My Plan to Save $140,000 in 12 Months

For the last two and a half years my wife and I have been fighting an important case in family court. While I won’t discuss the details of the case, I can say it has been a very long battle that has drained us emotionally and was very taxing financially. But after a long journey I’m pleased to report that, at least for now, we have won!

I’m mostly excited about what this means for my family. As an added benefit, it also means ending thousands of dollars each month in attorney bills, which provides much more stability for our family cash flow going forward, something that has been lacking lately for us.

Due to this, I’ve reworked our family budget to reflect our new focus of getting out of debt and investing in the future. If we’re able to follow this budget, we will add roughly $11,608/month, or nearly $140,000/year towards our net worth without factoring in any stock or housing market changes. That’s pretty incredible and is realistic, absent some other major unforeseen expenses. In addition to my income listed below, I expect that my business side hustle will continue to thrive, producing additional income, which I plan to reinvest into the business or use to offset unforeseen expenses.

Budget Overview:

  • $3,613: Home
  • $1,200: Discretionary Expenses
  • $1,000: College Savings
  • $1,000: Groceries
  • $820: Student Loans
  • $600: Child
  • $500: Transportation
  • $465: Utilities
  • $200: Health and Fitness
  • $200: Pets
  • $200: Shopping
  • $200: Gifts
  • $117: Life Insurance
  • $67: Credit Card Fees

Home: $3,613

We refinanced into a 15-year mortgage a few years ago, both to lower our rate and to cash-out equity to pay for attorneys. We debated extensively about a 15 v. 30 year option. I know many personal finance personalities argue you should get a 30 year mortgage, but then pay more each month if you want to accelerate the loan paydown. I generally disagree with this approach. I think you should either take the interest savings that a 15-year mortgage offers, or pay the minimum on a 30-year loan to leverage inflation eroding the purchasing power of your mortgage balance. Regardless, by selecting a 15-year note our mortgage payment is a little larger than I would prefer at $2,813, including escrow. Additionally we also have a $620/month condo association fee too, along with $139 in electric and $41 in gas each month.

Discretionary Budget: $1,200

For years I struggled to get my spouse to feel comfortable about how strict I am with budgeting. My efforts to closely control our family finances made her feel like she couldn’t spend money without my express approval, which is never a good thing in a marriage with shared finances. After a lot of back and forth, we decided the best way to make her feel free to spend a reasonable amount each month was by establishing her own budget line. We’ve done this for a few years now and it’s really helped avoid conflict and make her more comfortable (at least I think?). To make things fair, I get the same amount each month as my wife, and so too does the family for family activities.

So this $1,200 discretionary budget is actually a $400 budget for my spouse, $400 for me, and $400 for the family. Any money left over in my spouse’s budget is rolled over into a savings account for her future use.

While I don’t love spending $1,200 on discretionary items each month, I’ve found that this is the level of spending that is realistic for our family. If we were hurting financially, we could easily bring this down to a more reasonable level, but we have very solid incomes, so for now this is fine with me.

College Savings: $1,000

Despite this blog’s name, we do have a child living in our home, our 16 year old niece, who has become like a daughter to us. We have committed to providing her with at least $60,000 for college, so this is regular savings allocation to accomplish this goal. We used to put this money in a 529 plan, but we’ve maxed out the tax benefits for this account, so now this money goes into a taxable account for now.

Student Loan: $820

I graduated law school with about $120,000 in debt. Crazy right? Really only $80,000 was from law school, plus we took out some other loans to fund other investment activities. I’ve written extensively about this if you’re interested. I graduated law school in 2018 and so far I’ve managed to pay of all but $32,000 of my student loans. After refinancing, the remaining balance is less than .5% APR in interest, so I’m in no rush to pay off this loan early. Plus if President Biden forgives any student loans, I would hate to miss out (although personally, I oppose non-targeted student loan forgiveness).

Child: $600

Our 16 year old gets a monthly allowance of $220. She is required to pay for all her own discretionary expenses, including clothing, sports gear, food with friends, entertainment, etc. This money is designed to give her the opportunity to balance spending and saving, while her mistakes will still be modest. For the moment she has heavily favored savings, resulting in nearly $3,000 saved in her bank account. She also gets $60/month because she decided to keep her old cell phone in exchange for taking the cash we would have used to buy her an upgraded phone. She also sees a counselor twice a month that costs $160/session, which is included in this budget.

Transportation: $500

We own two paid off older vehicles. As a result, this category isn’t very large, with half going into a separate account for insurance/maintenance, and the other half going to gas, metro transit, parking, tolls, etc.

Utilities: $465

This category is admittedly is fairly bloated. We have Verizon wireless (my spouse was adamant about using Verizon specifically) which costs a premium, and fiber internet, which of course isn’t cheap either. We also have regular cable TV (spouse’s request) and a broad array of video streaming subscriptions (Disney, HBO, Hulu, Netflix, etc.). If we had any issues with income, cutting back on these services would easily save us $200+/month.

Pets: $200

Pretty straight forward. We have two dogs and a cat. All three are on pet insurance plans that cover day-to-day care. Combine with food costs and it’s around $200/month.

Shopping: $200

This is for family expenses that doesn’t fall into discretionary categories. Think paper towels, toilet paper, detergent, etc.

Gifts: $200

We give $40/month to a few children that aren’t our own to help them with college or whatever they choose to pursue once they are older. We started doing this years ago because we live across the country, so we don’t get invited to their birthday parties or other special events. This was our way to help make up for what we would have normally given and maybe a bit more. We have been doing this since they were born, so their accounts are up to several thousand dollars each!

Life Insurance: $117

Get term life insurance if others rely on you, financially speaking. Period. It’s cheap and will give you peace of mind.

Credit Card Fees: $67

I subscribe to many credit cards that provide perks that I believe are worth more than the yearly cost. For example, I recently signed up for the Delta and American Airline credit cards. Both give me a massive sign-up bonus (covers like 10 years of fees), free bags on future flights ($60 round trip), and the Delta card gives me a free “buddy pass” each year. This approach isn’t for everyone, but if you’re interested in learning more, check out this article.

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