Where is your discretionary income going?

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As you all know, Girl Ninja and I are on a mission to save like crazy for a down payment. We’ve been making some pretty serious progress and are just past half way to our $100,000 savings goal. If we end up buying a $350,000 house, we would be able to put $70,000 (20%) down and still have enough cash to furnish the place and maintain a reasonable E-fund (FYI: I’m assuming we won’t pay closing costs, since pretty much all sellers are paying them now). Our plan is simple, save. save. save.

Discretionary income, if you don’t already know, is the money you have leftover after paying for your essentials (things like bills, groceries, retirement contributions, etc). Sadly, many people live paycheck to paycheck, meaning they have no discretionary income. Every dollar they earn has to be paid to someone else. Fortunately, Girl Ninja and I have been able to keep our income up and our expenses down, leaving us with about $2,000 of discretionary income each month.

For the last 10 months of our marriage, I’ve been taking that money and throwing it in a high-interest (can you really call 1.1% high interest?) savings account. The balance has been steadily growing, which makes me a very happy Ninja. Each month that passes, brings us a little closer to that $100K mark.

It’s a good thing we have a goal to buy a house, otherwise I would have no idea what to do with our discretionary income. I guess we could start playing the short term investing game, buy nicer furniture, or go on lavish vacations every few months, but none of those things seem as exciting to me as having a fat chunk of change in the bank. Yeah, I don’t care what you think. Big savings accounts turn me on….meeeeow.

So now that you know what we’re doing with our discretionary income, it’s my turn to ask you a couple questions.

1. How much (if any) discretionary income do you have each month?

2. What are you doing with it? (Saving for a car? contributing more to retirement? planing to start a business?)

3. Why can’t male politicians keep it in their pants?

37 thoughts on “Where is your discretionary income going?”

  1. I am trying to focus as much discretionary income toward paying off some debt. I would like to start decreasing my monthly expenditures. Can’t answer question #3.

  2. We have just a little bit of debt left to go, part of it due to being “forced” to go on a trip down south for a wedding of a very close family member….so just $3400 left…yay! So we throw a lot at that on the debt (it was $17,000 back in Nov ’10) and we also keep a bit for “fun”! We have plans once the $3400 is paid off, which will be really soon. We basically have $1200 extra per month when we don’t get overtime (but we do get it a lot), so we are going to sock away $400 per month to put a chunk on our mortgage when we renew it in 2 years, $200 per month to a travel fund, $200 per month to save up for a new couch (then after that the $200 will probably go to general savings), and $200 extra fun money for DS and $200 for me. Gotta have some fun!
    Ninja, we had a house plan almost the same as yours, house was $311,000 and we saved $70,000 and put $62,500 down on it…the left over was for “new house” expenses like paving the driveway, lawn, gardens, curtains, water heater….there is a crap load of stuff to purchase when you buy a new home!

  3. Most of our discretionary income is going towards 3 things: 1) Paying down our LOC, 2) Building up our USD account for a trip to (likely) Vegas within the next year or 2 (money for the flight/accommodations is already put aside; the USD Acct. is strictly spending money), and 3) making additional principal payments on the mortgage.

    We’ve also recently opened up a TFSA; we’re going to have to replace our car within the next couple of years.

    Not every extra penny goes towards those 3 items; we put some aside for the occasional weekend away (ie: an overnight stay in downtown Toronto or Niagara Falls); close to home, but still a change of scenery to make it feel like a “mini vacation”… as Catch pointed out… gotta have some fun!!

  4. Currently, our discretionary income is being eaten up by house maintenance and preparation for our soon to arrive baby. We also save for retirement, emergencies, pay extra on the mortgage and have some fun (saw Bridesmaids on Friday-hilarious!) though these things will decrease as we live on a much reduced income for the next 6 months while I take maternity leave.

