Debt cripples you, it weighs you down and keeps you from living your life the way you want. Debt prevents you from accomplishing your goals, limits your ability to "Do" what you want, "Have" what you want, and "Be" who you want to be, it constricts your opportunities, and constrains your charity.
As you said,
Graduated in May from school. Student loans are coming due here in January. Bought a new car recently. The added monthly expenses have me concerned that I am budgeting my money correctly.
Awesome! Congratulations. You need to develop a plan to repay the student loans. Buying a (new) car before you have planned you budget may have been premature.
I currently am spending around 45-50% of my monthly (net)income to cover all
my expenses and living. The left over is pretty discretionary, but things
like eating dinner outside the house and expenses that are abnormal would
come out of this. My question is what percentage is a safe amount to be
committing to expenses on a monthly basis?
Great! Plan 40-50% for essentials, and decide to spend under 20-30% for lifestyle. Be frugal here and you could allocate 30-40% for
Budget - create a budget divided into three broad categories, control your spending and your life.
- Essentials (housing, food, utilities including gas, electricity, water, trash, transportation), under 40-50%, try 40%
- Financial (emergency fund, debt payoff, savings, investments, et al), at least 20-40%, try 40%
- Lifestyle (cellphone, internet, cable, movies, clothes, shoes, haircuts, restaurants, et al), under 20-30%, try 20%
Goals - a Goal is a dream with a plan.
Organize your goals into specific items with timelines, and steps to progress to your goals. You should have three classes of goals, what you want to "Have", what you want to "Do", and who you want to "Be"; Ask yourself, what is important to you.
Then establish a timeline to achieve each goal. You should place specific goals or steps into three time blocks, Near (under 3-6 months), medium (under 12 months), and Long (under 24 months). It is ok to have longer term
plans, but establish steps to get to those goals, and place those steps under one of these three timeframes.
- Save, increase emergency fund to $2000.
- Sell expensive car (ditch the payment).
- (then) Buy a cheaper car for cash.
- Payoff Visacard/Mastercard debt.
- Sell bike.
- Save, increase emergency fund to $3000.
- Take guitar lessons.
- Travel to Florida.
- Learn to make veggie chili.
- Payoff $3000 of student loan debt.
- Payoff additional $6000 of student loan debt.
- Buy Motorcycle.
- Buy new laptop.
Good advice I have heard includes keeping housing costs under 25%, keeping vehicle costs under 10%, and paying off debt quickly. Some advise 10-20% for financial priorities, but I prefer 30-40%. If you put 10% toward retirement (for now), save 10-20%, and pay 10-20% toward debt, you should make good progress on your student loans.