Budget Question... for SAHM...

Nickiechan · January 2011

I am almost 20 weeks pregnant and DH and I are trying to look at our monthly budget to make sure we are in the positives before I quit my job to become a SAHM. I am very excited about becoming a SAHM and I've always wanted to do this, however currently we are -$300 in our monthly budget. This is in part of our $404 a month student loans!(UGH) We refinanced our home and we are planning on refinancing our car. Which will lower our required monthly bills. I also added $100 for health insurance since right now I am covered under my work an we will need to be covered under DH health insurance. I budgeted $250 for baby a month. I am planning on breastfeeding and using disposable diapers. I know that we can save some money if I cloth diapering. I just would have to learn about cloth diapering. We are also going to look over our car insurance policy to see if we can lower our car insurance bills. $200 for groceries... and $40 for vet bills/dog food. (we have two pugs) What are some ways to save $300 a month? Give me suggestions on how you save money. I will plan to cut coupons and such. I just a bit nervous about leaving and finances. DH is also worried. Thank you!!

Mom2Toddler · January 2011

This budget seems really close. If you and DH are worried I would think that it is not time for you to stay at home. You forgot 1 big part of a monthly budget. A COLLEGE FUND FOR YOUR CHILD. You should be putting at least 200 bucks away a month in an IRA fund for your childs future ( i said an IRA bc if you do a college fund and if your child does not go to school you lose it). We put 10,000 away a year for our DD.

I also do not think 200 bucks a month for groceries is logical for a family of 3.

Nickiechan · January 2011

We are planning on starting a 529 account...(Don't worry DH is very vocal on this one!) This is what it looks like Please any suggestions would be appreciated!)

Diapers/Whipes   $70.00
Medical Expenses   $30.00
Clothing/Other Expensive/529 Account   $130.00
Baby Food/Breast Milk Storage    $20.00

If we have a boy we won't have to worry about clothing because my brother has all his sons clothing he will give us.

Do you think that is too much for groceries is too much or too little??

I rather over estimate then under, but it does make me feel better if i drastically over estimate.

momofmanyinthemitten · January 2011

Nickiechan:
We are planning on starting a 529 account...(Don't worry DH is very vocal on this one!) This is what it looks like Please any suggestions would be appreciated!)
Diapers/Whipes   $70.00
Medical Expenses   $30.00
Clothing/Other Expensive/529 Account   $130.00
Baby Food/Breast Milk Storage    $20.00
If we have a boy we won't have to worry about clothing because my brother has all his sons clothing he will give us.
Do you think that is too much for groceries is too much or too little??
I rather over estimate then under, but it does make me feel better if i drastically over estimate.

We are cloth diapering and while it will save money long-term, it is expensive to start up (maybe put them on your registry?). I would budget more for groceries than $200, as well as how much you expect to spend on baby each month. I thought I could limit it to $150, but it's been quite a bit over that, even before baby came. If you have more questions about cloth diapering, feel free to message me or go to the cloth diaper board. The ladies there are full of good advice.

millardk17 · January 2011

You can save on baby products too. If you join costco or sams club that will help with baby and groceries. You can trade coupons here. Sign up for formula checks and trade them for gc or coupons. Good luck

You will find a way to make it work. You won't be driving as much (gas), and you won't eat out as much. We also cut gps and internet off my phone since I have it at home.

wesleysgirl1106 · January 2011

Personally, $200 would never cut it for groceries in our house. Then again, I'm not a coupon nut and we buy organic milk and fruit. Even if you plan on EBF, you may want to put in some money for formula. DS stopped at 4 months because the same week he got shots, he also cut his first tooth. I pumped a little while longer, but he had no interest in BF anymore.

janbrady · January 2011

Post your total budget, I'm sure there are places to cut. Cable, cell phones, gym? Usually those add up significantly.

Also, I would not be comfortable SAHM without sizable savings. At least 6 month expenses.

ETA - Have you looked into how your tax bill will change with a child and without your income. For us we're saving way more than $300 a month. But everyone is different. Use the witholding calculator on IRS.gov and then look at how many exemptions your DH can claim. It's better (imo) to get this money monthly instead of as a refund in April.

Nickiechan · January 2011

wesleysgirl1106:
Personally, $200 would never cut it for groceries in our house..

What would be a reasonable amount to put for groceries? DH and I currently do around $140 to $160 a month.

For the past year we have been putting my income back into savings/money market account. (Only dipping into it for finishing the basement etc.) We have more then 6 months of my income in savings. The -$300 is a $200 lee way... we are really only $-100 off, however I would like to have 'some' money left a month. Currently without baby we live off of his income with my income for groceries and entertainment.

I am interested in doing cloth diapering since that could cut some expensive...

