Author Topic: Reader Case Study--Where to cut  (Read 12546 times)

Victoria

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Reader Case Study--Where to cut
« on: June 20, 2014, 01:25:58 PM »
So budgeting and finance have never interested me. Numbers = boring. The bill paying and number crunching is one of my husbands jobs, so you're talking to the less financially savvy partner right now. But my husband's job is grueling and I dream about the day when he gets more than five hours of sleep regularly. Reading MMM I hear the siren song of independence, so I've started looking into our spending habits. Help me find the cuts.

2 adults, 1 kid 50% custody, 1 baby. Husband is 32, finishing his B.S. online part time while working full time. I'm 26, have a M.A. in Poli Sci and am a SAHM.

Income: 65000 a year or 3,924 a month after taxes and Roth IRA/ 401k taken out (Husband used to take side jobs but just doesn't have the time anymore due to working about 11 hours a day on average with no overtime pay because he's on salary + going to school part time. Theoretically we could increase this if I find a job in my field, but as long as the kids are young we made the joint decision that it was worth the money for them to have one full-time parent. I have heard of exactly zero part-time jobs in my field)

Edited to add: I just realized some of that money is going to Christmas, birthday gifts throughout the year, and of course the $8 Netflix subscription.
Current Expences: Fixed


Rent: 1200 (3 bedroom apt, which is a very reasonable for a 3 bedroom in this area; I can't find anything similar on craigslist. We know the owner so we get discounted rent; When we have enough savings for a good enough sized down payment that mortgage + taxes + maintenance are cheaper than that, we'll buy a house. We need to stay in the area due to sharing custody of a child.)

Tithing and fast offering: 561 (non-negotiable)
Health insurance: 437 (for myself and 1 kid; husband's work pays his)
Health insurance : 27 (for 1 kid: costs are split with step-daughter's mom, who gets cheap insurance through job)
Phone: 71 T-mobil, two non-smartphones
Internet: 40
Utilities: average 55 a month (the units share hot water so we don't pay that)
Car loan: Minimum payment is 181 but we pay 200 each month, so at this point we're several payments ahead (bought used from a dealer--going craigslist next time)
Car insurance: 70
College savings for kids: 80 (10 a week direct deposited for each of them)
Total:  1521

Current expenses: Variable

Gas: about 70 a month (Husband has work vehicle. I'd like to cut it down, but have two impediments: school pick-up and drop-off at a distance to far to bike/over giant hill; and a child too young to go on a bike anyway; those bike trailers are wider than bike lanes, what would your solution be? I'd have to walk the bike up the largest hill anyway, and that's a 45 mph highway. But I can walk the mile to the grocery store for vegetables, even if I do have to drive to costco)
Groceries:  700 this month!!! How did that happen???? I'm so embarrassed. This is what happens when you don't track spending I suppose. Obviously we need to cut this down substantially. This number also includes diapers & wipes, and cat food & litter. (We're not doing cloth diapering because we have to share apartment laundry)
Laundry: 15-20 (we bought a couple of drying racks, but it's 1.25 to wash a load; about the same price as a laundromat; 3-4 loads a week)
Clothes: avg about 25 a month  (I get most of daughter's free second-hand; baby's are mostly gifts or second-hand; husband's are from costco; mine I buy as things wear out)
Eating out: WAS about 50 but I'm cutting that down to zero
Tuition: BYUI online,  432 a trimester currently, will increase to 864 when husband starts taking more units next semester, avg a month about 144 a month currently
Misc: about 500 (Inc. household goods; baby goods; money for daughter's dance class;. I intend to stop buying anything that is not on the shopping list, even if we "need" it, and see how much that cuts into it. I'm afraid we can't just unilaterally take her out of dance, but even if we could I'd start cutting other places first and it's only about $37)
Total: 1459

Total monthly spending: 2980 leaving 944 a month. Which must be wrong because according to my husband, we break close to even every month, unless my increasing interest in frugality is already paying off. Is there anything obvious I'm missing?? I'm obviously a neophyte at this whole written-down budget thing. I joined Mint a couple weeks ago.

Debt:

1 car loan, about 7,000 at 8.6ish% interest (ouch)

I'm ridiculously proud of having never taken out student loans. I tip my hat to those who had them and have managed to pay them off.

