Is saving 35 percent of my gross pay good (and still in a Chapter 13)?

[espo1357]

Just wanted to get some feedback from the forum on this. I think I did good, in saving 35 percent of my gross this year. This includes a 1400 mortgage and a 600 BK 13.

I am still upset about the lost equity in this home and the long term consquences of this situation, as I will not have equity for at least 10-20 years.

So, should I just stop complaining and just stay in the home?

If I rented a small one bedroom, I could have saved at least 10 percent more, maybe 20 percent.

Thanks for all the feedback.

[momofthree]

That's awesome! We'll be lucky to save 5% of our pay each year, lol.

[espo1357]

That's awesome! We'll be lucky to save 5% of our pay each year, lol.

Thanks for the feedback. I figured it was, but I am a bit naive when it comes to savings and where I am at compared to others.

It is definitely not a smart move to compare yourself to others (my great weakness), but its important to see where I am at.

Everyday, I change my mind about the home. But, with the way I am saving good, its probably ok to just stay put and stop complaining!

[kornellred]

Let's see - suppose you make $100,000 per year gross. If you saved 35% of that amount, that would be $35,000. If your gross income is $100,000, that would make your net pay after taxes about $60,000. If you saved $35,000, that would mean that you saved about 58% of your net income.

That seems unlikely in a Chapter 13 situation.

[espo1357]

Let's see - suppose you make $100,000 per year gross. If you saved 35% of that amount, that would be $35,000. If your gross income is $100,000, that would make your net pay after taxes about $60,000. If you saved $35,000, that would mean that you saved about 58% of your net income.

That seems unlikely in a Chapter 13 situation.

40k in taxes?

34k of that is at 15%
48k of that is at 25%
12k of that is at 28%

no state income tax.
tax write off for home.
401k maxed out.

Am I missing something. And I don't make that much, so my taxes are much less.

Yes, its possible.

[momofthree]

Let's see - suppose you make $100,000 per year gross. If you saved 35% of that amount, that would be $35,000. If your gross income is $100,000, that would make your net pay after taxes about $60,000. If you saved $35,000, that would mean that you saved about 58% of your net income.

That seems unlikely in a Chapter 13 situation.

I just calculated it out, and if our income were high enough to claim the IRS standard expenses on our schedule J, we could save around $1500/mo, which would be about 23% of our income and we have 3 kids to provide for (including one with special medical needs that also weren't budgeted for). As it is, we're able to save nearly $500 a month on an extremely tight budget just by being extra frugal and saving every dime we get our hands on. I can see how someone could save a large chunk of money, especially if they're single. It's all about lifestyle, really...

[espo1357]

I just calculated it out, and if our income were high enough to claim the IRS standard expenses on our schedule J, we could save around $1500/mo, which would be about 23% of our income and we have 3 kids to provide for (including one with special medical needs that also weren't budgeted for). As it is, we're able to save nearly $500 a month on an extremely tight budget just by being extra frugal and saving every dime we get our hands on. I can see how someone could save a large chunk of money, especially if they're single. It's all about lifestyle, really...

I was just informed that you CANNOT save any money in a BK. At least, you can't inform them that you are saving.

Wow.

There is no incentive to get tax deductions to reduce your tax bill either, because any tax refunds go to the BK.

My lawyer needs to get his head out of his rear end. At least I find this out early in my BK, so its not too bad.

They just own us.

[NowImDownInIt]

I was just informed that you CANNOT save any money in a BK. At least, you can't inform them that you are saving.

Wow.

There is no incentive to get tax deductions to reduce your tax bill either, because any tax refunds go to the BK.

My lawyer needs to get his head out of his rear end. At least I find this out early in my BK, so its not too bad.

They just own us.

As far as I know, there is no steadfast rule against saving in a Chapter 13. My paperwork from the trustee encouraged it when costs were lower than projected (in my case, I MADE them lower than projected) and when bonuses or refunds were given... in amounts that he doesn't deem significant to go after. He states 2% holiday bonuses are safe, above that is sketchy. That's for non-100% payback filers. I am 100% so this doesn't apply to me.