What is really killing us is DH and I's student loan bills $404 a month... if we could cut those back some how. I am meeting with my mother(who is a financial adviser) and see if we can consolidate those or lower those in anyway. Right now my Mother said that she see no reason why we wouldn't be financially ok with me being a SAHM. I just want to find way to say money once it happens.

BeachM · January 2011

My advice is to practice living on your husband's salary for at least a month and see if it works. We lived on DH's salary for several months before even starting TTC so the transition to one income wasn't a shock for us. We saved about a year of my salary doing this, in addition to our regular monthly savings from just DH's income.

I also would not be comfortable SAH unless we were still able to max out my IRA.

MrsBalletStar05 · January 2011

What do you include in your groceries? What kind of foods are you eating and do you include paper and hygiene products in that $140/month? Do you ever eat out? I too think that $200 is pretty skimpy and that comes from someone who buys generic EVERYTHING and clips coupons.

Also, not required to save for your child's college education. Just sayin'.

Try to cut other stuff, the extras, such as cell phone, shopping/eating out, going out expenses, ect. Try to be more energy efficient and shave a bit off your electricity (although if you're working now, you'll be home more and therefor use more electricity, but this way you can save $$ now and learn how to keep that cost down).

Also keep in mind that you may not be able to breastfeed, or may only be able to breastfeed for a short time.

Just a few things to think about and consider.

Nickiechan · January 2011

We have $200 budgeted for entertainment which includes 'going out' (going out for lunch or at night) currently. How much do you think would be a reasonable amount for groceries? Milk, Eggs, Cereal, Lunch items... It does not include hygiene or paper products... DH hunts so we have venison all year... and I get chicken on occasion. $400 be more reasonable amount? (I would like to over estimate if possible)

Andrewsgal · January 2011

So I assume you have a different category for paper products and hygene?

There is no way that I would be comfortable SAH on what you posted. Not that it can't be done, and I am sure some do it on less, but for me it would not happen.

I think your medical category is also too low. Our co-pay is $25 alone any prescription/diaper cream/motrin would easily put you over your $30 for one month. I don't consider my kids very sick but we have maxed out our out of pocket every year for our family at a whopping $5000

What about parties, birthdays, holidays? Where would the money for these gifts come from?

What about emergency expenses? new tires, a new roof, new water heater? Would you have to dig into your savings for these? if so I could see your savings being gone very quickly.

Also I know if you have a boy you will have clothes, but to be honest although i am not against hand-me-downs or second hand clothes they can be pretty dingy and it is nice to have room to purchase clothes.

So my answer NO on your budget I would not feel comfortable SAH.

lms_bride · January 2011

janbrady:
Post your total budget, I'm sure there are places to cut. Cable, cell phones, gym? Usually those add up significantly.

Also, I would not be comfortable SAHM without sizable savings. At least 6 month expenses.
ETA - Have you looked into how your tax bill will change with a child and without your income. For us we're saving way more than $300 a month. But everyone is different. Use the witholding calculator on IRS.gov and then look at how many exemptions your DH can claim. It's better (imo) to get this money monthly instead of as a refund in April.

Agreed on the taxes thing. See if he can adjust his withholdings so he takes home more every month. An annual refund is just letting the government use your money for 12 months at a time.

Also re: mom2toddler's comment about $200/month for a college fund. I think this is totally optional at this point. It is definitely a nice to have, but if you are just trying to get by, put that as a goal for a couple years from now.

Re: your car. Is it possible to sell it and pay cash for an older (but reliable) one? No car payment would make a huge difference. Also definitely call your insurance and reduce your mileage for your car, it will reduce your premiums (you will drive a lot less when you're staying home). We saved several hundred dollars a year doing this.

Good luck! I hope you can find ways to make it work, it is a sacrifice but very worth it.

LeahBeah1212 · January 2011

You need to post your entire budget for everyone to get a good idea on the overall situation here. Including rent/mortage, utilities, cable, cell plans, etc. You are only giving little pieces of what you actually spend so it is hard to get a good idea of where you are at overall. Go over the Money Matters board on the Nest. They will critique your budget and have a lot of good suggestions.

I think that you need to re evaluate your entertainment money. You are spending an equal amount of money each month on entertainment and groceries. You should try to cut back on your eating out and allocate that money toward groceries.

I have used Target brand everything for DD. Their formula after I pumped for 6 months, diapers, wipes, etc. I have been happy with all of it and it is a lot cheaper than name brand.

MrsBalletStar05 · January 2011

I won't say you can't/shouldn't stay home. Like others have said, we don't know your whole budget. Probably you just need to re-allocate some of your money. Like one person said, you should probably put more of your entertainment money towards groceries.

