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Be the expert: How should this guy manage his monthly expenses?

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Here’s a recent email from IWT reader Richard A.

How would you answer his question?

“I have no idea why I’m writing this but you seem like the only person that would even care and/or be eligible to say I told you so.

I live a pretty normal life. House, car, girlfriend, occasionally going out. I max out my 401k at work and put enough away each month to hit my Roth IRA yearly limits. I put away money for an emergency fund, vacation and gifts (bday, xmas, etc). Other than that I don’t wear fancy clothes or drive a fancy car or do/own anything I’d consider “rich people” things. I make a good wage so I’m not the kind of person to sit down and look at numbers very often, set it and forget it right?

And yet I spend $140 over my monthly income each month on just basic expenses, savings and retirement! WTF?! I MAKE $90 fucking thousand a year (pretax of course). How am I spending more than that a month? I just don’t understand. My lifestyle hasn’t changed from when I was making $50k/year.

It’s really just shocking and eye opening and I’m sitting here dumbfounded. Thought you might enjoy. And for shits and giggles here is my list of monthly expenses.

car payment – 300
mortgage – 1400
car ins – 260
water/elec/gas – 230
misc expenses (netflix, gf cell etc) – 70
gf bills – 600 (car, ins, medical, etc)

roth ira – 400
emergency fund – 500

vacation – 240
gifts – 80
spending cash – 400

mind blowing. mind blowing.”

Be the expert: What would you tell Richard? BE SPECIFIC and consider not just the numbers, but the psychology of spending.

Leave a comment below.

 

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485 Comments on "Be the expert: How should this guy manage his monthly expenses?"

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Samantha
Samantha
4 years 4 months ago

While the car insurance looks a little high – and I would consider shopping for a better deal and/or negotiating a lower rate immediately – the big red flag is $600 a month for the girlfriend’s bills.

Why are you paying any of anyone else’s bills if you aren’t able to stay within your budget?

Caroline F. Lee
Caroline F. Lee
4 years 4 months ago

I agree. You are not married – this is what married people do b/c there is a contract in place. With a girlfriend there is no contract and no obligation. She should pay her own way or tie the knot.

Shaquita
Shaquita
4 years 4 months ago
The red flag for me was also the girlfriends bills. Until they get married I would not consider that a shared expense. Why isn’t she working? How much of her bills does she pay herself? As an unmarried female, I wouldn’t expect my boyfriend to pay my bills. I make $50,000/year right now with my part-time security and I take care of myself. That $600 would be better used so that he can build up his emergency fund, add to his travel account, pay his mortgage off early, or have extra spending money. If he doesn’t want to make his… Read more »
David Hunter
4 years 4 months ago

Samantha hit the target!!

Lose the bloodsucking girlfriend, Richard.

Debora
Debora
4 years 4 months ago

I actually know a couple that have been together for over 30 years and do not plan to get married, ever. They are very committed to one another. Some people don’t care about official things like that.
Also, I don’t see why it’s suddenly completely okay for Richard A to pay his girlfriends bills if she was his wife.
Maybe she’s between jobs, maybe she’s ill, maybe they’re focusing on having children, and maybe she’s lazy. No way to tell from this story.

Dee
Dee
4 years 4 months ago

Yes, why are you paying your gf’s bills? That makes me wonder what else you spend on her (gifts, eating out, going out) that you aren’t aware of.

Missing expenses: car gas, food, clothing, annual expenses (car registration), your cell.

eemusings
4 years 4 months ago

Samantha covered the big one: why the girlfriend bills?

Aside from that, I would suggest figuring out what’s most important to him, then going down line by line and working out what can be reduced or cut out.

Zeke
Zeke
4 years 4 months ago

Does this girlfriend live with you? Have to agree with Samantha. You help her get through school and she leaves you for a better model.

Brian
Brian
4 years 4 months ago

what i don’t get is that the expenses don’t line up with his income. It only totals $53k per year in expenses. If he’s making $90k in income pre tax, thats what, $60-$65k after tax? Probably more than that since he owns a house. He should easily have an extra $1000 per month. I would say he needs to figure out where than $1000 is going rather than arguing over $50 for insurance or paying his GF’s bills (which, while expensive, could easily give him more than $600 elsewhere could ever buy).

Andrew
Andrew
4 years 4 months ago

Other than all the GF notes here, I’d add to just knock down your emergency fund contribution. It’s an illusion that you have $500 available for this. This should be pretty obvious. No reason to stop saving or go on weak vacations as others have mentioned. This seems pretty easy to me.

Richard
4 years 4 months ago

Totally agree Brian. There’s a big hole in his pockets. I once learned if you don’t give money a place to go, it will find a place to go.

Rob
Rob
4 years 4 months ago

Bri: I’m with you. The numbers didn’t add up to me.

Minimally, he’s not including his tax refund as part of his income. I could imagine putting the whole thing towards next year’s Roth and decreasing the monthly Roth withholding, for example.

Kris
Kris
4 years 4 months ago
I wouldn’t assume he’s taking home more than that. My income is in the same range as his and after taxes, 401k, and group benefits such as health insurance, life insurance, disability insurance and the FSA account, I bring home just over 56% of my gross income. If he is making $90K, using the same ratio of 56%, that’s take home pay of $50,400. The cost of his benefits, etc. will vary but I think it’s likely that his net income is significantly less than $60-$65K after tax. If the number he gave of overspending $140/month is accurate, based on… Read more »
Brian
Brian
4 years 4 months ago

He said he is maxing out his 401k, which is $15,000 a year. That puts him a lot closer to your extra $1000 a month.

Lindsay
Lindsay
4 years 3 months ago

The extra money comes from the 401(k). If he’s make 90 pretax, let’s say 30 after tax…plus contributing $17K/YR to 401(k), that takes it down to $53.

Brian
Brian
4 years 4 months ago

As a follow up, if he’s contributing that $1000 to his 401K (which isn’t accounted for in his expenses) then he just needs to recognize that he is putting a significant amount towards savings/retirement (almost 30%). Depending on when he wants to retire, maybe he could back that down a little bit and have the extra money there.

liss
liss
4 years 4 months ago

Right. It’s the missing information that’s most important here. If only I’d read these previous couple comments my superfluous comment down at number, what 453?, wouldn’t have been needed.

Amanda
Amanda
4 years 4 months ago
First of all, why are you saving so much if you can’t afford it? You should probably try to not accumulate a debt by saving. If you’re paying for your girlfriend’s expenses, does that mean you’re paying all of the mortgage and energy bills too? How can you afford another person beyond your own expenses? Also, rather than socking away money for a $3000 vacation, maybe you could go on a cheaper vacation for $1200 instead? The vacation budget alone could fix your problem. If none of those work, I would suggest to try to cut down constant cost. Is… Read more »
Amanda
Amanda
4 years 4 months ago

Edit- I meant why save past what you can afford to.

Whitney Z
Whitney Z
4 years 4 months ago
Three things I see: 1. Assuming you don’t drop your car after your lease is up, your $300 a month car payment will disappear and you’ll no longer be spending more than you’re making. 2. Your lifestyle might be the same, but you’re also spending money on your girlfriend’s too, which can add up fast. She’s the most expensive thing after your mortgage and savings. 3. I think your main problem is that the more money you make, the more you think you can diversify your priorities. Little increases add up fast. So, for example, if your priorities are long… Read more »
Bess
Bess
4 years 4 months ago
Whitney, you make a fantastic point about priorities. It seems so basic when you say it, but I find myself doing that, too. In the past three years I’ve had two large jumps in salary (from pretty low to now reasonable) and each time I got stuck in the same thinking. I wanted to throw it all at retirement + student loans + vacations + liquid savings…you get the idea. Sometimes you have to pick one or two priorities and be patient about the rest. As long as you’re building toward a goal or two, you’re making progress, not staying… Read more »
Jeff
Jeff
4 years 4 months ago
Richard, The most glaring problems that can be highlighted from your email are the Girlfriend tax, Emergency fund and 401K. If you don’t have a handle on your own finances don’t take on other peoples. When you say you are paying other peoples bills you basically tell me that you are fine with people living above their means and there is always a solution. I’m guessing that you are from 25 to 40 and I will also assume you are healthy. There for you should be focusing on paying off your debt rather than “saving” in an emergency fund and… Read more »
Andrew
Andrew
4 years 4 months ago

Disagree with this one. Compounded savings is the single biggest advantage a young investor has. Mortgage rates now are very low. Keep your 401k.

Funancials
4 years 4 months ago

Disagree as well. Assuming his mortgage is less than 5%, it’s hardly a priority – that’s cheap money!

William Lipira
William Lipira
4 years 4 months ago
While I agree that he has not listed a few things, having an emergency fund is vital. Of course, once you reach your goal number, then stop paying into it (unless you are replenishing it). Not contribute to your 401k? Really? You are wrong in this, very wrong. Your idea about the mortgage is also wrong. Whether one rents or pays a mortgage, there will always be this expenditure (for the most part), so this isn’t a “debt” one should worry about paying off, post haste. Also, you get to use your mortgage for tax purposes (I don’t know the… Read more »
Jeff
Jeff
4 years 4 months ago

My opinions are based on Australia mortgages and tax.

I should have read up on Mortgage rates what the difference between a 401k and Superannuation (Australian) but I was lazy.

Chris Montone
4 years 4 months ago
The two major things that stand out to me “occasionally going out” and “My lifestyle hasn’t changed from when…” The first one, I used to think I didn’t go out that much but once I started tracking my expenses using a tool like mint, I was shocked at how much I was spending eating out or having drinks, etc. I think if you really tracked all your transactions for one month you’d be surprised on how much you really spent. The second one is obviously not true, it must have changed, to be blunt your in denial of where your… Read more »
Jocelyn
Jocelyn
4 years 4 months ago

I completely agree. Take a couple months to track your spending- this in itself reduces consumption. You can’t cut costs and optimize spending when you don’t know how much you’re spending where.

Andrea Graham
Andrea Graham
4 years 4 months ago
I think you hit the nail on the head for this one, Chris. While we have lots people mentioning the girlfriend as a budget-buster, I would also be more inclined to say that perhaps he isn’t as cognizant of his spending habits as he thinks he is. I don’t think the point here was to point out that this guy spends $600/month helping his girlfriend out, that is much to obvious. I think this is more about the fact that this guy’s mind is blown as to where all of his money is going without ever really analyzing or admitting… Read more »
William Lipira
William Lipira
4 years 4 months ago

He is living it up. Making a boatload of money, and treating his girlfriend lavishly. Notice that they are not married, so hot-shot spending goes up. Trust me, if they were married, it would be a whole other ball game.

Robin
Robin
4 years 4 months ago

Yep, I immediately wonder about anything called “miscellaneous” or “spending cash”. And I wonder how much he (and she) spend each month eating out.

Ira Kinro
Ira Kinro
4 years 4 months ago
The psychology of car ownership can be overwhelming. Are you an adult if you don’t own a car? Can you be taken seriously if you ride a bicycle? 🙂 My perspective shifted from “I drive a car, so I’m self-sufficient and powerful” to “I ride a bicycle so I’m cost effective in terms of time and money, and I’m making myself healthier at the same time.” And by the way, I feel a lot more self-sufficient because I don’t pay for gas, mechanic, etc. And, I feel a lot more powerful knowing that I hauled my own ass to get… Read more »
Dave Stewart
4 years 4 months ago

That’s Wack, Ira! Is the girlfriend supposed to ride on his handlebars to go out to dinner????

Bicycling is great for exercise or SOME routine trips, but not having a car puts a SEVERE kink in one’s lifestyle.

The Auto insurance, though, is a BIG red flag. $260 a month??? He must drive like a madman!!! Maybe, on second thought, he SHOULDN’T have a car!

cbereal
4 years 4 months ago
So if car insurance is $260/month, what did he do to earn that cost? There’s more details than what we know! I am getting he feels victim to his money and what I am seeing is lack of accountability to know where every penny is being spent and to have a plan. He knows he needs to have retirement, emergency and of course a girlfriend is important and…. if we let life happen, it does! and it did for me! and we become victim to it. If we have a plan of where we are going, what we want to… Read more »
Jake
Jake
4 years 4 months ago

I’m all for dropping the car and biking (or walking/public transit). If you live in a small town or a city, it doesn’t need to affect your lifestyle at all (gf can have her own bike!) Rural/suburb, maybe a different story. But many/most people (probably this guy) just will not ever consider it, which is a shame.

I’m wondering what the $400 cash goes to. Also, based purely on my own experience, $230 for water+gas+electric seems steep–last time I paid utilities (admittedly in an apartment, not a house).

William Lipira
William Lipira
4 years 4 months ago

Interesting Ira. You must live in an area where everything is right there, like a big city. Just because someone owns a car, doesn’t mean what you think it does. The way you put it means that you are ignorant. Now, if someone decied to get a mercedes on a kia budget, then ok, you would have a valid point, to an extent. Your bruhaha bs talk doesn’t mean you’re cool, either.

Chris
Chris
4 years 4 months ago
My two cents: 1) I noticed that expenses for girlfriend are mentioned but not income. If they’re to the point of combining finances, I’m assuming she’s unemployed and he’s helping her out. I’m not pointing this out as a source for a point of advice, but to commend him. (Without more info, I’m hesitant to make assumptions about her, let alone negative ones) 2) Assuming he’s right about his lifestyle not changing despite an 80% increase in income, either his increase in spending increased gradually (to the point he wouldn’t notice), his saving for goals/retirement increased (because he realized he… Read more »
Tom
Tom
4 years 4 months ago
I agree with Chris the most. Hopefully, your gf’s income is part of the $90k. Your car insurance seems high, but I live in the Chicago burbs, my brother lives in San Fran and insurance on his crappier car is three times mine. Great job on the saving for retirement, I bet you were not putting that much away when you made $50k. I’m in a similar boat, making just shy of $87k. Each month, bills and groceries whittle it down to nothing. I have a stay home wife and two kids. My goal is to end as much debt… Read more »
Jason
Jason
4 years 4 months ago
Dude, first, congratulate yourself for socking money away for retirement in both your 401k and Roth AND for funding your emergency fund. You’re way ahead of a lot of people right there. Where is you’re money for food/groceries? Is that under Spending Cash? Gifts should include the GF’s bills (and her cell, which is listed under Misc) and so should really be around $700/month. Are you (Richard A) comfortable with $700/month being Gifts? I know Ramit likes to focus on Earning More vs Spending Less, but you should really try tracking your spending for one month just to make absolutely… Read more »
Reggie
Reggie
4 years 4 months ago
1. 90k a year amounts to $7500 a month. The total monthly expenses provided amount to $4480. So, it seems like he is receiving only 60% of his income (4480/7500 * 100). So, 40% of his income is spent on taxes and 401 K. 2. Next, the fixed expenses (everything excluding vacation, gift, spending cash, and emergency funds) amounts to $3260. That is ~43% of his pre-tax income. 3. Taking into account, 1 & 2, he seems to be spending a staggering 83% of his pre-tax income on monthly. This leaves only 16% of his money for savings and spending,… Read more »
Doug
Doug
4 years 4 months ago
I’d start by looking at the house payment, because it’s the biggest. The highest-payoff change there is to consider refinancing. If you didn’t get a mortgage or refinance recently, you can propably reduce your interest rate. Yes, you will have to spend several weekends or evenings fussing with online calculators and pricing loans, but the savings will stay with you as long as you own this home, and potentially amount to hundreds per month. Of course, be smart about it and stick to plain-vanilla fixed-rate products unless you have special circumstances. Next biggest component of that house payment is insurance.… Read more »
Tom
Tom
4 years 4 months ago

You can analyze trends from a single data point. 3% variation from your spending plan is pretty dam good. Not sure how your emergency fund is set up but I’d let it build up in your everyday account as a buffer to smoorh out the monthly variations.
Other than that, revisit it in a few months to establish whether it is trend or one off.

Josh
Josh
4 years 4 months ago
Richard, First of all, congratulations on your awareness of the problem and your attitude of seeking assistance to help you with your dilemma. Personal finance is a difficult area and one that takes time to master (and we all are ongoing students in this area). This list of expenses is a great start for someone who does not normally track their expenditure. Perhaps an idea would be to begin tracking everything you spend for the next 30 days either in a notebook or an iPhone. This is difficult but will give you a good indication as to the accuracy of… Read more »
Rich
Rich
4 years 4 months ago
I’m going to throw in with Josh on this one. This is one of the many areas in life where speaking with specificity and unadulterated truth helps, both with yourself and significant other. My wife and I had modest incomes when we were first married (and she was still in grad school). In just a few years that quickly grew 2x then 3x. While we felt our lifestyles were relatively stable, it in fact was growing, particularly factoring debt we took on with houses and cars. When we got serious about tracking every penny (maybe overkill, but it provided a… Read more »
Patrick
Patrick
4 years 4 months ago

My man, the money goes somewhere. My big question for you is what kind of neighborhood do you live in- specifically, how much do people make? In my area of the country 90,000 is roughly a median salary- so it would be no surprise you’re just scraping by on that if you lived here and led a normal lifestyle. Remember, most normal people are just scraping by with maybe a few months emergency fund, if that- so if you’re living a normal lifestyle on a normal salary, you’re probably just scraping by- its normal!

uclalien
uclalien
4 years 4 months ago
It doesn’t matter how much other people make. This is the kind of “keeping up with the Joneses” mentality that gets people into financial trouble to begin with. He makes $90,000 per year. He needs to make his expenses fit within the confines of his income. Period. Generally, areas with high median incomes also have fairly high home values. A $1,400/month mortgage means his home is probably valued a little higher than the average US home, but his income is nearly triple the median US household income. Coincidentally, I live in a suburb of San Francisco where a $1,400/mortgage is… Read more »
asraidevin
4 years 4 months ago
There a piece of the puzzle missing. Where is your food budget? Entertainment? Are the numbers you give actual numbers from your several months worth of bank statments, or just guesses based on what you think you spend? If they are actual numbers, then you should be able to figure out what is going wrong. Where does it make most sense to cut back? Is the gf willing to help you cut back? If your numbers are guesses, then you need to look at your TRUE numbers month per month. Since you claim to be a set and forget it… Read more »
uclalien
uclalien
4 years 4 months ago
I don’t say this to mean, but you need a reality check. Stop lying to yourself and start tracking your income and expenditures. Anyone who provides such and incomplete list of expenditures obviously doesn’t have a clue where his money is really going. “My lifestyle hasn’t changed from when I was making $50k/year.” Are you sure? According to your (obviously incomplete) list of expenses, you were spending 107.5% of your pretax income when making $50,000/year. Accounting for taxes, this would imply that you were actually spending 134% of you after tax income (assuming a federal and state effective tax rate… Read more »
-Rob-
-Rob-
4 years 4 months ago
I’d be willing to bet you didn’t have “home+gf+new car” at 50K. Nearly all monthly bills and expenses are direct or hidden costs tied to those three things. I’m not gonna judge on the gf thing (many of us do the same, we’d just never track/admit it), but you obviously know you’re overextending, and perhaps even over-planning considering your circumstances (likely high interest rate on the car, for example). PS – About that $400 “spending cash”, if you know where that’s going, why would you not say? If you don’t know where it’s going, consider the possibility that you’re not… Read more »
Ky
Ky
4 years 4 months ago
It’s the 600+ you are spending on having a “gf”. Stop kidding yourself. If you are spending that much on her to keep her around, so that she can be doing whatever it is she is doing without earning money, you are a fool if you don’t marry her and have some sort of binding agreement. You are obviously being very kind to support her throughout a period of her life, but you cannot afford this expense and you have no reason to unless you are in a marriage, and you can reasonably expect it to be an equal and… Read more »
Jon
Jon
4 years 4 months ago
The “gf” expenses jumped out a me too. I’d suggest applying Ramit’s gym membership philosophy to the “gf.” Cancel the monthly subscription and just pay for day passes instead. If he only hangs out with her two to three days a week, that should take care of his $140/month shortfall. I have to disagree about him being a fool if he doesn’t marry her though. Marriage hasn’t been a “binding agreement” since about the 1970s when no fault divorce became popular. It’s much safer to financially support a girlfriend than a wife because he doesn’t run the risk of court… Read more »
William Lipira
William Lipira
4 years 4 months ago

As far as the car insurance goes, it’s pretty high here if you have either gaps in your insurance, tickets and other nasties on your record, or don’t shop around for the best deal. I could go on, but you get the gist.

Chris
Chris
4 years 4 months ago
These aren’t “real” numbers, they’re estimates, so he’s not automating, which means he’s losing money through unseen expenses. We can tell they aren’t real numbers because 1) the itemization misses items like “groceries,” “entertainment,” and “homeowner’s insurance,” which a line-by-line itemization would yield, and 2) the itemized expenses are WAY below his income. If he wants to get in control of his finances, he first needs to figure out what he’s spending. Mint.com is my favorite method. Once he has some valuable data, he can actually create a plan. But trying to come up with a plan based on faulty… Read more »
Joel
Joel
4 years 4 months ago

To me, it looks like the big hole is the “spending money” section. That basically shows that you have no idea where it’s going, and aren’t tracking. If you’re anything like me, you’re basically leaving yourself open to buying whatever you want with “the rest” of your money, and that’s way too flimsy to base a budget around.

** Z **
** Z **
4 years 4 months ago
Relax. You’re doing fine. You’re “paying yourself first” — sucking money out of your cashflow into roth, 401k, and emergency fund before you can blow it is a great habit. Keep up the high savings rate so that you feel a little stretched — it keeps you from taking on more expenses. A big “emergency fund” or other cash savings will let you take advantage of future situations, or take certain risks that could have a big payoff. (E.g. I parted with a few thousand in cash to complete a *really* good refi on my mortgage that will save big… Read more »
diaphanous
diaphanous
4 years 4 months ago
The disconnect is, I think, here: ” WTF?! I MAKE $90 fucking thousand a year.” Somewhere in the back of your mind (or hell, even the forefront), you think this should buy you the ability to max out all your savings goals (401k, IRAs, emergency fund), live in a nice but not extravagant house, drive a nice but not extravagant car, take one or two nice but not extravagant vacations per year, and help out those you love without having to worry about your day to day expenses. The reality is it doesn’t. That you’re $140 in the red every… Read more »
MW
MW
4 years 4 months ago
Agree with Diaphanous. Why are so many responders saying to cut funding his retirement??? That is completely ridiculous to me when he has a healthy $240/month vacation fund. I also think you are the first one to really get into his psychology about making $90k now vs making $50k and what he SHOULD be able to afford at $90K. I agree with everyone though that these numbers feel like guesses and not like he went back through the last 6 months of spending to really see where it was all going. No need to track the next 2 months….I’d wager… Read more »
Streever
Streever
4 years 4 months ago

Richard,
move closer to work: take mass transit, a bike, walk, carpool. Sell one of the vehicles.

Owning 1 car/person is expensive, unnecessary, and wasteful. Ditch the addiction.

–Car-free 8 years and delighted

Megan H
Megan H
4 years 4 months ago

Why is he paying so much for his girlfriend’s bills? Cut that out and perhaps he would have a better handle on his finances.

