Author Topic: Reader Case Study: Nate & Shannon looking for suggestions  (Read 13177 times)

MustacheMcHermanson

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Reader Case Study: Nate & Shannon looking for suggestions
« on: December 25, 2014, 05:35:42 PM »
Mr. Money Mustache Community

Hello,

We are Nate and Shannon.  We have made some mistakes in the past, but are very excited to take a big step to financial independence by paying off our student loans and all other debt. 

Our situation:
About 10 months ago, Nate had a great idea – he decided to pay off $10K of his student loans by transferring them to his credit cards for a 3% balance transfer fee and no interest for 12 months for one card, and 15 months for the other.  This would save roughly $380 in interest over the year compared to the 6.8% interest of his student loans.  At the time we had $10K in cash to match the credit card balances.  With some unexpected scenarios: Backing into a neighbors car, repairing an old VW Jetta, and upgrading Shannon’s car for about $3500, the cash no longer matched the credit cards.  We have scraped back and we currently owe $2400 more on our credit cards than the cash we have available.  This will be covered in January when Nate gets his quarterly and annual bonus.  The first credit card needs to be paid off by March. 

Before reading MMM, Nate thought it would be a good idea to buy a new car to replace his VW Jetta that was super unreliable.  He had never purchased a new car before, but did so with the intent of having it to create additional income by driving for UberX.  He has done this, but it has been very sporadic lately as his new job is taking a lot of mental effort.
 
Currently, Nate and Shannon have two great roommates that provide a total of $998 of rent each month.  We plan to start trying to have children soon, so that may put a stop to the extra rental income.  It would also cost $135/week for daycare.  We have put Shannon's CR-V up for sale since it is paid off, and the Sentra gets much better gas mileage for now since she at this point needs to commute about 17.5 miles each way to work. There are many things we plan to cut/change, but just want to hear the community’s input first. 

Let’s start with our debt balances
Student Loan 1       $534 @ 5.75% with a $50/month payment
Student Loan 2      $1016 @ 6.875% with no monthly payments due until 2023
Student Loan 3      $6638 @ 6% with a $145/month payment
Student Loan 4      $48,323 @ 4% interest with a $296/month payment
Nissan Sentra Car Loan   $15,111 @ 0.9% interest with a $296/month payment
Mortgage:    $215,352 @ 4.75% interest with a $1535/month PITI payment
Credit Cards: $9350 (again, no interest until March, and will be paid off in full)
Total Debt of $296,324 with monthly payments totaling $2322/month. 

Assets:
Investments: $43,500 (all but $2000 in life insurance cash value is in employer sponsored retirement plans)
House: $230K (mortgage listed above)
2002 Honda CR-V: $4K
2013 Nissan Sentra: $13.5K
Checking/Savings: $7K
Total Assets: $298K

Net Worth: Roughly $2K-$3K

Now let’s move to our budgeted non-debt monthly expenses.
Life Insurance: $245/month.  (Nate used to be a life insurance salesman)
Utility Bill: $150/month (plastic sealing the windows this weekend)
Auto Insurance: $125/month (paid every six months)
Cell Phones: $93/month – Should be cheaper as Nate just switched to Ting from his family plan that he was paying $55/month.  Shannon pays her folks $38/month, but we will get her on Ting too in a couple of months.
Pharmacy: $60/month for Nate’s ADD medications
Internet: $45/month
Water Bill: $40/month
Gene’s Disposal: $17/month
Shannon Fitness: $17/month
Netflix: $8.60/month
Total fixed monthly payments: $801

All other spending on gas, groceries, home supplies, potential discretionary (that we may need to completely cut for the time being): $780/month pure cash.  Shannon gets $100/week as she has to drive to work while Nate can bus and is considering biking (he gets $80/week). It’s roughly a 40 minute ride and he has done it before, but not in Minnesota winters (bus pass subsidized so he has $52/month taken out of paychecks on a pre-tax basis for unlimited rides).  We just started this approach two weeks ago.  We have tried different accounts for different spending in the past, and cash envelopes for different spending categories, but everything was too complicated, and we would get lazy.

Total monthly payments: $2322 (debt) + $801 (fixed) + $780 all other cash = $3903/month

Income: Shannon makes $37,000 annually and Nate makes $52,000 annually with a bonus target of $15,000 for $67,000 total.  Nate has worked this job for 6 months and received one pro-rata bonus, one full calendar quarter bonus, and an additional unexpected bonus.  The two regular bonuses were about 90% of target, and with the additional bonus, he has been paid about the target thus far.  To plan conservatively, we will estimate that Nate makes 75% of target bonuses.   Adding Shannon’s income ($37K), Nate’s conservative income estimate ($63,250), and total rent income ($11,976), we come up with annual pre-tax, pre-benefit income of $112,226.  After benefits, Shannon takes home $2565/month and Nate’s take home is estimated at $3449/month.  I’m not sure what to estimate on taxes for our rental income, so I will put it at a 25% tax rate and call that $748.50/month after taxes.  This comes to a grand total of $6762.50/month in income.