Nickiechan · January 2011

Thank you everyone,

I don't feel comfortable putting our budget on here. I know that we can work it out... I think DH feels financially pressured. We are still working out the kinks of our budget and trying to do everything necessary for me to stay home, but me working part time is not out of the question. I would like to learn any ways that you could do to save money... such as cloth diapering and using Target/off brand brand items.

spunkyprincessmande · January 2011

DH and I could never live off of $200 a month for groceries! But if you're already doing $140-160, you'll probably be fine. Do you currently eat out a lot? You could probably cut a large chunk of that out. While you might still have the desire to eat out, I find we just don't have the energy. It's a lot of work to bundle up LO and bring him to a restaurant!

I also cloth diaper and LOVE it! Seriously, we bought 2 boxes of diapers before he was born b/c they were on sale at Target and I had coupons. We are currently trying to give away one of those boxes b/c we don't use them. However, I did register for cloth diapers. Total, we've spent $200 of our own money on the diapers and gotten the rest as gifts (or used money DS got to buy more diapers). I also EBF. However, I save every formula coupon and check. When the check is about to expire, I go through my coupons (I also watch the sale ads and when formula is a really good price somewhere I'll buy it with the coupons/checks) and buy a can of formula--I've yet to have to pay more than $2 for formula and I'm not even using it! I figure if the formula expires before I need it or if I never need it, I can always donate to the food pantry or give it to someone I know that does FF. Because of cloth diapers and EBFing, we honestly don't need to spend any money on DS--of course we do because I just can't resist looking at the outfits when we go to Target!

Other areas to look at to cut back: cable (we have NetFlix and it streams live through our Wii, that and TV shows online = we don't need cable), internet. Do you have a landline and cell phone? You probably don't need both. You'll probably cut down on gas for your car. Any kind of memberships that you can cut (we cut our gym membership when I was about 8 months pregnant, I wasn't going anymore due to bedrest and figured it would be quite a while before I really had the opportunity to go regularly anymore so I just try to do stuff at home instead)? HTH!

nd01 · January 2011

We cloth diaper and you really do save a ton of money (due to a move for a few weeks we are in disposable and OUCH, it is expensive). If you do prefolds and use cloth wipes, it'll save you a ton.

We're buying a new house and are cutting costs to afford it and we're doing the following:

- cutting cable out entirely (save $75 a month)

- my husband is on his work's cell phone plan so I am going to join my parents family plan (save $50 a month ($70 current plan - $20 contribution twd new plan))

- only eat out once a month

We are putting some towards our kid's college fund but I also anticipate going back to work once they are in school so I feel that I will probably have about 10 years worth of salary behind me by the time the first one goes to college. That is how my parents did it and it worked fine (and I went to a lovely but expensive college so it can work out)

spiritenergy · January 2011

Nickiechan:

We are planning on starting a 529 account...(Don't worry DH is very vocal on this one!) This is what it looks like Please any suggestions would be appreciated!)

Diapers/Whipes   $70.00
Medical Expenses   $30.00
Clothing/Other Expensive/529 Account   $130.00
Baby Food/Breast Milk Storage    $20.00

If we have a boy we won't have to worry about clothing because my brother has all his sons clothing he will give us.

Do you think that is too much for groceries is too much or too little??

I rather over estimate then under, but it does make me feel better if i drastically over estimate.

Ideas of things you can do to cut your budget:

1) Reduce your cell phone plan. If you have a data plan, then get rid of it.

2) Cut cable. Netflix is a viable option.

3) Decrease your car insurance because your second car will be used occassionally or consider selling one car to give you extra room in your budget.

4) Decrease your luxury spending on things like new clothes, hair cuts, manicures, hunting supplies (I do not know what you spend on so these are just suggestions of things to cut)

5) Cut your gym membership if you have one.

I think your grocery budget is too low and your enertainment budget seems too high. When the baby is first born, you will probably not want to go out a lot anyway so it will probably decrease naturally. If eating out is a big part of your enertainment spending, then try making some freezer meals that you can pull out in a pinch. I keep things like chili and soups in the freezer for days when the meal plan isn't going to work out. Also, you might not be able to eat normally after you have a baby. My daughter could not handle me eating any dairy products for 4 months after I had her, so this increased our food budget.

Your medical seems too low as well. Babies require a lot of vaccines and check ups in the first year and you will have post partum follow ups. I am not sure what your co-pay is, but I would bank on you having to see the doctor at least 4 times after the baby and the baby 6 times. If you or the baby gets sick, then the number can quickly increase. Also, check to make sure that your DHs insurance includes the cost of vaccines since not all insurance companies will cover vaccines.

I don't use disposable diapers, but some people say that you can save lot by using Amazon mom. It is something to consider.

I buy all my kids clothes second hand, and I get nice stuff at Goodwill and garage sales. Most people have no idea that I get used clothes. I have got some nice name brand stuff. As you join mom's groups you may find people to swap with for clothing. This is not an expense that I would stress out about too much.