Jaye
4 years 4 months ago

Haha, I’d say sell the house and rent instead of paying a mortgage for something most likely more than you need, and sell the car and buy one you can afford without a monthly payment.

Mun Keong
Mun Keong
4 years 4 months ago
a. Car Payment + Car insurance + Mortgage + Utilities = $2,190 or 50.46% of net income. Good – 50%+/- goes to “necessities”… er.. where’s the food / groceries? b. roth ira + emergency fund = $900 or 20.74% of net income Not bad – 20%+ savings on net income. Can be better c. vacation + gifts + Misc (netflix, gf cell etc) + GF bills (car, ins, medical, etc) = $990 or 22.81% of net income Generally a lot of “feel good” spending, especially GF’s bills which makes up 60.61% of this “feel good” spending. Assuming she’s “worth it”,… Read more »
Meg
Meg
4 years 4 months ago
Most importantly, I think you’re focusing on too many things at once and this is frustrating you. You’re saving for retirement in two different ways AND emergencies AND a vacation. If I were you, I’d calculate how much you want for an emergency fund vs. how much you have. Then stop saving for retirement and roll your vacation savings into your emergency fund. Given your current savings levels, I suspect you should have a fat emergency fund in six months or less if you put all your saving energies into it. Yes, this means you won’t max out your retirement… Read more »
Zoya
Zoya
4 years 4 months ago

Cut back on the emergency fund and negotiate for a 10K raise at work!

Scott
Scott
4 years 4 months ago

Your car insurance seems very high. I like to keep housing pretty low as well – 1400 seems high to me. Its nice to see you’re pumping a good amount into emergency and IRA each month. Personally I’d really focus on your Mortgage, Car Insurance, and GF Bills. You also might consider that you are saving a bit too much for vacations. Even if you take a vacation every 8 months – that’s nearly $2k.

Good luck

Chris
Chris
4 years 4 months ago

I’m curious to hear your thoughts on how he should “focus on” his mortgage. Without a full-on refi, moving (assuming he isn’t upside-down on it), or falling into money to pay it off, that seems like a pretty fixed cost. I’m pretty sure that’s not something that can be negotiated with a script.

fahad
fahad
4 years 4 months ago

600 bucks for your gf bills?? You got to be kidding me. You are loosing $7200/yr. That’s a pretty big number given your situation. Tell your little gf to get a job. Its your hard earned money and no one has the right to take it away from you.

Sarah
Sarah
4 years 4 months ago
Well, it looks like this is an incomplete list of expenses. I don’t see food on here. My guess is that it’s wrapped up in “Spending Cash” but $400 seems very low for that, especially if he is also taking care of his girlfriend, what a nice guy. My fiance and I spend $800/mth on food and we could spend a lot more if we ate out as much as we used to. Also, when I do my budget, I leave a heavy allowance for “leisure spending” – movies, concerts, etc. It could be that some of the one-time expenses… Read more »
Lisa Hugh
Lisa Hugh
4 years 4 months ago

Why are gf bills in one category and gf cell phone in another? Maybe there are more gf costs than he admits.

Juice Newton
4 years 4 months ago

You appear to be having a 140 dollar a month emergency an are failing to make appropriate use of your 500 dollar a month emergency fund. At some point your vacation and spending cash should be dropped by 70 each or you may eventually have an emergency.

Captain
Captain
4 years 4 months ago

Short and sweet. Dump your girlfriend:

Dylan
Dylan
4 years 4 months ago

Get a new girlfriend who can pay her own bills

Laura Collins
Laura Collins
4 years 4 months ago

Here is some good advice.

Sign up for Mint.com. I did it 8 months ago and it is amazing. It will track all of your monthly expenses, with interactive graphs. It is the best, free budget program out there. Before I used it, I had no idea where my money was going. Now, I can tell you how much I spend on every item, over time, how much I am saving, how much credit card, mortgage, debt I have, you can set savings goals, it tells you your net worth, it does everything.

Christine
Christine
4 years 4 months ago

Tell your girlfriend to get a job and start paying her own bills.

Ted
4 years 4 months ago

Find a side job and earn more money. Or use some of your savings to buy a car for cash to get rid of the $300/month.

Or negotiate a raise.

Or get a girlfriend that can pay her own way.

You car insurance is also high. Just get real low insurance. You have enough savings to cover a higher deductible. Unless you drive like a douch and hit people a lot.

But seriously, that much for the girlfriend? She must be frickin hot.

Liz
Liz
4 years 4 months ago

Unless your girlfriend is unemployed, temporarily down-and-out etc., why are you paying for her cell bill?

If you need to do this to keep her, something is (deeply) wrong.

Anna
Anna
4 years 4 months ago

Quit paying for the girlfriend! Duh!

Liz
4 years 4 months ago

Obviously you can’t afford to save $500 a month in emergency savings – guess you can really only afford to save $250 a month.

Bill C
Bill C
4 years 4 months ago

1 – Try and renegotiate on your car/home insurance (bundling can result in significant savings)
2 – Look for ways to reduce the stuff you are spending on your girlfriend, without messing with your lifestyle. One way is to get a rewards credit card to help pay for your vacations with your purchases.
3 – You can try the scrooge strategy of eating dinner at home and going out for appetizers.

Dave
Dave
4 years 4 months ago
A few observations; 1. What do you eat? There is neither groceries nor eating out listed in your budget. 2. Do you drive? Gasoline, maintenance and repair costs need to be budgeted. 3. What do you wear? Got to figure clothing into the budget. You are going to buy it, so you need to budget for it. You’ve got the recurring bills accounted for, but of the big four (Food, Clothing, Shelter, and Transportation) you only have shelter accounted for. Kudos for including to GF expenses, if that is where the money is going, you need to be accurate in… Read more »
Rob
Rob
4 years 4 months ago
From the statement that you are maxing out your work 401k you are probably putting in 30-40% of your income into that while also contributing to your Roth IRA. Maxing out your 401k is great, but it’s not great at the expense of your credit cards. To stay within your budget, consider pulling back your work 401k to something more reasonable, maybe 25%. Also, consider asking your girlfriend to get a part time job to help out with expenses. You are probably going to get married and have kids within the next couple of years. After pulling back on your… Read more »
Ian Rasmussen
Ian Rasmussen
4 years 4 months ago
Richard. Chill out. You’re over budget by $1,680 a year, with an annual salary of $90,000. This is not a big problem. (You’re over by less than 2%.) It sounds like your savings plan is very aggressive. That’s awesome, but if you can’t sleep at night, maybe you need to take it down a notch. You could also eat out less, and stop buying $4 lattes. But IMHO, you can’t save your way to wealth. Here’s an idea. Figure out how you can make an additional couple of hundred dollars a month. That’s less than a good waiter or bartender… Read more »
SarahB
SarahB
4 years 4 months ago

Maybe the *girlfriend* should be figuring out how to make an extra couple hundred a month—or cut back on *her* expenses.

Obviously, I have no idea what the situation here is (though it’s fun to speculate) but it does seem like the burden is disproportionately on Richard. Even if the GF is in school or doing an internship or whatever, picking up her bills is awfully generous.

Liz
Liz
4 years 4 months ago

(am the first liz) again the same info for the health insurance and other expenses for the gf. But, if a temporary set-back, that is a different story. But it sounds like this is “routine” not an anomaly.

Vira
Vira
4 years 4 months ago

I think it s good the way he is spending and saving his money. I wish I was making what he is making in line of work I do.

Jim
Jim
4 years 4 months ago
He’s spending over $7K a year on his girlfriend? Ditch her, she’s taking up 12% of his take home pay… (unless she’s studying to be a doctor and and will support him later on;-) Depending on where he lives, the mortgage and car insurance seem a little high…29% of his likely take-home pay for housing; consider downsizing. The IRA and especially the emergency fund are good…you never know when you’ll get laid off these days. Take cheaper vacations (e.g. stay close to home) The big thing missing from this accounting is the cost of med insurance and the bite taxes… Read more »
Anne
Anne
4 years 4 months ago
The girlfriend’s expenses NEED to go. When she’s your wife and officially part of the household, you can work together as a couple financially – not before. Also, depending on the car (how much you owe, how much it’s worth, etc.) maybe sell the car, buy a very inexpensive one, keep making your car payment TO YOURSELF, and THEN buy a better car (with the proceeds from selling the beater plus your new savings.) Also, total was $4,480 = $53760 annually (net.) I’m guessing this is after 401k, so combined with his Roth he’s actually doing a decent job saving.… Read more »
Peter
Peter
4 years 4 months ago
So here’s what I see…. -Car insurance looks a bit high especially if this is monthly. I pay around 600 per half year. That’s 100 a month. See if you can’t whittle that down -any reason your go can’t contribute more to her own bills? Her mortgage/rent is definitely taking a huge chunk. -I think your 401k or Roth is a bit high on deductions. You only want to really go a bit above the match. I socked 18% into mine for 2 years. They matched up to 4% lol. It’s all yur money but figure your ROTH or an… Read more »
Derek Epperson
Derek Epperson
4 years 4 months ago
Although I wouldn’t expect you to do it often – take about 30-60 minutes and detail your spending. Apparently you have a grasp on where it ‘generally’ goes, but detailing it once every few months will find those red flag areas. As for the GF – she must be smokin’ hot and a great emotional match, since you “spend extravagantly on the things you love.” But as Ramit points out, you have to cut mercilessly on the things you don’t – what are those things to you? Playing off of many of the other comments: (1) Start with your emergency… Read more »
Nathan
Nathan
4 years 4 months ago
I’m going to be blunt here and address something that nobody is dealing with head on. You stated to Ramit ““I have no idea why I’m writing this but you seem like the only person that would even care.” If this is actually true you need to dump your girlfriend because I’m pretty sure she’d like to know that you are overextended. You need to have a serious sit down conversation with her and tell her you two as a group are overspending by $140 a month. (I trust this the real number. Based on your list of expenses I… Read more »
Paris
Paris
4 years 4 months ago

I like Elizabeth Warren’s 50/20/30 principle on how to allocate your take-home pay (50%=must-haves, 20%=savings, 30%=wants).

in the budget listed, the expenses would categorize as follows:

must-haves: car payment, mortgage, car ins., utilities
savings: roth ira, emergency fund
wants: misc expenses, gf bills, spending cash

so, richard should first check out how much he is taking home each month (the 90k pre-tax means nothing), and then be sure to properly allocate the amounts as outlined above.

Laura
Laura
4 years 4 months ago

I’m betting if he took his credit cards out of his wallet and worked on a cash only system, he wouldn’t go over budget every month.

There’s a psychology behind plastic that makes you forget what you’re spending for which goods and services.

Other than that, he could try to negotiate lower bills on some things or take a few less vacations, but…switching to cash (after the automated payments have been made) should flip the switch.

Michael
Michael
4 years 4 months ago

gf bills? Is she working? Is she a dependent? Are you getting any sort of tax break??

Betsy
Betsy
4 years 4 months ago

I recommend reading Elizabeth Warren’s book All Your Worth. Her recommendation is 50% must haves, 20% savings, and 30% wants. It works.

David
David
4 years 4 months ago

I’d renegotiate like everyone’s said, then cut vacation and spending cash 10% per month

Joseph '06
Joseph '06
4 years 4 months ago

For some reason, he feels the need to pay gf bills/cell. My guess it to show that he can take care of her and that this will portray him a better boyfriend. However, until he breaks this track of thinking he will always be spending more than he makes.

Rob
4 years 4 months ago

How long-term is your relationship with her? You’re currently spending over $8000 a year on her. I’d recommend you commit (and combine your incomes) or drop her.

Also, your emergency fund is probably plenty big by now, but that’s up to your discretion.

Jeremy
Jeremy
4 years 4 months ago

Sign up for mint.com so you can see what you are really spending money on. It’s easy to spend more than you think you are especially when you start making more. if you make 40k plus more a year I guarantee you aren’t living just like you were when you were making 50k. Especially with the 140 dollar gap.

joe
joe
4 years 4 months ago

where’s the “food” bill? toiletries, paper towels, toilet paper, etc.??? is this in the “spending cash” area?

As everyone else has said. why the GF expenses?

$260/month car insurance (as stated before, shop around annually to reduce this).

as stated by others. the $$$ don’t add up with income and expenses.
is misc expenses covering clothes,

Gavin S.
Gavin S.
4 years 4 months ago

Dude. Stop paying your girlfriend’s bills. Immediately. Also, if you have an iPhone, try using the AceBudget app to track your expenses a little more closely. You might find that you’re spending more on miscellaneous things like “going out” than you think.

Tara M.
Tara M.
4 years 4 months ago
The first thing I’d do – even before judging him for paying his girlfriend’s bills – is help him understand exactly where his money is going right now. I’d suggest that he set up a Mint.com account – it takes 15 minutes or less to do and within a month he’ll know exactly where his money is going, and which expenses he’s not currently taking into account. Data doesn’t lie. Once he sees how everything adds up he can make conscious adjustments based on what his priorities are. As a side note, based on the math it’s not surprising that… Read more »
Tara M.
Tara M.
4 years 4 months ago

Here’s a Mint.com-like picture of his monthly expenses:

$4590 per month
minus $1730 HOUSING ($1400 mortgage + $230 utilities)
minus $530 CAR ($300 car payments + $230 car insurance; I’m going to assume this includes gas too)
minus $900 SAVINGS ($400 Roth IRA + $500 emergency fund)
minus $720 LIFESTYLE ($240 vacation + $80 gifts + $400 spending cash)
minus $600 GIRLFRIEND
minus $70 MISCELLANEOUS EXPENSES
= $110 left. And that doesn’t cover food, cell phone, etc.

Isaac
Isaac
4 years 4 months ago

This is an easy one.

Tell your girlfriend to get a job to pay for her own crap.

Mary P.
Mary P.
4 years 4 months ago

1.The numbers don’t add up. There is nothing there for taxes, his cell, credit card interest if he’s overspending, . There is obviously some spending that’s happening that he is not aware of. Step 1–write down EVERYTHING you spend money on for one month.
2.Why is he paying for his girlfriend?
3.Car insurance looks high. Is there a history of bad behavior accounting for that?
5.Psychological issue–I make $90K/year ergo, I’m rich. I can spend what I want and don’t have to account for it. Also, I am funding my retirement very well ergo I am building wealth.

Blake G
Blake G
4 years 4 months ago
Richard is only earning around $58,500 after tax. Which may not go as far as he’s thinking, so as a preface to this conversation, let’s get real here about how much we really have to work with. 1. The car payment isn’t huge so I’m assuming he could pay it off by using some of his savings (which may be a no-no for some but if he’s running over his budget anyway, knock it out with savings on hand.) 2. Cut the cord on the real estate – I’m a fan of income-producing real estate (I own a good portfolio… Read more »
Matt B.
Matt B.
4 years 4 months ago
I think it’s funny how he thinks his lifestyle hasn’t changed since he made nearly half of what he makes now. I think a quick, easy win would be to lower all car insurance payments, if at all possible. It seems high to me, but I admit that I don’t know what they drive, where they live, or anyone’s driving record. I wonder why he’s paying his girlfriend’s expenses, but, again, we don’t know circumstances here. I noticed there are medical expenses every month, so maybe she’s got medical problems? Negotiating those down would also be a quick and easy… Read more »
Laura
4 years 4 months ago

Simple: Pay off the car. No car payment completely rectifies the problem.

AskSteve
4 years 4 months ago
I love helping people figure out good ways to spend/save their money and still meet their goals. It sounds to me like Richard A. is in the same situation I was: Makes plenty of money, hardly spends any, isn’t “flashy”, but is still “poor”. There is a good amount of information in the request, but I still need a few more pieces of information. 1. Having an emergency fund is great. What is your goal and when will you reach that goal so you can get that $500/back? Treat your EMF as a debt and pay it off just like… Read more »
tyler
tyler
4 years 4 months ago

WTF 260 dollars on a 300 dollar a month car for insurance? HOW? cancel that crap, problem solved. Find a better insurance company.

kb
4 years 4 months ago
For one, those numbers are pulled out of his butt. Instead of saying OH WOE IS ME WHERE IS IT ALL GOING, do some actual inventory. Recently got a large increase in income but you seem to still have the same money problem? It’s what I call the goldfish syndrome. A goldfish will stay tiny in a small bowl, but drop that same goldfish in a 100 gallon tank and suddenly that sucker will grow to fit it’s new bowl. Same thing happened to me when I doubled my income in one year by switching careers — same mortgage, same… Read more »
Gina Colon
Gina Colon
4 years 4 months ago

GF expenses have to go. Let her pay for her own car insurance and stuff. The car insurance is too much, I would shop around and see if you can get a better deal.

Tom Sexton
Tom Sexton
4 years 4 months ago

$600 for gf bills? I know a lot of people have harped on this in the comments but allow me to reiterate…find a new squeeze, you putz! If it was your wife, I’d cut some more slack, but The fact is, unless she’s disabled; inbetween jobs (and actually looking for employment); or her name is Adriana Lima, cut your losses.

Jose Massas
Jose Massas
4 years 4 months ago

Tell your gf to get a job to pay her bills. In todays society the women also work! I would probably pay a partial part of her bill not all of it.

Ujjwal Trivedi
4 years 4 months ago
Look to earn 1k more per month with #Earn1k. 🙂 It’s a peculiar problem similar to as stated in Murphy’s Law – “Work expands to fill up the time available”… and “Junk expands to fill up the space available.” When you say my life style hasn’t changed – I doubt it. Because I’ve been through it. When I earned 30k my mobile bills were 1k, i went for cheaper plans and cared about internet usage, never looked at expensive restaurants, branded clothes. Now when i earn 90k i don’t care about plans, buy branded clothes(though i shop once in a… Read more »
L Marie Joseph
4 years 4 months ago

Hmmm the more you make the more taxes you pay. You may want to adjust your withholding

Andrew
Andrew
4 years 4 months ago

Richard,

Unless you have cash in the bank, the only way you can spend more than you bring in is if you are using credit. Suggest you limit your spending my putting in a highly visibly hard limit — even if it’s $0. Use your debit card and turn on low balance notifications or carry cash. It doesn’t matter WHAT you spend your money on. Give the spending process visibility and hard limits; everything else will fall into place because you will naturally identify the non-value spending.

Adam
Adam
4 years 4 months ago
Others have mentioned it, but besides the whole gf expense thing, I think the big issue here is not actually knowing where every dollar is being spent. Small expenses can rack up really fast. After spending $400 one month on going out to dinner at restaurants my wife and I decided to stop eating out as much. But the next month we were in the same spot financially. But when I looked at our spending, I saw something odd. Yes, we stopped going out to sit down restaurants but spent WAY more on fast food, snacks at the grocery store,… Read more »
Ujjwal Trivedi
4 years 4 months ago

People GF expenses are a choice…. what if it were Wife expenses or Family expenses???? Would you still hammer him for that. It’s just a prejudice that you should get off your heads.

Katie
Katie
4 years 4 months ago
First off, I don’t think that this is shocking or that the original poster should feel at all badly. I think, for a lot of us, it’s really easy to go over our income, especially when we are saving large amounts (it sounds like the original poster is saving almost 30% of his pre-tax income, which is a lot). The first thing I would consider is not maxing out the 401K. Is Richard getting a full match for every dollar he contributes? If not, I would drop the amount down to the full match amount. I don’t know Richard’s personal… Read more »
Johnathan
Johnathan
4 years 4 months ago
Since I really don’t know Richard and would have to ask more questions before throwing out certain opinions about his mortgage, getting rid of his car, girlfriend, etc. Richard, you’re estimating your expenses. Signup for Mint and spend sometime categorizing things. It’ll help you get a true understanding of where it’s all going. Too bad you weren’t doing this back in your 50K days because then you’d have to be honest with your expenses. Once you have the tracking automation in place, see if there are areas you can push to save in. Negotiate with mortgage companies, insurance, etc. Hell… Read more »
Dids
Dids
4 years 4 months ago

If you can invest more than 600 bucks in your gf – you can invest a couple more bucks in Ramits’ stuff. Eventually you don’t need to shoot yourself.

Only half kidding.

Maureen
Maureen
4 years 4 months ago
The numbers add up exactly right if he is maxing out his 401k to be $1400 a month in contributions, and taking taxes into account. To me, this seems like a lot of ‘infrastructure’ (house, utilities, insurance) etc to take on as a single guy. Along with the gf expenses. He should consider if his home ownership and support of gf would be his choice if he were to get a redo today. Maybe a smaller house or townhouse? He probably drifted into the increasing expenses without considering them as choices. However, he is to be commended!!! for his very… Read more »
Grant
Grant
4 years 4 months ago
The Good News: You’re “only” $140 a month over budget. The Bad News: As has been pointed out in previous comments, your listed monthly expenditures, when calculated over the course of a year, only add up to $50,640. Even if you’re paying 35% income tax on the entirety of your income – which you aren’t – you should have an after tax income of $58,500, which would be an approximately $8000 surplus – or around $650 extra each month. First, you need to find out where that extra $800 or more is going. Second, again, you’re only $140 over. The… Read more »
Audrey
Audrey
4 years 4 months ago
He can switch to a regular IRA, one that would be tax deferred and save quite a bit of his over-budget right there. What does eat out occasionally mean? If he is committed to his girlfriend enough to help her with her expenses they should both also be eating in more. Vacation fund can be managed differently and go on $2000 vacations instead of $3000. If he is in a situation where he can drop the car, he should do so. You can save so much by renting a car instead for special trips when needed.
Adnan
Adnan
4 years 4 months ago
I think the problem is mostly what you don’t see here, which are incidentals. I was in the same boat last year wondering where all my money was going. I made more money than ever before, bills I figured were the same, and yet I was in the red more often than not. These were the things I wasn’t considering… 1) never underestimate the cost of the morning coffee and bagel. It adds up very quickly. 2) the debit card is a hole in your pocket. Its quick and easy so pulling out for a quick lunch (nothing is cheap… Read more »
Sara
Sara
4 years 4 months ago

Real problem is his assumptions. He says he’s spending on the basics, his spending hasn’t changed much since he made $50k/year. This is obviously not true if he’s making $90k now and is $140 short every month. He thinks he knows where his money is going, but doesn’t really. Needs to do some conscious spending, and an analysis of where he can make some small wins.
So 1950’s of everyone to blame a woman for a man’s problem.

Eric
Eric
4 years 4 months ago

Dump the gf.

Rachel B
Rachel B
4 years 4 months ago

WHY is he paying his gf’s bills??? $600 in bills that aren’t even his? Wow. IF YOU’RE WORRIED ABOUT GOING $140 OVER YOUR BUDGET, QUIT PAYING FOR ALL YOUR GF’S SH**!

