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All Your Worth
Apr. 20th, 2010 07:07 pmI got All Your Worth from the library today; it's the money planning book by Elizabeth Warren and her daughter. Warren is the pretty darn awesome lawyer currently advocating for consumer protection legislation; her daughter is a financial consultant. The pair wrote the book The Two-Income Trap as well.
They argue that 50% of your income should go to Must Haves, 30% to Wants, and 20% to savings. To calculate the factors the way they do:
Income:
Gross income
Minus taxes
Plus employer contributions to your retirement
Must Haves:
Rent/mortgage
Insurance (life, health, car)
Car payment
Child care
Utilities
Food
Student loans
Anything you have a contractual obligation to pay for over the long term
Not credit card debt; the credit card piece gets complicated, but since we have no credit card debt I didn't pay that much attention to it.
Wants:
Clothes
Eating Out
Stuff You Buy
Gym memberships
Basically anything that if, you lost your job and cut back to the bone, you'd eliminate.
Savings:
Includes employer contribution to retirement.
So I totted up our percentages on Must Haves and Savings, which are the ones with easy-to-come-by numbers. With Dillo still in day care (until August) and counting our new car payment, our Must Haves are at 66%. Oops. Once Dillo starts school, we'll be down to 58%, which is still not that great, but is out of the Danger Zone. On the plus side, our Savings run at 19%, which is about on target. (Also on the plus side, we have an extensive cash reserve, that runs to about 6 months of Must Haves, and we have no consumer debt, but.) But no wonder it feels like we are still having to be cheap all the time - our Wants are what's getting squeezed in our budget.
Right now there's not too much we can cut from the Must Haves. We need to look at the life insurance we have through work, and maybe choose a cheaper health insurance plan when open enrollment rolls around. I think mr. flea may need to adjust his federal tax withholding. And it would be great if I were able to get a job as a librarian, and mr. flea got hired as a permanent employee. In the meantime, we'll be cheap.
In general, I think this is a good book. It says all the sensible things all good financial planning books do (don't buy a house with no money down, don't buy stuff you can't afford, credit cards are of the devil) and that we have always done. I didn't learn a lot, but if you need a good basic financial management book (in paperback, cheap), you might look at this one.
They argue that 50% of your income should go to Must Haves, 30% to Wants, and 20% to savings. To calculate the factors the way they do:
Income:
Gross income
Minus taxes
Plus employer contributions to your retirement
Must Haves:
Rent/mortgage
Insurance (life, health, car)
Car payment
Child care
Utilities
Food
Student loans
Anything you have a contractual obligation to pay for over the long term
Not credit card debt; the credit card piece gets complicated, but since we have no credit card debt I didn't pay that much attention to it.
Wants:
Clothes
Eating Out
Stuff You Buy
Gym memberships
Basically anything that if, you lost your job and cut back to the bone, you'd eliminate.
Savings:
Includes employer contribution to retirement.
So I totted up our percentages on Must Haves and Savings, which are the ones with easy-to-come-by numbers. With Dillo still in day care (until August) and counting our new car payment, our Must Haves are at 66%. Oops. Once Dillo starts school, we'll be down to 58%, which is still not that great, but is out of the Danger Zone. On the plus side, our Savings run at 19%, which is about on target. (Also on the plus side, we have an extensive cash reserve, that runs to about 6 months of Must Haves, and we have no consumer debt, but.) But no wonder it feels like we are still having to be cheap all the time - our Wants are what's getting squeezed in our budget.
Right now there's not too much we can cut from the Must Haves. We need to look at the life insurance we have through work, and maybe choose a cheaper health insurance plan when open enrollment rolls around. I think mr. flea may need to adjust his federal tax withholding. And it would be great if I were able to get a job as a librarian, and mr. flea got hired as a permanent employee. In the meantime, we'll be cheap.
In general, I think this is a good book. It says all the sensible things all good financial planning books do (don't buy a house with no money down, don't buy stuff you can't afford, credit cards are of the devil) and that we have always done. I didn't learn a lot, but if you need a good basic financial management book (in paperback, cheap), you might look at this one.