There were more, but I'm drawing a blank at the moment. Plus, it's good to see only a few bits and pieces at a time. One final note, that SL already touched on but is worth spending more time on: Interest. For those people who are using credit cards and aren't paying them off in full, they often neglect to add in the interest into their budgeting when figuring out how much money they're spending. I would tell people not to get into credit debt in the first place, but it's often either unavoidable or too late for that: But it's not too late to start tracking it.Fixed vs. variable expenses: People - especially young couples, especially young about-to-be couples - sometimes underestimate just how much their fixed expenses are going to be. I still remember the 'Woah' look on my friend's face when I went through it with him a couple of years ago. But usually, people have a pretty good handle on their fixed expenses after a while if they're paying any attention to their budget. The tricky part is variable expenses. Even if a couple is paying attention to their expenses, the variable expenses add up to a lot more than people realize. People will estimate, then add a good 30% assuming they aren't thinking of everything... add when the month ends, they can't figure out how they have no money left when they thought they'd have plenty. It's amazing how much the little drugstore buys and extra food and whatnot add up to. Mind-boggling, really. Be careful to try and track those variable expenses as much as possible to see how much they're adding up to. Don't drive yourself nuts - it's not worth it - but if (say) you are using a debit card, those purchases will be on your statement. Cash purchases you may need to write down. Don't forget about basic expenses. I know this sounds obvious, but it's amazing to see how easily people forget to include expenses such as: Gas and electric, cell phones, home phones, DSL/Cable, car insurance, health insurance, gas, etc.
Just as an example of the first part above, here's what our basic fixed costs were for our old 1-bedroom apartment (on average):
For everyone, especially young couples - and especially couples-to-be [Y'all know who you are ;) ] - make sure you're well aware of these numbers. We didn't (and don't) have a car, which would have knocked it up many thousands more. We did have tuition, but I'm not even going to touch that here, as that both varies highly from person to person and is a completely different story. Please feel free to point out anything I may have missed, especially as it pertains to what I've tried to cover in this particular post (or SL's post). Thanks.
- $983.25 Rent
- $125 Gas/Electric
- $396 Health
- $70 Phone + DSL
- $140 Cell phones
- $100 Transportation
TOTAL: $1814.25/month [$21,771/year]
Great critique. Excellent points.
ReplyDeleteI would argue that a young couple should try to drop the cell phones, but even without the cell phones, the "basics" are astronomical.
SL - Thanks. Cell phones aren't bad, especially in terms of how much they often help us save simply because we hear about sales/etc. faster. Plus, since we're rarely home or in the same place [until I started working] there was no real way to reach either of us otherwise. What people *should* do is get together on a family plan and save $30 easily.
ReplyDeleteMaryKayGal - I should note that those were our *previous* expenses. I'm not sure yet what our electric/gas will be here, not to mention some of our other bills. We haven't (ouch, don't hurt me!) really figured out our own budget yet, truth be told... Notice I didn't even include food, diapers, formula, and the like - there's a reason for that (coming up in a post sometime soon!). I also left out how much debt we have and some other facts, but I'll get to that as well. Suffice it to say that we're sadly in pretty bad shape considering our age from a debt standpoint. My guess is that we're likely somewhere slightly worse than you were at this point, but thankfully we do have some nice upside as it stands.
And, of course: B'sha'a Tova!! :)
ReplyDeleteI live in Israel, so these numbers are lower for me:
ReplyDeleteRent: $700
Gas/Electric: $100
Health: $50 (for the whole family)
Phone & DSL: $70
Cell Phones: $15
Water: $60
Transportation: $20
Not bad. Food, especially for Shabbos with guests, is expensive.
well... i know who to ask for budgeting advice when i need some!
ReplyDeleteIt's important to be aware of all that stuff, whatever situation.
Anon - Amen on the food, especially guests. We're very aware (though it's one thing we're willing to spend money on).
ReplyDeleteSarah - Yeah, ask SL :)
Diapers and formula for 2 kids should be less than $300/month, but don't forget childcare.
ReplyDeleteEzzie-I won't argue with you on the cell phone. We now have pay as you go for one cell since we rarely use it. But, you would probably call us of a different generation. We are more like our parents than our peers. More on that another time.
ReplyDeleteGreat comments and they always make me think of other ideas for posts.
Just wait until you have to deal with tuition!!!
ReplyDeleteAll those fixed expenses go up once you own a home.
And for yearly expenses there's life insurance, shul dues
It really never ends.
Important issue!
ReplyDeleteAnon1 - Oy. Don't remind me.
ReplyDeleteSL - Thanks!
Anon2 - All too aware... :(
Kasamba - Thanks
Wow! It's sure expensive. We're old. No more mortgage, and never paid rent. No car.
ReplyDeleteezzie- u kept to ur promise about posting about young couples and budgets!! keep posting more of these please.
ReplyDeleteokay well what will you do about this
ReplyDeleteBush: We Will Consider All Proposals to Help Iraq
ChanaF - Of course! :)
ReplyDeleteEzzie-Since we established our household much later than you, and many of your friends did, I would never much appreciate it if you could keep writing some posts from a young couple's perspective. I always enjoy new insights.
ReplyDeleteSL - My pleasure.
ReplyDeleteezzie-
ReplyDeleteyou don't eat? and you walk around naked? what about enterainment?
Nobody here pays tuition? we pay $36,000 for six kids.
ReplyDeletePlus $6,000 for day-camp.
Help!!!
Ari - I was listing only basic fixed expenses. The rest vary.
ReplyDeleteAnon - We're not up to tuition. AskShifra has a post up from a few months ago - there are people paying well more than that in tuition... :(
When accountants or credit counselors help people establish a budget, they usually start by "ignoring" fixed costs and only budgeting the variable costs to come to the point where income is great than or equal to expenses.
ReplyDeleteOftentimes, the story develops that there is just not enough left to pay for food or other "variables" and it becomes clear to the client that something has to be adjusted in the "fixed" category.
It is very difficult to tell a person flat out that they need to make an adjustment to one of the fixed costs. But, when the story develops that there is only $25(e.g.) left at the end of the month to eat, chances are a client will volunteer to make an adjustment to a "fixed" cost and the budgeting process is easier for all involved.
Ezzie is not at the point where tuition is a "fixed" cost. G-d knows the time is coming quickly because time flys. If tuition is a fixed cost, list it. If not, one should still be aware of the impending possibility remember this when buying their next car.
Looking foward to more, Ezzie.