Thanks for the feedback.My advice is to stick out your job for now while getting your wife on board with your future goals and eliminating/lowering as many expenses as you can. Definitely link all of your accounts to mint so you can get the complete picture. Once you've begun to eliminate a lot of these monthly expenses, I would consider looking for a lower paying job nearby. Getting everyone on board will likely be easier said than done but the good news is, you can start right away by cutting your own grass, servicing your own pool, and cutting back your electricity useage.
The three options I provided I guess were more targeted at my happiness around my employment situation and less about the debt reduction. I'd like to be able to do both, and finding something that pays less, but lets me accomplish a few of the goals at the same time next year seemed like a good idea.
I like the idea of taking a paycut, riding a bike, selling the car, etc - and getting a job closer to home. Sounds like most folks are advising me to revise my current debt/pay structure while sticking it out in current role with the lengthy commute.
I can do that, was just looking for an amicable solution to all of the above.
To Freznow: I would strongly consider a home sale along with liquidation of all assets, as it would get us debt free in one swoop, but moving isn't an option right now. The home means too much to the wife, and even at 80k is probably affordable if I'm able to rearrange some of our spending habits.
I like the idea of taking a paycut, riding a bike, selling the car, etc - and getting a job closer to home. Sounds like most folks are advising me to revise my current debt/pay structure while sticking it out in current role with the lengthy commute.
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area). Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).
Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area). Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).
Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.
So Close:
Thanks for the feedback, I also like the idea of cutting expenses and starting that path first with the idea that within 6-12 months I can be looking for a lower paying role closer to home.
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area). Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).
Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.
So Close:
Thanks for the feedback, I also like the idea of cutting expenses and starting that path first with the idea that within 6-12 months I can be looking for a lower paying role closer to home.
Foxus on the easy targets first.
Fact is, you could cut your expenses in HALF and KEEP THE HOUSE AND COMMUTE.
Your spending in the other, easier to target areas is that absurd.
Cut the other crap , then you can look at the house / commute.
The 1700/mo you give your wife for her monthly prada bags is more then I spend on EVERYTHING. And I make near 100k/yr.
Sounds like the house might be non-negotiable, at least for now. Can you refi for a better rate?
While I am not disagreeing with you, I'm just not sure how I'd be able to save 40% if I were to take a job at 80k per year that's closer to home (realistic for salaries in my living area). Especially with 4 kids and health insurance costs (current employer benefits run me around 700 per/mo before taxes).
Maybe you are right and I just need to change my complete view on spending, but I have a feeling that would come with getting rid of the house. I'd prefer not to do as we do truly enjoy our neighbors (trust them with our kids, etc.) and is a big deal to my wife.
So Close:
Thanks for the feedback, I also like the idea of cutting expenses and starting that path first with the idea that within 6-12 months I can be looking for a lower paying role closer to home.
Foxus on the easy targets first.
Fact is, you could cut your expenses in HALF and KEEP THE HOUSE AND COMMUTE.
Your spending in the other, easier to target areas is that absurd.
Cut the other crap , then you can look at the house / commute.
The 1700/mo you give your wife for her monthly prada bags is more then I spend on EVERYTHING. And I make near 100k/yr.
Thanks - The 1700 a month is more like 200/mo for gas, 800/mo with costco and 300/mo with the regular grocery store & the rest towards kids clothes, target, etc. I guess my point with "not knowing where she spends it" is that I give it to her and let her figure it out.
Sounds like the house might be non-negotiable, at least for now. Can you refi for a better rate?
@ 3.75 it's unlikely. It is an FHA loan though, and after 3 years will drop the PMI and reduce another 350/mo.
Sounds like the house might be non-negotiable, at least for now. Can you refi for a better rate?
@ 3.75 it's unlikely. It is an FHA loan though, and after 3 years will drop the PMI and reduce another 350/mo.
You can refi sooner then that to get rid of PMI.
My 15 year is at 3.0%, which I got a year ago (rates are similar now?)
350 for three years is $12600, so this alone would make it worth it.
Overall, the house can be okay to keep, depending on your answers to the following:
-How much is property tax/yr
-How much is homeowners insurance
-How much is your HOA
-Are you willing to do something about your crazy commute cost by getting a better car?
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work. I agree, the 401K loan has gotta go. The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.
Goldilocks - not sure How I'm being assigned such a huge chunk of the "luxuries." The only thing I'm keeping is my pool cleaners at the moment until I can learn to do it, and the dry cleaning is a 2106 expense on my end of year tax returns. Seems unreasonable to me to ask the wife to do my laundry when she has to keep up with it for 4 kids. The 401K loan is also a shared expense, as it was not an option for us at the time when it was taken.
4Alpacas - Selling the home at this point is not an option. I'd do it tomorrow as it would payoff every debt we have and allow us to go rent someplace cheap for a couple years and continue to save. My wife loves our house and wants us to retire there, so selling it is not something I can even discuss at this point.
