Comments on my budget, please!

[ej822]

Here's the budget I plan to take to my lawyer on Monday. Any advice, comments, etc?

Family of 4 in Colorado

Gross income 5061
Net income (after taxes) 4482.61
Total expenses 4456.60
disposable income 26.01

Breakdown:
Food 510
Housing 1997.60 (1686 mortgage, 90 electricity, 70 heating fuel, 21.60 trash, 80 telephone)
apparel 140
Transportation 1334 (389 car pmt, 550 gas - 100 mile daily commute for hubby, 40 maint, 100 repairs - hubby's bronco is 15+ years old and truck is a 1978, insurance 220, licensing 30, tolls 5)
healthcare 190 (includes 30 a week for cafeteria plan = 120, doc/dentist 30, Rx 10, glasses - both hubby and I wear 30)
entertainment 70 (really, this is our high-speed internet connection, which I require to work from home part time)
other 215 - haircuts 15, cigarettes (hubby smokes ) 200

From what I've seen, we're over on housing (1389 vs 1997.60) and transportation (956 vs 1334), under on all else. Do you think this will be a problem? Can they force you into a Chapter 7 liquidation if you basically can't pay anything to unsecureds because your house is too expensive AND too far away from your current job (not a lot out there right now!) so that it increases your transportation expenses?

[momofthree]

Are you hoping for a 13 over a 7? Why?

I only get $4406 when I add up your expenses, leaving you $76 a month as your budget stands....

Is your withholding accurate? If you got a refund this year, then you need to alter your W4 so that you come as close to breaking even at tax time as possible--that could free up extra money each month.

What is "cafeteria plan?" for your medical care?

You don't list a home maintenance expense, school expenses, & water bill.

I'd put the $200 cigs into the overall food budget--it'll still put you under the IRS monthly standards for a family of 4, and they're less likely to question it. That's how we included my dh's chewing tobacco.

If you WANT to file 13 over 7, then you'll have to make room in your budget to fund it. At least you should get a 36-month plan, since you appear to be under the median. We had to cut back on groceries, cancel our cable tv/internet, and completely delete our "home maintenance" expense in order to fund our 13....

[ej822]

If you have 0% payback to unsecured, what exactly are you funding? What do your payments consist of?

We are going Ch 13 because it would allow us to strip off a 25K 2nd mortgage with a $350/mo payment for 10 years. The house is severely underwater - 203K first mortgage, 25K second, and only worth 165K right now.

We did get a refund last year (more than we paid in, for the first time EVER - I guess we're now charity cases ) and we will change that, so that's 252/month.

The cafeteria plan is the money they take out before taxes so you can use it to pay your deductibles and copays.

I didn't list a home maint expense because we're so far over budget there already. The house desperately needs new decks (boards are actually weathered so bad we're expecting to fall through one of these days) and needs new carpet (completely threadbare in places and there's actually tacking strips showing through where it meets with the linoleum in the kitchen) and exterior painting (not done in 11 years).

Our kids are 2yo and 4 months, so no school expenses. I work at home part time, so no daycare. And we're on a well, so our water only costs the electricity to run the pump.

[momofthree]

We are paying our car payment into the plan + trustee fees + attny fees. We, like you, are about $20k under the median and chose the ch.13 route to strip our 2nd. It was a struggle to find the extra $98 a month to fund the plan. For a family of 5 our grocery budget is $450 and our clothing is $35. We don't even have cable tv or cell phones--we are down to bare bones for the next 5 years....but in 57 months our car will be paid off, and 12.5 years from now, the house will be paid off, and we'll be sitting pretty. We're trying to concentrate on the long-term and suffer thru the short-term for now. We're still better off than our parents were at our age....

[LadyInTheRed]

We did get a refund last year (more than we paid in, for the first time EVER - I guess we're now charity cases ) and we will change that, so that's 252/month.

When you adjust your withholding, don't forget to take into account the fact that your mortgage interest deduction will be smaller since you won't be paying the 2nd.

[ej822]

Updated budget

I can play with the numbers. We don't spend that much on most of these categories right now, but probably should. I have been wearing maternity clothes almost continuously for nearly 3 years and have very few regular clothes now that fit. I need to spend some money on clothing. We also haven't done home repairs because we've been so broke paying the CCs and those desperately need done (threadbare carpet with tack strip showing in major traffic area, decks and porches were built by builder with untreated lumber and are falling apart and now dangerous, paint exterior hasn't been done in 10 years, etc.).

My concern is that with the housing and transportation categories so high the trustee will say we live in too expensive of a house (it's only 1456 sq feet, but on 35 acres) and pay too much to commute and should give up the house and move closer to hubby's work. Can they do that? WILL they do that? It would mean giving up our horses (we already have to sell the trailer and will use that to pay the lawyer) and our entire lifestyle. We like the rural life, but could probably spend less if we did move back to the city (yuck). Of course, if we had to do that, we'd just file Ch7 and be done with it - no budget and no trustee scrutiny. We're only doing Ch 13 to keep our house and strip the 2nd since it's so far underwater.

[SMinGA]

As I understand it, you get less scrutiny for being below median. And when housing/transportation/etc. is above the median you may be asked to document it - but if they are your real expenses then it should not be a problem.


A few small details... $30/week cafeteria plan is actually $130/mo. 52 weeks in a year, divided by 12. (There are more than 4 weeks in a month.) $30 per month seems high on glasses as that comes out to $360/yr - but my only experience with glasses is for a child and I pay very little at Walmart. I realize adults could be more. ($50 exam, $50 or so for a new pair before school starts, $18 frame insurance. The insurance tends to get us a free pair each year!)

On the cigarettes - every little bit helps. See if you can sign up for monthly coupons at the website of hubby's brand of choice. We tend to save $8-10/mo this way. We also buy cartons - its much less $ overall than buying single packs. Hubby has cut back somewhat, and while I'd love him to quit completely its not a demand I can make...

For your home mortgage - are you counting the 2nd payment? If so, need to deduct it as you'll no longer pay it. And as mentioned - adjust withholding to aim for even at tax time. With 3 kids, we are able to claim exempt on federal and still get a refund due to child tax credits. Cannot withhold any less...

[ej822]

No, that amount does not include the second mortgage.

$360 would actually be low for glasses if we had to get new prescriptions each year. We only wear them for driving, but need both regular and sunglasses for each of us and they cost $150 each or more with the exam - and that's the cheapest on special. No fancy frames. Hubby needed ones that would qualify as safety glasses for work and that ran us nearly $300. Insurance paid part of it, but only as a reimbursement, they don't pay the bill up front.

I've signed up for the cigarette coupons, but it seems like they only send them every 6 weeks or so. Maybe once a month. Marlboro is not so generous it seems. ;-)

I also use lots of grocery coupons and combine with sales and buy almost nothing that isn't on sale with a coupon or at Sam's Club.

[debtinohio]

I have nothing to add but I love that he drives a '78 Bronco on that commute everyday - that's so cool.