Ben
Ben
4 years 4 months ago
I try hard to remember the idea of spending on what matters to you and cutting mercilessly on what doesn’t. Otherwise, it’s terribly easy to judge. Bearing that in mind: 1. Look at all of your expenses to get a solid picture. I recommend a tool like Mint.com or something to pull it all together and provide an easy reference to figure out what’s happening. You might be spending a lot of money in small transactions that don’t really matter to you, in which case getting back in order could be easy. It may all be in the unlisted food… Read more »
Alison
4 years 4 months ago
I’m not sure I agree that he’s overspending. I mean, the guy is maxing out both of his retirement accounts, right? 401(k), which is what, $15,000 a year? And his ROTH IRA, which is what, $5000 a year? So $20,000 of his $90,000 is going towards retirement. Plus, he’s putting $6000 in an emergency fund, PLUS he’s setting aside cash for vacations, gifts and spending, totaling $320 in savings for gifts and vacations ($3840/yr), $400 for spending during the month. While I can see where he is freaking out over the fact that he has allocated $140 MORE than per… Read more »
Mike Graf
Mike Graf
4 years 4 months ago

Personally I’m not gonna hate on you for spending 600 on your GF. she’s probably the most important thing on that list.. people are more important than stuff. Of course she could pay for herself, but if you like to spend on her (eg, its what you like to do then do it.)

TD
TD
4 years 4 months ago
The best way to figure out “where did all my money go” is to track expenses for a few months or even just 2 months and analyze the non-fixed expenditure categories. I don’t understand why so many commenters here latched on to his paying a few bills for his girl friend!! That expenditure is not the reason he has no clue where his money has gone! After he figures out the biggest offenders this category could be debated as whether it is a wise choice or not. Until then pointing to that category is premature. Going out sometimes can often… Read more »
mark
mark
4 years 4 months ago
Being that all the figures are rounded to the even dollar amount, half the expenses are missing and the money coming in doesn’t match the money going out I’d have to say all the figures were mentally calculated and the OP has no realclue of any of the true expenses other than the 401(k) and IRA are maxed. Kudos on the paying yourself first but as was already suggested…use a tracking program like Mint. I believe the OP’s jaw will drop when he finds where his money is truly going. When trying to figure out a problem the words “don’t,… Read more »
TH
TH
4 years 4 months ago
Just another “I’m entitled”, selfish, whinny American. I hear it in the email, “I’ve maxed out my retirement stuff, I’m so cool. I have a house! I’m so cool. I don’t wear fancy clothes or drive a fancy car or do/own anything I’d consider “rich people” things. I’m so cool. I have a big emergency fund! I’m so cool” Well, not really. Based on what you’ve told us you said and done these things to justify how you want to ‘play’. In themselves there’s nothing wrong with what you’ve done with the items listed above. They look good right? Congrats!… Read more »
James
James
4 years 4 months ago
Car insurance is high. He should be able to cut it in half. He should utilize his Roth Payment to his car loan if his loan is above 6% (I view 6% as a good return.) Get his GF to work or dump her. (I hate free loaders.) Most of all he seems like he is paying too much in taxes. How can you be making 90K and only have 54K after taxes. Thats over the top tax rate bracket. Someone isn’t budgeting well. I would tell him to make more but he is making a good amount if 90k… Read more »
Christian K.N.
4 years 4 months ago
I can identify with “My lifestyle hasn’t changed from when I was making $50k/year.” Lifestyle is not the same as expenses. You can increase the size of the lifestyle, without changing it in any meaningful way: a bigger car and house, bigger utility bills, bigger lunches and guilty pleasures. Etc. It adds up, without adding anything of real value. More important for this situation, however, Richard seems to be asking Ramit’s permission to tell his girlfriend off. (Her footprints are just a bit too all over the mail and numbers, yet unexplained.) Maybe he’s even hoping for one of Ramit’s… Read more »
Cl
Cl
4 years 4 months ago
I agree with the majority Of the other posters. You spend a ton on your girlfriend. Unless she’s your fiancée or you are seriously considering proposing, don’t pay for her insurance or other expenses. You also are saving 500 in your e fund while going 140 in the red. It makes no sense to do that. Build that fund more slowly and match your inflow to your outflow. Several other commenters have said that your list of expenses is incomplete, since there’s a disparity between what you earn and what you say you spend. If your income and expenses were… Read more »
Joe Fig
Joe Fig
4 years 4 months ago

Investing in your personal finacial education will allow you to work this and other concerns on a long term basis.

Jay S
4 years 4 months ago

Trade the $600/month in girlfriend expenses for $460 a month in cheap hookers instead and you’ll be golden. This will probably free up alot more longer term savings you are not factoring in, such as engagement ring, wedding, psychiatric counseling, marriage counseling, divorce lawyers, divorce settlements, and overall level of well-being and happiness.

Andrew
Andrew
4 years 4 months ago

There’s a $3000/month difference between your pretax amount and your estimates.
Use Mint to itemize your transactions. Track every penny for 2 months. It helps if you use a credit card as much as possible so that you can track the receipts. Cash just disappears.
Stop saving for retirement! Set an exact number for your emergency fund (3 months or 6 months of basic living) and hit it. Then go back to the retirement plan.

Ben
Ben
4 years 4 months ago
Lets just use the 80/20 rule here – tell your girlfriend to get a job or get out. Done, your problems are solved. There is no reason someones significant other should be draining so much of their income. You have everything else in pretty good order, it seems, by saving so much and contributing to your 401K, etc. Although it shouldn’t require any futher analysis – if your girlfriend is costing you about 650 a month (“gf bills” + “gf cell”), that is $7,800 a year in after tax dollars. If you work that out to pretax dollars, it is… Read more »
Justin Steele
Justin Steele
4 years 4 months ago
You car insurance is a bit high… shop around a little there. How much do you have in your E-Fund and how much is left to pay off your vehicle? Depending on these numbers, I would look into pulling back your E-Fund contribution a little and work to pay off that car ASAP. That will free up $300 / per month once paid off! Here’s a quick question, what does your tax returns look like? If you are getting a return big enough to cover your shortfall, rework your W4. Now, those ideas above are the small gains and they… Read more »
Zib
Zib
4 years 4 months ago
I have a feeling this was a trap set by Ramit. Basically, most commenters pointed out some of the red flags in the expenses. But I have a feeling the real problem we’re supposed to key into here is the fact that this seems like a very disorganized set of numbers. Chances are, if Richard A. had an actual system in place, there’d be more clarity in where money is going that he doesn’t know about. And, more specifically, if there was a system in place like the ones Ramit subscribes to, he wouldn’t be *able* to go over budget;… Read more »
Marc
Marc
4 years 4 months ago
Car Payment + Insurance: $560 per month. What year make/model is this? Consider selling your car payment to someone else and getting a used car that’s paid outright in cash. Doing this, my car payment is $0 naturally and insurance per month is $60. My car’s KBB value is about $4000. With the amount you’re saving on the car payment and insurance, that’s about 8 months before the car begins to ‘pay’ for itself. Once you’ve cleared that hurdle, square $200 out of the $500 in savings towards a fund for maintenance/repairs. That’ll still net you $300 per month in… Read more »
Jamey
Jamey
4 years 4 months ago
It is easy to beat up the expenses related to a girlfriend without knowing the whole story – the BIGGER issue in my mind – and some have touched on it – is this isn’t his “budget” this is a whole lot of numbers on a page that really don’t mean much. No money in this for groceries (typically a large budgetary item), car upkeep (on apparently two cars: gas/insurance/oil changes etc.), etc. The best advice for this guy is to go back take a couple of hours set up Mint.com or something and track where the money REALLY goes… Read more »
Dan
Dan
4 years 4 months ago
First approach was to run some number scenarios, and pretty quickly came up with some spending solutions. Then it hit me how easy it was to pinpoint this complete stranger’s financial shortfalls, especially when I agonize over my own. What if we all submitted our own numbers and reviewed each other? Back to Richard A. Numbers aside, the glaring admission is that you claim your lifestyle hasn’t changed after an 80% salary jump, and yet you’re still in the red. And it’s not that big a problem. Guarantee you didn’t max out your retirement options at 50k. Your taxes have… Read more »
Heather
Heather
4 years 4 months ago

Drop the free-loading gf like a bad habit and you will have an extra $600 a month, problem solved!

Brian
Brian
4 years 4 months ago

I’m not concerned with the girlfriend expenses, but he’s left off most of his expenses. I didn’t see groceries, his cell phone bill, what he spends on toilet paper, etc.

For some reason he didn’t include any of these basics in his own life. Spending cash is too broad and too low a number for groceries, take-out, dish soap, pet food (?), etc.

He’s leaking by $140 a month because he doesn’t have a whole picture of what he spends. You can spend $800/month on groceries if you don’t think about it.

I’d start with the groceries and work from there.

Adam2
Adam2
4 years 4 months ago
Psychologically, he is afraid to look at the hard numbers of his expenses and does not take them as seriously as he pretends (i.e., “for shits and giggles here is the list of expenses…”). He is also assuming that he is not “one of those guys” who lives beyond his means. He isn’t putting in the time for serious accounting because he doesn’t take it seriously given his high salary, otherwise he wouldn’t pay so much for his girlfriend, who has no contract to stay with him and enjoys the benefit of having her expenses paid for without any of… Read more »
Ricardo
Ricardo
4 years 4 months ago

Move town/state/country. Create an opportunity to re-start your costs by cutting with old habits and start a ‘new life’. New job, new house, get ride of car (ride a bike), new girlfriend ( … why not….).

Bob
Bob
4 years 4 months ago

Are you fisting me? You pay your girlfriend’s bills?
DUDE.
Wake the Freak up. Before we can even address your finances, let’s start with a clean slate. That means STOP PAYING BILLS FOR PEOPLE THAT ARE NOT YOUR LEGAL DEPENDENTS. Jesus Christ.

Bryan Sebeck
Bryan Sebeck
4 years 4 months ago
My gut reaction is to ask why he’s paying so much of his girlfriend’s expenses. This may not be the situation for many other period, but my wife and I have been together since 2005 and married since last June. Not once have I outright paid for her expenses for anything. I’d they’re her expenses, they’re her responsibility. When one or the other of us is in need (for example my wife lent me about 2 grand so that I could put enough down to get a much better interest rate) we’ll lend one another money, but it will always… Read more »
Carole
Carole
4 years 4 months ago

You are overspending because you are not giving yourself enough spending money. $400 a month is rather low for someone in your income bracket. Do you realize that you are spending more on your girlfriend than you allow yourself to spend?

How many months emergency fund do you currently have?

Don’t you want to invest some of your money?

Micah
Micah
4 years 4 months ago
If he had stated that it was his wife instead of GF would there be any issues with him footing the bill? Sounds like too many people are focused on that. I’m going to give this guy the benefit of the doubt and pretend that she’s supermodel hot. He states “WTF?! I MAKE $90 fucking thousand a year” like he’s Kobe Bryant pulling down 30 a night for the Lakers and there’s no way he should ever need any more cash. Guys only $140 short every month. He’s making $90K, why doesn’t he try to make $10K more? He’d have… Read more »
bamf
bamf
4 years 4 months ago

sorry, i LOL’ed at your Kobe quip.

Caroline
4 years 4 months ago
Here’s how I would answer his question: BASICS: car payment – 300 car ins – 260 Car: 560 mortgage – 1400 water/elec/gas – 230 misc expenses (netflix, gf cell etc) – 70 House + Comms: 1700 gf bills – 600 (car, ins, medical, etc) GF bills: 600 Basics Total: 2860 FINANCIAL SECURITY: roth ira – 400 emergency fund – 500 Total: 900 NICE TO HAVE: vacation – 240 gifts – 80 spending cash – 400 Total: 320 + 400 = 720 “Set it and forget it” His current expenses are 4480 per month, and his target is 4340 per month.… Read more »
Chris M
Chris M
4 years 4 months ago

Dude, is that your girlfriend or you daughter? My advice would to stop being a sugar Daddy and have a little more fun with your spending cash, add to the savings, & not go over your monthly limit! And if the job market is the reason you’re her financial crutch then tell her to find some hidden talent she has and get paid! I’m pretty sure this resolution already crossed your mind, but hey, remember, “Love doesn’t pay the bills”

Michael
Michael
4 years 4 months ago
Richard, A couple of things I jotted down, my notepad looks crazy with numbers. Even though that may not be the problem. You spend 4480 from what you tell us a month, 53760 a year. You make roughly 68k a year, which is about 5600 a month, since we are rounding:) So you have 1186 a month extra to spend. Seeing how your mortgage is 1400 a month you probably don’t live in a cheap house. Which means the things around town, gas, food, etc. Cost way more. If I put this into my perspective (which is truly the only… Read more »
Mark
Mark
4 years 4 months ago

Drop the monthly retainer for “Personal Services” you can buy as needed for less.

willie@internet newbie income
4 years 4 months ago
Don’t want to judge, and, you don’t say how long this lady has been your girlfriend, but, that must be some girlfriend, who knows though, maybe you two will be getting married, so maybe helping her out makes sense. I have to admit, on your misc expense, (netflix, gf cell etc) – 70, I am impressed, cause this is where I see so many people F up in their finances, specially on cell phones and cable. That is actually very low as an expense, to me. The mistake I see people make, and I include myself, is, we think the… Read more »
Joy
Joy
4 years 4 months ago

Well you DID have God’s favour until you posted that comment. (Matthew 6:2)

Just kidding, not really my department to decide who God favours or not. It’s sad that charitable giving is not on more peoples’ priority lists though. No matter what your income is the psychology of being able to say to yourself “I’m so rich I can spare some to give away” is very powerful.

Rick Glass
Rick Glass
4 years 4 months ago

Tell him to make his “gf” pay her own expenses!

Sara
Sara
4 years 4 months ago
Well he’s maxing out his 401K, so it would help if he started thinking of himself as making 73K per year instead of 90K per year (after the 17K per year he’s putting in his 401k to max. out contributions). So now he’s making 73K per year, with a $1400 mortgage payment, plus still saving a significant percentage of his other income and supporting his girlfriend and has a car payment. I personally think he’s doing fine as long as he feels good about spending the money where he is. He’s saving a lot, especially for retirement and most of… Read more »
Liz
Liz
4 years 4 months ago
Unless he isn’t giving us the full picture, Richard A does not know how to categorize expenses. Instead of giving specifics, I’m going to tr to teach how to analyze this. First, how is he tracking expenses? Mint is great for this, as it does 90% of the categorization for you. After a couple of months, you can really see where your money goes. Second, Richard needs to determine which expenses are under his control and which aren’t. For example, he can’t change his car payment, but can change the insurance amount (which sounds very high). He needs to look… Read more »
Gregory
Gregory
4 years 4 months ago

Ha ha ha ha your car insurance is what a month? 260.00? I am under 100.00 a month and im sure it could be lower but finding a new car insurance would save you estimated 160.00 bones a month so -$140.00 from the $160.00 which leaves you and xtra 20 spot and that you can add to your girlfriends budget hahaha. If this dude has to pay to get some play then he cant cut the girls budget and how do we really know its only 1 girl lol.

Justine
Justine
4 years 4 months ago
Nothing new to add that others haven’t all ready commented on, but I was curious if groceries, going out, clothes, gadgets etc were covered in $400 spending cash. If so that actually seems kind of low to me based on the other amounts you’re spending. What’s your cell phone like, ie plan type of phone used? Are you buying apps, movies etc? If so you must have internet which isn’t included in your expenses. Also car insurance is high, unless you’ve had a DUI in the past few months you should be able to get that down. What about combining… Read more »
Fraz
Fraz
4 years 4 months ago
While many of the comments have identified the “gf expenses” as a problem, we don’t have any insight into how Richard A. got to this point. Understanding this may be helpful in figuring out how to move forward. It is likely not so easy for Richard to move on from her, or else he probably wold have already. It is interesting how Richard set up his situation: “I live a pretty normal life. House, car, girlfriend, occasionally going out.” What are the invisible scripts that have led him to think that spending for his girlfriend in the way that he… Read more »
Jeremy Gollehon
4 years 4 months ago
First, get your numbers right. It’s obvious you don’t really know what you’re spending habits as your listed income and expenses don’t match your “$1000 in the hole each month” comment. If you truly understand your spending you might be more successful with the “set it and forget it” concept. THEN… focus on the income, not the expenses. Help your girlfriend nail down a good job so she feel the power of paying for her own bills, or even better, help you out every once in a while. Then have some FUN and don’t try swimming up a waterfall! 401K,… Read more »
Ray
Ray
4 years 4 months ago
I think it’s time for “rich people things.” You say your lifestyle hasn’t changed since you were earning $50K, but, of course, something changed or you wouldn’t be overspending, right? My guess is that, while your lifestyle may have remained unchanged, the way you think about money has. You know you have more than you need, so you don’t think about little dollar values while you’re out making your “basic” expenses. I am suggesting you give yourself a reason to think about it. Isn’t there something you would like to just save for and buy for fun? Anything will do… Read more »
Colleen
Colleen
4 years 4 months ago

I see $1,000 in expenses that could be changed. First, why is he paying $600+/month of his girlfriend’s bills? Is that temporary or an ongoing expectation? Next, I would be curious to know where that $400/month is going that he has earmarked for “spending cash”.

He should make note of exactly what he is spending the $400/month on. Or he could get rid of his girlfrined….

Scott Bishop
4 years 4 months ago

This ones easy, unless your name is Dad or your gf is a stripper (and in that case not really your gf) you have no business paying for someones bills.

Problem solved. You just freed up $600 a month to out and meet someone else.

Erik Noble
Erik Noble
4 years 4 months ago
I see a simple solution. If this this guy has saved enough to reach the total for his emergency fund, he already has an extra $500 free, which then makes the purpose of his posting null. With the extra $500, he can cover his extra expenses. Hopefully, he determined the total for emergency fund, which is unique to his situation. For instance, 10 K is a nice sizable emergency fund. Based on this posting, saving $500 a month, he probably has that amount saved up, and he can use the money for something else. Of course, if he has not… Read more »
Raj I
Raj I
4 years 4 months ago
The most expensive item on that list seems to be the girlfriend. If she’s that important, then she’s worth going $140 overbudget. My purely monetary advice would be to: 1. Pay off the car. If you’ve been putting $500 p.m. towards an emergency fund it should have enough to cover it. The $400 towards the car is simply eating from the emergency fund. 2. For a guy supposedly living a $50K lifestyle, $1400 mortgage seems high. Refinance. Or rent it out and rent yourself. Home prices are still low, but rents seem to be thriving. 3. Get a family-plan for… Read more »
Justin Steele
Justin Steele
4 years 4 months ago

Ugh. Please pardon and excuse my typos… thanks.

Matt
Matt
4 years 4 months ago
1. Car insurance seems a bit high at $2,760/yr., but again, it may not be. I’d comparison shop using Ramit’s tips, then call the current one to tell them you’re leaving unless they can match that price. It’s usually better to stick with the same place to accrue discounts, so jumping around may not be a big benefit. 2. Mortgage _may_ be able to be refinanced. That’s another few phone calls that could get some $100s per month. 3. You’re paying too many of your girlfriend’s expenses. Okay, okay, she’s probably really awesome and that’s the one place that is… Read more »
Dangerman
Dangerman
4 years 4 months ago

This guy sounds like “regular people”…

http://www.youtube.com/watch?v=-1t9dg5dzQo

Karthikeyan
Karthikeyan
4 years 4 months ago

I will ask him to get Married & stay in one place.

Alex
Alex
4 years 4 months ago
It would be useful to know a little more data… how old is this guy? The situation for someone below 20’s could be different for 25-30 yo. Also how serious is this girlfriend thing? I mean, will they commit? Does he have a wedding fund (See, Ramit, I’ve learned something) When does he plan to marry? To have kids? Overall I think it would be a two-step approach: a)Expenses. First, the numbers don’t add up as others have pointed out. And yes, the girlfriend spending… well, it’s up to him but you really have to be conscious about it. And… Read more »
Brad
Brad
4 years 4 months ago
Below are guidelines and food for thought, not directives: 1. There’s a math error. Listed expenses add up to around $4500/mo. After tax income on $90k/yr should be around $6000/mo. That’s not $150 more expenses than income. You should re-evaluate whether or not this is really a problem for you. If so, you likely have expenses you have not listed, and it might make sense to look at them. 2. More income is generally better than reducing costs. A 10% raise is much easier for most people than finding the same amount of stuff to cut back on. And a… Read more »
Evianne
Evianne
4 years 4 months ago
The girlfriend’s bill payments have to stop. Sure, she may have adverse circumstances, be under- or unemployed, etc. So do lots of people who DON’T have a partner paying their way. She is an unmarried adult, and she needs to be able to pay her own basic expenses. This sort of situation really bothers me, because lots of people jump to the ‘Gold digger!’ accusation. Don’t you see the man is just as bad for being an enabler? Gold diggers can’t exist without men willing to pony up that gold. If you really love her, help her be responsible for… Read more »
Michael
Michael
4 years 4 months ago
The one expense that really stands out is the car insurance-$3,120/yr. For a 2010 Mini & a 2011 G37, we pay $1,217/yr. Even if it includes gf’s car it is still expensive. If he is truly maxing his 401k contributions that means $17k /yr plus he’s contributing $5k/yr to a Roth. Over the next 20 yrs at a 7% return that’s $2.2 mil+. Admirable but perhaps he is being too aggressive with retirement svgs-depends on his goals, I suppose. The glaring hole in his expenses is no mention of food/dining out-maybe a lot of the $400 in cash accounts for… Read more »
Christopher
Christopher
4 years 4 months ago

At least you don’t have a $1400 monthly mortgage hanging over your head for the next 30 years. And tell your girlfriend to get a job, she’s not your dependent.

joey
joey
4 years 4 months ago

Food is not listed in the budget. I would guess that is where he loses a lot. I think he needs to track that spending for a month. Miscellaneous expenses seems way too low, especially $70 for a cell phone bill, must not have data.

Riley Cabot
4 years 4 months ago

If he’s not ready to commit to her for life, marrying the girlfriend is only setting him up to owe $600 or more a month in alimony… for the rest of his life. How is entering into a contract that makes him more financially liable to her any more reasonable than just helping her out because he can and chooses to do so?

Ellen
Ellen
4 years 4 months ago
I think the problem, as others have pointed out, is that you wanted to “set it and forget it”. You have forgotten a number of important things: Your numbers don’t add up. Your sample budget is missing several significant categories, like food, clothing and gas. These things cost money. Every day. You talk about your salary but you don’t mention your take-home pay. You can’t budget off an imaginary number. When you say your “lifestyle has not changed” since you made $50K, is that true? Were you single then, or were you supporting another family member? (If you are paying… Read more »
Sydney
Sydney
4 years 4 months ago
car payment – 300 mortgage – 1400 car ins – 260 water/elec/gas – 230 misc expenses (netflix, gf cell etc) – 70 gf bills – 600 (car, ins, medical, etc) roth ira – 400 emergency fund – 500 vacation – 240 gifts – 80 spending cash – 400 OK, so we see you budgeting for several discretionary priorities here: -Girlfriend -Gifts -Vacation We also see you budgeting for several discretionary monetary priorities I think most people would agree are more “important.” -Emergency fund -Retirement A few of Ramit’s pillars of personal finance come to mind for me. The first is… Read more »
Michelle
Michelle
4 years 4 months ago
Two main things come to my mind: 1. He spends a whole lot of money on expenses that his girlfriend should be responsible for. While it IS nice that he wants to help out (it’s very thoughtful), she should be responsible for her own expenses. They are not married. He has no financial responsibility to her. 2. I agree with a previous reader. He should use mint.com or some other site to really see where his money is going. I think the financial picture may be a bit distorted. Richard would benefit from an automatic transfer system to guarantee the… Read more »
Craig
Craig
4 years 4 months ago

Your lifestyle had to have changed or you couldn’t afford these expenses. I’m guessing that you upgraded the car and house at some point after you went from $50k to $90k. Were the girlfriend bills the same amount when you made $50k or did she decide to upgrade her lifestyle too? Not that there’s anything wrong with that. I’d like to get past $50k and my apartment lifestyle one day.