The way I looked at it is that we shaved off 7.2% of our monthly outgo in 60 days by cancelling services, and should be able to drop it by close to that again by the end of November. That is encouraging. It may not be encouraging "enough" for everyone here, but I feel like it's progress.
Back to Cars since it's my next point of attack:
Based on what the MMM original post from 2012 had laid out, he recommended that if you have an insane 15k/year commute, that a 2006 at the time should be the oldest model you should look at if I read it correctly. Do most people recommend buying a car over 100k/mi if it's a "newer" model? I'd love to find something that's under 7k that I can just pay cash for and drive into the dirt, just seems like they are hard to find in my area unless they are pretty worn out.
Just curious but was your wife receptive to the changes?
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work. I agree, the 401K loan has gotta go. The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.
Hi, I had to take a few guesses, in the breakdown, this is how it went: Definitely some guesses here.
Your splurges include Cell phone, pool, yard service and $365 (the difference up to $8k you mentioned for your "whatever" spending), were assumed to be exclusively yours. $900
Her luxuries are an assumed cell phone $45 for her (out of her spend), the $205/2 amounts remaining after that $1700 is spent on groceries, her gas, etc, but split in half between her and 4 kids. (kids do cost incidentals) $233.
Where do the church donations come from?
Joint luxuries between you are extra $300 or so from Costco, TV bill. (assumed split by 1/3 each, between you, kids, her and included above). Note that I assume she pays for the kids school incidentals, clothing and small items on a daily basis from the "$1700" budget.
Your car and expenses are a lot higher, too. Although you do commute
Someone made the 401k loan decision, which is in the past, but I assigned it to the person who had to sign the papers.
The big point is that house, utilities, and food do not take up excessive amounts of your budget, but mistakes with luxury spending, huge car costs and then acquiring 401k loan do.
The tone of "I don't know what she does with $1700 but she often goes over even that" seems to suggest that you think her spending is over the top. In actual fact, it is far less than yours according to your own numbers.
You have the money to fix this in your income.
Starting with cutting outside home services, cutting luxury spending, and cutting car costs will really help and is easy once you see it.
As to the car,
100 (miles or Km) is a magic number and you get a steep price discount to buy a car with 108k miles on it versus one with 92kmiles. Look for a car with a great body and 100k on it. Newish tires are nice too. A 2006 will start to have more expensive but routine maintenance, like brakes and eventually spark plugs, but these are not excessive and you get the great discount.
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work. I agree, the 401K loan has gotta go. The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.
I can see where you're coming from, but it doesn't make any mathematical sense. And I'm curious her ability to bring in some extra money or find places to save. If you sell your Jeep and get a $10K bonus, you could buy a car for cash, throw a little at the 401(k), and you'll have probably an extra $600 a month to throw at the 401(k) loan. If you throw that money at the 0.9% car loan, no dent is made in the 401(k), and you don't have the cash on hand to buy the commuter car; financing a used car will cost more than 0.9%. It does seem reasonable for her to do your laundry if it's an expense of your job, which is sustaining the whole family in this current lifestyle.
Horsepoor - I appreciate your practical feedback, and yes we've talked about once all 4 kids are in school full time for her to go back to work. I agree, the 401K loan has gotta go. The reason I am choosing to pay off her car is I feel I can take the 400/mo and roll it back into the 401K loan immediately and try to pay it off within the next year.
I can see where you're coming from, but it doesn't make any mathematical sense. And I'm curious her ability to bring in some extra money or find places to save. If you sell your Jeep and get a $10K bonus, you could buy a car for cash, throw a little at the 401(k), and you'll have probably an extra $600 a month to throw at the 401(k) loan. If you throw that money at the 0.9% car loan, no dent is made in the 401(k), and you don't have the cash on hand to buy the commuter car; financing a used car will cost more than 0.9%. It does seem reasonable for her to do your laundry if it's an expense of your job, which is sustaining the whole family in this current lifestyle.
I see where you are coming from. I was basically thinking of paying off her car with what's sitting in savings, but maybe you are right - just keep the money there as a cushion since I've already paid most of the interest anyways. I'm also anticipating making a couple thousand on the sale of the car, and due to some business expenses this year (side hustle) I should get a little back from uncle sam too. I may have enough to replenish the 4-6k I need for a used car once burned from savings if the Jeep sells quickly. Fingers crossed.
Am I crazy to be looking at a 9-15k car, or should I be absolutely setting my limits at 6-7k? I absolutely MUST have reliable transportation to get me back and forth to work.
QuoteAm I crazy to be looking at a 9-15k car, or should I be absolutely setting my limits at 6-7k? I absolutely MUST have reliable transportation to get me back and forth to work.
Absolutely stay in the recommended range. You should be able find a base model honda/toyota/hyundai for 6-7 k with 70-80k miles and in good condition. Just be sure you have an inspection done on it before you buy and give it a good look-over yourself. It's really when you get down to 2-3k that reliability becomes a serious issue. 6-7k is luxurious in my opinion. Could you have a breakdown with a 6k car? Yes! Of course you could with a brand new vehicle as well and I have seen that first hand.
