The 60 Percent Budget

by Stacey Carroll, Contributing Writer

In lean times, it makes sense to reevaluate how we spend our money. The best rule of thumb is to spend no more than 60 percent of your net monthly income which creates a 40 percent buffer. A 40 percent buffer should cover all the unexpected expenses we typically incur during the month without having to dip into credit cards or savings accounts on a regular basis.

Base Income, Gross Income, and Net Income

First we start out with a base income. Let’s say we make $15 an hour and work 40 hours a week. This gives us a gross amount of $2400. We can’t do our calculations on gross income because we don’t physically see all that money. Taxes, medical insurance, and other deductions come out of our pay before we ever see it.

For simplicity's sake, let’s assume that the taxes are 25% and insurance is $70. every two weeks. We have to subtract this from $2400 which gives us a total of $2260. Now we need to multiply this by .75 to get our net monthly income of $1695. This is the figure that we will work our calculations on.

Rent and Mortgage Payments

The largest expense for most of us is our rent or mortgage payments. Typically, realtors allow you to spend up to 33% of your gross income or $733 in this scenario. That’s almost half of the net income we just calculated. A better way to do this is to spend no more than 25% to 28% of your net monthly income. This gives us a housing cost range of $423 to $474.60.

Now, we need to figure out how much 60% of $1695. $1695 * .60 = $1017. Next, subtract the estimated rent amount: $1017 - $474.60 = $542.40. That’s $542 for everything else, groceries, electric, cell phones, car payments, and entertainment.

Utilities and Other Expenses

Let’s take this a step further and assume no car payment, no cable TV, and no landline phone. This leaves a basic set of utilities: cell phone, cable internet, electricity, car insurance, gym membership. A basic cell phone plan runs about $40, gym membership $45, car insurance $60, electricity $100, and the cheapest cable internet about $32. Subtracting all these bills leaves us with $265 for groceries and miscellaneous expenses for the rest of the month.

When done successfully, this plan would leave just about $600 per month extra for unforeseen expenses and saving. By the end of the year, someone following this plan would have a max buffer of $7200.

Author Bio:

Stacey Carroll is the author of the thriller series - Avia.  She also authors the paranormal erotica series - The Blooddoll Factory. Stacey grew up in Indianapolis, Indiana. she went to college at Indiana State University (ISU) and graduated with a Bachelor's degree in aerospace in the professional pilot program. She has flown Cessna 152s, Cessna 172s, the Pipe Seneca and the King Air. She also graduated with a minor in computer science that specialized in web design.

She has always been interested in reading and writing, and the first book she was ever read was the Grimms Brother's Fairy tales. From the ages of 6 to 11, she read the Nancy Drew series. By the age of 11, she had graduated to Stephen King novels. A few of her favorites include Carrie, Tommyknockers, The Dark Tower Series up to book 3 (That's where it stopped in the late 80s/ early 90s), Pet Semetary, The Shining, Night Shift, The Stand, It, Cujo, Christine, The Eyes of the Dragon and Thinner (Richard Bachman). In her teen years, she moved on to Anne Rice and got through about four of those books before they degraded. If you've ever read Anne Rice, you know book 5 isn't readable. Stacey has read a couple Harry Potter books as she was introduced to them in the early 2000s, and she's never read or watched anything Twilight or 50 Shades. Sorry. I'm a vampire purist, and nothing needs to be said about the latter. You already know.

She is currently an author and freelance writer. She received an honorable mention in Alfred Hitchcock's Mystery Magazine in 2008 for a short story entitled The Field. In 2014, she was published in 13 Stories by Us by MacKenzie Publishing.

Other books by Stacey

• AVIA II
• AVIA Memories

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