There may be some “unconscious” spending occurring, especially with a category called spending cash.

Jeremy
Jeremy
4 years 4 months ago

Girlfriend spending? $600?? Ummm…

Jacqui Gonzales
4 years 4 months ago
Track your expenses. It sucks, it’s boring, but as Ramit says, would you rather be sexy or rich? If the answer is rich, sit down and track your stuff. Suck it up. Mint is a great program and makes it very easy to set up. Do it for 2-3 months, to get a real handle on your actual expenses. If possible, don’t use cash to track unless you want to keep your receipts. Once you see where the money is going, start trying to figure out where to cut down. Figure out what is really important to you. Do you… Read more »
Nick
Nick
4 years 4 months ago
As far as money is concerned – there is a difference between overspending $140 per month and having a cash flow problem. Here are my suggestions: Mortgage – if you have the option, paying twice a month or better yet, bi-weekly (which is like having one extra payment a year) can free up cash. It is the timing of the income vs expense which causes concern. So ensure that payments coincide with deposits, which as Ramit has shown us, to automate payments. Other expenses can be shifted – just call and ask – take a hit this month on an… Read more »
Tim
Tim
4 years 4 months ago

Your budget here would be well below your monthly income if you are following this. If you are running over, I would definitely suspect that you are spending the rest on food/out to eat. I do not see this in your budget, and is one of my biggest expenses. Controlling spending there and cutting out paying for GF or consolidating bills with her (if you guys are planning on getting married or whatever) would be where I would start.

Ben
Ben
4 years 4 months ago

Stop worrying about shaving your expenses. You won’t save much. Go for the big win which is to ask for a raise. $140 a month is less than $2000 a year. So asking for a raise that is at least 3% or more is doable. You would be the man if you can raise it by 10% or more. (you can use Ramit’s tips on negotiating your salary to do that easily).

Jim
Jim
4 years 4 months ago

Marry the girl, get an extra 200/mo (at least!) back in taxes. Plus, you have the stability to do things like combine cell phone bills, insurance, etc, for better rates.

I’m only half joking here.

Brad
4 years 4 months ago
The spending looks about normal when I was making that salary. What I don’t see is a budget for all the little things that can really creep into the amount of available cash left over each month such as groceries, gas, fast food, coffee etc… These little things are probably what is pushing you over the limit. I would pull down the last 6 months of bank statements and see what it is you are not budgeting. All the saving are automated, owning a home, working down a car payment, and still budgeting for fun I would say this is… Read more »
Janelle
4 years 4 months ago

I’d like to hear the response to why he thinks his gf’s bills are his responsibility.

myself
myself
4 years 4 months ago

Janelle (and plenty of others). Why is it presumed that he believes the gf’s bills are his responsibility. When I was dating (and eventually married) my wife, we put her entire paycheck away and only spent my … well even less than my paycheck too. This was our way of preparing for my wife to stay at home with our children that were born 1-2 years after we were finally married.

sheila
sheila
4 years 4 months ago
I agree with all the others saying track spending on going out, etc. But I am writing this under the influence of Ramit… so here’s what I think Ramit might say if he were me and I him: …you already know that you *don’t* track this kind of discretionary spending, and that you should be doing so. So, make it really easy and take a photo from your smart phone (assuming you have one) of every bar bill, every restaurant bill, every movie ticket that you pay for. Even if you’re at a hotdog stand, take a photo of the… Read more »
Nick Fox
4 years 4 months ago

Sell the dog!

…errr, I mean the girlfriend.

myself
myself
4 years 4 months ago
Let’s see. Broad examination with percentages based on gross income. 1) 30.8% income devoted to savings/retirement … EXCELLENT! 2) Housing (presumption is $1,400 is PITI + $230 basic utilities) 21.73% … GREAT JOB! 3) Personal transportation costs 7.47% – not bad, although I’m hoping that $300 is a car payment and not a lease, because the $300/month ignores the initial payment. 4) GF costs are 8% or slightly more because he merged “misc” & GF cell. 5) Spending cash is only 5.33%. This is rather low, although if he’s like my wife and I when we were dating and saving… Read more »
myself
myself
4 years 4 months ago

Once the “bleeding” is contained, then begin working on increasing the income through other means.

Tim
Tim
4 years 4 months ago
If you break this budget every month it seems like the obvious answer would be to lower the amount that you’re putting into categories that aren’t fixed. I’m going to ignore the fact that you’re paying gf bills even though I think its ridiculous because I don’t know you and those would be fixed cost if they’re actually necessary. That said, cut first from: spending money vacation gifts You can get 140 there easy, but for the sake of it cut next from misc expenses that you don’t care that much about and rethinking your car and insurance. Last would… Read more »
Ira Kinro
Ira Kinro
4 years 4 months ago

So many responses just tell him what to do rather than what to consider. The instructions were “What would you tell Richard? BE SPECIFIC and consider not just the numbers, but the psychology of spending.” (emphasis added) I guess the “unwashed masses” don’t follow directions…

Jen
Jen
4 years 4 months ago
Well, here’s the thing: he doesn’t give us enough info to get into his psychology, just enough to speculate wildly. He has a very high personal savings rate (especially retirement), he pays some of his girlfriend’s bills, and his car insurance bill is unusually high. He also doesn’t include all of his bills. The only concrete things anyone can say is, “track your stuff more clearly because it’s hard to know where you could cut” and “your car insurance could be renegotiated.” If I’m being super-nice, I could say “yeah, he crashed a Corvette and he’s gotta wait it out… Read more »
J. B. Rainsberger
4 years 4 months ago
First, two things: 1. You make $90k/year; congratulations. Many people who make $200k/year throw most of it away on status symbols and indulgence, so making $90k/year doesn’t mean that you can be careless, BUT… 2. Good for you! At $90k/year, you certainly have the tools to turn this ship around. Be glad that you actually have the money to solve your problems, which others making $20k/year don’t have. You appear to be waking up from a deep sleep about your money. Better late than never. Now, two questions: * Are you willing to give up your vacation for JUST ONE… Read more »
EM
EM
4 years 4 months ago
1. car ins – 260 Your car insurance seems very high. You should be able to pay a lot less unless you had a car accident in the past five years. -$60 by shopping around. 2. water/elec/gas – 230 Your utility bill is very high for one person. Do you live with your girlfriend? Is she contributing? Do you cook everyday and take your lunch to work? Save the energy and water. Just by turning off the light when you leave the room, or outlets when you go to sleep, you can save a ton of energy. -$30 3. misc… Read more »
Michael Defoe
4 years 4 months ago
First, congratulation on making $90k. Seems like you are doing well and enjoying life. I didn’t read most of the comments, but some I saw commented on your paying the gf bills. Screw that, pay ’em. Consider it an investment in your relationship. If it makes her happy, your relationship should be the better for it. To each his/her own. My concern is the following spending: Emergency Fund – 500 Vacation – 240 Gifts – 80 Spending Cash – 400 You spend $240 per MONTH on vacation and you are putting $500 away for savings? On top of the vacation,… Read more »
Stefan
Stefan
4 years 4 months ago

Cut it all down – live in a tent and invest in stock like Warren Buffett!

Keith Harris
Keith Harris
4 years 4 months ago

Wives are cheaper than gf’s. Get married!

Susan
Susan
4 years 4 months ago
From his budget, I get the impression that Richard has not identified what it is that will make him “feel” rich, in the sense Ramit describes in his book. In other words, his expenses look very scattered out to me, instead of focusing on his one true passion and cutting back on everything else. For example, Richard may need a car (certain cities and parts of the country don’t have good public transport or the weather prohibits biking half the year). But, if so, how much of a car? Or Richard and his girlfriend may need cell phones (for many… Read more »
Anouar
Anouar
4 years 4 months ago

I lost count on how many comments there are about the girlfriend.
Keep her if she’s a good gf.

If you automate your payments (everything gets paid automatically in the beginning of each month) do you still have 400 in spending cash left?

vic
vic
4 years 4 months ago

1) Track your expenses better, at least for a couple of months.

2) Call & negotiate:
car payment – 300
mortgage – 1400
car ins – 260
water/elec/gas – 230
misc expenses (netflix, gf cell etc) – 70
gf bills – 600 (car, ins, medical, etc) (at least half should be negotiable) – 300

total 2560, with a simple 4% reduction… 100 less each month

3.A) Increase your income by 1000/year with a lil side job…
3.B) Check the “better tracked expenses” and cut something (50/month)

And you’ll be able to pay the gf bills, gifts, vacation, savings… 🙂

Siddharth
Siddharth
4 years 4 months ago

I have two glaring suggestions for this guy:
1. Your car insurance is insanely high. I pay half of that amount for a leased car (which means that the minimum coverage required is pretty high)
2. Your girlfriend needs to start pulling her own weight… jus’ sayin’

Michael Yamamoto
Michael Yamamoto
4 years 4 months ago
One potential problem could be whether or not you were saving for retirement at your previous job. I am in a similar position with my current income just over 90k. My previous income was through an internship where I made around 45k, but received no benefits. Because of this, none of that income was being taken out for a 401k. I was also not considering retirement at the time. When I got my current job and started earning double, I maxed out all of my retirement accounts. However, this effectively reduced my income by 22k. If you weren’t putting money… Read more »
Raymond
Raymond
4 years 4 months ago
The list of expenses are almost $54k. I think you are leaving out other expenses. Where’s your grocery/food dude? Do you have debts from loan sharks or dealers we’re not accounting for (kidding)? I think you’d better look closer because you’re saying your monthlies are $140 over. That’s $4,600 a month lifestyle. At your income that’s only 61%. What’s your after tax? Can you reduce it more with better tax planning? Because if you went from $50k to $90k then taxes have gone up. Maybe way up. Finally, it’s not like you have kids to support. Others are giving you… Read more »
shrmaj
shrmaj
4 years 4 months ago

Wow, I have no words to describe how I feel after reading this line – “If she’s awesome, you’re being cheap. Having a pet can cost more.”

Financial Advice for Young Professionals

Dude! Get rid of that car payment! If you make 90k a year you should most definitely be paying cash for a car. You probably have way too much of a car for your salary, also probably why the insurance is so high.

I understand why people like nice cars, but if you want to have a car that is above your pay scale, you need to make sacrifices in other areas like eating out, travel, etc. You can’t have it all 🙂

Alexander Boland
Alexander Boland
4 years 4 months ago

Forgive me if I made a horrible careless error, but this doesn’t add up to nearly 90k per year. What’s not being included in this list?

I imagine somewhere there is a decisive choice that leads to a domino effect (see Tim Ferriss on “domino foods”)

Mary
Mary
4 years 4 months ago
Richard, It is difficult to get a clear picture of your finances without more detail of where your money is going. As previous posts have mentioned, your list of expenses is generalized and incomplete. If you track your expenses carefully for a few months the problems and solutions will become more apparent. Until that is accomplished the only logical course is to reduce your discretionary expenditures toward the emergency and vacation funds. The most obvious problem from the information you provided is your budget for your girlfriend’s support. Until you are legally married you are not responsible for another person’s… Read more »
Joe
Joe
4 years 4 months ago

1. Get a new girlfriend.
2. Take Ramit’s course on how to bag an extra $1k per month.
3. Have girlfriend take Ramit’s course on how to bag an extra $1k per month.

If #1 is not an option, then #2 and #3 will work.

Good Luck.

Shamil
Shamil
4 years 4 months ago
1. Forget about saving so much and pay off your car loan(put just enough to get the company match). You are probably paying more in interest even if your rate was as good a 3.5% vs what you earn back on your savings. 2.If you’ve been stacking $500 in your emergency fund every month you should have enough for 12 months ? don’t contribute more than that 3.What kind of car do u drive ? Mercedes Vs a Camry ? Fuel consumption rates ? INS rates? All matter 4.Check you INS rate 5.LIST down all your expenses…the ones you have… Read more »
Steve Nicholas
4 years 4 months ago
If you are spending $240 a month for a vacation fund, that works out to $2880 a year. Nice vacations can be had for $1500 (or even less), so cut that down to $125. That will take care of $115 of the $140 in shortfall. Also, cut the $400 in spending money down to $250 and that is another $150 in savings. Right there, you have $265/month, which leaves an extra $125. There is also the car insurance of $260/mo. Maybe if you got a car a little less nicer, you would have lower car insurance as well. (I’ve never… Read more »
Lacey
Lacey
4 years 4 months ago
The numbers here don’t add up. You should have an extra $1000 every month. Since you don’t, it’s would be valuable to find out where that money is going (we discover this in our own expenses every few months). Once you do, you should probably decide what kind of spender you are: the kind that spends a lot more when there’s money in the bank or the kind that it doesn’t matter. I find that when I think I have money, I get lazy at keeping track of my expenses. So instead of letting the excess stay in a bank… Read more »
Alyssa
4 years 4 months ago

Yup. I’m with everybody else on this. Easy way to cut back on expenses is to have his girlfriend contribute to her bills. It’s interesting how he didn’t even think twice about this. Or maybe he has but he just doesn’t know how to tell his gf and this will be a way to break it to her??

Frugal Portland
4 years 4 months ago

My first piece of advice is to figure out what you mean by “emergency” and likely just contribute $140/month less to that fund. Problem solved. Are you interested in saving more? Cut more spending. Make more on the side. It’s math. A simple equation.

Amy
Amy
4 years 4 months ago
I have had this come to Jesus moment myself! Two things that have helped me: * Credit cards are great tools, but they introduce some delay into your cash in- cash out analysis. As an exercise, try withdrawing the money in cash, in advance, that you plan to spend. It can be a real eye-opener, especially when applied to food and entertainment expenses! * Keep in mind that if you put money away into savings, and then overspend in another category… you’re not saving as much as you think you are. Try calculating how much you actually saved at the… Read more »
Cindy
Cindy
4 years 4 months ago
From my point of view, even a mortgage isn’t basic, but once a person starts on one, they’re commited. Paying a girlfriend’s expenses isn’t basic either. I say kudos to the savings plan. However I find it odd to say he’s $140 over his income when he’s putting away $900 each month. With $90,000 income it makes sense to put away some savings, but not if it’s over the budget. Psychologically speaking I think it makes more sense to budget based on the income figures first. 90,000 is a lot of money and it may seem like a person can… Read more »
Jen Loebel
Jen Loebel
4 years 4 months ago
Okay, it’s been said: RED FLAG your paying too much for your GIRLFRIEND. I’m married, we live off of one income, we have 4 kids, make less than you, and my HUSBAND is not paying that much for me. We drive 2 cars for about $675 /mo (insurance & gas not included) so it seems liks GF could downgrade if she’s taking a free ride… Girlfriend needs a job, bro. If I were your mom (the 4 kids are all boys), I’d say she’s taking advantage of you and probably not like her very much… how does Mom feel? Moms… Read more »
Mark
4 years 4 months ago
Richard, the first thing you need to do is identify where your money is actually going. These numbers don’t add up. This isn’t the whole picture. You say you’re putting $500 a month into your emergency fund and $240 to a vacation fund and have a shortfall of $140 a month, which means you’re actually still saving $600 a month, not including retirement. If this is actually the case, then you’re doing OK and need to chill. But you sound pretty stressed about money for someone who is saving a lot. What signs do you see money is tight? Do… Read more »
NIck Fox
4 years 4 months ago

You used the “B” word…Budget. Gird your loins for the full force of Ramit with a word like that.

I’d hazard to say that if he doesn’t have money budgeted in those areas or going to those areas on a regular basis, they aren’t important to him.

The bigger issue is whether his priorities (What’s most important to him) match his expenditures. (Is he spending the most on his priorities and the least on his frivolities)

Robert
Robert
4 years 4 months ago
First off, the others are right. If you are spending beyond your means the most obvious bills to cut are the ones that aren’t your’s i.e the GF tax. Next your totals don’t add up. You have substantially less listed than what you should be earning after tax. Next look at your emergency fund. If you have enough saved in there to equal six months of income you can cut that expense or atleast reduce it. Another thing that caught my attention is that you said you max out your 401K. Why? You should not be contributing anymore to your… Read more »
Nick Fox
4 years 4 months ago

Ummm, “Maxing out your 401(k)” usually DOES mean allocating the maximum amount matched by your employer.

…At least that’s how we all used it back when I was still employed by someone else.

Cooie
Cooie
4 years 4 months ago

Unless this guy is the world’s worst driver, he’s being looted by his insurance company. And “gf”? – what, he forgot that he added a concubine when his income went up?

JD Davie
4 years 4 months ago

Very simple to solve. STOP PAYING YOUR GFs bills! Or get a GF that doesn’t need or ask you to.

funancials
4 years 4 months ago

First and foremost, relax. I have to say you are doing a fantastic job. The problem isn’t in your budget but your mind. You have automated your emergency savings, retirement, vacation fund, etc. which is why you’re in a great position. You’re not “spending” $140 over your monthly income each month. You’re paying yourself – there’s a difference.

My advice: do what makes you happy.

If your girlfriend gives you phenomenal massages, then by-all-means reward her with a $600/month allowance. If deep down you feel it’s a one-sided relationship, then re-prioritize.

shrmaj
shrmaj
4 years 4 months ago
If you’re paying the girlfriends bills then she better contribute towards your retirement. But she won’t. You know why? because .. SHE’S NOT MARRIED TO YOU.!!! Wake up Richard or Bob or who ever you are! My then boyfriend and now husband let me live in his house for 6 months while he was deployed for the military. You know what I did in return? I took the $1200 that I saved by not paying rent and utilities, to a ING Direct Savings account and put it in a “Wedding” sub-account. You’re a sugar daddy my friend. Wake up !… Read more »
Charlie Harper
4 years 4 months ago

Who is this guy? Normal life?
I’m calling bullshit.
Keeping a girlfriend and carrying $600/mo of her expenses is not “normal”. Are you shitting me? That’s about 12% of his take home pay. Besides which, I’m sure she receives some of the gifts and accompanies him on the vacations so she costs even more than he’s reporting.

“OMG, I’m spending $7200 per year buying my girlfriend’s affections and I just can’t figure out where all my money is going.”

He’s right about one thing though – “mind blowing”.

Margaret
Margaret
4 years 4 months ago
He says he’s going over budget by $140 each month. Looking at his expenses, I’d reduce the vacation savings by $140. Ta-da! Now everything balances, and he has an incentive to find ways to save money. Every time he wants to spend, he has to think, do I want this expensive dinner, or do I want to increase my vacation savings? That can be a powerful incentive to cut costs. Next track expenses. This budget isn’t adding up. Money is dribbling away somewhere. He should find out where it’s going, and look for easy ways to cut back so he… Read more »
matt
4 years 4 months ago

Track your expenses, so you know exactly where you’re spending money. See if there is anywhere you can gradually cut back. Quitting cold turkey will work for a month or two, but after that you’ll end up making up for anything you didn’t spend in the coming months.

Why are you paying for all of your girlfriends expenses? Also, if you’re running a deficit the first place to cut is your emergency fund (assuming you have a decent amount saved already)

Cliff Samuels Jr
4 years 4 months ago
The key mindset hurdle here is from this statement is “My lifestyle hasn’t changed from when I was making $50k/year”. If this was true, you would should at least a small surplus of cash at the end of the month. You are believing that you have maintained the lifestyle of a $50k a year person but in fact you have slowly adjusted your spending to use you current salary of $90K. A quick test of this theory is for you to track you spending for one month with no judgements on your spending to locate exactly where this lost cash… Read more »
Cliff Samuels Jr
4 years 4 months ago

Another mindset issue here is the “being poor” mindset that is leaking into you life. You have a major wins with a fully funded IRA and emergency fund. Once you have completed your spending tests, you will see the areas that need improvement. Also, take some time to analyze you relationship and make sure this is a win-win situation. From a distance, your GF is winning all the time and you have no victories in this relationship.

Sean
Sean
4 years 4 months ago
Why in the world is he paying his girlfriend’s bills? Ax that and he’ll not only get rid of that $140 deficit, but he’s also have some positive cash flow. If he and his girl are not married, he should not be paying her bills. Also, his car insurance seems very high. I have a brand new Honda Pilot and owned a Hummer (when it was new) and my monthly insurance cost for each was significantly less than 30% of his monthly premium. If he has driving record issues that have inflated hsi cost, take the 10 hour class. Otherwise,… Read more »
Kaylen
4 years 4 months ago
From the experiences I’ve had with paying other people’s bills, let me tell you, you should NEVER be paying for anyone else’s bills unless a) you are their parent , b) they are family (by blood, not marriage!) or c) you are married to them. Why isn’t your girlfriend paying her own bills? Is she not woman enough to take care of her own expenses? As a woman myself, I am of the opinion that it is completely lame to rely on someone else to take care of you unless you are actually, physically unable to do so yourself (such… Read more »
Sarah
Sarah
4 years 4 months ago
Like many of the other comments on here (and no, I haven’t read them all) I agree that paying your girlfriend’s bills is a large and perhaps unnecessary expense. Also, I wonder if part of your gift/spending cash fund is also being spent on her? I could understand covering the bills if she needed to take time off work to raise a child (that’s a thoroughly demanding job) but am confused why there’s a need to cover her basic expenses. As a female, I could never imagine asking a boyfriend to pay MY bills. Occasional dinner or a movie? Absolutely,… Read more »
Chad Lansford
4 years 4 months ago
One line really stood out for me: “I make a good wage so I’m not the kind of person to sit down and look at numbers very often, set it and forget it right?” This is the heart of the issue, and I know because this is exactly what I did. Richard needs to know: You can NOT out earn a bad budget or bad habits. Personally, I think the biggest mistake is that his priorities are backwards. I agree with other comments above with the one glaring category missing from his budget: FOOD. What do we all need, Food,… Read more »
Lindsay
Lindsay
4 years 4 months ago
So much agreement here with Chad. I now make 1/3 of my former pre-laid-off salary…and I live in one of the most expensive areas in the US. However, my budget is more balanced now than ever. I used to think that if I could just make more money, I could get out of debt/live better. It’s just not true. Yet, most of us fall into that line of thinking at some point. When I got laid off, I had to drastically re-think how I earned and spent money, and have had to adapt. Now, my once PT/side income is my… Read more »
Jonathan
Jonathan
4 years 4 months ago
Well – those numbers don’t add up right. All those expenses come to about $54k. Even at a 30% tax rate – after tax on a $90k salary should be over $60k. That means there’s probably a “leak” somewhere other than the bills/expenses he listed. My guess this is coming from food and spending – this is probably where he’s overspending and not noticing. He admitted already that he doesn’t look at the numbers very often. And it’s really easy to accidentally overspend on groceries, eating out, small items. They add up quickly and are harder to track. RECOMMENDATION: get… Read more »
HeidiW
HeidiW
4 years 4 months ago

1) Girlfriend needs to get a job, pay own bills.

or

2) He’s saving too much.

