Okay, my wife and I struggle with our finances and we are trying to get them in order.

  • My net pay is approx $1300 every two weeks (my wife does not work)
  • That is after health insurance premiums
  • 401K deduction are happening too

I should add we have two kids and just sold one of our vehicles in order to drop the payment so right now we are a one car family. We have $4000 on two credit cards.

So my question is, what are we doing that is causing us a problem?

We think we live modestly but I feel like the crunching of our expenses versus income says otherwise. Does $1300 every two weeks not go as far as it used to? I am looking at moving from AT&T to a prepaid wireless (Straight Talk) because they offer plans for $45/month/line so that would save us $60 per month.

Here's a breakdown of where our money goes. I feel like we live a moderate lifestyle yet we never seem to have any money left over at the end. All numbers shown below are what we pay per month.

$261.84 - Mortgage
$168.65 - Taxes and Insurance
$ 93.65 - Loan for window replacement
$ 80.00 - DirectTV
$ 39.95 - Time Warner
$  7.99 - Netflix
$151.00 - AT&T (two iPhones and a 21% discount)
$194.00 - Electricity
$ 66.00 - Gas
$ 18.30 - Garbage
$ 57.64 - Water
$ 39.00 - Sewage
$ 80.00 - Student Loan #1 (private, interest free student loan)
$152.97 - Student Loan #2 (federal loan)
$160.61 - Car Payment (2006 Jeep Liberty)   
$109.53 - Car Insurance 
$ 50.00 - 529 Plans (2 kids, $25 each)

$1731.13 total expenses

  • You don't eat?. – JTP - Apologise to Monica Jun 30 '12 at 4:35
  • Or buy clothes? or toilet paper? Or pay for the kid's field trips? There are lots of things missing from this list. – MrChrister Jun 30 '12 at 6:15
  • 3
    Can you do an update with the suggested omitted items included? Food (grcoceries/restaurants), gasoline/diesel, clothes, household supplies, trips, non-covered medical, misc. purchases ("toys"), movies out, gifts, car repairs, etc. Also, how much is going into 401k a month? – Chelonian Jun 30 '12 at 15:22
  • Sure we eat, buy clothes, toilet paper and all the other stuff I didn't add but I don't have a solid number to tell you how much goes where. – rodey Jul 2 '12 at 13:49
  • See what you can spitball. Welcome to the site and I know you will get some good answers and great advice. You gotta stick with it. Like JoeTaxpayer said, no judgement is being passed here so lets work together. – MrChrister Jul 2 '12 at 17:05

I'll second what littleadv says about the "entertainment" expenses; they do seem high relative to your income. The numbers for electricity and vehicle insurance seem high to me as well, but that depends on where you live and how you heat your house, etc., so they may be normal for your situation.

You've got almost $500/month going to debt payments (vehicle, window replacement, and student loan). You didn't list the credit card payments on there, so that will add to the debt payment amount. Finding a way to get those debts paid off as quickly as possible would free up a lot of cash flow. You could consider trying to find extra income (second job, your wife getting a job or finding a way to make some money from home, sell some things, etc.)

I'm wondering about the things I don't see here: food (including restaurants), clothing, fuel, maintenance and repairs (both car and house), etc, etc. With the numbers you list above, you have money left over every month, but when you add in the things I just mentioned, that may not be the case.

I suggest that you keep track of all of your expenses for the next month to see what you're really spending (including the things not listed here). Then, using that information, make a plan for the following month (and every month thereafter) about how you're going to live on what you bring home. Just tracking your expenses will likely show you some areas where you could easily cut back on spending.

Also, I recommend that you start working on a plan to increase your income, both temporarily as I suggest above, and longer term by focusing on your career direction. You are above the poverty level (assuming you live in the US), but below average in income.


First: great job on getting it together. This is good for your family in any respect I can think of. This is a life long process and skill, but it will pay off for you and yours if you work on it.

Your problem is that you don't seem to know where you money goes. You can't decide how whacky your expenses are until you know what they are. Looking at just your committed expenses and ignore the other stuff might be the problem here. You state that you feel you live modestly, but you need to be able to measure it completely to decide.

I would suggest an online tool like mint.com (if you can get it in your country) because it will go back for 90 days and get transactions for you. If you primarily work in cash, this isn't helpful, but based on your credit card debt I am hoping not. (Although, a cash lifestyle would be good if you tend to overspend.)

Take the time and sort your transactions into categories. Don't setup a budget, just sort them out. I like to limit the number of categories for clarity sake, especially to start.

  1. Required expenses: Things you must pay like your mortgage, car payment loans and utilities. (Internet and TV are not, sadly, utilities)
  2. Optional expenses: Things you want. TV, Internet, extra cell phone, magazines
  3. Shopping: This is where I put anything that I buy that isn't food. Not usually regular expenses really. Toilet paper, new wallet, computer parts, going to the movies and toys for the kids are just plain old shopping.
  4. Food: I break this down to grocery store and everything else. Fast food, mini marts, coffee shops, work lunches are all bunched together with grocery stores all by themselves.