We really love the Mustachian way of life, and really just need practical advice on changes to make. Initially, we didn’t want to leave our home state of Minnesota; we’re close to family and we like living in St. Paul. However, after the brutal winter we had last year, and a desire to live in a nice area (weather, bikeability, education, outdoors-y activities), we’re warming to moving somewhere else. (Not the South, the East Coast, anywhere with tornadoes or hurricanes…so somewhere in the West). Thanks in advance for your sage advice!


UPDATE $780 breakdown, as requested:
Gas $40/week, $160/month (this is fixed as this is commuting for Shannon to work, in a suburb)
Groceries:$70/week, $280/month (this is a spot we can definitely seek to reduce spending; there's an Aldi nearby and Shannon's work comes with a Sam's Club membership!)
Dog food breaks down to $20/month (a big bag lasts the dog 2 months, costs about $40)
Veterinary visits: $20/month (she doesn't go that much, but averaged out, it's about that much)
Haircuts: $40/month. Nate, every month $15 @ Great Clips, Shannon, every other month @ $50 at a fancy pants place (these are DEFINITELY areas to reduce or cut (haha, get it?) as Nate can get his hair cut by Shannon's mom and Shannon has a friend who isn't bad with scissors. Shannon had a few unfortunate haircuts by her mom as a kid... so she steers clear of those haircuts. The multi-use manly grooming tool is out for Nate.... his head doesn't support a "buzzed" look.
Home supplies: $20/month (cleaning supplies, toiletry items, toilet paper, etc.)
Gifts: $40/month We don't like it, but this time of year seems to come with unwanted gift buying. Other times of the year come with birthdays or weddings. Even when we make gifts, like paintings, supplies aren't free! Even when we tell family that we DON'T want anything (because we don't!) and we won't be buying anything... they throw a huge fit because they're consumerist sukkas.

Booze: $40/month. We aren't huge drinkers, but we like to have friends over instead of going out.
Entertaining friends (food): $50/month (this goes hand-in-hand with the booze mentioned above. We won't go out to eat, but have a couple or a group of friends over a few times a month).
So that's $650, leaving $150/month unaccounted for, or discretionary spending, as Nate calls it. We can cut all discretionary spending.

Though gas might be a bit more, since both of our parents live 40 minutes away and it seems that we are always going down to visit someone. It's not that we don't want to see family, it just gets expensive. How do you tell your family that they're sucking you dry when we go and visit 2x a month?
Also, Nate has a tendency to give people cash or buy them beer for doing nice things like fixing the lawn mower, snow blower, etc., when really the neighbors that help us out would be happy just to chat with us more.

Nissan Sentra: yes, we're well aware that it was dumb to buy it when we didn't have the cash for it. We would be underwater on it if we sold it now, so we'll wait until we're not underwater and then sell it and get something Mustachian. We're trying to sell the CR-V, then we'll put that cash towards debt.

Kids: While it would be ideal to wait... we might not have that luxury at the moment. We'll have to wait a few weeks, but it's possible that a kid might happen sooner rather than later. Daycare costs at $135 is from a woman who runs her own in the town Shannon works in. Nate's mom is retiring in March of this year, so it's likely she could help out. Shannon could possibly move jobs closer to St. Paul and cut off gas expenses because she'd bike or take the bus.

Debt: College was pricey, and Shannon's parents didn't help at all (Nate's helped some). Obviously, hindsight is 20/20 and She'd go to a different and much cheaper school if she had to do it again... and maybe become a plumber instead! However, you cannot change the past and the best we can do is aggressively pay down debt now.
« Last Edit: December 26, 2014, 09:56:49 AM by MustacheMcHermanson »

fidgiegirl

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #1 on: December 25, 2014, 08:11:58 PM »
If you are going to stay in St. Paul, can you refinance your mortgage for a cheaper rate?

Not sure about your medical insurance but can the prescriptions be generic or come from mail order pharmacy for a savings there?

I also live in this beautiful city and we pay $300/week which is a BARGAIN for a good center.  I called 10 places in March for our four month old to start in Sept (that's right, this was calling before the baby was born) and our place was the only one that even had open spots.  I am not sure how you came up with $135?

I'm sure someone with far more knowledge of life insurance will pipe up about that.

And . . . this winter IS looking a lot better than last winter so far.  :)  But I think St. Paul is a high COL area.  I am periodically tempted to relocate, mainly also due to weather, but sometimes just across the river for better bike trails.  :)  But we have a lot of good things keeping us here, and mostly love it.  I tell myself we might have snowstorms but elsewhere they have cockroaches!  Ugh!

