We Bought a House! Cash Only Budget For the Last Dash

by Les@SpillingBuckets on May 13, 2009

So… We bought a house!

We met with the bank and got all the loan paperwork squared away to be processed, signed our names and initials on about a thousand contracts, and now just have to move in.

The move in time isn’t totally set, and the bank has told us that it is really backed up so it might not get a chance to finish our paperwork until the maximally allowed time of 60 days. This would put us at a July 1st move in. It’s really only the bank holding things up, we can move earlier and the current owners can move out earlier too. Even if we can’t get in before July it’s still going to be great to have most of the summer to get settled.

We got a great rate on our mortgage, fixed at 4.625%. Looks like we avoided Sub-Primate Man.

[youtube=http://www.youtube.com/watch?v=o4oaGGksYS0]

So what does this have to do with a cash only budget?

We want and need to put $10,000 down on the house. We bought it for $124,900, so this is about 8%. The down payment does not include taxes (just over $4,000) and closing costs (about $2,000) When you add this all up it means we have to have $16,000 in cash ready to hand over when we move in.

Here is our plan: We currently have $3,500 alloted for the purchase, and our other savings and checking accounts add up to about $1,200. We would rather not use our emergency fund but since we are living in unusal times, we are willing to temporarily loan ourselves $8,000 until we get it back from Obama when we amend our taxes. This puts our total savings at a grand total of $12,935.10 with a emergency reserve of $2,000.

Our current credit card balance (which we always have and will continue to always pay in full) adds up to $1,799.35, leaving only $11,135.75 that we could use towards the house. This means that we need to save $4,865 between now and then to make our goal of 16k.

Is this savings even possible with less than 2 months to go?

Between now and July 1st we will get a total of seven pay checks, four for Leslie and three for Ryan (and then he’ll get a fourth two days later on the 3rd as well) With all those paychecks we will be receiving about $7,700. We have already earned about $300 in alternative income this month and have included that in our income tally, but we have not factored it into June’s alternative income.

Unfortunately when you subtract our income ($7,700) from how much we have to save ($4,865) there is not much left to live on. We will have just over $3,000 to make it a month and a half including all fixed and variable expenses. You can see the exact details in the chart below.

We’ve already paid a lot of our expenses for May, but in June we will have just under $1,100 in fixed expenses, plus an estimated $750 in variable expenses (based on four months past expenses), including utilities, food, gas, unexpected things, and fun. When we we add up all our anticipated costs, including what we’ve already paid in May and an estimate of how much more we will have to cover this month, we are left with $13 leeway.

Yes, $13.00 . This is just crazy how it worked out.

If we go over budget and spend more than $700 in variable expenses in May, or more than $750 in June we go over. If we earn more via alternative income that will really help, but if we slack off like we did in April then we are going to be cutting it very, very close.

Of course, we do have the “extra” $2,000 in the emergency fund that we could use and not all of the credit card balances will be due all at once, but it would sure be nice to have that as a buffer for the unexpected expenses we are surely going to find when we move in.

We would also like to get a really nice kitchen table, and would like the flexibility to have cash for that right away. (We’ve got an awesome 90 degree window in the kitchen and want to get an equally awesome table to match the space)

Normally we only use credit cards for our purchases. This method allows us to track where the money goes when we do our net worth posts at the end of each month, and also gives us cash back rewards. We’ve earned several hundred dollars in cash back this way. So far this has worked for us very well, but because the budget needs to be so tight this month we have decided to go to a cash only system.

In June we will withdraw $750 for all variable spending. The fixed spending is pretty much all electronic (except rent) so we will still use credit cards and online payments for that, but having only cash will force us to stay control as much as we can with our spending and hopefully give us the cash we need at the end. It will be more difficult to record how each dollar is spent, but I would like to get receipts and keep a daily spreadsheet log to make sure we stay on track. We might do this for the remainder of May as well, withdrawing only the $250 allocated to finish off the month.

The $750 for June will be broken down into the following categories:

$250 for groceries and food. This includes all food we eat as well as cat food and other misc. stuff you get at a grocery store that isn’t really food. We have always tried to stay around this area and usually have no trouble making it.

$150 on gas. This number was collected after averaging how much we spent on gas the last 4 months.

$150 on fun. This was again based on an average of how much we spend on fun and by using the 5% of income fun fund.

$200 unexpected and other miscellaneous stuff. This will cover things like new glasses or haircuts.

We have a lot going on in June, so hopefully we can stick to this. We will be visiting Leslie’s parents in Connecticut for a weekend (extra gas expenses, it’s a full tank each way), as well as vising Ryan’s parents when they have rented a lake house nearby. We also have already planned some fun activities that cost a little bit of mo
ney, like a Film Festival and a play.

This cash only system will probably only last a month because a budget this tight is no fun. It will a great learning experience. I’ll be sure to keep you posted on how we are doing as the month goes along.

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