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Reader 911: I Need Help With My Budget!

Okay guys, I have a reader who needs our help. I received an email from Missy (who may or may not be a mega hot model) asking for ways to save for retirement on a budget that’s already stretched pretty thin. I have my own thoughts about what she can do, but what fun is that? You guys listen to me yap all the time; I want to hear what YOU think!

Some rules before we play: Remember, this is a real human being asking for information and advice. Don’t be mean. If you can’t form a comment without being rude, email it to me and I’ll help you. Also, if you want to help, make sure you read all the information so you don’t offer useless advice.

Missy’s Income – $3912

Missy brings home $3550 a month from her job. She also receives $362 a month in child support.

Missy’s Expenses – $4933

Home ($1438): Includes cell phones, cleaning service, home improvement items, utilities, and rent. Missy recently cut out her home phone, cable, and internet access.

Child ($658): Includes school tuition, band fees, lunches, school trips, and photos. Also includes $100 a month toward miscellaneous expenses.

Daily Living ($485): Includes groceries, dry cleaning, dining out, and meals at work.

Transportation ($372): Includes gas, insurance, repair fund, car washing/detailing, parking, and annual registration.

Entertainment ($100): Includes bowling, movies, etc.

Health ($310): Includes prescriptions, copayments, pet supplies for 2 dogs, vet expenses, and life insurance.

Vacations ($300): Missy has a goal to put back $300 a month.

Tithing/subscriptions ($365): Includes newspaper, tithing, and donations to charity.

Personal ($430): Includes clothing, gifts, haircuts, gym membership, stockpiling sale grocery items, and pedicures 4x/year.

Financial/Misc. ($475): Includes emergency fund, blog expenses, dietary supplements, and bank fees.

A Few Things to Note

First, Missy’s budget is very detailed (what I typed out above is nothing compared to what she sent me). She has a lot of categories and every item accounted for under those categories. Personally, I would have heart failure if I saw everything broken down in this much detail, but it’s working for her. I think it’s awesome – I just don’t think I could do it for my own budget.

Second, I’m sure you noticed that Missy is over $1000 short every month. However, she has no debt. How does she do it? She overestimates practically everything in her budget, which makes up for the shortfall. There were a number of items that had me scratching my head, like the fact that she designates $50 a month for a cleaning service, yet has only used it twice in two years. In fact, my number for her total monthly expenses is actually lower than what she sent in her email, because I took out all the items that are still accounted for and shouldn’t be (like internet and home phone that were canceled at the beginning of the month).

Finally, Missy has a decent income, especially for a single parent. She isn’t struggling to make ends meet; she’s just struggling to allocate her money in the most efficient way possible.

EDIT: In the comments so far, I’ve noticed that you guys are picking up on the same problem I am – by padding various areas of her budget, Missy has made it difficult to see exactly what she’s spending. Even if I had included every number for every expenditure, you’d be just as confused. I think that’s a huge issue because it makes it easier NOT to know exactly what she’s spending each month. When you don’t know what you spend, you can’t make changes easily.


While Missy wants to find a way to save for retirement, there are a few things she is not willing to give up to do it. Here are the non-negotiables in her budget:

  • Her house. Her rent is only $893 a month; she is not willing to move or downsize and I don’t blame her.
  • Her phones. If she didn’t need the level of service she has, she would cut back. But the cell service she has is needed and works for her family.
  • The dogs. If you have pets, you probably understand this one. Yes, the pets cost money, but the benefits are worth it for most people.
  • Dining out. Missy doesn’t spend much money on food at all. We’re talking $255 a month for dining out and meals at work, or 6% of her net income. This is not an area she wants to change at this point.
  • Entertainment. $100 a month isn’t a lot to spend on occasional trips to the movies or the bowling alley. Missy enjoys this time with her son and that’s that.

Okay, What Do You Think?

Now that you’ve seen Missy’s income and expenses, what do you think she could do to free up money for retirement savings? As I said, I have my own ideas, but I want to know what you think first.

Remember, be nice! It takes a lot of guts to put this out there for the world to see (even anonymously).