TexasStash

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #2 on: December 25, 2014, 10:24:12 PM »
Nate and Shannon,

Welcome to the forums!

Sometimes I think people can be overly rude or blunt, especially when someone is new and looking for help, but I hope you hear merely sincere concern when I say this: your story indicates that you've done more than make a few mistakes. You're in what's often called a "hair on fire" situation. You're a major appliance failure, a car breakdown or a roommate move out from a negative net worth on $112k income. I hope the seriousness of your situation motivates you to get radical about paying off debt and saving money.

A few thoughts:

I agree that the credit cards should be immediate priority since you need to avoid the interest charges after March.

I hope you see that the Sentra purchase where you're already underwater was a bad choice. A very reliable car could have been had for much, much less.

245/month for life insurance is way overpriced. My wife and I each have $500k 30 year term policies and we are paying around 60 bucks a month combined. Drop your policy and find a cheap level term that's well under $1k per year.

Cut everything that's not absolutely necessary for awhile. That could even include fitness and Netflix if you can find free alternatives (home workouts and the library come to mind). You need every last dime to pay off debt. Netflix may be cheaper than alternatives but you need to be ruthless about each line item. Everything must be justified.

Definitely agree on selling the CR-V. One car and one insurance is the way to go for now.

Your debt payments each month are almost equal to our mortgage payment. That is a definite problem.

Good job identifying all the expenses. But I would be way more specific about what you spend the 780/month on. You could be wasting money each month because you don't keep track.

Congrats on your incomes. Well done. But you should not have cash flow issues on that income. Spending seems to be a MAJOR problem here.
« Last Edit: December 25, 2014, 10:30:24 PM by TexasStash »

MayDay

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #3 on: December 26, 2014, 06:19:41 AM »
Agree to drop that life insurance immediately. That's insane.

You can't afford kids for awhile unless you have a grandparent providing free childcare. I agree with fidgie about childcare costs. My son is seven. Seven years ago we paid about 1200$ a month. In home is cheaper but can be hard to find.  Nannies are insane.

You need to pay off more debt, IMO, before kids enter the picture.  Your monthly expenses aren't unreasonable, just get the debt paid down.

chasesfish

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #4 on: December 26, 2014, 06:23:18 AM »
I would also eliminate the life insurance policy immediately, it frees up cash flow and gives you $2,000 you can use to payoff stuff. 

Albert

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #5 on: December 26, 2014, 07:31:44 AM »
Your situation is not great because you have too much debt, but there is no reason to panic either. Your income is good an current spending not particularly outrageous. I've heard of lot worse and not willing to change in addition! You just need some discipline to pay off debts, not accumulate new ones and reduce spending a bit here and there (eliminate life insurance and one car should be sufficient). Do that, keep your jobs and you'll be in a sound financial situation to have a child or two in 2-3 years max.

thedayisbrave

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #6 on: December 26, 2014, 07:42:16 AM »
Hey guys.

I see some things you're doing right, some you're doing wrong, and some that could be optimized even further.

First off, pay off those CC/SL debts ASAP.  It would be helpful if you could break down your "cash" spending of $780/mo further, because we could help you take a look at it and see where else you need to trim some fat.  Even $20 here and there could really help snowball your way to debt freedom.  Along the same lines, get rid of your life insurance policy, like yesterday.  Use the approx. $240/mo in savings to throw toward your CC/SL debt.

Buying a new car with a loan was not the wisest decision.  BUT you could have done way worse, and the interest rate is a paltry 0.9% so I would focus on this last.

Once you sell the CR-V, throw that $4K toward your debts immediately.

And to be honest, if I were in your situation I would be uncomfortable with the thought of having kids soon.  They are expensive and if you think random expenses are cropping up now, you're probably in for a rude awakening.  Once the debts are gone and you're making strides towards growing that stash, I'd re-visit the topic but honestly like others have mentioned, y'all are cutting it close as it is already. 

Good job getting roommates though :)

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #7 on: December 26, 2014, 08:03:41 AM »
Kids are SO expensive, if you will continue working. Daycare, formula, diapers. I would switch to term life insurance, pay off the credit cards, student loans, and Nissan...and THEN think about starting a family. Good luck!!!

athomeintheworld

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #8 on: December 26, 2014, 10:13:24 AM »
Alright devils advocate here - Kids don't HAVE to be insanely expensive. Sorry - daycare, diapers, and formula?? Cloth diaper and breastfeed. Savings of thousands right there.  Evaluate if it makes sense to do daycare or if it makes sense for Shannon to stay home (only if she is interested!) or if it makes sense for you guys to cover childcare on your own by working different days/shifts etc.

Look for a lower rate on your house. I see Pen Fed recommended a lot here and know the rate is much lower.