What's the max recommended age you all think I should be looking at? I drive about 60 miles per day all in. Found this one on Craigslist locally, looks nice. AC is a must - I live in AZ :)
http://phoenix.craigslist.org/evl/cto/4734292001.html
| Category | Monthly amt. | Comments | Annual |
| Salary/Wages | $11,250 | $135,000 | |
| Pretax Health Ins. | $700 | $8,400 | |
| FICA base salary/wages | $10,550 | $126,600 | |
| $ | |||
| Federal Adj. Gross Inc. | $10,550 | $126,600 | |
| $ | |||
| Federal tax | $791 | 2014 rates, item. ded., 6 exemptions | $9,493 |
| State/City tax | $369 | Guess, using 0.035 * Fed. AGI | $4,431 |
| Soc. Sec. | $605 | Assumes 1 earner paying | $7,254 |
| Medicare | $153 | $1,836 | |
| Total income taxes | $1,918 | $23,014 | |
| Income before other expenses | $8,632 | $103,586 | |
| Monthly Expenses: | $ | $ | |
| Mortgage | $1,621 | Guess various items | $19,451 |
| HOA | $100 | to get total | $1,200 |
| Property Tax | $229 | housing cost | $2,748 |
| Home/Rent Insurance | $100 | to $2,400/mo | $1,200 |
| PMI | $350 | per OP | $4,200 |
| Cable TV | $120 | $1,440 | |
| Car Insurance | $120 | $1,440 | |
| Dry Cleaning | $90 | $1,080 | |
| Electricity | $300 | $3,600 | |
| Fuel/Public Transport | $550 | $6,600 | |
| Gas/Oil for heating | $50 | $600 | |
| Internet | $90 | $1,080 | |
| Miscellaneous | $1,615 | DW=1250, DH=365 | $19,380 |
| Phone (cell) | $75 | $900 | |
| Sports/Recreation | $120 | Pool care | $1,440 |
| Non-mortgage total | $3,909 | $46,908 | |
| Loans: | $ | $ | |
| Student Loan | $400 | Adjust P to match $400/mo in OP | $4,800 |
| 401k Loan | $575 | Guess numbers to match $575/mo in OP | $6,900 |
| Car loans | $915 | Guess numbers to match $915/mo in OP | $10,980 |
| Total Expense | $7,420 | $89,039 | |
| Total to invest | $1,212 | $14,547 |
I'm confused about your priorities. You cancelled your children's gymnastics, but kept two expensive cars, cable, pool care, dry cleaning, and a ridiculous gas bill. Your wife refuses to sell the house.
What strikes out to me about this case study is that the op has recognised he has a spending problem but it sounds like it was only a result of wanting to move to a lower paid less stressful job. If expenses are cut down a bit only to allow for a lower salary you are back to square one with no room to spare.
If you want to be able to cut back on your work then you must first generate some surplus income to pay off your debts and acquire some investments to allow you to do so. Otherwise you will have to keep working forever to maintain your lifestyle.
Sorry to be harsh.
I really hope you report back with some better progress.
Are you mechanically inclined at all? If so, stop being so nervous about older cars. I drive an 01 Hyundai elantra with ~90k on it. It cost about $4k. DH drives a 92 or 93 corolla with 240k on it. It cost $1k. They both run fine. Mine is better looking than his. They both get us reliably from point a to b.
I do agree with the Drycleaning - some of my shirts that I've had for 2-3 years still look new as a result of it (I'm actually somewhat frugal with clothing for myself) but maybe it's time to go buy a couple of non-wrinkle shirts so I can drop the Dry Cleaning bill. I only kept it around by justifying it as a 2106 expense for work, which I think is pretty close to a dollar for dollar tax deduction up to a certain %.
Now maybe its because I have a house the same size :) but I personally wouldn't get hung up on the house if you think it'll hold value and you are paying it down. Until you have trimmed a lot of other things, I wouldn't bother even thinking about it as moving can be expensive and it sounds like it is a major source of angst for your wife.
Personally, I've used Mint for tracking spending - free and easy. My wife hates it though when I whip out the computer and show her charts that refute what she thinks she spent haha. :)
What 6 shows do you like? Its likely the community can help (as long as its not NFL haha).
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6) Lose the Dry Cleaning bill - cheaper, no wrinkle clothes, dry em at home :)
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Do you have a term life insurance policy? If not, you should think hard about getting one. You are the sole breadwinner supporting 4 kids and a spouse and you don't have a substantial net worth. What would happen to your family financially if you died?
I was really excited to see an update from you, but a bit disappointed with how little progress was made -- I have to second Alpaca's comments:+1QuoteI'm confused about your priorities. You cancelled your children's gymnastics, but kept two expensive cars, cable, pool care, dry cleaning, and a ridiculous gas bill. Your wife refuses to sell the house.