Have a financial issue you’d like some help solving? Email me and I’ll post it (you’ll be anonymous) for other readers to discuss!

About Andrea Whitmer

Andrea is a freelance web developer and mom trying to maintain a sense of humor in an otherwise chaotic world. She blogs in hopes of helping others avoid the same mistakes she made in the past. Join in the discussion here on So Over This, or connect on Twitter, Pinterest, Instagram, or Google Plus. You can also subscribe to new posts via RSS so you never miss out!


  1. Since her budget doesn't show what she's actually spending, it's hard to recommend changes.  Cleaning service, home improvement items, and car washing/detailing are items that look easy to cut or reduce – but if she's not actually spending on those, it won't help.

    Since she's not carrying debt (and presumably is making a point to avoid it), the solution might be as simple as setting up an auto-payment to a retirement account and let herself auto-adjust her other spending.  I'd suggest starting small ($50/month) and then adjusting it upwards when she is used to that expense.

  2. lora kathleen says:

    If this were me, I'd do the following:
    – set up account for variables like cleaning, car wash/detail, home improvement, personal items (pedicures, haircut, dry cleaning) and put a set amount in there every month.  If she budgets say $250 currently, i'd cut it to $150ish and put that money in a bank account.  If the account hits, oh, $1000 and I haven't touched it, stop contributing. Then I'd drop the contribution amount (to say $50) and start transferring the rest of the money that was going to this fund to her retirement accts.  It can be a second checking account (I do this) or a savings fund.
    – on transport I'd do something similar to above.  I have a car fund that serves as a quasi-emergency fund for my car only.  So I contribute a set amount and EVERYTHING except for gas comes out of there if it goes to my car. That way I can usually save a lower amount per month and it just builds up over time.  If I were planning to purchase a vehicle, just up the monthly savings significantly.
    At the end of the day, it all comes down to what's important to Missy.  If you can control the variable expenses or pay them out of a separate fund you've been building up (with a smaller amount than you currently have budgeted), it should help free up some income to save for other goals that are more important to you.

  3. It's a bit harder to plan this since she is looking for long-term changes. And without an accurate/close-to-realistic amount for each category, even harder to find where the air pockets are.

    $300/mo on vacations gives her 3.6k/yr. Perhaps this can be scaled down. Stockpiling on grocery sale items should be coming out of the grocery/daily living budget and adjusted accordingly. The Personal section seems a bit high, but hard to pinpoint what could be cut down from that expense.

    If I were to guess, Financial/Misc also seems high, but hopefully most of that is going into an EF (which gives her about 4.2k/yr). This could be split and funneled to retirement.

    Last, although it may have been a good idea to overestimate her costs, she could benefit from getting a more realistic total. Take last quarter's grocery bills and average them, then use that amount for the following quarter and adjust every so often as needed. Having a cushion is nice, but having too much of a cushion can cause you to lose track where that cushion money ends up going. And if you add it up, that could help her fund her retirement funds overtime.

    It's hard to go into specifics without having the details, but my two advices: cut a bit into the vacations/financial-misc/EF budget and give that to retirement, then get realistic/as-accurate-as-possible numbers for the spending. She can even designate a budget item called "cushion", as long as it is within her 3.9k allowance. Even though she isnt getting into debt, she may not be categorizing/distributing the money correctly because of all the cushions.

  4. Can be tough to make specific recommendations without seeing the specific numbers in the budget, but there are few things that stick out to me.
    Cleanign Service: I've never used a cleaning service in my life. It's something I always said i would get if I had more money than I knew what to do with, but I'm not at that point and it looks like she isn't either. Even though it isn't used often, just drop it from the budget and make do without.
    Dry cleaning: Ty wearing fewer clothes that require it and look for alternatives. Silk CAN be hand-washed. How else was it done before they invented dry cleaners?
    Car washing/detailing: This can be done yourself for pennies. Tap water and dish water in a bucket to wash with a 99 cent sponge.
    My last point: private school education. Personally, I'm not a fan. I only have two friends who ever went to private schools (and then only for high school), and neither have had any particular edge over us public school students in the adult world. Parental involvement is a much bigger deciding factor in student success than the school.

