Financial Makeover: Petunia
Don’t think for a second I’ve forgotten about this series! I decided to retool it a little though. My video quality wasn’t the best and I do my best work writing, so here goes:
Petunia is 43 years old with two kids, one living at home. Her takehome pay is $2970 although there is occasional overtime. Her monthly expenses are a whopping $2850 a month:
- $1300 going to her mortgage
- $350 to utilities
- $42 to life insurance
- $82 to gym
- $45 to internet
- $30 to home phone
- $45 to dish TV
- $19 to Netflix
- $31 to pest control
- $130 to car insurance
- $150 to gas
- $500 to groceries
- $100 to personal grooming
I see a few areas of opportunity here. First, she receives child support twice a month for $226. That money can be considered in addition to income, and could immediately go into savings. You should save at least 10% of your takehome for retirement, which I don’t see up here right now. She does have about $100k in an IRA but that’s not currently receiving any contributions. That NEEDS CONTRIBUTIONS. There’s a few frivolous items (like it or not) that you could afford to give up to afford to contribute to your IRA.
For one, the gym. Examine how often you go and see what you could replace with home workouts. Investment in gym equipment can often be worth only one or two months of gym membership. $82 is an awful lot to pay–if you’re not willing to give it up, find a different and cheaper gym.
Do you need dish TV AND Netflix? Netflix offers a lot of services streaming and dish TV is eating up a chunk of your retirement and fun money. Can you afford to get rid of it? I would ditch it, personally, and go to the lower option on Netflix. Then you just hook your computer to your TV and watch stuff for $9 a month.
Utilities can always be scaled back to a surprising degree. Turn off anything when it’s not in use, and by using a power strip which turns off vampire draw from electronic devices. If you aren’t already using low-energy bulbs, invest in some. They can save you a ton of money over the long run, so definitely start doing that.
Now. Your boyfriend is moving in and you want to know what’s fair to share in terms of expenses. I would advise you to have him share a proportional amount of his income. If he makes less than you, don’t expect him to cough up 50%. A good friend of mine and his boyfriend pay proportionally to their income. His boyfriend makes about 33% more than he does, so he contributes two-thirds of the rent while my friend pays a third. He should pay for anything he uses, though, so that’s the house, the groceries, the utilities, and the car. If you can afford it–and I say this without joking–try to get by on one car. My parents have done so successfully for several years now and are happier, closer, and have saved money more than before. Two cars are a luxury.
Anyone else have advice for Petunia? I intentionally didn’t touch groceries because she’s not spending money on eating out–and that is AWESOME. Let us know in the comments below!