saving money

[Doug]

I gotta vent. I'm sick of not having a big(ger) savings acct. I make pretty decent money, but we just can't seem to get the account to go up. I know it can take a while but, but jeeeps.

My wife stays at home with my two lil ones, plus another on the way. Now, I must say we've been paying a buttt load to the OB/GYN and Hospital for prepaying our future bundle-o-joy. That itself will cost us around $2500 total. The good thing about Eastern Oregon, is it's cheap. We just bought a nice ranch home on acreage for $130k. So, I don't have an expensive mortgage.

So, we have reasonable bills, electic bill runs around $150 (all appliances are Elec. and we have a well, so that includes our pump.) We don't have any cable TV or sattellite bills. My wife is very frugal, way more than me. I have a lot of tools and shop stuff, but none that I have bought lately. Our vehicles are paid off. Why the crud can't we save???? I only drive 3 miles to work. The wife only goes around town. She doesn't even go to Starbucks anymore, she makes her own coffee drinks at home.

I use Wells Fargo banking and I can pull spending reports. Between the mortgage, utilities, groceries, etc, it adds up to where we still have around $1200 left. I know incidentals add up QUICK. We only eat out maybe 2 times a week.

We did drain our savings on our house. Had to buy new appliances, new riding lawn mower, etc. But, paid cash, so we don't have any credit card payments. I'd freak if we did........

Any suggestions? We even opened a savings acct with US Bank, a seperate bank, to where we try and pay it every month like it's a bill, but when we are cutting it tight, we sometime dip into it.

I want to have a savings incase the wells goes dry or the house needs a new roof or the transmission in the minivan goes out.

Oh well, I done ranting.

[ June 24, 2006, 10:34 PM: Message edited by: Bio-T ]

 

[Pablo]

Forget all the other stuff, forget all my other investment advice.

Now you have a $400/month bill that you have to pay no matter if other things must wait. This bill is the most important check you write each month and if you don't pay it, bad, or very bad things will happen in the future. Might even be smart to have this auto-deducted by your employer straight into your account.

 

[sprintman]

What is the $400/month bil?

 

[pacem]

inflation & fiat money is the answer you are looking for. I am in the same boat, no matter how much you make, you cannot seem to save anything.

prices of everything in big metro areas are EXORBITANT

 

[JHZR2]

First off, how is your retirement savings? If youre not taking advantage of tax-advantaged accounts, you should - youll likely find that the difference (because of taking the money out before taxes, lowering your tax liability) isnt much in your take-home, yet youll be saving for the long term. Ive found that when I dropped my retirement savings because I bought my house, it turned out that I didnt have as much extra $$$ each paycheck as I should have, because I was paying more taxes!

Beyond that, Pablo has it right. I assume US bank pays above 4% interest, and so just pretend that you have a $400/month bill that you pay and put away. At that point, see how little you can spend and try to have a bit more to put into your US bank account at the end of each month.

Beyond that, things are what they are. You made the choice to have a stay at home wife and a family. You could have become DINKs (dual income no kids), but youre not. Be proud of the situation, and be glad that you do have the ability to have comfort and not be totally reliant on two incomes to make ends meet.

You could always have your wife start babysitting, dogsitting, dog walking, or even a part time job working 5 or 10 hours a week. Sure, it wouldnt bring a whole lot in each week, but each little extra bit will add up. If you have an extra $200/eek that you never had before, and just get it saved directly without ever passing through your hands, youll save faster.

There really are only two options, save more or bring in more money. Tax advantaged accounts lets you bring in more with the same salary. Beyond that, you need to get creative for saving (and it seems youre fine there) or get more $$$ coming in.

Do you have stuff you can sell on ebay? Can you provide some weekend work that brings extra money in on the weekends?

In my experience, youll never have enough money in your savings account.

JMH

 

[Doug]

quote:

---

Originally posted by Pablo:
Forget all the other stuff, forget all my other investment advice.

Now you have a $400/month bill that you have to pay no matter if other things must wait. This bill is the most important check you write each month and if you don't pay it, bad, or very bad things will happen in the future. Might even be smart to have this auto-deducted by your employer straight into your account.

---

what investment advice? you being serious or sarcastic? (You confuse me sometimes Pab!)

 

[Doug]

JHZR2,
You are right, we did make the choice for her to stay home, one of the reasons we chose E. Oregon to transfer to. I love that my wife is raising our kids and not a babysitter, I;d work three jobs if I had to, so she could stay home. This is just our choice.

I'm paying the minimum 3% to my 401K, company matches that. I can't really go over that 3% right now.

You know, it's not really that bad, I know poeople who aren't saving ANYTHING, they have a - cashflow. But, I guess it's just frustrating for me sometimes cuz I wish I could be putting away more. A few reasons for my anxieties are like I said earlier about an emergency fund and what if I lost my job, etc? I'm not an optomistic person.

With one income and all those dependence that I HAVE TO take care of, it kinda gets overwhelming in my head sometimes..

We're not at the $400/mo to the other savings yet, but we're close....

thanks all...

 

[Doug]

quote:

---

Originally posted by Doug:
JHZR2,
You are right, we did make the choice for her to stay home, one of the reasons we chose E. Oregon to transfer to, we could afford it. I love that my wife is raising our kids and not a babysitter, I;d work three jobs if I had to, so she could stay home. This is just our choice.

I'm paying the minimum 3% to my 401K, company matches that. I can't really go over that 3% right now.

You know, it's not really that bad, I know poeople who aren't saving ANYTHING, they have a negative cashflow. But, I guess it's just frustrating for me sometimes cuz I wish I could be putting away more. A few reasons for my anxieties are like I said earlier about an emergency fund and what if I lost my job, etc? I'm not an optomistic person.

