What’s a “must have”?

Dear Liz: You’ve written frequently about the 50/30/20 budget, where no more than 50% of your after-tax income should be spent on “must haves” so that you have 30% for “wants” and 20% for debt repayment and savings. In which category would alimony fall? How about car payments?

Answer: Any expense that can’t be put off without serious consequences is considered a must-have. Since you could be sued or held in contempt of court for not paying your alimony, that would certainly qualify as a must-have. So too are all required loan payments, since failing to pay those will lead to credit card damage, possible lawsuits and, in the case of vehicles, repossession. Other must-haves include shelter costs, food, utilities, other transportation costs, insurance and child support.

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  1. I have a family member who was sued because he did not pay alimony so it’s no surprise that it is a “must have”. I do wonder in what category do school loan early repayments fall. There is no penalty for not paying them early, but I feel as if the earlier I get started on repayment the better it will be for me in the end.

    • Hi, Jessica. Minimum loan payments are “must haves.” Any payments in excess of the minimum would go under the 20% for debt repayment/saving.

  2. Tim Berthiaume says

    Tim Berthiaume
    Jan. 20,2013
    I couldn’t find the link to a calculator that you wrote about in The 10 Commandments of Money. I would like to use it to help create my 50/30/20
    budget. Can you guide me to it?

    • Hi, Tim. Unfortunately, MSN disabled the calculator as it wasn’t compatible with the latest version of Internet Explorer. I’m working on getting another version created. Stay tuned.