Budget/savings question

Re: Budget/savings question

• AZ123 member

  August 2013

  How's the growth going in your area in terms of jobs, unemployment, housing values? i'm wondering if investing in property would be a good idea to make up the difference in percentage.

  

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• DiveFrog member

  August 2013

  A lot of budgeting and financial planning is about personal comfort levels. What you will be comfortable with and what another family is comfortable with can be quite different. You also probably have unique financial savings goals, and unique budget/spending preferences.

  Personally, I think where you are and what you are suggesting sounds more than fine.

  As an example, we spend about 27% of our take home on our mortgage, and have approximately a 3month emergency fund. We are not adding to our e-fund at all at the moment, but saving for some home repairs that must be done, for my next vehicle, and for a future second maternity leave.

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• FemShep member

  August 2013

  I know you're trying not to share too much, but it's hard to give you a good answer.  I think it really depends on your income level.  If 10% of your income after taxes means you're only putting $500 a month into an emergency fund, I'd have a much different feeling than if 10% of your income means you're putting $2000 a month into the emergency fund.  KWIM?

  
  

  Also, you mentioned new cars and vacations.  How soon do you expect to need a new car?  If you're driving an older car with 110k miles on it, that's something to consider.  

  
  

  Is there a reason you want to buy right now instead of waiting a few years?

  

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• DiveFrog member

  August 2013

  FemShep said:

  I know you're trying not to share too much, but it's hard to give you a good answer.  I think it really depends on your income level.  If 10% of your income after taxes means you're only putting $500 a month into an emergency fund, I'd have a much different feeling than if 10% of your income means you're putting $2000 a month into the emergency fund.  KWIM?

  
  

   

  This is a very good point about the percentage versus amount. You have to be able to see that the reduced amount to save can still allow you to save for the things you will need to.

  DH & I are somewhat odd in that we are very tight about our monthly budget and discretionary day to day spending but, we have a mountain of mortgage debt. We chose to keep our first house as a rental, as well as, purchase a 2nd home as a rental, plus we live in our 3rd home. The two rentals don't allow us to save as much cash in the short term, but we look at them as long term savings/investments that will pay off in the future. So really, in the end we are saving the same total amount, just some of it is not being saved as a liquid asset.
  

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• jlaOK member

  August 2013

  I'll try and address all questions:

  Growth in my area is pretty steady.  We didn't get hit very bad with the economy crash so values are rising slow and steady.

  The mortgage payment will be higher.  Our current payment is about 18% of our take-home on a 15-year (new house will be a 30-year).

  10% of our take-home is higher than but closer to the $500/month.

  We plan on savings for and paying cash for a new car in the next 3 years.

  The reason we are looking early is that we want to move to one specific neighborhood.  Reason being a combination of lot size, schools, and location.  We'll basically just have to wait for a house we like to come on the market.  A house on the low end of our price range just came on the market which is why we are considering moving early.

  

                                                

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• court115 member

  August 2013

  jlaOK said:

  The reason we are looking early is that we want to move to one specific neighborhood.  Reason being a combination of lot size, schools, and location.  We'll basically just have to wait for a house we like to come on the market.  A house on the low end of our price range just came on the market which is why we are considering moving early.

  Is your house already listed? I ask this because we found a great house that drove us to list our home early and we ended up loosing that house because our house didn't sell in time. If your house isn't listed already and you need to sell it before you can buy a new house, I wouldn't rush into it yet.

  
  

  As far as your budgeting question, honestly, it sounds fine to me. Like a PP said, budgeting is really all about personal choice and comfort. Would you be comfortable with it?

  

  
  

  

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• blushingbride_08 member

  August 2013

  We are currently in the process of buying a house. Honestly the progress has been long and dreadful. We gave ourselves a deadline of 3 months to find something then pushed it back since we hadn't found anything. It is now going on 9 months and since interest rates are rising we need to make a decision fast or we'll have to adjust our initial budget. My point is to look now and if anything comes up that's a great deal then move early. If you wait until a planned time frame you may end up paying more depending on how the market is at that time.

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• StayingSecret member

  August 2013

  We're in the midst of doing this - moving a few years before we thought we would.  Cue sappy music since we found the right house at the right time.

  
  

  
  

  I'd definitely be concerned that you aren't saving towards a future car purchase cause that's gonna need to happen, eventually right?  BUT...you have a decent start on an emergency fund, so I'd probably start earmarking some savings for a future car instead of emergency fund.  Just so you know what you're dealing with.

  
  

  I don't think 10% is too low for going into savings each month as long as you know what that 10% is really getting you.  I mean, 10% of $100K salary is different than 10% of $50K salary. If you have a big salary and are used to spending most of it and want big vacations and fancy cars, 10% might not get you there.

  DS/LO #1: Born March 2012 DS/LO #2: On his way! Due October 2013

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• RibbitGrl930 member

  August 2013

  Do you have (or plan to have) at least 20% down for a house in addition to your emergency savings? If not, I would wait until you have both 20% and at least *8* months of an emergency fund, not just 6. Besides reducing your monthly contribution to your savings due to the increased expense of a mortgage, you are also on the hook for absolutely everything that needs fixing. 10% of income going to savings is fine, but it will seem like so much less when you're trying to play catch-up and then somethinglike the roof needs repairing.

   

  

   

  
  

  
  

   

   

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