Assets:

9,400 in savings
Roth IRA and 401k: don't have access to the latest numbers but according to memory there's about 20,000 in the one and 15,000 in the other, not included in above budget because it is taken directly out of the paycheck
College savings 1: 1550
College savings 2: 450 (when there's enough in these the money will be moved into a high interest accounts/whatever it is people usually do with college savings money 10 years before it needs to be used so it can accrue interest)

Goal nr 1: pay off car loan
Goal nr 2: save for down payment on a small house; about $50,000
Goal nr 3: start investing
Goals 2 & 3 could be combined
Eventual goal: own home outright, have enough money saved up & working for us that husband can be choosy about job, possibly switch careers, which may involve going to school full-time.  We'll probably have one more kid within the next couple of years.

So, give it to me. Where do I kill the spending? Any tips on cutting that inflated grocery bill while still eating a large amount of vegetables? Know where to get brown rice in bulk? Costco doesn't sell it. (I've cut out white rice and potatoes, as an investment in our health, and am trying to cut down on pasta). How much should we have in savings for an emergency? We have abut 3 months worth, which is the minimum for sleeping well at night. Should all extra money at this point should be thrown at that loan? Prepared for face punches.
« Last Edit: June 20, 2014, 01:35:55 PM by Victoria »

gimp

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Re: Reader Case Study--Where to cut
« Reply #1 on: June 20, 2014, 01:45:06 PM »
Phone: $71 for t-mobil for two non-smart phones is outrageous. I haven't looked too much at Ting but I think you can pay around $300 for two unlocked smartphones and around $30/month there (break-even: 8 months). I use republic wireless; their new phones/plans would probably be more like $300/pair and then $20/month for unlimited talk+text on cell, and unlimited everything on wifi, which would break even in six months. Smartphones these days aren't strictly necessary but you might find them a lot more useful, and beneficial than you thought. Besides which, you'd be paying less money inside of a year.

Groceries: How many people? 4? $700 is way too much. You can cut that down to $400 next month. The month after that, $350. Try cutting it down $5, 10, 25 per month, however much you're comfortable with.

Misc: Dance is worth it; kids need things to do. Not necessarily worth the money, maybe look into something/somewhere else, but definitely not a bad expense. As for the rest, do try cutting it down.

Tithe: Non-negotiable. Ok. I'd definitely think about negotiating it, think hard, over the next while. You might find it better to save now so you can give more later. 14% is a lot to give away when you have a baby.

Exflyboy

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Re: Reader Case Study--Where to cut
« Reply #2 on: June 20, 2014, 02:06:28 PM »
Airvoice wireless.. $10 a month each dumb phone if you don't use it too much.. Skype for $2:99 unlimited per month if you talk a lot.

Frank

morjax

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Re: Reader Case Study--Where to cut
« Reply #3 on: June 20, 2014, 02:31:52 PM »
You mentioned you're less number interested, so sorry in advance. I'll try to bold some of estimates of savings to give a quick opportunity cost of spending versus investing. You know you're looking at cutting the right things if it feels like a punch in the face. Some thoughts I had (I'll get the face punches out of the way first):

1) Low hanging fruit for many is to move to a cheaper residence. MMM and the forums should have a good amount of info on this, but I don't have a soapbox to stand on in this category, because we choose to stay in our likely over-sized house. Big picture is that the largest areas in which you spend naturally afford the greatest potential savings

I guess what I want to say is cut where you can, but careful not to expend all your energy on finding the absolute best deal on pants when your clothes budget is 2% of your rent. Maybe it's obvious, but not all savings are equivalent. nuff said?