Don't get too crazy, and don't get too detailed at first. If you buy a magazine at the grocery store, just call it groceries.

Once you know what you spend, then you can setup a budget for the categories. If somethings are important, create new categories. If one category is a problem, then break it down and find the specific issue.

The key is that you budget not be more than you earn but also representative of what you spend.

Follow up with mint every other day or every weekend so the categorization is a quick and easy process. Put it on your iPhone and do it at every lunch break. Share the information with your spouse and talk about it often.

  • 3
    sadly, for some of us, internet is a "utility" (it certainly is for my job, at least) – warren Jul 2 '12 at 20:21
  • 2
    I agree with @warren the internet connection in this day and age can really act as a utility. However, with a good internet connection you can usually do away with the TV related bills so it can be leveraged that way. – anonymous Jan 30 '13 at 0:44

DirecTV... Time Warner.... Netflix... 2 iPhones (= 2*Data plan)....

$280 a month on pure luxuries. >10% of your net income.

Of course, you may be needing at least some of this, no-one wants to come home and stare at bare walls. But if you have Netflix - maybe you don't need DirecTV? Or the other way around? And maybe DSL internet will be cheaper than cable? Maybe prepaid $1/day AT&T GoPhone or similar plan would be better than paying $151 for two iPhones?

  • I want to +1 because I agree, but I think Randy's answer is more appropriate here. @rodey needs to get a realistic picture of their debt first before we can point out places to save. – MrChrister Jun 30 '12 at 6:18

I concur with pretty much what everyone else said. Let me break it down in a concrete plan of action.

First, though, note that at least the minimum payments for the credit cards needs to be on this list of fixed expenses. Also, you have $868 remaining in a normal month -- food could be $500 or more easily for a family, so find out how much!

Adding in just those 2 things, and you're already at your max. And there are other expenses in life.

Ok, cutting from the top:

DirectTv -- gone. Pure luxury, and between netflix, hulu and your internet connection (hook your computer to the tv), there's no need for it. $80 savings.

Cell phones -- you're already moving in the right direction, but not far enough. In a financial crunch why does your stay-at-home wife have a cell? Especially when she could just as easily use Google Voice for free? Both plans gone, replaced by one of the prepaids @$45. $105 savings, total $186 savings.

529 plans -- Of course you want to save for your kids college, but it doesn't help them for you to drown financially. Gone until your credit card debit is too. $50 savings, $236 total.

Ok, we're already up to $236/month in savings just cutting items you don't need. That probably gets you back into the black, but why stop there?

Trimming expenses

Electric -- ok, I know it's summer, but can you cut this back? Is the thermostat set as high as you can comfortably bear? Are you diligent in turning of lights, especially incandescent? Do you turn off your computer when you're not using it? See if you can get the Electric down by 10%. That's $20/month savings. Doesn't seem like much, but it adds up.

Gas -- same with gas. Do you have gas hot water? If so, cut shower length. Saves on water too.

Food -- this one you didn't list. But as I said, you could be spending $500 or $600 a month easily for a family. Do you guys plan meals, and thus plan shopping trips? If not, do it. You'll be surprised how much you can save. Either way, 10% reduction should be doable. That's $50/month. If you don't plan now, 20% is within reach -- that's $100/month.

Ok, that may have added as much as $130 or so. If so, you're now up to $366/month savings. That's like a 15% raise.

Simply cutting, however, is only half the plan. You want to improve your situation, so you can get the Directtv back (assuming you'll even want it at that point), and the wife's cell phone, for starters.

To do that, you've got to nail down that debt. I figure you've got minimum $567.23/month in debt payments. That's not including your mortgage, and including an assumed $80/month minimum credit card payments. You pay over 21% of your take-home to short term and consumer debt!

Yea, that's why you're hurting.

Here's what you do

  1. Find out the minimum of that $366/month savings you need to stop bleeding, then put the rest toward debt. I'm going to assume that's $250/month.
  2. Since you're paid bi-weekly, two months out of the year you get an extra paycheck. Send it directly to pay off your debt. No splurging no gifts, no counting on it for regular expenses.

In both cases, apply the extra payments entirely to one balance at a time. Pick either the smallest balance (psychologically best because you quickly see a loan & it's payment dissappear), or the highest interest (mathematically the best). Roll each regular payment that's paid off into the extra debt payments.

You didn't list total debt balances, but you did say you had $4000 in credit card debt. Applying an extra $250/month to debt (out of that $366 savings), plus two extra paychecks of $1300 each, is $5600/year paid off.

In under a year, you could have those credit cards paid off, and likely that window loan too. Start the 529s again, but keep going paying down the rest. When you have the car paid off, bring back the wife's cell (you and I both know that's going to be #1 on the list :) ), then finish off those student loans.

Then bask in the extra $567/month - 21% of your income - you'll have in sweet, sweet green cash!