With one income and all those dependence that I HAVE TO take care of, it kinda gets overwhelming in my head sometimes..

We're not at the $400/mo to the other savings yet, but we're close....

thanks all...

---

 

[Doug]

duplicate

 

[Doug]

duplicate...

 

[Shannow]

Doug,
we elected for the missus to stay home with our kids, and it's really a solid investment in their future.

The extra income would be nice, but more than half of that will go in childcare, so it's a big outlay in her effort, to get another $100/week.

One thing thatwe have done is auto-divert a few hundred a month into a higher interest internet only account that we only allow to move in one direction (at least until the final payment on my truck turns up in Spetember).

We live out of the debit card

 

[JHZR2]

quote:

---

Originally posted by Doug:
JHZR2,

I'm paying the minimum 3% to my 401K, company matches that. I can't really go over that 3% right now.

---

Seriously, I doubt that youll see a big decrease in take-home pay if you bump up to 5 or 6%, and youll reap better reward faster.

Assuming a 30% tax rate, the difference between 0%, 3%, 5% and 6% is quite small, especially on a per pay period basis. See here:

code:

---

savings tax /10k takehome / 10k weekly net / 10k biweekly net monthly net

0 3000 7000 $134.62 $269.23 $583.33

3 2910 6790 $130.58 $261.15 $565.83

5 2850 6650 $127.88 $255.77 $554.17

6 2820 6580 $126.54 $253.08 $548.33

---

Sorry the code doesnt work out that well, but you can read the columns, there isnt that much data. All in all, bumping from 3% to 6% - $300 extra saved per $10k gross income per year - is a whopping difference of $4/10k yearly gross per paycheck if you get paid weekly, $8 if you get paid biweely, and $17 if you get paid monthly. Multiply these by the multiple of $10k you get paid to estimate the actual impacton your standard pay period amount. It doesnt come to much, but you get tax advantaged savings setting you up near painlessly for the long term.

Granted you cant easily touch it without taking a loan against it. But for long term savings, its the way to go.

If I were you, Id bump up the retirement savings and then try saving about the same as ever everywhere else. Thinking truly long term this will put you in a stronger position than anything else, IMO.

Of course only you know your actual financial position, and so you need to make the final determination of what youre comfortable with.

Good luck!

JMH

[ June 24, 2006, 09:06 PM: Message edited by: JHZR2 ]

 

[Pablo]

Actually I wasn't being silly or anything. I just didn't want to type "pay yourself first". The bill is your savings. You have to be totally religious about it. It doesn't have to be $400, $500 is better....

My other investment "advice" is the longest thread on BiTOG, started by Last Z, but really isn't "advice". You wouldn't get any discipline out of the thread. I'm not perfect. I did start my 401K fairly early, but did only 6% for too many years. Now I'm up to 18%. Painful, but doable.

I didn't mention your 401K, because I knew JHZR2 would

Hope this helps. Most people just say they will save what is left over. You know how that works....it doesn't.

 

[Doug]

I haven't gotten involved in the other investment thread, too late, it'll take the next year to catch up!

We are definitely going to keep up the religious payments to the saving account that we don't see since our banking is out of Wells Fargo...

I agree about saving what's left over, funny, we never have anything left over!?!?

JM,
I'll up it 1% and see what it does, then I can go from there. I know I need to put in as much as possible.

 

[JHZR2]

quote:

---

Originally posted by Doug:


JM,
I'll up it 1% and see what it does, then I can go from there. I know I need to put in as much as possible.

---

Look above, I edited my post to give you a reasonable estimate method to see its real impact. Chances are it isnt as much as you'd think... It is a good deal, youll be saving $300 or a real cost of only about $208!

Congrats on taking the cautious first step to saving more for retirement!

JMH

 

[rjundi]

What do you consider a big savings account? In my humble opinion 3 months of salary is a good goal. The $400/month number is pretty aribitrary. I would recommend picking a reasobable number you can stick with and have it pulled directly out of your check in to a decent interest rate acccount (ie ING Direct).

On retirement make sure you can squeak to have the same % as what they match otherwise you are giving away money. Stretch as much as you can for this. It usually is not too much.

It sounds like you are ok in that you have good debt, mortgage. No credit card and other debt like vehicle loans etc.

 

[msparks]

Okay here is how you do it.

You set up an automatic draft into a savings account to happen say every payday or at least once a month. You start out small like $50 per month. Then a few months you do $75, then you do $100, then $150 and so on. Before you know it will be up to $500 per month going into savings.

Once you have an emergency fund of 3-6 months expenses then start looking at longer term investments.

This is exactly how I started.

Hope that helps

 

[Shannow]

quote:

---

Originally posted by Doug:
I agree about saving what's left over, funny, we never have anything left over!?!?

---

That's the problem. Like Pablo says, make savings the first thing for the month (pick a sensible target), and manage expenses into what's left afterwards.

My pay goes in every Monday night, and $200 of that automatically gets diverted into the high interest account, before it hits the balance on the Visa debit card. Then the timing of payments of bills is managed to keep the balance on the debit card at our target.

 

[Buford T. Justice]

http://www.emigrant-direct.com/

 

[Pablo]

I keep some minor savings in Paypal...4.77%. At least I don't roll money out as I did before when the interest rate was 0.00%!

Looks like you are getting some good advice, I like Sparks plan of easing into it, like boiling the frog.

Yes the $400 is a bit arbitrary. However if somehow you can get it to $500/mo or $500/two weeks....the sum will very tidy indeed, very shortly.