Kristin
Kristin
4 years 4 months ago
Before you can fix the problem, you need to determine what is really going on with your spending. The numbers you provided look like estimates, and leave out some important categories like food. I suggest that you track all of your expenses for a month. You can sign up for a budget program like Mint or just use Excel, but the important thing is to not leave anything out, not even if you bought just one item at the dollar store. Save your receipts, carry a notebook with you to write down expenses – whatever method works for you. If… Read more »
Alex | Perfecting Parenthood
4 years 4 months ago
Ramit requested a psych focus, so here it is: No wonder he’s distraught. This guy’s life is filled up with stuff that gives him no happiness. About the only discretionary piece is the spending cash of $400, which is probably the only piece out of his paycheque that gives him any joy. He works all day at a good job yet feels that he barely has ten bucks at the end of it. He’s somehow accepted or accumulated these recurring expenses, like all the things others mentioned – the car, the gf’s car, the house, and all the other associated… Read more »
Ty
4 years 4 months ago

As bf/gf you should keep your own finances. Heck, I’ve known married couples that keep their finances separated. 😉
Anyway, it’s sobering when you add it all up per month, isn’t it? Here’s another fun activity: compare a 1950’s budget to a 2012. You’ll notice income and prices have changed quite disproportionately.

Katie
Katie
4 years 4 months ago
The GF definitely raises a red flag for a lot of us – but I think if this is something he WANTS to do for her, we shouldn’t suggest that he stop supporting her. I don’t know what the circumstances are but whatever the case, I think he should help her out and get her on track – since he’s already taken on the responsibilities to take care of her. If she’s got health issues and can’t work – get her on disability. If she’s unemployed – buy Ramit’s Dream Job course to help her get a job =). Maybe… Read more »
Heather
Heather
4 years 4 months ago
Personally, I would not spend money on a car unless I’d saved up cash to do so. So I’d find a way to dump the car, and replace it with something you could buy with cash. Stop saving emergency fund money and roth and everything else until you can build up enough cash to buy out the lease or whatever, and then buy a used car. This would free up a lot of money a month, once it is straightened out. Use an auto-savings method to do this (send money straight to a savings account, automatically each month) and just… Read more »
Pat
Pat
4 years 4 months ago

GF Bills…HUGE RED FLAG! There are a lot of things she could do as extra PT work to make that amount each month to cover her own bills. And, think of what this guy could do with that money for himself and his future?! A little help is one thing but putting that amount out monthly? He really needs to evaluate that.

Lea
Lea
4 years 4 months ago
Ok, hate to be harsh, but why the hell are you paying all this money towards your girlfriend? Does she not have a job? Unless she has some dire health condition that is preventing her from working, I don’t see how it is fiscally responsible for you to carry her weight. While you may make a good wage, it seems as though you think watching your budgets and numbers is for people who don’t make a good wage. Sorry to say, but managing your money and looking at your numbers is good for anyone regardless of good wage/bad wage. Lastly,… Read more »
Dave
Dave
4 years 4 months ago
A few things come to mind… 1. You pay your GF’s bills. Maybe you live together and it is more than just a GF, but what does she contribute to the household? 2. Your emergency fund. How much do you already have in here? I’ve heard different ideas, but most “experts” recommend having between 3-6 months worth of expenses in your emergency fund. Enough to cover your mortgage, car payments, insurances, utilities, food, etc… for 3-6 months. 3. Not sure of his age, retirement plan, but maybe its best for him to be in a regular IRA and not a… Read more »
Chris
Chris
4 years 4 months ago

Sure hope he didn’t co-sign for his girlfriends car loan…

Cristina
4 years 4 months ago

It’s interesting to me that so many people are upset that Richard is helping his girlfriend without knowing anything about their situation. My advice to Richard is that if you are treating your girlfriend as a domestic partner, you should try to take advantage of potential savings that come from that. Can you consolidate your auto insurance, medical insurance, and/or cell phone plan to decrease spending by $140/month?

Tim
Tim
4 years 4 months ago
I drive a nice car and my insurance is $120 a month. Your insurance is more than twice that, which leads me to believe that you either DO in fact drive a fancy car, or that you are simply carrying way too much coverage. Also, it’s hard to believe that you’re going into the negative when you are able to max out your 401K, IRA, and have the comfort of a $500 post-tax emergency fund. These are all luxuries that many people don’t have. Additionally, the fact that you’re a home owner means that you are itemizing deductions and therefore… Read more »
D M
D M
4 years 4 months ago

Richard isn’t spending $140 more per month than he earns, he just thinks he saving more than he is. Assuming his monthly savings for 911 fund, vacation, and gifts are automated (“set it and forget it, right?”) he just needs to reduce them by a total of $140, so it reflects his reality, and go back to enjoying his life with peace of mind.

Matt
4 years 4 months ago
My webbrowser ate my first response…. You’re living below your means, 1/3 on shelter, 1/3 on the rest of your living expenses. You’re supporting your GF which is fine, my wife and I supported each other through school, and it worked out pretty good. But that should be temporary. Your car loan should be paid off eventually, which will improve your cashflow. If you want your cashflow to look better, pay it off quicker by shifting some money from your emergency fund. You’ve got 20% going to savings after tax, this is a LOT, assuming you have pre-tax savings too… Read more »
TB
TB
4 years 4 months ago

Why is his car insurance so high? Unless he had a DUI or something similar. I have 2 cars and pay not even half that much. 07 4runner and 12 Odyssey – not pos’s. Otherwise cut the girlfriend off or ask her to contribute. She is soaking him for 700 a month. If she had a full time job making minimum wage she could pay for herself. Unless of course she has a gold plated ….. and then maybe she’s worth it.

Amy
Amy
4 years 4 months ago
Guys, quit it with the “make the girlfriend get a job” or “stop paying the girlfriend’s bills” talk. Whether or not paying her bills is justified (certainly it is in some relationships and not in others – perhaps they are soon to be engaged, perhaps she supported him for a while… we just don’t know), it is an emotional decision as much as it is a financial one. Perhaps more. He can afford to pay it, he decided to pay it, and he gave us no sign that he felt even remotely unhappy or resentful about it. The car payment… Read more »
Cameron Miller
Cameron Miller
4 years 4 months ago

On surface make more spend less ask for raise at work, confirm that your IRAs are yielding the strongest return by comparing to comparable wealth management plans. Same goes for mortgage and car perhaps refinance and place the savings into new business creation/exiting business boost to make more money with saved money!!! As for GF if paying her bills is a must go for it however reducing gradually or cutting 100% will yield 5-10k extra per YEAR$$$$ Show me the MONEY$$$!!! Kind of tough being sugar daddy/mommy and still being negative each month

KathChalmers
KathChalmers
4 years 4 months ago
At 90K and technically single, you’re starting to move into the income range where some idiots in Congress start to think you’re rich and should be taxed accordingly. Pay careful attention to your tax rates. If a notable proportion of your income is from incentive payments like commissions or bonuses, be aware that money will be taxed at significantly higher rates than your base salary. You might want to check with your employer to see if there are some pre-tax expense payment or reimbursement options for some of your spending – flexible spending accounts, cell phone or internet service allowances,… Read more »
Jon
Jon
4 years 4 months ago

In the US, bonuses aren’t taxed any differently than normal wages and salary.

The employer may be required to withhold at a higher rate when issuing bonus checks, but that doesn’t mean you actually pay taxes at a higher rate when you file your return.

Peter75
Peter75
4 years 4 months ago
Richard, I would say, you are very disciplined, and seriously investing in your retirement. So congrats for that. Now, let’s face it, $90k for a single + GF is a relatively comfortable income, and you should be able to balance your budget! The good news is $140 is not much. Looking at your budget, you look to me as someone very cautious but who like nice cars and nice vacations and making nice gifts. You could easily save on each of these, but I believe that those are important for you, and is your reward for your hard work. Let’s… Read more »
Oscar
Oscar
4 years 4 months ago

If you get a new g/f who could pay her own bills, you’d have a lot more money.

TB
TB
4 years 4 months ago

HA!

Charles
Charles
4 years 4 months ago

Do you need to be putting so much away for retirement? You should do an analysis.

$500 for emergnecy fund a month? Until when, in perpetuity or until you have a certain amount.

I see a lot of lack of planning and money dumping for the sake of dumping. Prioritize your spending, if anything cut the mergency fund by $140 a month at least that will stop the leak!

Jay
4 years 4 months ago

This one is SUPER easy. Stop paying for your girlfriend’s bills.

Andrew Toburen
4 years 4 months ago
Ramit would probably tell you to automate everything, but I think for you the problem is you have too much automated. you don’t actually know what you spend. What you have presented to us is what you think happens, an imaginary budget, that you break any time you want a new TV or to go out to eat again. Sign up for mint.com add all of your accounts, and actually look at what you spend for a few months. Then adjust what you don’t want to be spending on. You have no clue what you are spending. Otherwise you wouldn’t… Read more »
Kevin
Kevin
4 years 4 months ago
I like your thoughts Andrew. I recently considered signing up for mint.com, but the idea of providing all of my financial info to a website left me hesitant! I haven’t yet signed on, but would like to have a system stare me in the face with data I am certainly avoiding. And I also acknowledge that there are likely pieces of my financial puzzle across the internet already, that could be linked together……or accessed in other ways. That info is probably for sale somewhere! What thoughts did you have about keeping your info secure, and how did you resolve those… Read more »
KA
KA
4 years 4 months ago
Apologies if this repeats what someone said above, I only got through about the first 50 comments. There’s a lot of great advice up there, but some of it is based on assumptions about the missing pieces in this story. From my perspective, the solution comes down something only Richard can decide: prioritizing—the spend extravagantly, cut ruthlessly tenet. If you’re coming up short each month, you need to revaluate what’s important to you—is it saving for retirement, supporting your girlfriend, travel, funding your emergency fund, leasing your car? If you’re coming up short something has to give—at least right now—so… Read more »
SKG
4 years 4 months ago
Hi Richard A., Consider taking a step back to see if you “really” spend what you say you do, where you do. Try Mint.com for a 2 to 4 weeks to see where your money is going. Or, you can try something as detailed as I’ve done, and track your daily expenses in a spreadsheet. Before I knew exactly where my money was going I had a “mental” budget (much like you). My exercise revealed that I spent twice as much on food in reality compared to what I “thought” I spent. Once you get an accurate assessment of where… Read more »
Desi
4 years 4 months ago

I don’t see food listed in his list of expenses. This is one of the places most of my husband and my income goes. Also, I think he needs to look a little deeper and decide what will make him feel like he’s treating himself and what doesn’t. Drop what doesn’t and spend on what does. I think he will feel better about money in general.

TTC
TTC
4 years 4 months ago
I am not really concerned with why Richard is paying for his GF’s bills. That’s his business and should be none of out concern. I would first suggest that you try mint.com and link up all your financial accounts. When you first join, the site will let you know exactluy how much you are spending in each of your areas. One thing that people always overspend on is food and alcohol. Try to itemize how much you spend on groceries, work lunches, going out to eat, at coffee shops, restaurants, fast food, etc. I have a sepearate budget for each,… Read more »
Dan
Dan
4 years 4 months ago

If your a younger guy I would minimize my 401k contributions right now and max out your payments on the house and car to get rid of those interest rates your losing more money on those than your probably making by maxing your 401k also tell your gf to get a job and pay half of her bills untill she is self sufficient financially cut out the eating out start cooking at home it’s healthier and cheaper in the short and long term, fix your car insurance why pay $200 more than you have to be?

Kate
Kate
4 years 4 months ago
I’m going to chime in here to say something a little contrarian: I am not worried about the fact that you’re covering a lot of your girlfriend’s expenses. I’m going to assume that you love each other, and this is something you’re doing to make her life easier. (Dear other commenters: Yes, I’m a woman, but I have paid this much — and MORE — a month towards my then-boyfriend’s living expenses. So suck it. I’m an equal opportunity sugar mommy.) However, I am worried that it’s a sign that you’re actually trying to cut back, and not thinking longterm.… Read more »
Teeny
Teeny
4 years 4 months ago
I agree about the car insurance, it seems high. Shop around, that can be a big win there to get the car insurance lowered. This guy also needs to dig into his finances and find some specifics on how much he is spending, do a money diary, keep track, and once you have more information it is much easier to see trends. He needs to make a discussion about his spending cash if that is really how he wants to blow his money. Otherwise break it down into what he is using it for, and cut back because that seems… Read more »
Bence Pascu
Bence Pascu
4 years 4 months ago

LOL!!!!!!!!
I know where this guy could save about $660 a month if you know what I mean….
I never understood why some guys think they need to pay for ALL of their GFs expense!!!?
I would say “Tell that chick of yours to get off her pretty little ass and get a goddamn job.” of she refuses because shes too good good for a job, then trade her in for someone that is a productive member of society….not a leach.
And I’d tell that guy to grown a set of balls and stop complaining about making $90k.

Thank you

Suzie
4 years 4 months ago

Figure out what your priorities are. Either move to a smaller house, or sell the car and get a second-hand for cheap, or stop supporting your girlfriend*, or cut down on your savings. You can’t do all four.

CR Mayhew
CR Mayhew
4 years 4 months ago
Richard, your lifestyle has obviously changed since you were making $50K/year, as you’re now spending more than $90K/year. Face that fact. You have to get control of your spending. With your income, there is no reason you cannot live within your means. Leave your savings levels as they are. You’ll thank yourself later. Take all of your expenses and multiply the monthly amounts by 12 to find out how much you are spending in each category per year. Then look at each line item and ask yourself, is that worth it? If not, you know where to cut. When I… Read more »
FRB
FRB
4 years 4 months ago

Get rid of the girl friend and find a new one that pays her own bills, has a good job and takes you out to dinner or a movie once in awhile.

Dave
Dave
4 years 4 months ago
1. Why the hell are you paying your GF’s bills? $600 a month? Doesn’t she have a job? If she doesn’t then she has no business having a car loan. 2. You’re paying too damn high for car insurance. Have you tried to rate shop? You might wanna talk to an insurance broker, or get quotes from at least 6 companies and choose the best. 3. I wonder what state you live in. Why are your utilities so high? $230 is more than double what I pay. I pay about $80 for water, thrash, sewer, gas and electricity. You need… Read more »
Anoel
Anoel
4 years 4 months ago

1) Car insurance is too high. Mine is way less and I’m under 25 and live in a big city. Shop around.
2) Not sure what the situation is with the gf, my guess is it’s temporary so it’s not too big of a concern beyond seeing when she can be self-sufficient
3) Easiest way to drop down: take out $100 from the emergency fund, $40 from the vacation fund. It’s not going to kill you.
4) Monitor your spending cash to see where exactly it’s going (automatically if possible) and see if you can take $100 out of it

Nunzio
4 years 4 months ago

One of the first places I would look is that emergency fund savings. How much is in it and how many months of all your expenses would be covered. Everyone’s magic number is different but if that account has a comfortable cushion for you – maybe think about reducing that monthly contribution. You will still be contributing just at a slower rate. If everything was true and accurate about your story it sounds like your budgeting might be pretty solid. I’m trying to avoid cliches like consume less and save more lol. Hope that helps!

AO
4 years 4 months ago

For someone who makes 90K a year and apparently has no kids, it seems that socking away $500 a month for emergencies seems to be over doing it. By my math you would need around $15000 to get by for 6 months; you could easily scale that back to $350 and more than likely hit that mark fairly quickly. It sure beats cutting your girlfriend’s money off and having her be pissed at you!

Denislav
4 years 4 months ago

I think your mortgage payment is high. Better try to find another bank with less interest payment for refinansing.

AR
AR
4 years 4 months ago

In the spirit of Mr.Sethi, start a side business or lease your girlfriend.

Dav
Dav
4 years 4 months ago
I hate to say this and everyone else basically has. But ask your GF to start paying your own way. The $600 is too much. Now this maybe temporary and that is fine, but if this has been going on for a while it is time to take a closer look at things. Is your GF unemployed or doesn’t earn enough, ok then help finance an education course for her. It will help commit your relationship and help her understand that this is for the long run. If she doesn’t like this idea, it is time to think long and… Read more »
Kevin
Kevin
4 years 4 months ago
I think the key is to reframe our understanding of his spending. Some here have questioned why he is spending X dollars on his girlfriend’s bills…….since they aren’t married. Understanding the psychology behind his decision to do so is paramount. For whatever his reasons, he is willing to assume her financial obligations. What did he learn about money growing up? Does he view his role as one of a more historical or traditional husband / spouse ‘provider’ for her? That might explain why he seems to fail to recognize her monthly expenses are negotiable / re-assignable to her. Ultimately, if… Read more »
KO
KO
4 years 4 months ago
I don’t know where he lives, so I can’t say whether or not his bills are outrageous. I’m guessing it isn’t San Francisco, New York or Boston, based on his mortgage. That said, you are paying a ridiculous amount for car insurance. My mortgage is comparable, and my car insurance is $47 a month. He could probably save some here and there, like negotiating better insurance rates. But there are 2 glaring things that contribute. First is what everyone has mentioned, paying the girlfriend’s bills. If that’s what he wants to do that is his prerogative. He needs to realize… Read more »
Matt
4 years 4 months ago

Just cut your expenses. Think of your income as a business. Realize that you will have to make some changes. Find the difference from wants and needs. And then decide what you want…think give up something to gain something..think logically about spending money vs. emotionally making money decisions.

Denise
Denise
4 years 4 months ago

He should get a rewards Credit Card to pay for his expenses and rack up points for vacations & other perks. Scale back on GF’s expenses.

Russ
Russ
4 years 4 months ago
There seems to be some cognitive dissonance going on, he needs to realize where his money is going and that he actually is spending more than he thinks (no food, cable/internet, entertainment or going out in the budget). I’m not concerned about the gf spending, it’s obviously very important to him and not something he wants to give up. I think all the posters commenting here telling him to dump his gf need to get a clue, normally iwtytbr readers are better at not being judgmental about a person’s spending. We have no idea what their relationship is like, how… Read more »
Diva
Diva
4 years 4 months ago

If “gf bills” means girlfriends bills, stop paying them. You’d save yourself $600 a month. She can pick up the slack and not only will you be out of the red, you’d be back in the black plus a few hundred to spare.

If not, cut back your vacation account. You can find great deals online and take a more budget conscious vacation as vacation isn’t a must, it’s a ‘nice to have’. When you’re in the red, cut the non-necessities

Raymond
Raymond
4 years 4 months ago
Wow, I have no words to describe how I feel after reading this line – “If she’s awesome, you’re being cheap. Having a pet can cost more.” @shrmaj – You can’t put a low price on awesomeness. Ask Ramit! I hear his courses are awesome. Seriously though. Did anyone asked why he’s paying her bill. Is she in grad school? Is she disabled or had a serious accident? That can totally change how you give advice to a client or friend. The pet reference actually came from my neighbor that paid a vet bill of $5k when her black lab… Read more »
Christine Gonos
Christine Gonos
4 years 4 months ago
1. I would reevaluate why I am spending $560.00 a month supporting the use of a car. Btw, it must be a pretty fancy car for that kind of premium…..unless there is more to the story…. 2. I would reevaluate why I need a Roth, a 401K and an emergency fund to the tune of $900 plus a month? I’m assuming your 401K contribution is around $200 a month or so? So we are at $1100 or so a month. What are you thinking? And why? 3. What do you do about food? Eat out, in? 4. why is your… Read more »
TD
TD
4 years 4 months ago

Re-evaluate your current spending. Determine a financial goal (ex) spend $140 less so you don’t go over your monthly income. Create a cash flow sheet, reallocate monthly distribution and stick to it. (ex) 10% cash to spend, 5% traveling funds 10% girlfriend, etc. Fixed costs are fixed costs, but other costs that are not fixed you have control over. Creating a goal is important, but executing it is even harder. Live within your means.

Mustapha
Mustapha
4 years 4 months ago
1. Reduce car insurance by   A. Shopping around   B. increasing deductible  2. Increase take home pay for you and your gf   A. Making sure w-4 is filled out correctly   B. work a few more hours if paid hourly   C. get a second job   D. Check health/life insurance to see if you are over insured 3. Reduce other expenses by   A. Paying off the car with and extra savings you might have (this will also help with the car insurance )   B. eating out less 4. Optimize accounts by  A. Getting a good… Read more »
Lucy Ra
4 years 4 months ago
Seems like Richards priorities are to save money (IRA, 401K, savings, emergency fund) which is great. However, he seems to get rather emotional about $140 over monthly income. Realistically, $140 is not that much. That means that it shouldn’t be hard to control it. Ramit mentions that cash can be very bad because it’s harder to keep track of. Richard can trim down his $400 spending cash to $200 spending cash and that will take care of a) that $140 and b) keeping track of where that cash is really going. If he wants to keep maxing out on 401K… Read more »
Alex
Alex
4 years 4 months ago
What struck me as odd is how much you out away to your emergency fund each month (at least I think that’s what you meant; a little difficult to interpret). Anyway, I’d say leave enough in your EF account for just that, emergencies and out the rest towards paying off your car. While it is good to have money set away for a rainy day, it would be better to pay off that car faster and save on the interest…also you can renegotiate your insurance once it’s paid off. After the car is paid, put the money you were spending… Read more »
Sid
Sid
4 years 4 months ago

The douchebag is paying $600 for the bills of his gold digger girlfriend to whom he is not even married!????!!!

WTF???!!!!

If he cannot see this mistake he sure does not deserve any advice..

Truly common sense is uncommon

Brent
Brent
4 years 4 months ago

“car ins – 260”
WAY too high. Get liability only and put the “savings” into your emergency fund. No reason to pay a company for something you can do yourself.

“gf bills – 600 (car, ins, medical, etc)”
What is this I don’t even…see other comments about wives vs. gfs.

“gifts – 80”
While this may be admirable, who are you spending $960/year on for gifts if your gf expenses have already been outlined separately?

Lacey
Lacey
4 years 4 months ago

You pay your girlfriends’ bills??????

Matt
4 years 4 months ago

I think these numbers are probably rough estimates. If he did more precise tracking he’d probably be surprised that several of the expenses are actually higher.

I noticed there’s no separate category for food. If he doesn’t cook and gets takeout every day, he might be spending $15-$20 a day on food. However, since the cost of each meal is small, he forgets about this expense. It could be as large as $600 per month.

