View Full Version : Need Budget Recommendations
06-23-2009, 08:10 AM
I'm in the process of setting up a new budget and need some recommendations. I was wondering what percentage of your income would be reasonable to assume for the following categories (for a single mom supporting a child):
Mandatory Bills (electric, cable, phone, health insurance of $120)
Misc (gas, groceries, etc)
My credit card will be paid in full and I may or may not have a car payment (that would be my only debt). I'm debating on that as well:
* Pay car off, keep remaining money from sale of house in the bank/cd (depends on how much of a cushion that would give me)
* Keep car payment and put all money from sale of the house in the bank/cd (it would be there if it's needed for a certain month)
Would the car be a mandatory bill or misc?
I'm not sure which way to go and don't want to make any drastic decisions without waying ALL the odds. With the economy my gut is telling me to keep it all in part CD/ part bank and just withdraw if it would be needed.
I'd like to hear your recommendations/thoughts...If you had 6 months worth of expenses saved as an emergency fund, would you pay off car?
06-29-2009, 11:11 AM
06-29-2009, 11:21 AM
I'm no expert but I would feel safer, especially if you are the sole support of your child, with a years savings in the bank. The reason I say this is that I have been out of work for almost seven months now and there really is no telling how long it will be before I land a job. Any job. Whether it pays enough to cover our expenses or is just a min. wage job. So a years savings may be more realistic in today's economy.
On the other hand, I have always heard that if you have six month's income in savings and your car interest rate that you are paying is higher than what you would get with investing it then the 'better' thing to do would be to pay off the car.
If you pay off the car then you can increase your emergency savings with that car payment you are no longer paying every month until you have a nine month to a year income in savings.
I am sure others will be able to help you more!
06-29-2009, 12:10 PM
Here's a budget chart from Crown Financial Ministries... It's a PDF file, and it includes a tithe, so if you don't do that you can use that amount for other categories...
The budget I created (I use YNAB Pro from www.youneedabudget.com) has a lot more categories, so I can tweak it a bit more. (i.e., budgeted more than I needed for gas? that money then can go to X category...)
As for whether or not to pay for the car, I would choose to keep the money in savings. (I don't know if I'd even put it in a CD, unless there's no penalty for withdrawing early... Emergency money needs to be easily accessed.)
06-29-2009, 12:36 PM
I know renting a 2BR around here is $800-$1000/month, I'm not sure about your area. Most Cable TV + internet packages are $99.
How much time do you have left on your car payment? If it's just the last year, there's no need to really pay it off since interest should not be any more than $5-$10 a month. You could just pay a little bit more instead of paying it off completely. That way, your savings are a little more cushioned to help you feel more secure.
06-30-2009, 09:48 AM
I have 4 years left on my car. Thanks for the links, I'm checking them out as needed.
06-30-2009, 09:54 AM
I would try to aim for no more than 40% of take-home being rent. I would also pay-off the car and put your savings in a savings account not a CD. If you have an emergency and need the funds, you might be out of luck on the CD. Also should you have a drop in income, then the car payment is one less thing to worry about.
06-30-2009, 09:58 AM
Try this one from Dave Ramsey. It has the suggested percentage ratios. Don't get too hung up on those - they are great guidelines - but can vary significanly depending on your income level.
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