  5. It seems like both the Personal and Financial/Misc are quite high. If she could half each of those, that would put a good chink into her retirement savings.

    As for her dogs, is it possible to put them on a cheaper food? When it comes to my cat, I started feeding her just grocery store variety Purina, because I didn't know anything about pet food, but when I talked to the vet, she said the cheaper stuff is genuinely fine for her, especially when she's young. Maybe she could cut in that area?

  6. It looks to me like there are a few items that aren't essential or maybe negotiable. Car washing/detailing could be cut or use someone cheaper or (depending on how old her child is) let her child wash it to earn some extra money.
    As she didn't list newspaper as a necessary item, I would say drop that subscription.
    If she's been stockpiling for awhile for on sale items, she could probably cut back on grocery spending at least temporarily and just "eat out of the pantry".
    $300 a month seems a little high for vacation spending. It would probably be possible to take a smaller vacation, or even several small vacations each year that would total less than $3600 each year.
    Not knowing her situation personally, these may or may not work for her. But good job on having no debt!!

  7. Parkerkathleen says:

    I have a friend that pays himself first.  When his pay check hits the bank, he immediately moves 200 dollars into a savings account.  Then continues on.  It's a matter of priorities.  Btw, he bought his home free and clear several years ago, by using the savings he had accumulated. 

  8. Hey guys, 

    Missy is having trouble getting her responses to you to post, so I'm pasting in what she emailed me:

    I knew going to Andrea would be a great idea. She has given me tremendous input and the comments here are great too. I am going to try to answer some of your questions.
    To start, I spoke with my ex and we made some adjustments on how we do things. So from now on only one Child Support check will go into my account and I will continue to cover tuition. The other check will be separated and all son-related items will be removed from my budget. So my income numbers have changed due to that.
    I followed Andrea’s suggestion and put more realistic numbers in my budget, not the super inflated ones. For February, my numbers should be $3736 income and $3347 expenses. The goal is to take the difference and allocate that to a savings account and open an IRA.
    To answer your questions:
    CG: There has been an auto payment to a savings account (for ER fund – first $1k goal met). The ultimate goal is to get that much higher and add in retirement savings (possible solution above).
    Lora: LOVE the idea of a variables account. That is why my numbers were so high. I didn’t want to be caught out there when those variables came up, so I divided them by 12 and put into the budget as a cushion. I like your idea of putting aside a set amount and when it gets to a certain point untouched, adjust my numbers.
    Tanner: The $300 a month for vacation was because we are planning a family reunion/ graduation of several kids (including mine) get together in June. Since I started late, I need to save $300 per month until then. I do not plan on a $3600/yr vacation fund (one of my budget overestimates). I am receiving a tax refund (I know-letting government use my money tax free is no good-adjusting that this year) and will use the refund for the vacation. I have removed that $300/month from the budget.
    Personal section has been taken from $430 to $235. That was another overestimate.
    Financial/misc is for ER fund. Goal was to get to $10k and then funnel to retirement.
    Edward: Dropped the cleaning from the budget. Tough for me to spend money for something I do myself so I never do it. So removed from budget. Dry cleaning: I wear suits to work and am sure I clean them much less often than I should. That was also a very big overestimate though. Lowered considerably. I don’t actually get my car washed by pros. Dropped from budget.
    Private school: until now not a negotiable. It was important to me to have my son in Catholic school for elementary education. He is graduating this year and will likely go to charter or public for high school. So next year that payment will go away; however my intention is to divert it to savings for college.
    Melissa: Dogs: they are on “cheap” food. I am a couponer and so are they. Haha. They eat what I get deals on. The amount is so high because one was adopted early last year and there were fees associated with new pet (adoption, shots, accessories, blah blah blah). Another area where I over estimated. Dropped from budget. I increased my grocery budget a little to account for their food. Newspaper is not a subscription. I buy a couple of extra papers from the dollar store on weeks where coupons are particular good. Trust me, they pay for themselves in my grocery savings. Stockpiling: you are right about living from the pantry. Un?/fortunately I had 4 family members live with me for 3 months last year. I completed supported them all and the stockpiles were depleted. Building back slowly.

