If there’s one thing I like more than checking out my *own* finances, it’s being a voyeur and checking out OTHERS’ finances too, haha… it doesn’t even matter if they’re rich or poor or have no idea what they’re doing at all – it’s just a rush to see how other people live and manage their money :)
So today I thought we’d start a new series where we post up someone ELSE’S finances here on the site, and then we all help to critique it. I get emailed alllll the time asking for my own opinion and thoughts on peoples’ situations, but I’m only one person with my own set of preferences and knowledge/etc, so I figure let’s open it up to the rest of you too so we can get a plethora of advice going on! :) Everyone helping everyone out, you know?
We’ll kick off our first one here with a look into our new friend, “George’s,” finances. He had emailed me earlier in the week for my take on it, and I was pretty impressed with what was going on there.
Check it out and let us know what you think:
The Family: George (29), Wife (25), Daughter (3mo)
Assets Emergency Savings $15,000 Regular Savings $10,000 (savings for bigger house) Checking $6,000 My 401k $17,000 Wife’s 401K $1,000 Roth IRA $600 (brand new, Betterment)
Condo $132,000 (worth $150,000) Cars $0.00 Credit Cards $0.00 Student loans ~$100,000 Other Term life insurance for George $1.2mm Budget Gross Income per mo $10,833 My 401k per month $354 (up to company match of 5%) Wife 401k per month $225 (up to company match of 6%) Medical insurance $226 Taxes $1,940 After tax income $8,088 Wife stock purchase plan $188 (up to company max of 5%) Savings $1,083 (10% of gross) Tithing $1,083 (10% of gross) Total Net Take Home $5,734 My IRA $316 Other fixed expenses $2,385 (includes mortgage, HOA, utilities, student loans, car insurance, gym membership, life insurance premiums) Other variable expenses $2,222 (includes $300 fuel, $806 food, $1,116 miscellaneous) Total Surplus $811 (usually added to savings) Monthly Use Giving 10% Savings/Retirement 20% Taxes 18% Expenses 44% Surplus 7%
The J. Money Report:
Nicely done! Lots of saving and investing going on, and seems like y’all have an incredible system down. Even with a nice chunk of change leftover every month! That’s gonna be the total X Factor here to your continued success, in my opinion. I think dropping it into savings is perfectly fine for now, even though you’re already dropping 10% off the bat, but at some point you’ll have to figure out how to get rid of the rest of that nagging $100,000 in student loans currently staring you down :( You can’t really save your way out of that, I’m afraid…
Other quick notes from my point of view:
- Emergency Fund: $15 grand is nothing to sneeze at, but I’d run the numbers and see how many months that lets you survive in the worst case scenario of losing all streams of income. You probably want to shoot for 3-6 months depending on your level of comfortableness, and from the looks of your budget there, it seems that would only cover a little over 2 months unless you start tapping other areas like your extra savings and/or investment accts which you wouldn’t want to do. ($5k in expenses each month + $2k in taxes = $7k/mo to live, outside of any future saving).
- Cars and Credit Cards: That’s hot!!! Keep those balances at $0.00, baby! :)
- Student Loans: That’s NOT hot, haha, but of course important for all your degrees, etc… I’m not sure how much of that variable expense category you’re putting towards them all, or how much your interest rate is for that matter, but either way it may be smart to have a good game plan going on behind the scenes. I wouldn’t hold it against you at all if you used a big chunk of that extra $800/mo towards it – you’re already saving and investing 20%. Just an idea…
- Monthly income: Not sure how many of you work in your family, and for how long/week, but that monthly gross income is great for your ages :) Almost $130,000 a year!
- 401(k)s: Yes, brilliant – keep it up. Matching up to your company’s maxes is by far the easiest and quickest way to double your money, and you don’t even have to do any work! It’s FREE!
- Life Insurance: That’s killer man! (Pardon the pun). Your family will be more than fine with $1.2 Million there, and some may even say it’s *too* much. But I think it comes down to what makes you feel safe and secure, so if that’s the magic number I say stick with it – esp. now that you have a wee one (Congrats!). I actually need to double check mine too – thx for the reminder ;)
- Wife’s Life Insurance? I may have missed it, but I don’t see any insurance for your wife – I’d probably pick up some if it were me just in case, but def. not like yours at $1.2 Million. The wife and I both have equal amounts just in case, but I’m not sure actually what the rule of thumb is for this stuff… maybe someone else here knows?
- Tithing: Good for you guys, that’s awesome :) I need to be better about this myself.
- Miscellaneous: This category looks high in your “other variable expenses” area, but then again mine always does too as I’d rather see a bigger chunk there than a million smaller sub-categories to have to deal with, haha… So I guess just a word of caution to make sure it doesn’t get too out of hand as the years go by :)
Overall score: A! The only thing holding me back from the + at the end is that nasty student loan egg sitting there ready to be killed. I had my stank face on the entire time reading that, haha… The rest though? Pretty dope. A great monthly income paired with a sweet below-your-means living strategy. Y’all should be proud! Keep it up!
George also passed along this little trick after some emailing. Maybe it’ll help you too?
“One thing we do with our variable expense budgets (food, misc.) is give each one a dollar amount per person per day of the month. So food is like $13 per person per day. That accomplishes 3 things. 1) We can go light during the week and enjoy some dinners out on the weekends with the surplus, 2) It takes into account the number of days in the month. We’re going to spend more on food in August than we will in February just based on day count, and 3) It locks a value in instead of letting it float as a percentage of our income. No need to spend more on food just because I’m making more money.”
What do you guys think about all this? Anything stand out for the positive or negative? Does it make you want to email me YOUR stats too? Haha… feel free to as I’ll need lots more to review if we decide it’s a series we should def. continue! ;) Hope you guys enjoyed this!
(Photo by Images_of_Money)
Jay loves talking about money, collecting coins, blasting hip-hop, and hanging out with his three beautiful boys. You can check out all of his online projects at jmoney.biz. Thanks for reading the blog!