  5. We probably have between $1000 – $2000 in discretionary income each month (it varies because my husband is self-employed and has an irregular income.) Right now, we’re putting almost all of it toward paying off debt, though we are also putting some toward some projects around the house. After the consumer debt is paid (hopefully by May of 2012) we’ll work on paying off the house, and then we’ll start saving up for some acreage in the country. So, pretty much all our discretionary income is spoken for until we die.

  6. After all our bills, tithing, and retirement savings we have between $2500-$3000 a month! And we live in Texas, so we actually have more left over than we spend. We’ve actually only had that much since the hubs graduated May 2010 and started working full time.

    Before he graduated we paid off our car 2 years early (and swore to never ever ever have another car payment again) Then we started saving 400-500 a month to pay off his student loans when his grace period was up. When he graduated we paid off $28,500 to Wells Fargo by the end of 2010. That leaves ~75,000 on our house, and then we’re finished! So we’ve beefed up our house payment to have it paid off in 10 years, thrown a ridiculous amount of money back for a baby, a car, house repairs, etc. The best part is that we’ve been able to start a “missions fund” which is outside of our monthly tithe. When God puts someone in our paths that has a need (small or big) we’ve had the money to give freely. He has been faithful!

  7. The extra income goes mostly to the vacation fund (we try to leave the country once a year) and to the old investment account. Our house is paid off, our cars are paid off and my student loan interest is stupid low and I can earn more with a simple bond fund, so I am no rush to pay that off (balance is low too). We have a healthy emergency fund and a healthy replacement car fund. We are pretty lucky to be in the position we are in (especially for our ages).

    As far as the politicians… I have no idea, but it makes for some interesting radio on my drive to work.

  8. It’s hard to answer how much “discretionary” income we have as we try to budget all of it. We are currently adding $700 a month extra to student loans (only for another 6 months or so to go!) and saving an automatic $1700 each month. So maybe $2400 is that amount. SWEET! That’s my wife’s take-home income each month.

    Male politicians are easily wooed by the power and authority that (they think) they have. With that delusion of power comes the second delusion that all women want to give it to them and give it to them hard. Male politicians then send pictures of their wangular units to women thinking that it’s an innocent way to escape into fantasy.

  9. My wife and I have about 3,300 per month in discretionary income left over. This is on top of the 2K each month going to investments and retirement. We are both very frugal and hate spending money. No goals at this point for the money, but at some point in the next couple of years we will have a kid and my wife will stay at home, so it is nice having some padding for that.

  10. After my normal bills and budget (which includes things like shopping and eating out, which I technically consider discretionary…) I end up with about $1300 discretionary. I’ve decided to divvy this up between emergency fun ($400/month), vacation fund ($160 / month), then whatever is left is used for random out-of-budget items (like bday gifts, weekend trips, etc) and then usually about 400+ left which I use to attack my debts. Right now it’s my student loan. With the extra $ + the “extra” paycheck coming in July, I should be done with student loans by August. Horray!

  11. 1 – I throw about $400/month into a savings account. We’re looking to buy a condo next year, and we’ve already hit the down payment. Soon I’ll be up to about $700 since we won’t have a car payment after this month.

    2 – Dooooooownpayment. I’m going to be so sad after writing that check.

    3 – Dude, his last name is Weiner. He was doomed.

  12. After all the necessities, I end up with about 50% of the remaining towards travel, 30% towards the emergency fund, and 10% for everything else. That can change depending on what’s going on, but the rough estimate will do.

  13. Almost all of my income is discretionary income! Living at home + in college = no bills! Except gas. I spend like $100-$250 on gas every month driving to school and the that’s the only thing I have to pay. I’m busy spending the rest on an upcoming trip to Italy or stashing it in general savings.

    #3 disappoints me! I always liked Weiner (haha…) and then he decides to be an idiot.

    • “#3 disappoints me! I always liked Weiner (haha…) and then he decides to be an idiot.”