You might be able to save money if you make your own baby food (some people say you can save and other will tell you that you will not save...I think it depends if you plan to buy organic or not).

For dates with your husband, look for free things to do like museums or concerts.

If you need to make choices in your budget between 529 plan or life insurance, then I would choose life insurance. If you go back to work, then you can always catch up with college savings.

For the student loans, have you looked into an income based repayment plan? I am not sure what % the student loan is of your income, but going on an income based repayment plan might reduce your payments for now. As your income rises, then your student loan payments would increase again. This option might cause you to pay more interest in the long term, but it might work in your situation especially if you know your DH will move up over time.

I strongly urge you to set up a phony screen name and post your budget either here or money matters.

I also reccomend that you read the book, The Road to Wealth by Suze Orman. It is a little out of date because of law changes and the way credit scores are calculated, but it is still a great read and can really help you in your situation.

I wish you the best of luck.

kelleylk · January 2011

Mom2Toddler:
This budget seems really close. If you and DH are worried I would think that it is not time for you to stay at home. You forgot 1 big part of a monthly budget. A COLLEGE FUND FOR YOUR CHILD. You should be putting at least 200 bucks away a month in an IRA fund for your childs future ( i said an IRA bc if you do a college fund and if your child does not go to school you lose it). We put 10,000 away a year for our DD.

I also do not think 200 bucks a month for groceries is logical for a family of 3.

This. Unless you know how to get groceries for practically free like the "coupon mom", I'm not sure how you will buy a months worth of groceries for $200.00. GL with that. I cut coupons and buy sale items only and still end up spending around $350.00/monthly (not including diapers and wipes).

Other ways we save money: we spend only what we make (NO Credit Cards!), we never eat out, we don't have a home phone, we have basic cable, being a SAHM you don't have to spend $ on childcare, I try to make trips out to town only once or twice a week so I don't spend much on gas, I make DS's babyfood (and before that I EBFed for free).

Honestly, the only way I'm able to stay home is b/c we are debt free. We followed Dave Ramsey's Financial Peace University. He is a Christan man and really helped us understand how to get out of debt (except our mortgage).

spring_time · January 2011

It is really hard to tell without your entire budget. The Money Matters board is phenomenal at breaking apart budgets, do it under an AE if it makes you feel uncomfortable.

I have two pieces of advice:

1. Don't count on BF to save money. Allocate money for formula. I did not do that because I planned on BF for a year. After 4 months, DS started losing weight dramatically...my milk started drying up for no reason. I tried everything to fix it. By 6 months, he was classified as failure to thrive. Formula was no longer an option, and I wish I had started it sooner.

2. Start living off your DH's salary now. A month, as suggested by a pp, isn't long enough to factor in unexpected expenses. It will do two things for you. First, it will let you know if you can manage it. Secondly, you can put your money is savings to build up the emergency fund.

Lisadi · January 2011

I would allow for more "what-ifs." One thing that I'm surprised that I haven't seen mentioned is what if breastfeeding doesn't work out for one reason or another. I'm only mentioning this because I've read several posts about people who wanted to BF, but tried and it didn't work out.

GL!

Que*Syrah · January 2011

It looks too tight to me personally.

Have you actually lived on JUST your husband's income? if your income goes towards groceries and fun money how the heck will you survive without it?

ladyalmalthea · January 2011

For going out money- we never go out, so we save money there.

I recommend what has already been said before- live just off of DH's salarty for at least a month, and track expenses from here out so you can budget better.

wesleysgirl1106 · January 2011

You probably won't see an increase in your grocery bill until you start introducing solid foods to baby. Ours went up significantly! From about $130 every 2 weeks to about $200 every two weeks. Now, I'm lucky to spend less than $420 every month. And that's shopping at Walmart!

Liz342 · January 2011

I would increase your allowance for groceries and I don't think you would need 250 a month for baby expenses but that's just me. I don't even spend close to 250 a month on diapers/baby food/clothes etc.

Also, I don't think you need to worry about saving for LOs college fund yet either.

We cut our budget very close each month but we knew this would be the case and had money in our savings prior to me quitting my job that we would use for months when we were in the red. It might not be the smartest thing but it's worth it to us and it's temporary. I plan on going back to work when the LOs are in school so I know we will be fine until then.

Save as much as you can now. We have a mortgage that is higher than I would like but we also have cars that are paid for, no credit card debt etc.

I believe that if you really want it to work you can. If it doesn't seem to be working you can go back to work if need be.

MrsBalletStar05 · January 2011

Lisadi:
I would allow for more "what-ifs." One thing that I'm surprised that I haven't seen mentioned is what if breastfeeding doesn't work out for one reason or another. I'm only mentioning this because I've read several posts about people who wanted to BF, but tried and it didn't work out.

GL!

I did actually mention this in one of my posts. Wink

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