Budget Update January 17th, 2014 « A Pirate's Cents and a Pirate's Sense

Budget Update January 17th, 2014

The slow drip of money going down the train from an unbalanced budget is both annoying and critically important to address.

It’s my Friday off and like all Friday’s off, the first thing I do is sit down and track to see where the PirateCents family is with our budget(s).

The big news of the week was we received our first paychecks of 2014. It’s also my first real paycheck at a new job and my wife’s first paycheck with the new HSA.

The good, the bad and the ugly of Mr. PirateCent’s paycheck:

The Good: I got paid! Hurray. It is a new high watermark for me for salaried income. That part is very exciting. This last job change was transitioning from a qualified salary plan (where I received straight time overtime pay, with a few exceptions) to a true salary plan (no overtime pay). It’s a move I have been resistant towards for many years because, let’s be honest: How often does an American worker who’s trying to move up in a company, in an industry or in a career ever only work 40 hours/week? Never. Exactly. Still, it was a move I had to make for my career, so here we are.

Also good was that I am immediately able to contribute to the new company’s 401(k) plan! No waiting period. This is huge for me since 401(k) plans form the foundation of the PirateCent’s Family saving plan.

Finally, the amount deposited in our joint checking account for expenses was correct so it fits our budget well.

The Bad: No Roth 401(k) option. This is meaning that yet again, for another year at least, Mr. PirateCents is only going to be able to save with his 401(k) on a pretax basis. While this saves on taxes now, it limits the total amount of gross savings being achieved.

The Ugly: New higher pay means new, higher taxes. With both Mr. and Mrs. PirateCents being professionals and no side business expenses to speak of, both of us set our withholding to single and zero and as often as not owe money at tax time.

The good, the bad and the ugly of Mrs. PirateCents paycheck:

The Good: She got paid! Woot.

The Bad: Taxes have been ravaging her paycheck for the last several months and it’s always painful to watch. Especially since she does have a Roth 401(k) option and maxes it out. Uncle Sam loves my wife.

The Ugly: I did not take into account two things on my wife’s paycheck:

  1. Her company ‘strongly encourages’ her employees to donate to the United Way. When I say “strongly encourages,” it’s a lot better than her last company where it was a factor in her performance review if she donated less than a couple percentage points of her gross income, but it’s still perceived as the ‘should do,’ by the company and it’s still a few percent of her income I did not calculate as coming out of her paycheck.
  2. Her company’s 401(k) provider does not offer fractional contribution amounts, only whole percentages. (clearly they can’t handle 3 significant figures with their powerful computers, despite managing $1.7 trillion dollars. (yes, that’s $1,700,000,000,000 and can’t handle half a percent contribution amounts). Anyway, so my wife was required to round up to the next whole percentage point, which brought the total amount I was off on her paycheck up another 0.5%.

These oversights were further compounded by the fact that the percentages of her gross income withheld were in after tax dollars, so factoring in those taxes, it was even more that I didn’t anticipate missing. And while being off a few percent of your income should not be a really huge deal, that gross was extracted out of our Net, which after taxes, health insurance and 401(k) savings, is significantly less than ½ of our gross to begin with. So it felt like I’d missed by a lot more than it looks like on first blush.

So total hit:

We’re going to be short $151/month. I have a few options to make this up:

  1. We can make more money. It can’t be at our jobs because we’re both salary.
  2. Survive off our savings until we (hopefully) get some raises this year (I may not see one, but I expect Mrs. PirateCents will get at least a small raise) and then hope that money coming in is enough to close the gap. Hoping and praying will not close our gap in the next few months, however.
  3. I can save less toward our miscellaneous expenses like our Charitable donation and car maintenance, but I think this is a bad idea since I’ve already raided this money for a potential company stock purchase program and we’re committed to our charitable causes.
  4. We could get part time side jobs. I don’t see this likely working since we’re already putting in way too many hours at work and the gym and if we spend one second less with PirateCents Junior, I may have to quit my job in disgust.
  5. We could sell stuff around the house. Trick is, we have been living fairly frugally for the last few years and there’s very little accumulated ‘stuff,’ to sell. I have a few DVDs I could part with and there’s an end table we’re trying to sell (best offer so far has been $10), but no where near enough to make up the $151/month downfall. I was already sort of planning on doing this to raise money for fun things.
  6. We can cut budgets. This was my first instinct. The first step was easy: Mrs. PirateCents agreed that we should change our Gym contract from month to month to a 1 year contract for each to get the discount. We’ve been going now for six months (I had to take some time off because of surgery, but haven’t missed any time beyond that), so making the commitment for the next year was a pretty easy choice. Our goals are not short-term health improvement, but long term lifestyle improvement. This freed up $59/month! That brings our shortfall to a slightly more manageable $92/month.
    Cutting any of the other budgets is a work in progress and requires more and longer discussions with Mrs. PirateCents. We’re under contract with the cable company, so that’s not changing right now, and even when we finish the contract, Mrs. PirateCents is unconvinced we can do without it. The other budget line items could be an even bigger struggle.
  7. Monetize this website. I haven’t tried yet, and while I have thought about it, I’ve planned on it either becoming a source of ultra-risky investment capital or maybe the fun money I’m always desperately short on.

What would you do?

I don’t know what to do. What do you think we ought to do? How would you close a stubborn whole in your monthly family budget? The goals are to not allow my wife to get “budget fatigue” which invariably induces spending. It needs to be as painless as possible.


2 Responses to Budget Update January 17th, 2014

  1. Hey, Ragnar, is there room to cut your grocery budget? This has been the easiest area for us to improve upon, that, and eating out. We are now, after lots of work, feeding our family of six on less than $450 a month, and have cut our entertainment costs down to about $60-$75 a month. Is there room to cut there for you guys? Best of luck on the budget thing: you can do it!

    • Ragnar says:

      Laurie, we’re working on those right now. I’ve committed to allowing my wife to allocate being those two budgets each month to our vacation funds (since we currently have $0 for vacations and they’re really important to my wife). If I were to revise those budgets down before a vacation, I’d feel like a horse’s you-know-what for changing the conditions of our ‘deal’ because I estimated her take-home pay wrong.

      That said, we’ve been able to beat the grocery budget twice in the last three months. The entertainment budget last month got destroyed by babysitters since we had several company functions to attend. January is shaping up to be a lot quieter, so I think we’ll beat that budget too. That said, I am going to have to try and figure out some other place to find money.

      I’ve been following your blog, but I haven’t found how you’ve been able to do the feeding of the family of six on $450/month. That really blows my mind. That said, it costs a lot more to feed my family here than a few other places I’ve lived due to exceptionally high priced grocery stores selling low quality food, and the only competition are “whole-paycheck” and a ‘farmer’s market’ that’s as expensive as whole-paycheck. It’s something we’re working on figuring out how to better source our food, but we’re really struggling. Also, as I’ve said, our “house-hold/grocery” budget includes a lot of miscellaneous things (some of the expensive ones I know better than to ask about, like make-up and feminine products). It’s really frustrating though, since we don’t buy any junk food (no candy, no cakes, no cookies, no sweets of any kind, no ice cream, pop corn, no chips or pretzels, no carbonated beverages, no sweetened beverages, very little 100% juice [just for my toddler], no frozen meals, etc) like I grew up on and yet our food budget is miles and miles high. We don’t throw out hardly anything, do our best to buy in bulk and it’s just mind blowing how fast the money goes. I know some of it is going towards trying to eat better with things like grass-fed only, no-steroids beef, but we don’t eat beef very often (who can afford it?). It may have to be a post all on its own where I try and take apart a few months of grocery bills and see if I can’t try and find some kind of waste.

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