Most attorneys and trustees will encourage you to save what you can, because emergencies pop up and trustees want you to complete your plan. It's all at the discretion of your trustee and your ability to manage your lifestyle.

35% seems like it would be difficult to me, but everyone's situation is different. We have young children and were able to save about 7% this year. I am hoping to up that to at least 10% after the new year with my new insurance elections.

[espo1357]

As far as I know, there is no steadfast rule against saving in a Chapter 13. My paperwork from the trustee encouraged it when costs were lower than projected (in my case, I MADE them lower than projected) and when bonuses or refunds were given... in amounts that he doesn't deem significant to go after. He states 2% holiday bonuses are safe, above that is sketchy. That's for non-100% payback filers. I am 100% so this doesn't apply to me.

Most attorneys and trustees will encourage you to save what you can, because emergencies pop up and trustees want you to complete your plan. It's all at the discretion of your trustee and your ability to manage your lifestyle.

35% seems like it would be difficult to me, but everyone's situation is different. We have young children and were able to save about 7% this year. I am hoping to up that to at least 10% after the new year with my new insurance elections.

I am single, no kids. And I don't spend anything for the most part.

My lawyer is out today, so not sure about it. But, I think I can contribute to the 401k while in a chapter 13. I guess I will just have to wait and see what happens when I file my tax returns and submit.

I do know that the trustee takes any tax refunds, so there is little incentive to aggressively avoid taxes, such as a 401k contribution that will move you towards a refund.

Any further thoughts?

thanks.

[newbie2]

Thanks for the feedback. I figured it was, but I am a bit naive when it comes to savings and where I am at compared to others.

It is definitely not a smart move to compare yourself to others (my great weakness), but its important to see where I am at.

Everyday, I change my mind about the home. But, with the way I am saving good, its probably ok to just stay put and stop complaining!

I ditto the stop complaining part. You are in a Chapter 13 plan and most that are in them contribute so much of their disposable income that there isn't much money left for savings. Since you are so upfront about being able to save so much, perhaps just lay low and avoid the trustees radar. Your attorney obviously worked out a good plan for you. Thank him/her for that.

[NowImDownInIt]

Delete?

[espo1357]

Delete?

How?

It shouldn't matter. I am anom. Its not like they can pinpoint it was me. My brother log in all the time and posts under my name too.

But how do you delete?

lol.

[momofthree]

If we weren't allowed to save, then annual/occasional expenses wouldn't be allowed on the schedule J. Budgets are set up in a way that REQUIRE you to save in order to meet all of your annual obligations. It's ridiculous to say that savings aren't allowed in a ch.13. That said, of course, a "savings" expense over and above your obligations is not permitted, but if you can squirrel away money here and there, I doubt your trustee will care. Mine doesn't even want to see my tax returns, I don't think he's going to care if I am able to save $50 at the grocery store and put it away for a rainy day, lol, and he certainly doesn't have the time to review my monthly bank statements and compare my actual expenses to my schedule J.

[espo1357]

If we weren't allowed to save, then annual/occasional expenses wouldn't be allowed on the schedule J. Budgets are set up in a way that REQUIRE you to save in order to meet all of your annual obligations. It's ridiculous to say that savings aren't allowed in a ch.13. That said, of course, a "savings" expense over and above your obligations is not permitted, but if you can squirrel away money here and there, I doubt your trustee will care. Mine doesn't even want to see my tax returns, I don't think he's going to care if I am able to save $50 at the grocery store and put it away for a rainy day, lol, and he certainly doesn't have the time to review my monthly bank statements and compare my actual expenses to my schedule J.

Thanks Momof3.

Mine wants the tax returns. I don't think it is going to matter (I will find out next year) because I am contributing the same BEFORE I was confirmed, as I am now. It wouldn't make sense if they raised an objection. Anyway, I also look at it this way: I am paying every month, and the trustee is getting paid, the creditors are getting paid, and all is taken care of. If they want to give me a beef about this, then I will just go to plan B, and let the 13 get dismissed, and then just file a 7 when I qualify.

I won't let them just take advantage of me, when I don't even have any judgement or anything, and I have a home that is underwater over 100k. F That, lol.