Liz
Liz
4 years 4 months ago
Okay, don’t know if anyone has said this before, I got through about 100 comments and then started to get frustrated at people. First, keep the girlfriend, the car, the house, and the retirement. These are lifestyle choices that you can afford to make. Don’t let anyone tell you to dump your girlfriend because you’re paying her bills. That’s just ridiculous. They have no idea what your situation is and have no right to make judgments. Also, it would probably be less expensive to bike everywhere you went, but that’s also a ridiculous proposition without knowing your situation. Come on… Read more »
Doug
Doug
4 years 4 months ago
A few major issues in my mind: 1) He is getting killed on taxes if he really only nets 60% of his pay (granted there is some 401(k) deduction included 2) He needs to rethink his philosophy of living in the now! He is deferring so much money and won’t be able to use much of it. He has the right mentality to become wealthy just a lack of understanding how to really do it. Go ahead and skip the ROTH IRA until you fund your emergency fund to your comfort level, this may only take a few more months… Read more »
muhammad
muhammad
4 years 4 months ago

i want to be rich yes

Andrea
Andrea
4 years 4 months ago
Wow….reading the comments is almost as interesting as the original question. Most people have already pointed out the obvious….it looks like Richard doesn’t have a handle on where his money really goes. I’m disappointed but not suprised to see everyone jumping on the GF expense like a pack of rabid wolves. Seriously, put your money into the things you care about…if it’s $600+ a month on the GF that’s his decision and not our place to judge. Richard needs to figure out where he’s really spending his money, what he wants to be spending it on, and then automate to… Read more »
Christina
Christina
4 years 4 months ago
I think the comments about Richard needing to actually track what he’s spending are spot-on and I wasn’t going to chime in until I read the hundredth comment about his “gold-digging” gf. The fact that “medical expenses” is included in his list of things he is covering for her was the first thing that caught my eye. Maybe it’s just because I’ve helped a former SO financially when he was disabled and struggling through the SSDI process, or maybe because I’ve been dealing with a “pre-existing health condition” since my mid-twenties (after being fit and healthy up to that point,… Read more »
Satish
Satish
4 years 4 months ago

The girlfriend is a leech. Have her get her shit sorted out, if she doesn’t, DUMP HER!!.

mcarson
mcarson
4 years 4 months ago
He’s leaking cash somewhere. I’d pay all the bills the usual way – card, check, online, whatever. Then I’d take out cash for everything else – gas, clothes, groceries, entertainment, anything that you don’t mail away each month. Keep track of where the money goes, make categories of spending – snacks, meals, whatever. Gas, clothes, work expenses. There will be something there – I don’t know what, but you’ll see it and know what to do. The people I’ve done this with have discovered they were spending $5,000 a year on maintenance eating out – not for fun, but because… Read more »
Joyce Noel
Joyce Noel
4 years 4 months ago

I doubt you really need $500 a month for an emergency fund. Cut that back by $140/the amount you are short.
Also, are you paying for your gf’s expenses? I mean, that’s awesome, but certainly an area that could be reduced.

Rick Francis
4 years 4 months ago
>How am I spending more than that a month? I just don’t understand. My lifestyle hasn’t changed from when I was making $50k/year. What really matters is your spending not your lifestyle. If the prices of major things in your lifestyle have gone up a lot so will your spending. You may also find that your spending has crept up without notably improving your lifestyle. Looking at your actual spending could find areas where you could cut back without losing much quality of life. The money went somewhere- If you are interested you could track it: I suspect you use… Read more »
Sherri
Sherri
4 years 4 months ago
One look for a cheaper Insurance, and why are you paying your girlfriends Car insurance and medical? She needs to get a job and work like the rest of us! I would put a little less away for vacation! But that is just me! there are a lot of things that you could do that are free! Or semi-free! There are a lot of great deals as far as vacations ever considered 1/2 off deals, you can find some nice places to go and do things with an all inclusive deals. I would cut half of that money on vacations.… Read more »
DanP
4 years 4 months ago
Ramit, to be honest with you, the actual guy you wrote about is sort of boring. The most interesting part are the comments and what people’s thoughts are on the “girlfriend.” THere are far too many comments to have read them all, but from the ones i did read, comments like calling her a leech, and asking why he is paying her bills. I’d be curious to know how this would be taken if he had said his “wife’s bills” or had even lumped in the bills are “our bills.” The way it is presented is extremely interesting and I… Read more »
CR
CR
4 years 4 months ago
Dear Richard, First off, you’re only below your plan because you’re still building your emergency fund. You’ll be up $360/month once that’s full. But you can still improve on that… After taxes, your three biggest expenses are your house, your girlfriend, and your car. Let’s focus on those big items. On your house – what costs can you lower? Can you refinance the mortgage? Can you raise your insurance deductible now that you’ve got an emergency fund? Maybe you can figure out how to lower your utility costs? Your girlfriend. If you’re going to spend that much on her, how… Read more »
Ken F
Ken F
4 years 4 months ago
To channel my inner Remit I’d say that this guy has some invisible scripts. One says “If I make $90k I should be all set if I don’t live an extravagent lifestyle.” Another invisible script is “If I make enough, I don’t have to worry about the details… set it and forget it”. I’d challenge both of those statements. I’d also point out that if you are putting $900 into an emergency fund + a retirement plan, you can’t aren’t in the red by $140/month. If you want to put that much away AND still maintain your current checking balance,… Read more »
Ken F
Ken F
4 years 4 months ago

Unfortunate typo. Sorry, Ramit, for the misspelling.

Chris
Chris
4 years 4 months ago

Whether we’re talking about the missing dollars (from going out most likely) or throwing his money down the well (e.g. girlfriend’s expenses), it’s very clear:

This guy is dedicated to not knowing where the money is going. He has some other motivation (probably – again – girlfriend-related), and is blind to the obvious realities as a result.

(Fact: That’s all of us to some degree or another. Denial is really hard to overcome, whether we’re talking about little foibles or really problematic behaviors.)

Bold Khan
Bold Khan
4 years 4 months ago

The problem is that Richard set up his spending and saving pattern without creating a conscious spending plan. Everything here, even what people attempt to provide solutions for, is guesswork without a real honest & budgeted spending plan.

-Bold

Jeffrey B.
Jeffrey B.
4 years 4 months ago

Dude,
You’re budgeting $500 a MONTH for your emergency fund…but your complaining you’re over budget? Uhh…I have to believe you’re all set for your emergency fund at this point(?). Holding on to the caronce it’s paid off would help…and maybe trim the vacation savings a bit.

-Jeff B.

Helen McDonald
Helen McDonald
4 years 4 months ago
I am impressed with Richard’s savings; seperate amounts each month for vacations gifts and emergencies, maxing out the 401K and a Roth. Way to go. I am earning about half of Richards salary (also pre tax). I do not have any of his car expenses and my mortgage is a just over a third of his, my savings are one general account to cover everything that gets 250 a month and all travel, gifts etc have to come out it. I also have a Roth that gets 300 a month, but my pension is a 403b into which I put… Read more »
Sarah Kathleen Peck
4 years 4 months ago
Most of the comments seem to be geared towards tactics (here’s how you save money on car insurance!) or choices (drop the girlfriend!) but I would argue that it doesn’t matter what Richard spends his money on — that’s up to him. It’s a hard one to figure out because the numbers are baffling and not specific enough. I think he needs to step back and actually figure out what he’s really spending his money on. Three months of credit card statements and more information would help him figure out what he’s actually doing (for example, food?), and from that,… Read more »
Daniel
Daniel
4 years 4 months ago

Hi Richard,

Grab a spreadsheet enter your “fixed” costs and along with your income translate everything to a daily figure. That’s the amount you can spend on “stuff that isn’t a fixed cost”

Once you have a daily figure, track what you spend, one cell per day and stay under that “stuff” amount. I suspect you’ve never seen how much you spend laid out before and you’re in for some pain finding out.

Good luck, budget well =)

~Daniel

Jessy-Cher
Jessy-Cher
4 years 4 months ago

So…………….. Are you paying the mortgage by yourself, paying the girlfriend’s car and insurance AND CELLPHONE bill???

And a old school song :Why don’t you get a job!!!

Sara
Sara
4 years 4 months ago

Wow, 300+ comments in one day. This one might surpass the wedding spending post! People on the Interwebz sure do love being asked for their opinions.

Jessica P
Jessica P
4 years 4 months ago

Honestly, there’s no need to spend so much on gifts and spending money– some of the BEST activities are simply time-based– a nice long walk, a movie ON Netflix.

I don’t even get 16k a year busting my butt and trying to make sure my son goes without. Must be nice! His college fund would be fantastic if I was making 50k a year!

Marco
Marco
4 years 4 months ago

I hate when people tell me to cut my expense.
Instead, take the 900$ in emergecy/roth ira for 1.5 year and invest it in dividend paying stocks of 5-6% per year (yes, they exist). That should balance the books…

Irving
Irving
4 years 4 months ago
I think all of these comments are traditional advice, which is not Ramit’s style. We all could make a better budget, but would we stick to it? We all can negotiate better rates for expenses, but do we do it? I don’t think this guy is doing bad at all. He is maxing out his retirement accounts and contributing a significant amount to savings, as well as budgeting for things like vacation so I presume he is not using a credit card. We don’t know the story of his girlfriend to judge whether or not he should be giving money… Read more »
Tatyana
4 years 4 months ago

This guy is so lucky! He already has 263 advices and plus he is making so much money!
I wish I had so many personal comments on my financial situation which is much worse!
🙂

Liberty Gaither
Liberty Gaither
4 years 4 months ago

As has been said, your gf costs should be nonexistent. Make her pay her own way. She needs a job, if she doesn’t already have one. She should not use a guy that she is not married to (I am assuming that you also do not have children together).

And your spending costs could be cut just a tad, I’m sure. Any non-necessity can always be cut in times of dire circumstances.

Rachel
Rachel
4 years 4 months ago

What kind of car costs $300 a month, but is $260 a month in insurance?

What is he spending $400 a month cash on? Need a breakdown in order to see where he should cut back.

Susan
Susan
4 years 4 months ago
First off, this is the first time I’ve decided to take part in one of your “assignments”, though I’ve been reading your emails for quite some time now. I hope you aren’t terribly disappointed with me on this… Well, right off the bat I can tell you that $70.00 for misc expenses is, no offense to Richard, a joke. When I finally took a moment and added up 1 month of my own “miscellaneous” spending, I was sick to my stomach. [tangent] Cigarettes in Chicago are $8-$10 a pack and I smoke the brand that’s $10. Even when I drive… Read more »
Juliana
Juliana
4 years 4 months ago
I’ve read most of the comments, and I think the issue isn’t whether or not he’s supporting his supposedly indolent, layabout girlfriend or putting too much into his 401K and Roth. It’s that the money is going someone, and he doesn’t know where. I signed up for Mint.com on Ramit’s recommendation a couple of years ago. I was skeptical as hell and figured it was going to be as effective as an online weight-loss site, but it showed me I had exactly the same problem as Richard: where the hell is my money going? Look at all of the things… Read more »
Sally
4 years 4 months ago
Ramit, this is an interesting case study… For one, this man is putting a LOT of his money into savings and emergency funds BEFORE he pays off his debts. He needs to concentrate on getting rid of his car repayments before worrying about an emergency fund. And, what’s the point of putting all that money into an account you can’t touch until retirement when he could be using it to reduce debts he has now. He mentions that his lifestyle hasn’t changed but doesn’t seem to realise that he’s not just supporting his own lifestyle – he’s paying for someone… Read more »
Jessica H
Jessica H
4 years 4 months ago
She’s your girlfriend, not your wife….So stop paying her bills (unless you can consolidate, like getting her on your various insurances, which would be cheaper). Also, do you really need to spend $400 on misc. stuff? $80 for gifts? $240 for vacation funds? All of these numbers seem really arbitrary For your bills, definitely try to haggle down the insurance rate and the cable/satellite tv, internet, etc – Many of these companies will happily lower the bill to keep your business. If they won’t, let them know you’ll be switching to their competitor. Stuff like that is super-negotiable. And how… Read more »
Jen B.
Jen B.
4 years 4 months ago
In looking at Richard’s breakdown I see some things missing: he has not factored in groceries, gas, if he takes a toll road to work, if he has a gym membership, HOA fees, or other expenses that he might not be considering. Of course he might not have any of the latter expenses, but I feel there is a bigger piece of the puzzle missing here. I totaled up his expenses and figured his monthlies to be 4480 and that he is spending about 53760 on bills alone in a year (forgive me if my totals are off, I was… Read more »
Caitlin
Caitlin
4 years 4 months ago
He seems to be doing just fine if he has maxed out IRA contributions, has an emergency fund, has basic expenses covered. Far be it from me to criticize. Aaand..So What if he covers some GF expenses–that is his choice! He already has his own *** covered. I am sure she would do the same, but not be so public about the whole affair. If he wants to rein in that extra 140 overage, I am sure he will–if he really wants to do so. My best advice is to read Ramit’s book, and highlight pages that show one how… Read more »
Susan
Susan
4 years 4 months ago
That was exactly my point. By my calculations, based on his net income and just the expenses he listed, he should be coming out at least $1,400 ahead each month. And that’s exactly the issue, it’s based only upon the expenses he listed, which I guarantee he was estimating off the top of his head. I noticed he took the time to let us know that he makes 90k/yr PRE-TAX. This tells me he clearly doesn’t even know how much he’s paying in taxes! I can answer this for ya, roughly 15-18k/yr depending on if he bothers with deductions and… Read more »
William Lipira
William Lipira
4 years 4 months ago
Well, first of all lets break down his salary. 90,000 a year should equal 2700 per paycheck (a bit less with 401k contributions). a 300 car payment is either for a really cheap car (my montero sport pmt was 650 in 2001, 25,000 car/my 2006 scion pmt is 400, 16,000 car), oryou’re leasing it (bad idea). 1400 a month mortgage should be for a 375,000 house (or a cheaper house with high interest). Car insurance is about standard. Utilities, there is no way that 230 is paying for that big a house. So either there’s guessing on some things, or… Read more »
Cathy
Cathy
4 years 4 months ago
I agree with those that say the girlfriend is an unnecessary but acceptable expense. I think this person’s problems simply stem from an incorrect assessment of where his money goes and an unrealistic attitude about money – he thinks he shouldn’t have to worry about it at this stage of his professional life. The phrase, “I make a good wage so I’m not the kind of person to sit down and look at numbers very often…” says it all. We think that once we reach a certain income (whatever we define as “a good wage”), once we have “made it”,… Read more »
DJLee
DJLee
4 years 4 months ago
Agree with most people that the alarming item would be the girlfriend’s bills. That’s almost $700 a month gone. Assuming that if you are paying all/most of her bills that she is not contributing to the mortgage? Re-assess if both of you need a car EACH, considering you do not have dependents or children. What is you end-game? While putting aside money for emergencies and IRA, you have not allocated resources for investment purposes. Imagine having approx $700 to invest in a Managed Fund or save up to purchase stocks? Perhaps look to cut down the vacation budget into half… Read more »
Joann
Joann
4 years 4 months ago

I’m confused. 90K per year = $7,500/month of cash on hand to disperse into savings, etc.
Where is his grocery money? What does he spend on eating out?
I only added up to about 4,480 here. That sounds like “I’m doing OK. Let’s to out tonight, honey” to me. What does he spend on internet? Electronics? The spending is way off someplace. I see a spending diary as helpful here to help him understand where it may be going.
House Expenses? Car repair? Gasoline? Dog? Taxes? There’s just a lot left out.

Kerrie
Kerrie
4 years 4 months ago
A monthly check on expenditure doesn’t cut it! And all that spending on your girlfriend is not doing you, her or your relationship any favors.  At your level of income, it seems OTT that you are making car payments instead of owning a car already. What type of car is it? How much interest do you pay on those car payments. Cars are a liability, not an asset (they do not increase in value) so don’t spend up big on a car. Ideally you should start with a small car you can buy outright and then save for something better.… Read more »
Juan
Juan
4 years 4 months ago

Stop working for your GF, she is clearly the financial priority on your cashflow statement. Stop paying for her bills.

Natalie
Natalie
4 years 4 months ago
Hah, hah. Feels like you all fell into Ramit’s trap. 🙂 When I read posts like these, I automatically think, “Okay, what’s the question behind the question?” What’s Ramit trying to “test” about our psychology? The psychology part (I think) comes from this part: “Other than that I don’t wear fancy clothes or drive a fancy car or do/own anything I’d consider “rich people” things. He’s got this perception of “rich people” fancy-things as somehow being an excuse for exceeded one’s budget! Also this part: “I make a good wage so I’m not the kind of person to sit down… Read more »
Joy
Joy
4 years 4 months ago

Yes.

Jen B.
Jen B.
4 years 4 months ago
Natalie, you have TOTALLY nailed it! Richard’s statements about ‘i am not the kind of person to sit down and look at numbers’ and ‘i don’t buy rich guy things’ or whatever the wording was is EXACTLY the thing I think Ramit was trying to get us to evaluate. There is never a point in your life where you should not carefully manage your money. Just because you make enough to cover your bills doesn’t mean you can buy whatever you want the rest of the time, a lesson I learned the hard way! And you’re right, Richard is absolutely… Read more »
John Sullivan
John Sullivan
4 years 4 months ago
You mention 90k/year without taxes. With taxes, you net $75k/year. Your expenses add to 55k/year. Where is the other 20k/year going? I dream that 16.5k/year goes to roth401k and is matched, but likely it’s not. The real root of your problem lies in the unaccounted section. I imagine your $70 ‘misc’ section is actually closer to $1500/month. In the accounted section, there’s no reason you should spend 600/month on your GF’s bills. That you write ‘gf’ instead of ‘girlfriend’ or ‘loving soul companion’ only reinforces this. Spend 100/month letting her know how much you love her and save $5000 a… Read more »
jenn
jenn
4 years 4 months ago

Most of your expenditures seem reasonable. I would be more specific about your spending cash and gifts numbers. What kinds of things are you spending cash on? What are you spending on entertainment, movies, dining out? Is there anything there you can cut?

Terence
Terence
4 years 4 months ago

dont know if this has been mentioned yet but, have you read Ramit’s book and automated your finances. I think the point is for you to dummy proof your finances so you wont over spend. 90k should be enough for 2 people to live on especially seeing as how you’re paying 1400/mo for your home.

Besides that i would say stop living like a married couple and tell your girlfriend to find another way to get her bills paid.

Maxcina
Maxcina
4 years 4 months ago

Richard, you can’t pay all your girlfriend’s bills. That’s one of the biggest drains on your cash-flow. While I commend you for taking care of her (lucky girl!), if she’s truly her own, self-respecting woman, she will pay for a number of things for herself. Namely, her car, the insurance and a number of other things. You could also cut down the spending cash a bit. You’re probably buying a lot of knick-knacks/stuff that you don’t REALLY need but just have the money to buy so you do.

Eleanor
Eleanor
4 years 4 months ago
Hmm – many questions. How many pre-tax deductions are you taking? 401k? Medical? FSA? assuming absolutely no pre-tax deductions, and you’re filing as a single person, and your state does not have an income tax you would be looking at the following: $7,500 – gross monthly income -465 FICA -109 Medicare – 1,610 Federal Income Tax = $5,316 month available So, adding up the expenses declared, you have a total of $4480/month – and should have an additional $836 to use given the $5,316/month example. GF expenses = 13.4% per month Car total is: $560/month or 12.5%. Mortgage = $31.25%… Read more »
ration
ration
4 years 4 months ago
Maybe the problem is his lifestyle hasn’t changed relative to what he spends. Being rich isn’t about saving money, it’s about making it. He needs to maximize profits maybe? I can’t really tell him to stop spending money on certain things. I have no idea where he lives, his costs, and other stuff like that. I can’t really nitpick on the expenditure, but who wouldn’t benefit by more money. I also won’t talk about the girlfriend (although it did pop out at me first). Do whatever you have to do. I’m not here to judge you on how you live… Read more »
Shaun @ Money Cactus
4 years 4 months ago

Sure you could try negotiate some of your bills, or restrict your spending money a little, but I think I see a bigger problem. If GF = girlfriend, then I think we have found it. Why are you subsidizing your girlfriends living expenses? At more than $600 per month she better be doing A LOT of cooking and cleaning! Get her to pay her own way mate and you’ll have more to spoil her with as a result.

Marianna
Marianna
4 years 4 months ago

As has already been mentioned- why is he paying his gf’s bills? Is there more to that story?

If that is non- negotiable, he could consider ways of making $140pm in side income, which really isnt that much, and could be earned in one hour!

He could also look at shopping around for insurances & utilities to see if he can save on these.

Are his payments automated?

Isaac Sobol
Isaac Sobol
4 years 4 months ago

First of all, I’d question how vacation and gifts qualify as basic essentials.
Seems to me that if you are spending more than you net each month, those essentials should be changed to non-basic elements.

Moika Ori Isaro
Moika Ori Isaro
4 years 4 months ago

Heap I second Samanta. Girlfriends bill is too high. Please drop her allowance down she doesn’t deserve to earn that much from you.

Kaylen
4 years 4 months ago

I need a “like” button for Lindsay’s post #236. This is what your girlfriend should be doing for you if you’re paying all the bills. Fair is fair, and if she can’t work, then she can “work at home”.

John
John
4 years 4 months ago

How about moving in somewhere cheaper? The $1400 mortgage is quite hefty.

charles
charles
4 years 4 months ago
Had the same thing happen to me and its why over 6 figures doesn’t feel rich. Your pie expanded via making the slices bigger NOT just the “free cash” slice as we would picture in our minds. Income roughly doubled, tax slice more than doubled, 401k contribution roughly doubled etc. At 50k you look at different cars than 100k so there is expense creep, and in the end you spend more on all the same things. In my case I went from a 30 year to 15 year mortgage because I could. This lead to a push of lifestyle payoffs… Read more »
Tiffany
Tiffany
4 years 4 months ago

I would say the GF would be the expense I would cut because clearly she cannot manage her finances and is relying on Richard to bail her out, unless she has recently been put out of a job, she really needs to toughen up and get a better job with more money or cut her expenses

Robert
Robert
4 years 4 months ago
I think the biggest mistake Richard is making is the psychology encapsulated by his statement below: “I make a good wage so I’m not the kind of person to sit down and look at numbers very often, set it and forget it right?” Sitting down and looking at the numbers has nothing to do with your wage, so I have no idea how that correlates to you being ‘that kind of person’. I think there is some sort of guilty, underlying fear, that you are spending your money badly and you are unafraid to track your expenses to confirm it.… Read more »
Prabir
Prabir
4 years 4 months ago
I was in your place a few years ago. Single, making around $90k per year. That’s when you realize how high taxes and car insurance can be. I would: 1. Continue maxing out the 401(k) and Roth IRA especially if the 401(k) is matched. 2. Reduce spending on girlfriend. If you marry her, your taxes will go down (assuming she makes quite a bit less than you). Otherwise you shouldn’t be supporting her. Only exception is paying for eating out (I’m old fashioned). 3. Is your Roth IRA account over 5 years old? If so, you can withdraw those contributions… Read more »
Tiffany
Tiffany
4 years 4 months ago

Well, it’s hard to give advice, because these obviously aren’t the only expenses or it would add up to somewhere around $90,000 when you add all the numbers together and multiply by 12. It seems like there are some major spendings that he isn’t wanting to factor in. If he wants to pay for his girlfriend’s expenses there is nothing wrong with that, but he’ll either need to spend less or save less to balance the budget. It’s simple math.