    • I was going to say that until the budget is balanced, there's not much you can know or do.  You have re-adjusted your budget and now you have $400 a month surplus ( "my numbers should be $3736 income and $3347 expenses"). 

      You also said that you want to increase your emergency fund.  So you now have 400/month, or $4800/year to save toward retirement and/or add to your emergency fund.  That's great!  So I propose that you save that money into your emergency fund until it is fully funded, and then begin contributing to your retirement fund.

      It sounded like your question was "where do I find the money", but you've already found 400/month.  You can listen to all the advice in this thread.  If private school, or tithing, or your dogs are something you really value, then keep doing this.  Identify which other items you can negotiate and cut back.  This will get your emergency fund stocked more quickly, and let you begin investing more quickly.

  9. Get rid of the dogs, stop tithing, unsubscribe from newspapers, and cancel the cleaning service.

    That's it. Because she's already counting saving in her budget, things don't need to be cut in order to make room for saving… actually she might even be able to reduce some of her aggressive saving if she is really falling short. Saving for travel is awesome, but maybe $200 a month instead of $300?

    • Sorry. This is just silly.  Dogs are living beings.  One I've had since I nursed him as a puppy 8 years ago. The other is the same age and his family since puppyhood just dumped him at a kill shelter. I find that awful. I'd sell my car and walk everywhere (which isn't really possible where I live) before I'd get rid of them. They are as much of a non-negotiable as my child is.

      I know people cut tithing when in debt and I agree.  But I am not in debt and I believe tithing is as important as retirement.  I would cut other "luxuries" first.

  10. Hi Missy! Some of the things I cut down when I needed to start living beneath my means which I see on your list are: car washes. Even with a coupon, a car wash came out to about $16. So I just wash my car with a bucket and soap once a month. It's dirty a little longer, but this is definitely a luxury item. Next, newspaper subscription. Unless the coupon savings are WAY more than what the newspaper costs you. otherwise, you can get all your coupons and better deals on and coupon blogs. Pedicures. Make it twice a year. Also make haircuts WAY less frequent. Finally consider going to a low cost vet and getting the cheaper pet prescriptions. But definitely get high quality dog food (the good organic stuff no big brands like Pedigree). That's one area I wouldn't skimp on besides the ones you mentioned. I think you are close. You also have a big vacation fund. $300 a month is a lot. Can you cut it in half for now? Also, considering you only use the cleaning service twice a year, don't account for it and anything else you dont spend.

  11. @Bridget Gibson  – I am appalled that you suggested to get rid of the dogs. I REALLY hope that was a joke! Would you get rid of your kids to cut down on a budget expense? I don't think so.

  12. Gabracosa says:

    Missy tales home $3550 a month from her work I'm guessing her annual income is around 60k. With 1 child that puts her roughly in the 15% Fed tax bracket.

    It looks like her housing, car and food expenses are okay. Child seem to be on the right track.

    I would start with contributions to a 401k or IRA. If she contributed just 5% to a pretax retirement plan she would be saving up to $3000 per year($250 per month). Her Fed income tax witholding would also be reduced by about $150.00 per month and additional savings on state withholding taxes. If her state tax rate is 6%, then her state taxes would go down by $15.00. In effect, her $250 monthly retirement savings would cost her $85.00 ($250 less 150 less 15). If she has an employer participating in a 401k, at even a nominal 50 cents on the dollar, her monthly 401k contribution would be $375.00 but still only costing her the $85.00.

    As for cutting back in other areas, I agree with the others who mentioned that without knowing how much she actually spends, it's difficult to give any thoughts in this area.

    • Gabracosa says:

      I posted the above before I read the new updated budget. With $400.00 available, I personally would contribute about $300(pretax dollars) per month to the 401k/IRA and put another $100.00 a month back into the MISC fund. That way there's a little more extra for emergencies, yet the savings would grow much faster.