Replace the life insurance ASAP. If it makes you feel more comfortable to have some term life ins then great - but you can do this for significantly less.

Future Lazy

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #9 on: December 26, 2014, 10:39:40 AM »
Alright devils advocate here - Kids don't HAVE to be insanely expensive. Sorry - daycare, diapers, and formula?? Cloth diaper and breastfeed. Savings of thousands right there.  Evaluate if it makes sense to do daycare or if it makes sense for Shannon to stay home (only if she is interested!) or if it makes sense for you guys to cover childcare on your own by working different days/shifts etc.

+1 to this, kids don't have to be expensive as far as diapers and food - MMM has suggested multiple times that you can actually make money on a baby. In other words, get people to buy you stuff you want, like cloth diapers and a nice crib, and then sell them when the kid doesn't need them anymore, etc. However, for example if Shannon stays working for her salary, but half of that is spent on expensive baby daycare (which may require you to buy disposable diapers/formula, rendering it more expensive than face value...), you're still out several thousands there. If Shannon takes a year or more off, you're out her entire salary plus any raises for that many years. Choose wisely.

And to be honest, if I were in your situation I would be uncomfortable with the thought of having kids soon.  They are expensive and if you think random expenses are cropping up now, you're probably in for a rude awakening.  Once the debts are gone and you're making strides towards growing that stash, I'd re-visit the topic but honestly like others have mentioned, y'all are cutting it close as it is already. 

Good job getting roommates though :)

I also agree with TheDayIsBrave on this, though. I would be patient another couple of years or so. Even though kids don't have to be expensive, it seems like you guys currently have a lot of other stuff to chew on, like debt repayment and shortening commutes, etc. Once you've eliminated some of these possible stumbling blocks, then I would have a kiddo to grapple with. Plus, a couple of extra years of roommates paying rent at their current rate is $23952 in your pocket, or more. Looks like that alone could pay off the Nissan and the credit cards.

Like I said above, choose wisely.

EDIT:
Haircuts: $40/month. Nate, every month $15 @ Great Clips, Shannon, every other month @ $50 at a fancy pants place (these are DEFINITELY areas to reduce or cut (haha, get it?) as Nate can get his hair cut by Shannon's mom and Shannon has a friend who isn't bad with scissors. Shannon had a few unfortunate haircuts by her mom as a kid... so she steers clear of those haircuts. The multi-use manly grooming tool is out for Nate.... his head doesn't support a "buzzed" look.

Spotted this and wanted to add:
While the Universal Manly Grooming Tool is great, as is cutting the split ends off of long hair at home for long haired ladies, I prefer a short/bobbed style that I can't replicate myself with either of those options. Maybe the DW feels similarly?

My local Empire beauty school does $5 haircuts Sorry, $9 haircuts. They take longer than regular haircuts (think 1hr instead of 15-20 minutes) but the students are supervised closely by good teachers. While the student I get is always different, the teacher knows me by name and knows my preferred length and style. Try searching for something similar to this in your area.
http://www.empire.edu/
« Last Edit: December 26, 2014, 10:51:40 AM by KaylaEM »

Hey It's Me

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #10 on: December 26, 2014, 11:28:44 AM »

My local Empire beauty school does $5 haircuts Sorry, $9 haircuts. They take longer than regular haircuts (think 1hr instead of 15-20 minutes) but the students are supervised closely by good teachers. While the student I get is always different, the teacher knows me by name and knows my preferred length and style. Try searching for something similar to this in your area.
http://www.empire.edu/

Hey Kayla, I've seen this option touted a lot, and am totally interested ($20 haircuts bimonthly are kicking my butt.) How does one start? I can't seem to find a link on the website to register to be a guinea pig, haha.

athomeintheworld

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #11 on: December 26, 2014, 11:32:26 AM »

My local Empire beauty school does $5 haircuts Sorry, $9 haircuts. They take longer than regular haircuts (think 1hr instead of 15-20 minutes) but the students are supervised closely by good teachers. While the student I get is always different, the teacher knows me by name and knows my preferred length and style. Try searching for something similar to this in your area.
http://www.empire.edu/

Hey Kayla, I've seen this option touted a lot, and am totally interested ($20 haircuts bimonthly are kicking my butt.) How does one start? I can't seem to find a link on the website to register to be a guinea pig, haha.


Just search for beauty/cosmetology schools near you. They all (or most anyway) do similar programs.

Future Lazy

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #12 on: December 26, 2014, 11:38:24 AM »

My local Empire beauty school does $5 haircuts Sorry, $9 haircuts. They take longer than regular haircuts (think 1hr instead of 15-20 minutes) but the students are supervised closely by good teachers. While the student I get is always different, the teacher knows me by name and knows my preferred length and style. Try searching for something similar to this in your area.
http://www.empire.edu/

Hey Kayla, I've seen this option touted a lot, and am totally interested ($20 haircuts bimonthly are kicking my butt.) How does one start? I can't seem to find a link on the website to register to be a guinea pig, haha.