Malia L
Malia L
4 years 4 months ago
So I just started re-reading IWTBR after buying the book when it first came out. I would tell this guy to write down every time he actually watches Netflix and go the a la carte route if he’s not making it worth the watch. Red Box/Hulu could be better options. I would also make an envelope for personal care funds. Also sit down with moochy girlfriend and see what she’s contributing to the relationship financially. Read the chapter about having the discussion regarding who pays for what and how much. Don’t attack, but it definitely needs to be examined.Definitely do… Read more »
Melissa P.
Melissa P.
4 years 4 months ago
Step 1. Does your company match your 401k contribution? If yes, contribute up to that amount, and only that. For now. Step 2. Discontinue your Roth IRA payments. For now. Step 3. Discontinue your vacation savings. For now. Step 4. Add up your previous vacation savings, Roth IRA payments, and what remains of the previous 401k after the match and add that to your monthly emergency fund payment. Without the 401k money (an unknown right now) this equals $1440/month. Actually, forget the 401k money–that will go to cover your shortfall. Step 5. Pay into your emergency fund until you have… Read more »
RS
RS
4 years 4 months ago

Why The’F are you paying your girlfriends bills????!!!!!

Are you an idiot or just the most whipped guy of all time?

Get your head out of your ar$e buddy.

Greg
4 years 4 months ago

This dude is retarded – drop the girl!

SV Nagappa
SV Nagappa
4 years 4 months ago
The question is are you being honest with yourself? many of us think we are spending a certain amount but tend to exceed. Do yourself a favour every time you spend money put the receipt in a ziblock bacg. If you dont have a receipt write a small note and put it in the bag. Do it for 6 months to a year. Now sit and categorise it and see where your money is going and sneaking up on your spending. Many a time a coffee here a ice cream there are the answer to excess spending. Dont tie your… Read more »
Alex B.
Alex B.
4 years 4 months ago

Car insurance $260/month??? You got to be fisting me! I disagree with everyone ripping on you for paying for your girlfriend’s bills. I like to think that she earns that money by pleasing you so I won’t judge. You should consider taking public transportation and cabs each month if possible, instead of paying out of your ass for insurance. Or call other insurers and say, “Hi, I have a hot girlfriend that is high maintenance but performs in bed. Give me a competitive quote please. Thanks.”

Doug
Doug
4 years 4 months ago
Wow. I’m amazed at all the emphasis on “tracking expenses.” I’ve done it, but gradually quit because the payoff was so low relative to the time and effort required. F’rinstance… Suppose I spend half an hour or so per month setting up a system that tells me unequivically, yes, I spent $134.15 on gas this month, and that is $5.27 more than last month and $3.37 less than the previous year. So what? How does this information get me to the goal of having more money in savings or investments or paying off debt every month? Suppose instead I spend… Read more »
ishara
ishara
4 years 4 months ago
Wow, you are grate lover… never be upset to spend 600 for your girl, you might do some cash from part time work, probably ya… you are going to lose some talk time with your girl via phone, I have an idea for that too. Go out shopping with her for once a week, so she never wants you to bother about her for whole week, So that makes reduce your Telephone bill, As psychology when you are talking with your Girl Friend, you feel like it’s too much and you really don’t need her. But if you meet her… Read more »
Kris B
Kris B
4 years 4 months ago
Richard, You are an emotional spender trying to offset those choices with what you perceive are smart (unemotional) choices. Having a plan will help meet your goals when the emotions come knocking. 1. “I’m not the kind of person to sit down and look at numbers very often,” Become that person to gain the results you want. Results will be your reward and that will hit the emotional button you crave. 2.”I spend $140 over my monthly income each month on just basic expenses, savings and retirement! ” Pay debt before saving and retirement. It is logical. Savings interest rates… Read more »
Jaron Banks
Jaron Banks
4 years 4 months ago
The first thing I noticed about the language in the e-mail and the budget is that there is no focus on growth. Not one dollar is being spent on education, classes, books, etc. A person would not leave this type of stuff out so obviously it’s not happening even with some of the mystery areas of the budget. Which brings me to my next point, if you are going to keep a budget at least list everything accurately. What about food, groceries??? If that is considered a misc. expense then we have a serious problem with priorities which obviously explains… Read more »
A-ron
4 years 4 months ago
I love the “dump the girlfriend” comments. Do you practice what you preach? Of course I do, just because I’m so awesome. Anyway, I don’t see a problem with this dude’s situation. All his bases are covered better than 99% of the folks in the world (including myself). My advice would be to adjust in areas of excess to account for the extra spending. Unless he’s got a psychological addiction to spending $140 over his income each month, just make a slight adjustment to the automation system in place and funnel a little more from the savings bucket to the… Read more »
A-ron
4 years 4 months ago

Just to clarify, in no way would I suggest dumping the girl unless it makes him angry or bitter, or he’s doing it just so she’ll stay with him. I’m sure she provides value in other ways 😉

liss
liss
4 years 4 months ago

One of the best comments here. This guy does indeed “have his bases covered better than 99% of the folks in the world”.

The only (teeny-tiny) mistake with your suggestion to adjust a little to make up for $140 is if that isn’t an accurate number, but if for the last six months he’s been $140 over then absolutely a little tweak to “set it” different means he can “forget it” again.

Jenny Blick
Jenny Blick
4 years 4 months ago

You are spending money like a high-roller but 90k is not “high-roller” territory even if it were just you footing the bills.

Dump the girl and whore it up with prostitute instead.

Monthly Cost = $20 x 10 == $200
VS
Girlfriend Cost = $670

Instant savings = $470 a Month and Over $5000 a year!

Michael
Michael
4 years 4 months ago
car payment – 300 ->Why not pay this off instead of paying interest? mortgage – 1400->Fine car ins – 260->This equates to $3120 a year! I pay around $1300 so either you’re a VERY BAD driver or your car must be a Ferrari. Since you said you don’t have an expensive car I assume you must be a very bad driver. But either way you should be able to shop around and lower this at least $1000/year. water/elec/gas – 230 – Fine depending on where you live but it does seem about $30/month too much to me misc expenses (netflix,… Read more »
garrett
garrett
4 years 4 months ago
Richard A. Rather than trying to cut out $140 of expenses of a life you appear to be enjoying, consider putting together a plan that provides value to your employer. Then asking for a 10% raise (~$450 extra a month) would be no issue from your employer if you’re contributing a greater value than what you’re asking. Alternately, you could look at freelancing part time to provide an additional income stream. This could be more useful in the long run because it not only provided additional income to allow you to enjoy your life and make you more secure in… Read more »
estelle
estelle
4 years 4 months ago

I think you are not clear about where your money really goes, which is obvious from your email. And that there are undisclosed items in your spending, you did not mention because you simply did not realise you also spending your money that way.You should track your expenses better
Another point is that you keep basically little portion of your earnings on retirements and savings. There is no mention of investing your hard earn cash. Why are you paying your girlfrinends bills?And on last thing, why is your car insurance so high, are you really keeping your lifestyle simple?

Rachel
Rachel
4 years 4 months ago
Dude, get a pad and paper and start actually writing down what you spend! I just eyeballed your figures and it looks like you can’t be “spending” more than around $55,000. Sure, you gotta figure taxes – but that’s only gonna be about one-third of the total salary. It’s real simple – you’re missing some spending in there. Hey, you’re not alone – the first time I looked at the notebook where I kept track of ALL my expenses was an awakening. If you’re too disorganized to keep writing down what you spend (my hand goes up here too), try… Read more »
Mike
Mike
4 years 4 months ago

Introduce the girlfriend to Earn 1k. Reduce the emergency fund amount so you do not cross your monthly spending. Negotiate or shop around for expenses that can be(insurance etc).

Tim
Tim
4 years 4 months ago

He may be paying her bills to financially dominate her in the relationship so he has all the power which may make him feel good. Or he could just feel good by being the hero and helping her out when she is down. Can’t say without observing them together, but either way it is not sustainable on his income.

Jason
Jason
4 years 4 months ago

Stop paying the gf’s bills, frees up $600.
Reduce the amount you are putting towards the 401k by 3 – 5 %.
With that extra money add $100 towards the payment of your car and your mortgage. That will speed up getting rid of those bills. Any extra cash at the end of the month can go into savings or the ROTH, or towards a good investment like a rental property.

Christian Sullivan
Christian Sullivan
4 years 4 months ago
PSYCHOLOGY OF THE SPENDING: First, ignore the noise of people saying “cut the girl”. If it’s $21,000 spent at the bar, or on the girlfriend, or a wine collection, who cares? Do everything else right and you can spend your cash guilt free. Key Steps and realities: A. You need to ” TRACK YOUR SPENDING” B. You “SPEND MORE THAN YOU REALIZE” C. You need to READ A BOOK. FIRST START WITH RAMIT’S. THEN I SUGGEST YOU GOOGLE 2 AUTHORS, TOBIAS AND KIPLINGER 1. Sit down and look at the numbers! You have a system of unconscious spending. You need… Read more »
Venkatesh
Venkatesh
4 years 4 months ago

I don’t see any expense in Richard’s list to be a luxury item. I do agree with some comments below like saving on car insurance or getting rid of the gf ;). But personally i don’t think thats going to help him save any substantial $. I think he should give part-time jobs (like tutoring for couple of hrs in a week) a serious thought. He must have some skill-set, i would guess, especially since someone is paying him 90k.

Richard Anthony
4 years 4 months ago

Richard, do you and your girlfriend eat? I see no mention of food, groceries or entertainment (other than Netflix) in your budget. Generally, most of the previous commenters have addressed your problems intelligently and well. You just have to figure out what areas to cut back on and do it. (Except eating, of course;) In the context of your overall budget, shaving $140. a month seems like child’s play.

Grumpy
Grumpy
4 years 4 months ago
Seems to me this is one of the situations where Ramit’s ‘earn more’ strategy doesn’t apply, as you’ll keep spending whatever he earns. If the monthly shortfall is going on the credit card, stop doing that! The cost of credit is almost several times what you’re getting on savings and investments. Then to try to restore monthly savings to the desired level, look at the bigger ticket items for ways of getting ongoing automatic savings (eg, tell the mortgage provider that you’re ready to go elsewhere unless you get a better rate – unless you’re already getting an exceptionally good… Read more »
Ann Mehrman
Ann Mehrman
4 years 4 months ago

Not sure if he is really considering all factors. He has no food, clothing, home maintenance, home insurance, health costs, internet, technology, gasoline or his cell (gf cell, wtf?) as expenses.
If he has not considered these factors, what else is he not seeing?

Luis
Luis
4 years 4 months ago
Half of the bugdet is mortgage and car+car insurance. Maybe there is something that can be done there. Renegotiate the loans can be a posibility to reduce this expenses. Another posibility is to move to smaller house/flat. I did this, not for economical reasons but because it was time consuming to keep everything in order in a big house. Now i have more free time to enjoy instead of cleaning and gardening. Your GF expenses are also quite high, i think she can work get an income and help you with this. I dont think she needs a car+insurance when… Read more »
Rob
Rob
4 years 4 months ago
Richard, First congratulations are in order. In spite of having a negative income you are saving for your future and budgeting. As much as a butt kick as this is you are hopefully not waking up 15K in the hole. First question, are you a big win or a small win kind of guy? Second question, what is your credit score? Third, while you are saying that your lifestyle has not changed since you were pulling down just 50K I assume this means same car and house, I would look at the service contracts you have. Sit down with your… Read more »
Ed
Ed
4 years 4 months ago
Hi Richard As many had mention you have a GF expense rather high. But you know what that’s up to you. It’s your money and you’re allowed to spend it on whatever you want. My 2 cents are: In math, your numbers don’t add. $4,480/month in expenses is $53K a year. There’s a huge difference, and as some have pointed and according to your expenses, you don’t eat. You’re missing the little things. You need to take a good look at the bills, recipts and what not and write them down on a spreadsheet and use those numbers against the… Read more »
Paxton
Paxton
4 years 4 months ago
Since plenty of advice centered on your finances has been given, I will focus on the psychological aspect. The first thing you said was- “I have no idea why I’m writing this but you seem like the only person that would even care and/or be eligible to say I told you so.”. First thing I notice – you seem like the only person that would even care- That tells me you might have problems with self worth or you dont have many people that you feel care about you. Just that can cause all kinds of self sabotage. Many people… Read more »
john
john
4 years 4 months ago

^ Glad I bought my reading glasses Tolstoy

Michael Fitzgibbon
Michael Fitzgibbon
4 years 4 months ago
Richard – I see a couple of easy wins for you. First, your car insurance is too high unless you live in New York or New Jersey (maybe LA). If you live in NYC, ditch the car & take the subway. Otherwise, shop around. I have a late model Honda Pilot and an older beater and pay $75 / month TOTAL for 100k / 300k / 100k of full coverage insurance through USAA. Second, you’re saving money for retirement and making a car payment at the same time. Put the 401k on hold and put everything toward paying off the… Read more »
Louis
Louis
4 years 4 months ago
The main focus should be on big monthly expenses. Could he maybe sell his house and rent (homeownership is not all it’s cracked up to be)? Negotiate a lower monthly payment on his mortgage? That might save him a lot of money. Also, try to negotiate car payments and insurance. Perhaps just getting rid of the car and getting a new car, with a new loan with lower interest might do the trick. Negotiate the price of the car down as much as possible. See if you can find a new car which is “over-year” (last years model, but still… Read more »
Bec at Dreamline Diary
4 years 4 months ago
Here is my humble opinion. Read the book “I Will Teach you to be Rich” and put together a proper conscious spending plan. Clearly if you have emailed Ramit, you understand his work and get where he is coming from. See what big wins are possible with your spending plan to plug holes and reduce some areas of expenditure. Also your girlfriend needs to learn to support herself. If you two have any sort of serious future together, she needs to prove to you that she is willing to rise up for you. She needs to shine with her own… Read more »
Ajit
Ajit
4 years 4 months ago

I would firstly rank the expenses in descending order and attack the top 5 .
1. Mortgage – Analyze if refinancing your loan is a good option.
2. GF Expenses – If you have long term plans with GF, combine your insurances and get couples’ discount or BOGOF or 50% off sort of deals
3. Emergency Funds/Roth IRA – Good job. Keep at it
4. Spending Cash – Analyze where this money goes.

sonja
sonja
4 years 4 months ago
Well, some expenses you cannot avoid paying and you can’t do anything about it. But, you can control other costs like electricity bills for example or gas bills. I don’t know how is it in your country, but I believe everywhere is the same. In Croatia, for example, if I use electricity from 22:00 to 08:00 a.m. it is much cheaper. So, I can use that time to wash my clothes. You can also try to avoid driving in your free time and save gas. But not just because of saving, I think people who spend much time in their… Read more »
Brent B
Brent B
4 years 4 months ago

Refinance items at a lower rate, negotiate deals with utilities/cell. Also put your skills to work on the side if applicable.

JD The Soothsayer
JD The Soothsayer
4 years 4 months ago

I think you’ve heard it enough, but ONE MORE TIME: paying your “girlfriend”s bills is a poor use of your money. That is indeed what marriage is for. Until you have that partnership built on trust and commitment, you are no better off than if you were tossing that money away at a prostitute. You show her disrespect when you buy her affections, and you build a crumbling foundation of trust with her if there’s a monetary exchange involved in your relationship. Say what you will, she thinks you’re a sucker and you think she’s cheap……time for a sit-down!

Terry Gillespie
Terry Gillespie
4 years 4 months ago

Forget the Roth for a while and pay down the car and house loans. There is no luxury like having a car paid for and paying a few extra dollars a month makes a big dent in the principle of a loan.

Chris
Chris
4 years 4 months ago
I would like to analyze his spending on interest rates, fees, charges, etc., but FUGEDDABOWDIT!! Am I to understand that “gf” stands for girlfriend????? And this guy is paying somewhere north of $600 of HER bills?? My two cents is to cut the emergency fund by half for two months while he force marches the “gf” through Ramits material and gets her paying her own way. This will also force a refinement of his own priorities re: spending psychology and…priorities. 90k does not a sugar-daddy make. He needs to figure out if the gf’s bills are a conscious spending item… Read more »
Chris
Chris
4 years 4 months ago

…THEN star analyzing what he can do regarding insurance, interest rates, etc

Gerard
Gerard
4 years 4 months ago

@Richard A, I don’t think that you bare beging honest. You say that your lifestyle has not changed since you made 50K per year, but it has. Otherwise you would have been overspending even more then than you are now.
Something has changed and you are either not telling us, or don’t know it.

John
John
4 years 4 months ago
If you want to pay your GF’s bill….Fine If you want to spend $400 per month on misc stuff….fine The question you need to be asking is not what should I cut, it is how can I make more money? We Americans have become so comfortable in our lifestyles that we forget that we are not immune to disaster (financial or otherwise). Over the last six years or so as things have become worse in the world (finance, war, Dec 22, 2012 🙂 ) we are starting to wake up and realize we can’t live on credit, we can’t expect… Read more »
Manish
Manish
4 years 4 months ago
The numbers don’t add-up. If you are making 90K annual pre-tax, then i would assume that post-tax the number would be around 60K conservative. i.e. Around $5000 per month. The expenses mentioned add up to $4500 So you should actually be saving around 10% of your earnings ($500) every month. As many other’s have mentioned, the GF bills are too high. Have a fixed budget for your GF expenses. Secondly, you don’t set aside Emergency Funds every month. It should be a lump-some amount set aside for emergencies in a high yield account. I’d say set aside your Roth IRA,… Read more »
Sue Swift/Suz deMello
4 years 4 months ago

I didn’t read all the many comments as I am on a cruise, but his mortgage seems high. What’s his rate, and can he refinance? Terms are good right now.

Yes, I agree about the girlfriend and the car insurance. He should be bundling all his insurance together to get a better rate.

Tara
4 years 4 months ago
Richard tucks away $500 in his emergency fund as a MONTHLY expense? Wow, that thing must be huge! O_o Speaking psychologically, I would tell him that he really doesn’t need to make that a monthly expense and (if he hasn’t already) he should consider putting it into an interest-bearing savings account…or just take some money out and put it toward the other bills. What are the healthcare plans at his employer like? I would have to agree with some of the other posters on the girlfriend’s expenses…didn’t The Offspring already write a song about this? He probably does it because… Read more »
Micole
Micole
4 years 4 months ago

gf bills + gf cell – she should pay her stuff by herself.
car – really needed? is bicycle an option?

Gordy M
Gordy M
4 years 4 months ago
Let’s start with the “I live a pretty normal life. House, car, girlfriend, occasionally going out.” Is that what you consider normal or are you following someone else’s advice? btw paying a girlfriend’s bills is neither normal nor desirable, she probably resents it too. What do you want out of life? How will your current behavior get you there? You’re obviously making enough money for your current lifestyle. You have the luxury of making decisions about the long term. Otherwise, there will come a day, a lot sooner than you think, when you look around at all you have and… Read more »
Martha
Martha
4 years 4 months ago
I could tell Richard to take Earn1K and earn $1,000/month more, but he’d probably overspend that, as well. According to my calculations, he should have $3,000/month left over, given his salary and spending listed. However, not all of his expenses are listed (income taxes?). He may not think he has expensive stuff, but looking at the car and car insurance, sounds to me like he has some fancy tastes. Which is OK if he can afford it. Richard, decide what your goals are, and what is important for you to spend your $$ on. If something doesn’t further your goals… Read more »
Elizabeth B
Elizabeth B
4 years 4 months ago

I didn’t see property taxes in there. They come around twice a year & bite you in the ass if you’re not prepared for them. And the spending money seems low & vague. It would be better to realistically break it down & budget for it.

Kerry
4 years 4 months ago
Gosh this post was helpful to me. I made the most gorgeous, passion and values-based budget after reading through the comments on this post. Thank you all! My tip for Mr 90K is to start with practicing gratitude. Make a list of 140 things you are grateful for. Include your career, your relationship, your vacations, your car, your desire to learn and manage your finances better, your willingness to ask for support. I think this will help to calm you down, and shift your mindset and see that you have a lot going for you – including your ability to… Read more »
Kate
Kate
4 years 4 months ago
Richard, you have much of which to be proud here. A few suggestions. Long term cost management: If you have and use more than one credit card, consolidate them and limit spending so you don’t carry balances. This reduces stress and protects your credit (which is clearly important to you with your investments, Roth IRA, emergency fund, etc.). If you have military experience (or someone in your family does), apply for USAA and see how their types of insurance and car dealer deals are all terrific and affordable. An easy monthly price reduction: compare Netflix to AppleTV – what you… Read more »
Erica
Erica
4 years 4 months ago

Stop paying for your girlfriend’s shit

Robin
Robin
4 years 4 months ago

Also, I can’t imagine socking that much away in savings & retirement while paying a car loan. Pay cash for a car.

Miguel Gomez
4 years 4 months ago

I see most comments immediately questioning him paying his girlfriend’s expenses. What if he loves her and really likes paying for her stuff? (plus, we don’t know if she’s able/willing to work or anything else about her).
For me, I would cut off the emergency fund once it hits 6 months of expenses, then use the extra $500/mo to do what he pleases (maybe take a vacation earlier than planned or so on).

Faizal
Faizal
4 years 4 months ago

Cut the girlfriend loose.

Tom
4 years 4 months ago

Reading a bunch of these answers and not one of them gets the IWT point! Nip here, tuck there, fewer lattes, shop for better insurance. Ramit tells us you can easily make another $1000 per month and he outlines how you can do that. Become worth more and reap the rewards. YOU HAVE 2 PEOPLE IN YOUR HOUSEHOLD – that’s $2000 per month more. Do that, then take your gf to the mountains or the beach for a long weekend.

LaughingMouse
LaughingMouse
4 years 4 months ago
I know multiple people have already said one of the two things I noticed but I got tired of reading all of the comments. Ramit, you asked “What would you tell Richard, be specific.” 1) Quote your auto insurance. Call an independent agent recommended by a friend who trusts their agent and pays a reasonable amount in insurance. Then call another independent agent and get their quotes as well. $260 feels high to me (as a licensed agent in WI, I work with a couple thousand policies a year), but depending on the actual car, the level of coverage, and… Read more »
May
May
4 years 4 months ago
I agree with most of the comments regarding the potential take-home pay, car insurance, the 401, the girlfriend (to each his own, that is your personal business). Mint and personal spreadsheets HELP ALOT when it comes to the nitty gritty of where your money is going, but it doesn’t get to the heart of why you spend. At the end of the day (regardless of the numbers), it comes down to psychology, at least for me. Until I realized that I was my own worse enemy, I wasn’t able to control my overspending. I had to assess my behaviors attached… Read more »
coop
coop
4 years 4 months ago
to me the problem seems like his mindset. he thinks “being rich” = expensive cars, expensive clothes. to me, “being rich” = having money to burn on vacation, supporting GF, going out to dinner a ton, etc. i think that by not thinking of himself as “rich” he is giving himself permission to spend wildly as long as he doesn’t shell out for a fancy car. there’s a disconnect there. i think the car insurance seems really high. try to get a reduction. does he have homeowners insurance? bundling the two should get him a cheaper rate. also do you… Read more »
Alberta
Alberta
4 years 4 months ago
I don’t think the problem is paying for his girlfriend because clearly he can afford it. But I think if you are going to have a dependent, they should live with you. He saves alot which is great. I think the issue is that he isn’t as aware of his spending as he think he is. Do you really take $400 from your bank account and use just that for misc purposes? All those little things we buy here and there add up. Also, maybe too much of your money could be being withheld from paycheck. .
Lynne
Lynne
4 years 4 months ago

Do you eat? Just a question since it wasn’t listed in your expenses.

