Critique my budget - Page 2

[Delicateflower]

I did some quick calculations. If you continues as you are (no tax return), snowballing from one to the next accroding to interest rates. The car will be done in September, CC#2 in October, CC#1 in Dec 2001 and the line of credit in Dec 2013.

If you pay your tax to the car, the car is gone then, cc#1 is gone in June, CC#2 in Aug 2011, LOC in Aug 2013.

If you pay your tax to the cards: Card #2 is gone in April, CC#1 is gone in Aug 2011, LOC is gone in Aug 2013.

So the only difference is whether you pay 19 or 8% for two months. Which isn;t a huge deal. Psychologically, though, how hard will it be to hand over and optional $500 to the cards instead of compulsory to the car? I think you're more likely to pay the money to debt if you give the tax return to the cards (and, actually, probably the higher balance one so your compulsory paying down doesn't go from $200 to $150). WDYT?

[karkli]

Originally Posted by sanguine_speed

In some places, such as Canada, it is impossible to avoid a tax refund in certain situations. For instance, it is commonplace to have a refundable tax credit on rent paid. If you're low-income and you pay rent, you will probably get a substantial refund on your rent. You can't adjust withholdings to account for this. The "withholdings" form is very specific and you can only change your withholdings based on specific information such as estimated income, whether you're a student, whether you have dependents...you can't just pay less tax because you think you'll end up with a refund.
Also, in Canada, Registered Retirement Savings Plans offer refundable tax credits based on your income. So you can expect a refundable tax credit of up to 50% of your contribution and the only time you get this money back is when you file your income taxes--and again, you can't adjust your withholdings to account for this.
There are lots of other refundable tax credits that you can't really account for before filing your taxes. Tax refunds are not always refunds of taxes actually paid, besides. There are lots of refundable credits for expenses that there is no way to account for on withholdings: sports for kids, child care, RRSP contributions, etc.

So, in Canada, getting a tax refund is often not a result of poor accounting. In fact, those who end up with big refunds have often planned very well.

I was under the impression that the OP was in the United States and it was her SO who had emigrated from Canada to the U.S. Apologies if that was a misunderstanding.

In any case, I saw the OP's response to my post - that this tax refund is an anomaly. Is the whole $2500 due to claiming your SO as a dependent last year, or is a portion of it a "regular" tax refund?

Still, the budget looks do-able, especially when you consider that all of the budget ideas that have been brought up in this thread have been based on the minimum projected income. Anything earned in addition to that could go right toward savings/debt repayment. You could be out of debt within just a few years.

[dealic]

Originally Posted by Delicateflower

I did some quick calculations. If you continues as you are (no tax return), snowballing from one to the next accroding to interest rates. The car will be done in September, CC#2 in October, CC#1 in Dec 2001 and the line of credit in Dec 2013.

If you pay your tax to the car, the car is gone then, cc#1 is gone in June, CC#2 in Aug 2011, LOC in Aug 2013.

If you pay your tax to the cards: Card #2 is gone in April, CC#1 is gone in Aug 2011, LOC is gone in Aug 2013.

So the only difference is whether you pay 19 or 8% for two months. Which isn;t a huge deal. Psychologically, though, how hard will it be to hand over and optional $500 to the cards instead of compulsory to the car? I think you're more likely to pay the money to debt if you give the tax return to the cards (and, actually, probably the higher balance one so your compulsory paying down doesn't go from $200 to $150). WDYT?

Psychologically, I want to pay off the car because that payment makes me feel overwhelmed and panicky which makes me spend money because I think there is no escape, plus paying it off early makes me feel I have accomplished something.

I have historically been very good at sticking to voluntary payments (ex and I paid off all our 30k school debt in 1.5 years, in addition to paying for our 12k wedding in cash).

I just had a TERRIBLE year after we separated and I am just now facing the consequences of that (2 years after the separation). But if I have a plan, I CAN stick to tight budgets and I WILL make the payments. I just need to know its possible because for the past year it didn't seem it was, so I kinda ignored it because my anxiety disorder hates the stress of thinking about it.

I think if we can have the car and the small card gone by the time he starts school I will find it easier because the snowball will be well underway and I will have proven to myself that we can make it on our incomes.

[dealic]

Originally Posted by karkli

I was under the impression that the OP was in the United States and it was her SO who had emigrated from Canada to the U.S. Apologies if that was a misunderstanding.

In any case, I saw the OP's response to my post - that this tax refund is an anomaly. Is the whole $2500 due to claiming your SO as a dependent last year, or is a portion of it a "regular" tax refund?

Still, the budget looks do-able, especially when you consider that all of the budget ideas that have been brought up in this thread have been based on the minimum projected income. Anything earned in addition to that could go right toward savings/debt repayment. You could be out of debt within just a few years.

Nope, I am Canadian, he moved here My whole tax return is from claiming him, minus maybe 200 if I was lucky. On that note, since he is married, he now needs to file as married in the USA. So we are having me considered resident for tax purposes so he can file jointly. But my Canadian income is exempt, so "we" earned his income last year, which is below the line you pay taxes at so he is getting the $1000 in taxes he paid back.

I think its very workable. I am so grateful for everyone who posted here and helped me. Basing it on our lower projected income means we can survive no matter what, but that in reality we will often have more to put to the debt/savings so it can only get better! I am so excited!

[doubledutch]

i'm glad you feel better! i agree with you about dh's $1000 refund. use it for his tuition. you will be able to create savings and pay down the debt on your regular income. paying for his tuition is an investment that will give him much better earning potential in the future. congratulations on his great news at work!

[Delicateflower]

Originally Posted by dealic

Psychologically, I want to pay off the car because that payment makes me feel overwhelmed and panicky which makes me spend money because I think there is no escape, plus paying it off early makes me feel I have accomplished something.

I feel like that when our checking account is low. why IS that? And when we're flush and due to transfer some out I don't feel like spending anything.

[quantumleap]

Sounds like people have things well in hand with the suggestions. I just wanted to mention PC brand dog food from the Superstore/Independant/Extra Foods/whatever the heck it's called where you live. We had a dog with a ridiculously sensitive gut and he did very well on it. The ingredient list is really quite good, and the price is also really decent. I don't think they have a grain free version, but they do have a senior version.

Also, if you get a PC (CIBC) debit card, you get points for buying groceries at their store, which translates into free groceries down the road. When we live in places with cheaper grocery stores, we tend to get only produce and dog food at the Superstore, but it still seems to add up on the points front. We end up with about 50$/year in free groceries, which, granted, is not a huge amount, but 50$ is 50$. Maybe you've laready done this, but we've totally switched to PC - no fees at all, and they have a savings account with a wicked 4% interest, which is where our emergency fund lives (or, lived, until we had an emergency and had to use it).

Good luck with everything!