Where do you live? For example, you just call the local school... In my case:
http://www.empire.edu/cosmetology-schools/colorado/lakewood-denver

Ask for a hair appointment, show up and get trimmed. You can walk in, too, sometimes, but for me, usually they're booked up and make me come back later haha.

If there isn't an Empire near you, just go to Google Maps and search for "Beauty School" and give a few of them a call.

MustacheMcHermanson

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #13 on: December 26, 2014, 11:45:14 AM »
Re: childcare and haircuts
We're throwing out ideas for childcare, such as Nate's mom who will be retired or my cousin's husband who stays at home with their two young boys. They're mustachian too, and might be interested in swapping childcare for babysitting, or something else... but I definitely need to check with them first!
 I am in agreement about asking for the stuff you need, then selling it later. Also, said cousin has already given us a box of baby clothes, items, and toys; our family has ALWAYS been big into hand-me-downs. I wore her stuff forever, when we were growing up!

Haircuts: Nate can get his done by my mom or my good friend, Jen. I had a super traumatic experience as a 5-year-old, my neighbor cut off a HUGE majority of my shoulder length hair... in exchange for a kit Kat. I was, and still am, a chocoholic. Then, to fix it, I ended up with a very terrible pixie cut. I'm now overly attached to my long hair, and find it easier than a bob since I can often just let it air dry or whip it up in a bun or ponytail. I'd rather pay Jen in a bottle of wine than go to Aveda beauty school (and have to drive!) and have someone I don't know cut my hair and mess it up (as they have in the past).

I also had a dream about breastfeeding last night, and seemed to rather enjoy it. So I got that going for me, which is nice.

Future Lazy

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #14 on: December 26, 2014, 11:58:47 AM »
If it's long, why not just trim the split and uneven ends yourself as needed?

Disclaimer: I'm not very girly and don't do anything with my hair besides wash it and brush it, which is why I keep it generally short/boy cut (as opposed to pixie/bob, which needs morning showers/blow dry/hairspray/gel/whatever). So if that's actually a dumb question and you do a lot more styling with the cut than it sounds like ("just a bun/ponytail"), such as feathered, or framed, or having complicated bangs cut.. Just disregard. :')

MustacheMcHermanson

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #15 on: December 26, 2014, 01:17:24 PM »
Re: Shannon's hair
It's long with layers and I mostly wear it down, unless I don't shower and then it's up in a bun. I don't trust myself with trims, especially because it's layered. I'm also growing it longer, and it needs a trim every 6-8 weeks to keep it healthy and not ratty looking.

Edit: A quick Google search revealed that there's an Empire beauty school relatively close (but still a 15 minute drive, to another town... or an hour by bike or bus). But it's $5 without blow drying, $9 with blow drying. How much do those who go, tip?
« Last Edit: December 26, 2014, 01:40:27 PM by MustacheMcHermanson »

MayDay

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #16 on: December 26, 2014, 06:56:23 PM »
Dude. As a girl I have to question why long hair needs a trim every 6-8 weeks. That's nuts.

Hey It's Me

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #17 on: December 26, 2014, 07:07:10 PM »

My local Empire beauty school does $5 haircuts Sorry, $9 haircuts. They take longer than regular haircuts (think 1hr instead of 15-20 minutes) but the students are supervised closely by good teachers. While the student I get is always different, the teacher knows me by name and knows my preferred length and style. Try searching for something similar to this in your area.
http://www.empire.edu/

Thank you! :) New goal for 2015: minimize haircut expense!

Hey Kayla, I've seen this option touted a lot, and am totally interested ($20 haircuts bimonthly are kicking my butt.) How does one start? I can't seem to find a link on the website to register to be a guinea pig, haha.

Where do you live? For example, you just call the local school... In my case:
http://www.empire.edu/cosmetology-schools/colorado/lakewood-denver

Ask for a hair appointment, show up and get trimmed. You can walk in, too, sometimes, but for me, usually they're booked up and make me come back later haha.

If there isn't an Empire near you, just go to Google Maps and search for "Beauty School" and give a few of them a call.

MustacheMcHermanson

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #18 on: December 26, 2014, 07:31:31 PM »
Mayday: I'm growing it out, as stared previously. Even if I wasn't, I find that my hair tends to look shaggy if I don't get a trim every two months or so. I'm just glad mine doesn't grow as fast as Nate's. He could get a haircut every two weeks, if he wanted. He usually can't go a month before it starts to bug him.

fidgiegirl

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #19 on: December 26, 2014, 07:34:31 PM »
If you are ever in the White Bear Lake area the Century College cosmetology department has some dirt cheap beauty services by their students.  Hours are limited, however.

mm1970

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #20 on: December 26, 2014, 07:58:48 PM »
Alright devils advocate here - Kids don't HAVE to be insanely expensive. Sorry - daycare, diapers, and formula?? Cloth diaper and breastfeed. Savings of thousands right there.  Evaluate if it makes sense to do daycare or if it makes sense for Shannon to stay home (only if she is interested!) or if it makes sense for you guys to cover childcare on your own by working different days/shifts etc.