Ryan
Ryan
4 years 4 months ago

That was brutal Ramit 🙂
Hope you changed the guy’s name atleast.
You knew what he was doing wrong, now what was the point of this post, for us to also see?
I am quite sure all of us(most likely including you Ramit) do things like Richard without realizing it and just don’t want to see it.
Blinded by vanity we all are!

lol you are harsh dude.

Hope
Hope
4 years 4 months ago

First of all, he doesn’t mention where he lives or whether his girlfriend has a job. He really needs to work on lowering his car insurance and paying less of his girlfriend’s bills. I live within a city where car insurance is considered higher than the surrounding areas and my insurance is only $92/month; that’s on a 2.5 y/o car. However, my driving record is spotless and I’m a female, if that makes a difference.

Chuck
Chuck
4 years 4 months ago
Not knowing more of his situation makes it difficult to be more precise, but there are a number of questionables here. First off, and I see I am not the only one who noticed, but why is he (apparently) covering all of his girlfriend’s bills? Also, the combined amts for vacation/gifts/spending cash seems a little high and could be questioned. His emergency fund also seems high – (face value I mean). If he brings home $4340./month, with a minimum 3 months safety net ( his income is high so I am presuming that his career is in demand and he… Read more »
Bob
Bob
4 years 4 months ago

Richard,

Why are you paying your girlfriend’s bills? If you simply make her pay her own way, you would have enough money.

If you feel the need to throw money away, feel free to send your extra $440 this way. I could put it to good use.

Patric
Patric
4 years 4 months ago
Sell the house. Everything else is either paying for necessary/important things, but the mortgage is really a millstone around your neck. You could save all the money you’re spending on it to buy a house outright in the near future, or better yet, rent something really nice for less money, and sock away the difference for more diversified investments that will earn you more money for a bigger better house later – like when you turn 80 and actually need a place to live permanently. I also agree about the emergency fund. If you have enough saved to cover a… Read more »
Andrew
Andrew
4 years 4 months ago
The problem is clearly identified as excessive spending. The question is: “How should this guy manage his monthly expenses?” The solution is: He shouldn’t “manage” his spending, he should CONTROL his spending. That means hard limits on spending. He’s not suffering from an income crisis, so the solution isn’t earning more money (it won’t help this guy because he’ll just spend even more). Recommendations: 1) Setup automatic payments for most of your bills. Pay these items in advance and on the day you get paid. Most likely, you are paid every two weeks. Pay half of your mortgage every two… Read more »
Nico
Nico
4 years 4 months ago
I see a lot of people suggesting to drop the gf payments. At least someone mentioned that maybe his gf might not be able to work. Besides, like May mentioned here before me. It’s a personal choice if he loves her that much. Other suggestions from people are Earn1K, but again, won’t he spend that too? So my suggestion to him would be: Look into the psychology of your spending. What do you really need? Why do you spend it? Also I noticed that people of our generation tend to loose track of their spendings because who pays in cash?… Read more »
Katie
Katie
4 years 4 months ago

I strongly disagree with the cash vs. credit in regards to tracking spending. I rarely use cash, but when I do – I WILL lose track of it.

Perfect example: I had $25 cash last week; I have $6 cash now. I have no idea what I spent the $19 on! If I had used a credit card on those purchases, I would be able to look at my credit card statement and figure it out.

And no, it’s not worth keeping every little receipt for small cash transactions (for me).

Stephen
Stephen
4 years 4 months ago

Richard is more than likely spending more than he has listed on incidentals. $2 here, $5 there. It’s time to go back and look at where the extra money not accounted for in his list is going.

Cell phone bills for instance are not static and can fluctuate especially if your not on an unlimited plan. He’s obviously spending $25K somewhere that’s not in this list.

Peach Front
Peach Front
4 years 4 months ago

He’s actually doing pretty well. But with an income of only $90K a year, he has to give up the gold-digger and find a self-supporting girlfriend/partner/wife/mate.

Angie
Angie
4 years 4 months ago

Yeah – When I saw this email I knew there would be several comments about the $600 spent on the girlfriend.

I wasn’t going to respond because pointing out the obvious seemed like falling into some sort of trap. We were asked to be the expert here, but it doesn’t take an expert to point out that maybe $600 on the girl friend is too much.

I don’t really have any expert suggestions for this guy.

Cathy
Cathy
4 years 4 months ago

So, Ramit, what are your thoughts?

Steve
Steve
4 years 4 months ago
Get rid of the car, and pay cash for a decent 10 year old vehicle. Now that you own a vehicle outright, just get liability insurance. Then, sell off the house and downsize. If you’re paying 1400 bucks a month for a house, surely you can find a decent place you can buy with either a low mortgage or none at all. Then, quit paying for the girlfriend. By this point, you should have about 1000 in excess every month. Also, do you really need a vacation every month, or are you just saving up for one? I mean really,… Read more »
Brian b.
Brian b.
4 years 4 months ago
Hi Richard. Allocating your money has made it easy for you to keep track of your spending but you need to have a talk with your girlfriend. My guess is she’s probably spending way over her income can provide for her. In that case, why not have a talk with her? Why not show her what you’re doing so she knows how to handle her money? While you’re at it, you can take baby steps in reducing you’re payments for her bills ($100/mo.). I’m guessing that this is a serious relationship so talking about money should be important to both… Read more »
kl
kl
4 years 4 months ago

When I first read this I was busy trying to figure out what “gf” was. It never crossed my mind that he was paying his girlfriends bills. I find that mind blowing.

Kevin Brennan
Kevin Brennan
4 years 4 months ago

Richard needs to stop fretting the small things in life. The 600 to girlfriend and 900 to reserves suggest an excess of worry and a lack of creatively developing himself. Of that 1500, he could get pretty excited by actively investing this to putting in incremental steps to developing his own business – to create a growable and fun top-line for himself instead of living to small numbers determined by someone else. And as his own state of mind grows, coaching his girlfriend to be accountable to herself financially.

Tyler F
Tyler F
4 years 4 months ago
I’m not going to tell you what to do. But I will tell you that I make just about what you do from salary and my savings picture looks quite a bit different. My wife and I split the bills very loosely based on our incomes (we have separate finances) and I save about 1k a month from my salary (I also max my 401k and Roth). That $1k a month goes toward fun like you, as well as saving for a rainy day, Christmas, car stuff, home stuff, etc. It spreads thin when viewed in bi-weekly deposits, but when… Read more »
Bob
Bob
4 years 4 months ago

Hi Richard,

Here are my suggestions:

1. Renegotiate all your current bills. Do this every 6 months.

2. Cap your emergency fund. Once you have 3-6 months, stop. Reallocate that $500 towards other obligations.

3. You’re saving too much. Reduce your 401(k) contributions to $1,000/month. This alone would cover the deficit. Increase it as you get raises.

4. Earn a little extra (freelance, overtime, project) to pay for one bill a month. Each month I try to make enough on the side to cover my phone bill.

5. Paying your girlfriend’s bills is a personal choice so I won’t comment on them.

Best of luck,

Bob

eric
4 years 4 months ago
Guessing you can reduce all of these if needed, though let’s prioritize. But, first let’s address some psychology of spending – only spend what you can afford and on what’s necessary. Real quick, if you’re under water, then you don’t need the $240 on vacation, the $500 on emergency fund (where is this going, btw; hopefully earning interest), and most importantly the gf bills. You should also probably see about getting a raise with some of Ramit’s techniques to cover this. And read his book to help with cost cutting, though revenue likely more important. Separately, if your girl can… Read more »
Doug
Doug
4 years 4 months ago
Has it occured to anyone besides me that answer to the mystery of the missing grocery bill and the high GF expenses are one in the same? Maybe they’re living together and she’s picking up groceries, health insurance, and some of the other “missing” items, while he’s covering what he’s laid out here. I don’t *know* that, of course, but it’s a question worth asking, because it means we’re looking at only half a household. Be interesting to see what Ramit says when he finally weighs in on this one. My guess: We’re going to get told our collective analytic… Read more »
liss
liss
4 years 4 months ago

“Be interesting to see what Ramit says when he finally weighs in on this one. My guess: We’re going to get told our collective analytic skills suck….”

lol. right. he’s gonna school us all.

steve
steve
4 years 4 months ago
There is some financial vagueness in the email. How much does he earn per month after the 401K deduction and taxes? My guess was 4625 per month (90,000/12 – 30% taxes – 7500 for 401k after the tax break). The bills totaled up to 4480. Emergency fund target? Also inflation wasn’t considered. He hasn’t changed his lifestyle, but every year 2-4% of his expenses have increased– during this last recession employers have been using the economy as an excuse not to give cost of living increases. So it’s possible that his income hasn’t increased in direct proportion to his spending.… Read more »
Dan Main
4 years 4 months ago
Apologies if there is a UK slant on these comments! Main Prinicipals – I’m assuming that anything you have listed as a monthly cost is an actual monthly payment (rather than a lump sum you’ve allocated over 12 months). Anything which is being paid monthly and charged interest on (e.g. car payment, car insurance, and some extent your mortgage) you should consider settling in one go asap using your savings first and then interest free or low interest credit cards and loans. The interest benefit you receive on your savings is heavily offset by the interest charged on these financial… Read more »
joe
joe
4 years 4 months ago

look up on youtube: slimm thug heard of that …and listen very closely.

this song will solve your financial woes.

Jim Bathurst
Jim Bathurst
4 years 4 months ago
Rather than saving, has this guy asked for a raise recently? If he gets just a 5% raise, problem solved. There’s always a limit to what we can save, but not to what we can earn. We can’t make assumptions about the girlfriend (unemployed? in school?) and I assume he doesn’t want to dump here, so adjusting that is off the table. I’d renegotiate any reoccurring monthly bill (cell, car ins, etc). This may be a small victory, but it’ll then be an easy, automatic savings every month. If all this didn’t fix it, I’d just cut the emergency fund… Read more »
Sara
4 years 4 months ago

Easy- get a raise. $140 a month over? Seriously? How about an extra $1400/month instead? I’d say that’s a “win” over cutting back somewhere else any day.
You already have a good foundation for the extra income, and it might cure the ‘poor man’ mentality you have…. (“rich people” things? Reeeeaally?)

Everyone here…. loosen up!

Bunny
Bunny
4 years 4 months ago

Take half of your saving each month and work to pay off the car. Then lower the insurance premium. Sign up for mint.com to better track all expenses, and for heavens sake don’t marry the girlfriend. Nothing against girlfriend…marriage isn’t such a great idea any

liss
liss
4 years 4 months ago
In my (quick) perusal of the comments there was a lot of talk about how to slash current bills (the car & girlfriend bills getting the most suggestions). However I agree with the “asker” that isn’t the issue. His bills are a little over $4000 a month (actually $53,760 a year), he should be in the 28% tax bracket but even bumping that up to 33% (to help account for the 401k) that brings in an accounted for amount of $71,500; he maxes out the Roth IRA so that’s another $6000? Still $12,500 under his $90,000 and an additional $1680… Read more »
ZZ Top
ZZ Top
4 years 4 months ago
First, order your spending, from top to bottom, as follows: mortgage – 1400 gf bills – 600 (car, ins, medical, etc) emergency fund – 500 roth ira – 400 spending cash – 400 car payment – 300 car ins – 260 vacation – 240 water/elec/gas – 230 gifts – 80 My assumption is that you are not going to sell your house or break up with your girlfriend over $140/mo. My next question is why are you saving so much money at the same time you are going $140/mo over budget? $500 emergency fund + $400 roth ira + $400… Read more »
Catherine
Catherine
4 years 4 months ago
First – this budget is incomplete. These numbers total $4400/month, or 52,920 annually. You have left something out, something HUGE. (I don’t see groceries, do you not eat at home?) Are you paying down a massivr credit card debt? Student loans? Have a raging coke problem? If you make $90,000 like you say even after taxes there should still be tens of thousands of dollars a year laying around somewhere outside the equation you have provided. Try tracking EVERY DOLLAR you spend for one month, I suspect you are going to find you aren’t really spending what you think you… Read more »
Laura
Laura
4 years 4 months ago
I wasn’t going to comment, but in browsing through the comments no one has yet mentioned the first thing that jumped out at me about this email. It is this line: “I MAKE $90 fucking thousand a year (pretax of course). How am I spending more than that a month? I just don’t understand.” What that line tells me is that psychologically this gentleman thinks he’s making a lot of money. Unfortunately “a lot of money” is a very relative term. As soon as our minds flip the switch to thinking “I’m making a lot of money” we begin spending… Read more »
Jake
Jake
4 years 4 months ago
Overall there is opportunity to save at least a few hundred dollars a month and up to $1000/month. The areas that seem worth the time are the car insurance, the mortgage (depending on your current rate), gf expenses and maybe the utilities. Also, you are saving $500/month, which is a pretty decent amount of savings. I don’t know your target emergency fund, but it would be an area to direct into more savings/investment once you have your emergency fund at your desired level. For ease of reading, here’s the list with my inline comments: car payment – 300 Not too… Read more »
Erika
Erika
4 years 4 months ago

When you make good money, save, not live in excess and still come up short at the end of the month, you are NOT being honest about how much you spend and where you spend it. The red flags: left out expenses like food and the comment “I don’t look at the numbers very often.” If Richard takes the advice left in other comments to track his spending for a few months and check in on those numbers, the $150 over budget will cease to be mystery and he will be empowered to do something about it.

Kinga
Kinga
4 years 4 months ago

Now that there are so many answers from experts, I think he should sit down, go through them and LEARN ( it is about time;) ) to manage his own income/ budget/ expenses etc. 😀

Jenifer
Jenifer
4 years 4 months ago
1) Tell your girlfriend that you BOTH need to cut back, by $140. 2) Start paying for things in cash. I’m talking walking around stuff that you don’t even know that you do. Paying in cash won’t lie. 3) I’m not sure why you give your girlfriend $670 per month but you are not being honest with her and with yourself to think that you can continue to afford it. You are also not giving her a chance to be proud of herself; to earn enough to pay her expenses; to learn by her mistakes; to learn to economize. It’s… Read more »
julia
julia
4 years 3 months ago

if she really loves you,, she can see your situation… i don’t think she want you to pay for all her bills. you should negotiate with her talk heart to heart. join account for your monthly expenses ( hers+ yours) . do not spend your money for unnecessary things such as vacation or gift. cook at home can save much more than eat outside.

qsmith
qsmith
4 years 3 months ago

Richard,

you are building wealth, you seem to be enjoying life, you have a “false” negative cash flow (since your are putting more than enough aside in your emergency fund. I say leave things as they are because the slight negative cash flow keeps you aware of spending which keeps you from being completely frivolous with your money. You keep doing this and by 55 you’ll be able to retire.

Andrew Carroll, CPA/PFS
4 years 3 months ago

I think the expenses look ok, but the total outflow only adds up to $4,480 per month. If you are making $90,000 a year, your monthly gross is about $7,500. It sounds to me like you are withholding too much in taxes. Possibly changing that amount so you don’t get a big refund could offset the monthly overspend.

darly
darly
4 years 3 months ago

STOP PAYING YOUR GIRLFRIEND SHIT!!!! UGH..im a female myself and im very independent and i prefer to pay for my own.

Krisha
Krisha
4 years 3 months ago
Richard, You have to realize that your monthly bills listed add up to 4480 a month, then you have the 401K contribution, groceries, gas for the car as well as trash bill from home and depending on where you live a sewer bill, as well as a cell phone, home phone or internet bill none of those are even listed. Even though your income is 90K before taxes that only adds up to around 5000 per month.. then when you take off all the listed bills of 4480 well that doesn’t leave much. Seems to me that you may need… Read more »
Sarah M
Sarah M
4 years 3 months ago
Here is my plan. First, how much is left in car debt? If your emergency fund already has 3-6 months of expenses in it I would redirect emergency monthly toward the car payment, cutting back on everything I could handle going without until the car is paid off. Then I would reset the budget setting aside $150 toward the next car/ car repairs and the $140 over would just be part of the budget. In the meantime is there something that you and the girlfriend could do together as a bonding/moneymaking thing. If you are doing something like writing/illustrating books… Read more »
Trina
Trina
4 years 3 months ago
Beside the Girlfriend spending… (which would be your Conscious spending; paying your gf’s bills is between you and her.) How much is exactly in your Emergency fund? From the numbers it seems as though he’s putting $500 in there each month, after doing that for a year that’s $6,000 a nice chunk of change that would cover the usual emergency ( ie car breaking down, funeral plane ticket, hospital bill/co-pay etc). I think if you have at least 3 months salary saved in your emergency fund then you can stop putting $500 in each month. Slow the emergency fund deposit… Read more »
Lisa
Lisa
4 years 3 months ago

I agree with the other comments about paying the girlfriend’s bills…ixne the bill pay. I also think the combination of his car payment and insurance is really high. Maybe he should get out of that Land Rover/BMW lease and drive a Passat. Also, if the emergency fund already has six months of HIS living expenses (again, forget about the girlfriend) he does not have to continue to fund that one.

Mitch Moore
Mitch Moore
4 years 3 months ago
First off, if the guy is actually maxing out a Roth AND a 401k, in addition to $500 towards an emergency fund, he is SAVING about $2,500 a month. Which is awesome. He’s doing just fine, and if he keeps it up will be able to retire in 25 years a fairly wealthy man. I think the main question for him is to look at how to allocate the remainder of his monthly income. I get the feeling he may not be spending his money in alignment with his priorities, which is why he thinks there should be “more” left… Read more »
EAJ
EAJ
4 years 3 months ago
Mortgage rates are at an all time low – refinance. Not enough information to determine how much Richard A. would save, but it might be the entire $140 shortfall. Depending on the community where Richard lives and his house situation, rent out the garage or a room, assuming Richard has room, lives alone, doesn’t need the space & GF doesn’t mind. Shop around for car insurance. $260 per month seems high. If the car is old, get rid of comprehensive coverage & increase the deductible. Do the same for GF’s car. See if it’s possible to get coverage for both… Read more »
living off dividends
4 years 3 months ago

His expenses have doubled coz of the girl friend….why is he paying for her stuff and whinning?

Jonathan
Jonathan
4 years 3 months ago

Now I see why you asked your readers to respond to his problem instead of you because you realized how pathetic of an email it really was and didn’t want to waste your time. Basically he’s a liar whether purposefully or not, his lifestyle has changed and he doesn’t know where any of his money is going other than retirement. Maxing out his retirement and 401k yet living above a 90k/yr income, what a joke. This isn’t worth my time nor yours either.

Neska
Neska
4 years 3 months ago

I have not read the other comments so I may be repeating the same. Something is missing from the picture, montly expenses would be about 55,000 a year, HUGE chunk of money that we have no idea where’s going. Car insurance high, GF bills?? mmm, need more info on that. 80 on gifts?? He asks for help but does not provide complete info. 400 spending cash on what?? Food, bars, movies??
blaaaaaaaaaaaaaaaahhhhhhhhhhh

lhamo
lhamo
4 years 3 months ago
If he is really committed to his girlfriend then he might want to think about making it official and making her his wife. If he is contributing the max to his 401k ($17,000 in 2012), and if she has no income (an assumption made based on the fact he is covering her bills), then this will have a major effect on his taxes. Using 2011 rates, I get the following. 1) Tax for him as a single person: 73,000 income – 5800 standard deduction for single filer – 3700 exemption = 63500 taxable income Tax = $11,994 for single filer… Read more »
Kim
Kim
4 years 3 months ago
The biggest problem I see is that he is paying for his girlfriend’s expenses. Why can’t she pay her own? If this is a serious relationship and he feels he needs to pay them then he needs to have her contribute to the monthly expenses. Also, why is there such a high amount for vacation per month? If necessary, he can look into refinancing his mortgage if that is to high. Maybe it could lower the amount some. Maybe lower the emergency fund, limit the gift expenses and look into what is spending cash is purchasing. He needs to realize… Read more »
Penny
4 years 3 months ago

I will take 2 steps.

Identify one expense I could really do without.
# car expense
# minimize girlfriend expenses. Since he has been paying for her most of the time, the best he can do is to cut back on some.

Step 2: Increase income.
Do freelance gig or probably sign up for e$1k.
Instead of putting in $500 in emergency cash every month, consider alternative investments such as REIts or stocks that give quarterly dividend income.

Control cash flowing out.Increase cash flow coming in.

Ryan
Ryan
4 years 3 months ago
Step 1: You doubled your income, but your lifestyle hasn’t changed. Sorry dude, calling bullshit on that one. Consider how that job changed things. Did you move? Did you go from renting to mortgage? Did you start supporting your girlfriend? These are all things that change how much you are spending. The first thing I would do, is look at your girlfriends bills and your own, and see if you can combine them for a discount. Talk to your cellphone provider, and see if you can save some money by switching to a family plan. Secondly, you can negotiate down… Read more »
Jennifer
Jennifer
4 years 3 months ago

Where are groceries here? What does this guy eat? Yes, he spends $400 per month going out but if he didn’t do that he would not eat. I live in NYC and spend that much in a week going out. I actually think based on all his savings he is doing pretty well, much better than most. I make $120K a year and am single without a car and don’t save that much. Perhaps I need to look at my own budget.

Grace Morris
4 years 3 months ago

I am really late here, but first thing I thought was why (wtf) is this guy spending money on his girlfriend’s sh!t?? 600+ dollars?? are you kidding me?!! god knows what else he’s paying for on a DAILY basis for her that he isn’t realizing is adding up.

Brian
Brian
4 years 3 months ago

Dude, tell your gf to pay her own bills for starters.

Also, what do you eat? I see nothing for grocery or even dining out…

Lotus Flower
Lotus Flower
4 years 3 months ago
Unless there is some extreme extenuating circumstance (illness/ disability, job loss but seeking, etc), I see absolutely no reason why this guy should be paying any of his girlfriend’s bills. She is presumably a big girl and capable of taking care of herself. If they are living together, then she should be paying at least some of the expenses of their shared abode (part of the mortgage, part of the utilities, something along those lines at least) and taking responsibility for keeping her expenses within the limits of her own spending situation. Sounds like this guy needs to spend a… Read more »
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