  13. First of all, if her estimates are not accurate (i.e. everything is overestimated) it's really difficult to give any real suggestions and recommendations that would be useful or practical. My first bit of advice would be to redo her budget with realistic actual estimates of how much items actually really cost (based on her spending history) and completely removing items and services she no longer (or rarely) uses – such as housekeeping that's been used twice in two years. If it's not an ongoing monthly expense, it should be removed from the monthly budget.

    It is of no use if we can find $200 of savings in her budget each month that could be set aside towards retirement if that $200 doesn't exist to begin with, if it comes from overestimation that doesn't exist within her actual income.

    Budgets should *always* amount the actual amount of money made each month. After you add up all money you spent (and didn't spend, because leftover and savings should be reflected as well) the amount should be the same. If it's not the same, it's really hard to recommend real changes.

    That said, and assuming she actually uses money in each of the areas she said, and thusly can remove money from those places as well, these are the areas I would recommend trimming from her budget:

    ** Cleaning service – This one seems like the most obvious, just do your own cleaning and set the money aside.

    ** School tuition – Is the child in college? Otherwise I would question if there's truly a need for him to be in a private school. This area alone could give her significant savings. If there is a necessity of some nature here though, disregard.

    ** $100 a month toward miscellaneous expenses for child – Is it possible to trim this just a little? Perhaps $80 a month instead of $100? Taking small amounts out of different areas here and there will add up when combined.

    ** Dry cleaning – Is it possible to limit dry cleaning costs by only allowing herself a certain amount of items to be dry cleaned each month? Find a cheaper cleaner? Make an effort to wear items that don't have to be dry cleaned a few extra days a week? or dry clean less often by wearing an item more than once if it's still not dirty or soiled?
    Also, they do sell dry cleaning bags (or at home kits) where you can toss your clothing item in the bag, put the bag in the dryer, and do it yourself at home for much less.
    I don't know the details of her work or budget, but I just feel there has to be *some* way to squeeze in a little bit of savings here.

    **Tithing/subscriptions — Donations are always a wonderful thing, but perhaps she could match her donations to herself? Not the tithings, but the other donations to charity. For example, if she donates $25 to a cause, she should also donate $25 to her retirement fund.

    ** Vacations — Perhaps lowering her monthly amount from $300 a month to $250 per month. She will still save towards her vacation, but again, the extra $50 can go towards her retirement fund.

    ** Personal — Again, without knowing the details of her work and the need to spend money on new clothes and haircuts, I'm not comfortable eliminating this. However, I do think she could probably find a cheaper gym, or consider finding other ways to work out that don't cost money, like working out at home, running, biking, etc.

    **Financial/Misc — Seeing bank fees here is somewhat of a flag for me. There are plenty of free accounts out there that don't charge any fees unless you have NSF or an overdraft, in which case let's try to find a way to manage the money to avoid those completely.

    Again, this is the best I can come up with without an accurate (balanced) budget that truly reflects the spending for each month within the limits of the income.

  14. She could cut the vacation contribution by half and get rid of the cleaning contribution and save 200/month to retirement.

  15. Reading her response to everyone's comments makes me think that her very first priority is to write down everything she spends every month for at least three months. It sounds like she THINKS she knows where her money is going but isn't 100% sure. I can tell you that when I starting tracking food not bought at a grocery store I was shocked at the actual vs. the estimate!

    Once she does that I think she will more easily be able to figure out where she should cut back.

  16. Grizzlesina says:

    A few suggestions:
    "Tithing/subscriptions ($365)" — can she cut this? I understand that this is probably important to her, but she simply can't afford it right now. It makes more sense to invest in getting your finances on track so that you'll have more potential to tithe and be generous later in life than to give away a significant portion of your income now at a time that the money could make the difference between financial health and struggles later in life.
    I was going to say that depending on how old the child is, it may be better to not pay for private school now and put the money in a 529 to save for college later. Tuition is only getting higher, and you don't want him or her to be burdened with student loans forever. But I see that she is already planning to divert that cost to college savings – great plan. Please look into 529 plans, which let you invest the money and have tax benefits.