Look for a lower rate on your house. I see Pen Fed recommended a lot here and know the rate is much lower.

Replace the life insurance ASAP. If it makes you feel more comfortable to have some term life ins then great - but you can do this for significantly less.
Well, we just assume that mom is going to continue working to pay off those college loans.

So yes, diapers (most daycares will not take cloth), but with shopping and big box stores those are $40 a month.

Formula you can avoid with breastfeeding and a breast pump.  But success varies...my first child had no formula but my second child started at 8.5 months and was 100% on formula at 10 months.  It's not cheap, but if you are lucky you can use big box brand (costco).

fidgiegirl

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #21 on: December 26, 2014, 08:06:34 PM »
We thought we'd be SOL with cloth at daycare but happily ours does do it.  As mm1970 points out breastfeeding can also be a big savings.  It is hard, but I have found it waaaay worth it emotionally and financially.

1967mama

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #22 on: December 26, 2014, 09:00:40 PM »
Another person chiming in here to sing the praises of Beauty School haircuts. I go 2 or 3 times a year and pay $11 per cut, so $33 per year. I cut my husband's hair with clippers -- he suits a buzzed look. But I also cut my son's hair and several of them have a traditional "comb over" style that can easily be done with clippers. There are many tutorials on youtube. The idea is to cut the sides with a shorter guide and then a much longer guide on the top. Its SOOOO worth figuring this out.

Cloth diapering is the way to go -- you get used to it very quickly and with a newborn, I found that pampers (or their generic equivalent) felt so scratchy and rough on a newborn's bottom compared to a soft, flannelly cloth diaper. You learn quickly. About 3 dozen diapers is a good start for stock. If you don't have enough, you'll run out before you get a chance to wash them.

In a "hair on fire" debt emergency, I think the alcohol has to go -- and also the fancy foods for entertaining. Maybe you could do potlucks instead? or not serve a meal but just cheap/easy snacks?

Keep us posted in the next few weeks on the possible Jr. Nick and Shannon! <wink>

TerriM

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #23 on: December 27, 2014, 08:21:49 AM »
I would also eliminate the life insurance policy immediately, it frees up cash flow and gives you $2,000 you can use to payoff stuff.

I would think twice about canceling the life insurance.  We got life insurance, and the year after my husband showed up with a genetic condition that would probably double his premiums now. 

Though if Nate was a LI salesman, maybe he knows ways to get something cheap.

athomeintheworld

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #24 on: December 27, 2014, 10:20:59 AM »
What type of life insurance? Sounds very expensive for a term policy, which is what you should be getting if you want to have it. And I don't fault you for term life insurance until you're financially independent or have enough assets to feel comfortable BTW, but know there are varying opinions here.

NEMPLS

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #25 on: December 27, 2014, 01:30:58 PM »
Ouch! That is a lot of debt, but I'm guessing that may be the norm for young couples today. My wife and I are in our early 50's with no children, have little to no debt and make similar money to both of you. We had zero in the bank at age 32 when we decided to get serious about saving and have done well enough that we can sniff out a comfortable retirement in about 6 years.

Like you, we live in the Twin Cities. How did we do it? We avoided debt like the plague.

I applaud you for reaching out the forum to ask the question. I agree with most of what others are saying. Buy 30 year term insurance and drop your current expensive policy, drop the health club, drop expensive haircuts and go to Cost Cutters/Fantastic Sams, get Republic Wireless for cell phones (drop any land line that you may have). I'm serious when I say get a second job at one day a week for a few years ( I know it sounds like a lot of work.... it is) and use all of that money to pay down the debt. Use all your bonus money to pay down debt. When I say debt I don't mean house payment I mean credit cards starting with the highest interest rate first, student loan second. Slow down on the kids for a few years till you get a bit of debt payed down. No matter how you slice it kids are indeed expensive over the course of their time with you.

First step is to save about 5K and put it in the bank for emergency funds. This will take some stress out of your life when something goes wrong. Its nice to see that you have renters in your house but sooner or later you will not want them there. Is it possible to find housing that is less expensive? I know a decent place in the TC area is not always the cheapest but there are some nice deals to be had. I'm not saying that is the answer, just something to explore). Hopefully you are near work to cut down on commuting and gas expenses. It's a little too late, but driving a car that is running and paid off is better than purchasing a new car and having payment (no judgements at all because we have done this as well).

