% debt aggresively and lolligag on the 2.9%. Can you do a low/0% interest balance transfer of the 6.9% one?
And for the future: Quit charging vacations!
quote:
Originally posted by jefunds
Thanks for the links xboxundone. Thats also an interesting thought about the 401k, IRA contributions.
As far as IRA's go, would you suggest a Roth IRA?
I have to disagree on changing some of your 401k contribs to Roth. You are getting a tax break on the 401k contribs by not having that income taxed. Max the 401k, keep more money by paying lower income tax, and use those savings to pay off your debt OR contribute those savings to your 401k/Roth.
example: At a 15% tax rate, your $100 401k contribution only costs you $85. A Roth contribution will cost you $100. Will you be prepared to pay those taxes if you switch funding to a Roth? Use the tax break now to get your finances flowing, then start funding a Roth later to take advantage of tax breaks on distributions.
quote:
Originally posted by jefunds
Rolo, I currently do use a very basic Excel spreadhseet that I created to keep track of my monthly bills. I'm not interested in using Quicken for bill pay. Is it worth the investment just for budgeting purposes? Or should I just stick to my spreadsheet?
I use it to track all of my investments (well worth it) and to export that data to TurboTax (well worth it...particularly for active trading). I also use it to automatically download my bank and credit card transactions. It's 99% automated and I have a complete picutre at all times--the ultimate in maintaining financial control. I just use Excel for budgeting because it is so simple, non-cumbersome, and I can program it.
quote:
Originally posted by jefunds
Is there any websites that I can find some good examples of how I should set up my spreadsheet?
hmm...no attachments here. PM me your e-mail address and I will e-mail mine to you.
"Expect me when you see me."
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Mon Apr 04, 2005 10:19 pm |
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jefunds
Contributing Member
Cash: $ 7.44
Posts: 33
Joined: 03 Apr 2005
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A few things to point out:
1)The reason I charged the vacation was to get some membership rewards on my card. I have the cash to cover it. My concern was dealing with the rest of the balance.
2)I have been contributing to my 401k for 10 years and I'm 32 years old. Would this influence the "IRA or no IRA" decision?
Thanks for the offer of the spreadsheet. I'll PM you.
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Mon Apr 04, 2005 11:56 pm |
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xboxundone
Senior Member
Cash: $ 67.83
Posts: 796
Joined: 19 Sep 2004
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In the long run you are better off taking the additional percentage into an IRA.... while right now it may seem better as you avoid you current tax but will taxes be lower when you take it out of your 401K 20 to 30 years from know..... NO!!! also you can access your IRA money with no penalty at any time. you just can't access the interest without penalty.
Here is an article concerning this http://www.investingpub.com/news-30.html
I would pay down the 6.9% card and the other one pay it off over time but invest as you can get better return than 2.9%
Hope this helps
Last edited by xboxundone on Sun Apr 10, 2005 7:23 pm; edited 1 time in total |
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Tue Apr 05, 2005 12:59 am |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by jefunds
1)The reason I charged the vacation was to get some membership rewards on my card. I have the cash to cover it. My concern was dealing with the rest of the balance.
Ah, I see. Yes, I charge everything to plastic for convenience, but I pay the balance due when it is due--no finance charges. This is where Quicken keeps me updated.
quote:
Originally posted by jefunds
2)I have been contributing to my 401k for 10 years and I'm 32 years old. Would this influence the "IRA or no IRA" decision?
Good job on starting early. I wish I did and I am your age. You have a ways to go to retirement and we know a little money (tax savings) * a lot of time (20 or 30 years) = wealth. You can contribute $4,000 to a Roth or $4,600 to your 401k. The tax savings (it's not how much you make, but how much you keep) are more critical early on.
Ideally, and I assume, the goal is to eventually max out both if you can.
"Expect me when you see me."
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Tue Apr 05, 2005 4:15 am |
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Rolo
Yo' Daddy
Cash: $ 309.70
Posts: 1551
Joined: 13 Mar 2005
Location: Colorado/Florida
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quote:
Originally posted by xboxundone
but will taxes be lower when you take it out of your 401K 20 to 30 years from know..... NO!!!
Why not?
"Expect me when you see me."
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Tue Apr 05, 2005 4:16 am |
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xboxundone
Senior Member
Cash: $ 67.83
Posts: 796
Joined: 19 Sep 2004
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quote:
Originally posted by Rolo
quote:
Originally posted by xboxundone
but will taxes be lower when you take it out of your 401K 20 to 30 years from know..... NO!!!
Why not?
I do not forsee taxes going down... I think it is one thing you can bank on going up...... There may be new tax breaks but not lower taxes.... only time will tell....
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Tue Apr 05, 2005 12:11 pm |
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xboxundone
Senior Member
Cash: $ 67.83
Posts: 796
Joined: 19 Sep 2004
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quote:
Originally posted by jefunds
2)I have been contributing to my 401k for 10 years and I'm 32 years old. Would this influence the "IRA or no IRA" decision?
Good job on starting early. I wish I did and I am your age. You have a ways to go to retirement and we know a little money (tax savings) * a lot of time (20 or 30 years) = wealth. You can contribute $4,000 to a Roth or $4,600 to your 401k. The tax savings (it's not how much you make, but how much you keep) are more critical early on.
Ideally, and I assume, the goal is to eventually max out both if you can.
While this is right you have to take into account when you withdraw money from 401K you will have to pay taxes.... with IRA you willl not.
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Tue Apr 05, 2005 12:12 pm |
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jefunds
Contributing Member
Cash: $ 7.44
Posts: 33
Joined: 03 Apr 2005
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Just seems like one of those cases where there are valid arguements for both sides. I think I'm going to get the IRA started then return to contributing more to my 401k.
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Tue Apr 05, 2005 1:55 pm |
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