  14. I’d guesstimate about $600 discretionary, but I also have a skewed perspective because I find saving for retirement and vacation obligated expenses and my mifi card and cell phone are discretionary. I also opted to buy a car that was a little out of my price range because I liked it better than “what I could afford”. I would say I spend about $200 per month on frivolous stuff like books, decorative stuff for the house, clothes and dinners out. This is on a $3000 per month income. I am saving for a trip to Las Vegas at the end of the year, an awesome girlfriends road trip to Niagra Falls next fall, a trip to Scotland in 2014 and a trip to Antarctica in 2017.
    As for why politicians can’t keep it in their pants? I’d say they want to be rock stars but they’re not good looking enough and they can’t sing or dance.

  15. Trying to throw extra money at loans and emergency fund. This divided approach isn’t working though, so I have to figure something else out.

  16. My discretionary income goes for the fun things! Savings (403B, IRA & Roth IRA) are a payroll deduction and I have no debt except a small mortgage.

  17. Timely post, I’m trying to decide what to do with my discretionary income when my car is paid off (possibly at the end of this month!). So far all of it since December has gone to the car beyond Roth and vacation.

    1. Come September (moving to lower rent) I will have approx $1300 discretionary, with an extra paycheck four times a year. Which seems crazy high to me right now but that’s adding in what I add to my Roth IRA and vacation funds. I’ll own my car, housing expenses will drop by $150 and I just got a $325/month promotion/raise!

    2. $100 Roth IRA (will probably bump to $150)
    $125 vacation (Dave Ramsey would not approve…)
    Everything else to car repair fund until it hits $1,000 (end of August)
    THEN Everything else to engagement ring fund until $5,000 (January/February)
    THEN Everything else to some combination of student loans ($14,000) and wedding fund ($ o_0 )

    I may split ring and student loans when I get there, but that’s the general outline of what I’m looking at right now.

  18. 1. DH and I have around $2500 in discretionary income every month, more during extra paycheck months.
    2. We saved up a large efund, paid off a car loan and my student loans, bought a new TV, and bought a new to us car with cash. We also saved up for a Euro trip we’re taking later this year and have a house fund saved, but we are enjoying renting right now and are not feeling ready to buy.

    3. Sigh, don’t know bout that one!

  19. I have $436 in discretionary funds left at the end of every month, however, I have $800 more that I am using to pay off credit card debt. Once that is paid off in 5 months, I’ll apply it to my student loan. Once THAT is gone, I’ll have about $1400 left over in discretionary funds, that I plan to save up for a house with my fiance. Phew!

  20. 1. Not quite sure, it varies but I know I have some.
    2. I just save it, I have goals but they don’t have to come in any particular order, I’m just going with the flow
    3. It’s a way of life. Maybe not the best if you are in that position but a way of life. Plus it gives me a good laugh.

  21. 1. Varies depending on side gig income, but it’s never less than $1,500
    2. Savings, baby! I like big, fat e-Funds as well. I pretty much find a way to bring in more income or fit all purchases into my monthly budget in order to always put at least $1,000 into it each month. Sometimes the stars align and I’m able to throw in $2,000+, but those are the months where I have extra paychecks or have worked my arse off bringing in the side bacon
    3. Ugh…

  22. Ninja,

    Have you considered a less expensive house or bigger down payment?

    Some “rules of thumb” I’ve seen around other blogs (i.e. FMF – http://www.freemoneyfinance.com/2005/10/comments_buy_a_.html ) recommend only taking a mortgage of 2 or 2.5 times your gross household income, and then doubling your mortgage payment. That way your house is totally paid in about 10-12 years instead of 30, and you save a bumload on interest over the life of the loan. I’m sure you’re familiar with how it works given your Sallie Mae experience.

    Your current plan is $350k – $70k = $280k mortgage; $280k/$73k = nearly 4x your annual salary. Not counting GN since she is planning on leaving her job within those years.

    Just sayin’. Couldn’t hurt to bust out your TI-83 and run a scenario or two.

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