I know this sounds crazy but while you are doing all of this start putting money away into company 401k programs. Put away enough to get the match employer match. You will thank me in about 20 years and probably curse me for the first 10 :-). Once you have the initial debt under control start making an extra house payment per year on your home.

I sincerely wish the best for you both.

Future Lazy

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #26 on: December 27, 2014, 06:33:18 PM »
Re: Shannon's hair
It's long with layers and I mostly wear it down, unless I don't shower and then it's up in a bun. I don't trust myself with trims, especially because it's layered. I'm also growing it longer, and it needs a trim every 6-8 weeks to keep it healthy and not ratty looking.

Edit: A quick Google search revealed that there's an Empire beauty school relatively close (but still a 15 minute drive, to another town... or an hour by bike or bus). But it's $5 without blow drying, $9 with blow drying. How much do those who go, tip?

I don't usually tip at all. The people that are doing the cutting are students and are paying to be there. The teachers are paid well, from my knowledge, as they're usually the type of people who could be running their own salon instead of teaching, if they wanted. I don't feel the pressure to tip them like I would tip someone at Fantastic Sams or whatever.

mrsggrowsveg

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #27 on: December 29, 2014, 02:03:27 PM »
Hi Nate and Shannon.

We are in a very similar situation to you two.  We are a couple with similar incomes and a mortgage.  I even had similar student loan debt ($40k) that we were able to pay off in about a year of reading MMM. 

Your spending doesn't seem too out of line, but the debt is very high. 

Life insurance is really high.  Most people on here would suggest switching to term.  We pay about $50 a month for both of us and have plenty of coverage. 

Hair cuts:  I have long layered hair and have switched to cutting myself.  I do a high ponytail on the front of my head and cut straight across.  It gives me perfect layers every time.  A beauty school is another great option.

Potential daycare:  Is the $135 per week?  That is a really great cost.  A parent could be another great option, but that is a heavy burden to put on someone for at least 3 years.

Car Repair?:  Do you ever encounter car repairs in your budget? 

Moving:  If you would like to have children, I highly recommend staying close to family in the first few years.  The help is absolutely amazing that grandparents can offer.

Kids:  Kids really do not have to be expensive.  Our biggest cost for our two year old is daycare.  Other than that, it is not very expensive.  Groceries have gone up a bit since he was about one and started needing milk and eating at ton.  We cloth diaper even at daycare.  We picked a daycare with cloth diapering and breastfeeding in mind.  Clothing and toys for him is free because grandparents and friends are always giving us things for him.  Insurance also went up a bit when we had a child.

4alpacas

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #28 on: December 29, 2014, 02:14:13 PM »
Hair cuts:  I have long layered hair and have switched to cutting myself.  I do a high ponytail on the front of my head and cut straight across.  It gives me perfect layers every time.
+1

I recently started cutting my hair (forehead pony tail method), and I get a ton of compliments.  Before I made the switch, I was paying $90/cut (including tip).  I have thick, wavy hair that is past my shoulders.  The long layers look great with my hair texture.  The cut takes less than 5 minutes.  If I screw up my hair, I will put it in a bun for a few days and go to the salon for a fix. 

Lia-Aimee

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #29 on: December 30, 2014, 08:08:21 AM »
Another thought on the hair:
Does it have to be layered? As someone who had long hair her whole life but at varying lengths (from shoulder length to bum length) I definitely found that unlayered hair doesn't get the same "shaggy" look when it goes uncut for a while.

Imustacheyouaquestion

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #30 on: December 30, 2014, 11:45:41 AM »
If Nate has an unlimited bus pass for $52/month, there's no reason you shouldn't sell the CR-V immediately and become a 1 car family. Roll the $4k you receive from selling the CRV into the Nissan Sentra loan, at which point you will not be underwater on that loan. Sell the Sentra, and buy something used for under $5k.

MustacheMcHermanson

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #31 on: December 30, 2014, 07:28:47 PM »
If Nate has an unlimited bus pass for $52/month, there's no reason you shouldn't sell the CR-V immediately and become a 1 car family. Roll the $4k you receive from selling the CRV into the Nissan Sentra loan, at which point you will not be underwater on that loan. Sell the Sentra, and buy something used for under $5k.
That's an interesting idea. I'm letting the Mister think it through for now! I have to get someone to buy the Honda first... so far, nothing.

Another thought on the hair:
Does it have to be layered? As someone who had long hair her whole life but at varying lengths (from shoulder length to bum length) I definitely found that unlayered hair doesn't get the same "shaggy" look when it goes uncut for a while.

It doesn't have to be layered, but I prefer it layered. I can look up the forehead ponytail trick and/or have my friend Jen cut it (she does it for free!) I've had my hair all one layer in the past, but it gets too heavy! It's nice to have the layers to take the weight off and give it some shape. Really, our hair is one thing I'm concerned with the least as far as our budget is concerned.