    Consider cutting or reducing the frequency of the pedicures, unless she is a foot model or otherwise derives income from having nice feet. Not trying to be snarky, but this seems like something that could be reduced to special occasions unless there is a medical need.
    Bank fees — this is just throwing money away. Why are there bank fees? I never pay bank fees, so not knowing details of this I suggest she look into other banks or account types that will not charge fees. Use only the free ATMs and set up direct deposit to get a free checking account. If she is not already, I suggest Quicken or similar financial management software to keep on top of payment due dates so there are no late fees associated with credit cards.

    Those are just a few thoughts. She really seems to be doing pretty well as far as staying out of debt. Saving for retirement and for college should take precednece over some of the budget items IMO.

    • Parkerkathleen says:

      Just a couple of thoughts.  Tithing can be very important, especially to a devout Christian.  We firmly believe that we reap what we sow.  Second, if she sends her child to private school, perhaps that's because the public school isn't up to par.  ( And ) last, lol I certainly don't begrudge her four pedi's a year, a woman does what a woman does!!  ( Especially after she takes such good care of everything else. )

  17. Anonymous says:

    Ooohhh me! me!
    I just outlined a strategy for mid to low income households to save for retirement when they are living paycheck to paycheck in an article last week. It is through a double tax benefit she may be able to take advantage of.
    With a child, I think she would be categorized as head of household. Not sure if she can make the saver's tax credit (max. for this tax benefit is $41,625 for head of household), but perhaps. By contributing to a qualifying retirement acccount she will get a credit at the end of the year. If she opens a traditional retirement account, she will receive a second form of tax credit.
    How to take advantage of both of these credits at the same time without dipping into her paychecks? With a child, she is most likely getting a tax refund each year. Use the refund to contribute to a traditional IRA. Come next tax season, she can claim the saver's tax credit as well as the tax benefits of a tradtional IRA…then she will get a bigger tax refund. Use that tax refund to fund her IRA again…and you see a very nice cycle occuring? Nothing is coming out of her squeezed paycheck, yet she is funding her retirement.

    P.S. Is she taking a tax deduction for her donations (if she owns her home she might be able to)?

    • Missy Needs Help says:

      I will look into this next year.

      I was not head of household this year. My ex took the deduction. He also kept the house and itemizes because of mortgage interest and his work expenses. So I took standard deductions.

  18. Anonymous says:

    Hmmmm…I just read that she is going to use her refund for the vacation. Perhaps next year she can start the loop?

    Also, am not sure if she will qualify with her income level (she will need to look into her deductions and how the maximum threshold of income is calculated for the Saver's Tax Credit).

  19. It seems to Missy is on the right track. She really has all her bases covered, monthly expenses, things she doesn't want to give up, things she can, emergency fund, education for her child, retirement for herself, vacations and fun stuff.  It seems to me what she was really in need of was a budget clean-up, so it more truly reflected what was actually happening in her life.  I had to learn what worked for me and keeping a real budget (not just one that wouldn't get me into trouble) was part of what works, that and swearing myself off buying clothes for a while!

  20. A lot of what I was going to say has already been said.  I hope everything works out for Missy and just want to say to whoever said to get rid of the pets: when a person has a pet, that pet then becomes part of the family.  I would never get rid of my cat–it made finding an apartment worth it in the end because he came with us.  Again: good luck Missy! I used to over inflate my budget and then worry myself sick.  I've gotten a lot better about doing that–but I had to track what I spent on for a good 3-4 months before I got the hang of estimating.

  21. Thank you for all of the responses. I'm sorry some of you put so much detail before I was able to answer. I have a lot of trouble responding to this forum.

    I think Melissa nailed it – I mostly needed to clean up the budget to make it more realistic. I will also put some of the other suggestions in place (like the pre tax contributions).

    Thanks again. Spelling it all out really make everything make more sense.

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