  • Your wife could probably handle taking on some errands and odd tasks for friends and neighbers; offer to help her find these jobs and set a goal to make $200/month, until you pay off debt... – ChuckCottrill Dec 23 '13 at 19:50

Please either remove the $50 going to the 529 plan or move it into a ROTH IRA instead. You can always use your ROTH contributions to pay for college expenses in the future if you want to. I suspect you may not have enough saved up for retirement to have the luxury to help with college though.

  • Can you elaborate on why to use a Roth IRA versus a 529 plan? Who's name is on the IRA, mine or kids? – rodey Jul 2 '12 at 13:50
  • @rodey Your main concern should be saving enough money for your retirement. Once that is taken care of and you have extra cash flow to put away you can consider saving in a 529 plan. You can use your Roth contributions at any time without paying any penalties or taxes. For my situation, if I calculate that I am ahead of our retirement by the time the kids start going to school then I'll look at raiding my Roth contributions at that time. – tp9 Jul 2 '12 at 19:08
  • 2
    @rodey To add to my previous comment. A 529 plan is meant for people flush with cash who need someplace to put it after maxing out contributions to other tax-advantaged accounts. You don't sound like you are in that group. – tp9 Jul 2 '12 at 19:10

The $1300 turns into $2817/mo over a year. You've identified just over $1700 in expenses, but clearly missed a lot. Use what you wish, Mint, a spreadsheet, a notebook, I don't care. Just track every penny for a time. My property tax is due quarterly, so 3 months is minimum. It takes a year to get a full view of the items that are seasonal. Unless of course, the winter is mild (and your plowing expenses are low) or the summer is rainy (and the water bill for the grass is low.)

Even the above doesn't capture the things that are less regular. The house painting, the heater repair, etc.

The exercise itself is a great first step. As others stated $280 for cable/phone? Once you add the missing $900/mo, we'll know more.

What's really important is that you look at 100% of where the money goes and decide what the priorities are. No one's judging you, we chose the bigger house over eating out and expensive vacations. It's about knowing and understanding your choices.


Determining how much you should budget to spend on any area of your budget is one of those hard topics to find good information about. Part of the problem is that everyone has different priorities and needs, and incomes and expenses vary greatly depending upon where you live and your career choices.

The best thing you can do is track your spending for 1-3 months (you can use the envelope system if you need to, to track and control how much you spend on miscellaneous things like lunches, coffee, etc). The precision is important, though you probably dont need to measure to the penny, however you should capture all the areas where you spend money (even if you later gather them into more broad areas).

Split your spending into three broad areas, and try to limit the spending for each of those areas to the stated percentages (adjust for your preferences).

You state net Income $2600, and you stated you have $1731 of known expenses, so you are spending another $870 on groceries, debt payments, restaurants, unplanned expenses, and emergencies.

Essentials (50%,$1300) - rent, transportation, food, utilites

$261.84 - Mortgage
$168.65 - Taxes and Insurance
$194.00 - Electricity
$ 66.00 - Gas
$ 18.30 - Garbage
$ 57.64 - Water
$ 39.00 - Sewage
$160.61 - Car Payment (2006 Jeep Liberty)   
$109.53 - Car Insurance 
$     ? - groceries

Total $972+groceries (you probably spend $400-600 on groceries, so your essentials are higher by $100-300 than you can afford. You should try to cut your electricity usage ($30-50), and you may be able to find cheaper car insurance (save $20).

Financial Priorities (30%,$780) - savings, debt payments

$ 80.00 - Student Loan #1 (private, interest free student loan)
$152.97 - Student Loan #2 (federal loan)
$ 93.65 - Loan for window replacement
$ 50.00 - 529 Plans (2 kids, $25 each)
$     ? - credit card payments
$     ? - savings

Total $376, nearly 15% before you pay for credit cards and savings. Please focus on paying off your debts (credit cards, window loan, student loans). You are spending almost 10% of your income on student loans, and you cannot afford much other debt.

Lifestyle (20%,$520)

$ 80.00 - DirectTV
$ 39.95 - Time Warner
$  7.99 - Netflix
$151.00 - AT&T (two iPhones and a 21% discount)
$     ? - restaurants, movies, etc.

Total $279, over 10% of your income on communications! Please try to cut cellphone, and DirectTV costs, at least until you have reduced debt.

Since you have internet, your wife could use a voip provider (vonage, ooma telo, etc) or get an ipod touch and use skype or similar, at least until you get out of debt.

You might consider trying to find a way to earn extra money, until you have paid off either the loan for windows, your credit card debt, or one of your student loans.

  • +1 good analysis, unfortunately OP hasn't been back in a few months. And never responded to update the food and 'other' bill, which would certainly have helped us to help him. – JTP - Apologise to Monica Dec 25 '13 at 16:58

Your Answer

By clicking “Post Your Answer”, you agree to our terms of service, privacy policy and cookie policy

Not the answer you're looking for? Browse other questions tagged or ask your own question.