The life insurance, as many have mentioned, will be going away soon... but Nate's been having some colon/rectal problems and has to have a colonoscopy and an endoscopy in early January. The doctors said it could be ulcerative colitis, Chron's, IBS, or colon cancer... so Nate has said he'd like to hold onto the life insurance for a bit, just until we know what's literally up his butt.

Future Lazy

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #32 on: December 30, 2014, 07:46:40 PM »
The life insurance, as many have mentioned, will be going away soon... but Nate's been having some colon/rectal problems and has to have a colonoscopy and an endoscopy in early January. The doctors said it could be ulcerative colitis, Chron's, IBS, or colon cancer... so Nate has said he'd like to hold onto the life insurance for a bit, just until we know what's literally up his butt.

That's a real bummer.

HAHAHA

Butt seriously, good luck with all that.

Definitely better safe than sorry.

MustacheMcHermanson

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #33 on: January 18, 2015, 06:18:24 AM »
Update:
So Nate had his colonoscopy and we're still waiting for the results of the biopsy to come back, though his doctor thinks it is Crohn's Disease. Luckily, the procedure was fully covered by his insurance because it's considered preventative care!
I had a kidney stone last week (seriously, are we 75?!), but passed it. There are more in the kidneys, but all are passable.
Then I took a home pregnancy test and found out I'm pregnant. Not ideal, in a mustachian world, but it's not the worst thing that could happen. My cousin has two little boys, so between that and the baby shower that my mother-in-law and mom will want to throw, we'll probably be just fine. I'm under the impression that the box the hospital sends the baby home in can double as a crib and later, a imagination station.
I'm also hoping I won't have much trouble breastfeeding (I won't count on it, I'll just hope on it).

We sold our CR-V for $3400, so we are now a one-car family! Once we pay down the Sentra a bit more, we may downgrade to something with a hatchback. And put a mustache on the grill.

I am also getting close to finding a different job much closer to where we live. And it's possible that after the baby, I could take it with me to work. (I've found a few nannying positions around us...and since I don't make a ton of money now, I've found some fancy-pants families who pay about the same (or better!) as what I make now. I've nannied full-time in the past and really enjoyed it.

greenshade

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #34 on: January 18, 2015, 08:15:53 AM »
Congratulations on your pregnancy! It looks like you guys are making great progress in a short amount of time. I am due in less than 4 months and have still resisted buying anything at this point, there is so much pressure to buy a bunch of stuff you may or may not need. It sounds like your family will be a great source of hand me downs and assistance, you guys will do great!

fidgiegirl

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #35 on: January 19, 2015, 06:50:31 PM »
Congrats!!

But what box from the hospital are you talking about?  They do get those in Finland . . . but I've never heard of it here.

Smart thinking about the nanny job!

1967mama

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #36 on: January 20, 2015, 12:14:59 AM »

I'm also hoping I won't have much trouble breastfeeding (I won't count on it, I'll just hope on it).
 

Just a little suggestion that really helped me: take a look in the book section of a few thrift stores for the book "The Womanly Art of Breastfeeding."  I know the title sounds a little corny, but it truly is the definitive guide to all things breastfeeding. I was advised to do a little reading before having my first and this book was so very helpful, both before the baby arrived and in the early weeks postpartum. Congratulations on your pregnancy!

ShoulderThingThatGoesUp

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #37 on: January 20, 2015, 05:39:02 AM »
We never used the crib once because our daughter wouldn't sleep anywhere but beside her mother...

We found "The Baby Book" by Dr. Sears very helpful.

mm1970

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #38 on: January 20, 2015, 02:37:23 PM »

I'm also hoping I won't have much trouble breastfeeding (I won't count on it, I'll just hope on it).
 

Just a little suggestion that really helped me: take a look in the book section of a few thrift stores for the book "The Womanly Art of Breastfeeding."  I know the title sounds a little corny, but it truly is the definitive guide to all things breastfeeding. I was advised to do a little reading before having my first and this book was so very helpful, both before the baby arrived and in the early weeks postpartum. Congratulations on your pregnancy!

This book was SUPER helpful after I had my first child.

fidgiegirl

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #39 on: January 20, 2015, 04:29:08 PM »
Second the recommendation!!  Wonderful, hopeful book.

1967mama

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Re: Reader Case Study: Nate & Shannon looking for suggestions
« Reply #40 on: January 20, 2015, 11:06:48 PM »
Yes! Yes! Dr. Sears is a strong proponent of La Leche League, who wrote "The Womanly Art of Breastfeeding" and his work is wonderful!

http://www.askdrsears.com

Maybe these weren't the suggestions Nate & Shannon were looking for??? :-) Sorry for the thread hi-jack!