In which I set a budget

I mentioned in my last post that my approach to money so far has largely been not to think about it too much. It’s not that I regularly spend more than I earn and rack up credit card debt or anything like that, it’s more like at the end of each month the money is gone and I sort of vaguely wonder what on earth I spent it on.

I know, of course, that this is hardly the optimal way to handle my finances, and I’ve been getting increasingly uneasy at the amount of money I apparently spend more or less unconsciously without really feeling like I’m getting anything out of them. I’ve set up countless budgets before, but the sticky point has always been the part where I actually track my spending and stick to the budget. Hopefully blogging about it will shame me into sticking to it.

I don’t live in the US, but for ease and clarity I’ll be writing about my budget, assets and liabilities in dollars, using an exchange rate that is a bit different from the actual exchange rate from our currency, but which (at least partially) takes into account the difference in cost of living. Hopefully that makes the numbers turn out a bit more relatable (and, bonus, makes me feel a bit easier about putting specific numbers up online).

I’ll get back to my monthly budget in my next post, but before we delve into the budget, I thought it would be useful to have a bit of background. Last year I got married and my husband and I bought our first apartment. Most of the money I had saved up since I graduated went toward my share of the down payment (along with some money that my parents and grandparents gifted me a few years back specifically for a down payment). And although we did not have a very extravagant wedding (and again, had a bit of help from my parents and in-laws), pretty much the rest of the money we had saved up went to pay for the wedding. We are currently expecting our first, so we are also anticipating quite a few costs related to that. The result is that my current assets and liabilities look like this:

Student loans: $ 28,264*
Mortgage: $ 144,005**

Apartment: $ 170,000**
Retirement savings: $ 5,469***
Emergency fund: $ 1,500
Money set aside for upcoming baby-related expenses: $ 1,380

*These are fixed interest at a very low rate until 2025, which means I’m not paying much interest on them, but I also cannot prepay them without penalty
**I’ve counted half of the value of the apartment and the mortgage towards my assets and liabilities, as my husband and I own it together and pay half of the monthly payments each.
***I do also have a decent chunk of retirement savings with my employer but I’m not going to count that as it’s in separate low tax accounts which I cannot access until the official retirement age (although I can manage which portion is allocated to stocks vs. bonds), whereas this is just money I’ve set aside separately in an index fund (no tax breaks, I control it and can access it at any time).

Short term I’d like to bring my emergency fund up to about $ 6,000, which should give me a decent cushion if anything comes up. I also expect I will need about $ 2,400 total for baby-related expenses (my husband is finishing up his PhD by the time the baby comes, so since I make more I will be covering most things baby out of my salary for now), which means I need to set aside another $ 1,020 for that in the upcoming months. We also have a few things we’d like to fix around the apartment, which I expect will run us about $ 300/month for the rest of the year.

After those things are taken care of, we’d like to start paying down our mortgage more aggressively as well as saving more (I suppose we will come back to the allocation between the two when we get there).

So, what do you think, anything specific jump out at you? Anything I’ve forgotten to take into account?


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