2) Is there any way you can sell the current car for an older (2000-2005?) fuel efficient-ish one that you can pay for in cash? That's one category where you can "downgrade" relatively easily and still meet the same basic needs. Maybe this can be a springboard: http://www.mrmoneymustache.com/2012/03/19/top-10-cars-for-smart-people/

I haven't run the numbers here, but you have the option to have the same functionality without having a loan. Apply this post's thinking to yer car: http://www.mrmoneymustache.com/2011/04/29/living-well-on-the-trailing-edge-of-luxury/

3) Take the ax to t-mobile, and go for republic wireless if you have even moderate or better sprint/verizon coverage in your area. I can't recommend republic wireless enough. You have to pay upfront for the phones, but they quickly pay for themselves with the low cost plans. A case study here: If you each bought a Moto G ($149 each, $289 for two), and started on two $10/month unlimited talk/text plans, you'd end up ahead after 6 months. This switch alone will save you nearly ~$8500 over the next 10 years using the monthly compounding interest trick at the end of this post: http://www.mrmoneymustache.com/2012/07/15/two-fun-tools-from-the-mmm-software-department/

4) Your car insurance seems reasonable to me, but if you're trying to cut wherever you can, call around wherever you can think to and don't be afraid to leverage one carrier against the other "If I switch to so and so, they'll give me X price - can you match or meet that price?", etc.

5) You're right to scrutinize your groceries. Mint.com helps me with this quite a bit. be ruthless with not getting anything if you haven't put it on the list in advance. Try to incorporate some low cost foods into the mix, as is possible. Here's a decent springboard for price per serving amounts: http://www.solitaryroad.com/s815.html

You can get a lot of mileage out of rice, oatmeal, beans, potatoes, etc. I'm not suggesting this is all you ever eat, and I understand that kids can be picky, but see if you can work in a low cost meal 1-2 times per week. Then in a few weeks, challenge yourself to include one more low cost meal for a few weeks, etc. They are bland foods, but the savings tastes better. Switching to oatmeal from a microwave SmarOnes or similar twice a week for you and your significant other will net you an additional $8800 over the next ten years.

Brown bag it whenever possible. Even a $3 frozen meal versus a $7.50 sandwich/chips/drink combo three times a week will save you $10,000 over the next ten years.

6) Laundry. This is a small category,but one near and dear to my heart. Good on you for switching to the drying racks. They're great, and save a bunch with only a bit more work. TIP: put 1/2-1 cup of vinegar in your fabric softener slot on your washer to help them be a bit less stiff after drying (not really an issue for outdoor drying?).

Okay, now I'll fess up the real reason why laundry is near and dear to me heart...Please excuse the sales pitch: I make and sell laundry detergent and put 15% of proceeds to Child's Play Charity. I'm hoping to sell more and more to mustachians who are sick of paying out the nose for standard detergents. Typical prices for Tide or similar are around $0.20 per load. I sell a 64-100 load size for $8 which works out to $0.08-$0.125 per load. I usually charge $5 shipping, but if you were interested, I'd sent it your way for $8. If you dissolve the stuff in a cup of hot water first, you can run your was cold/cold, which would save you money, except you don't pay for hot water. Alright. Detergent rant over.
https://www.facebook.com/pages/Steves-Just-Laundry-Detergent/684639731576069
Also for dogecoin: http://shibemart.com/so/trick/homemade-laudry-detergent-for-your-clothes-not-your-doge/

7) I'd encourage you to not have a "misc" category. know where your money is going (mint.com helps). Often when I hear "misc expenses", I think "I'm not totally sure what all this is, but I have to account for the money somehow..."

Don't get me wrong, maybe you know exactly where this money is going. By all means, tell me to stuff my face on the topic ;) Just my experience that "misc" can be synonymous with "not totally sure".



Whew. My fingers are tuckered out. I hope it wasn't too accusatory, and know that I'm working on a lot of these things too. It seems your on the right track, and just the fact that you're examining it puts you ahead of "average."

morjax

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Re: Reader Case Study--Where to cut
« Reply #4 on: June 20, 2014, 02:41:22 PM »
Tithe: Non-negotiable. Ok. I'd definitely think about negotiating it, think hard, over the next while. You might find it better to save now so you can give more later. 14% is a lot to give away when you have a baby.

Agreed. You're free to allocate your money as you wish, but I think it's also appropriate to realize the full cost vs investing/saving. $561 monthly adds up to $97,053 not saved over ten years after compounding. If this is okay with you, then you're free to make that choice.

My personal feeling is that I can do a lot of good with my time and money with another $100k every ten years/reaching FI $100k sooner. For me, considering that's around a fifth of my target nest egg over a target 20 year working career, that's a sum not to be taken lightly.

Again, I don't want to pick on your values or force negotiation on what you've labeled as non-negotiable, but it's important to make your decision from a place of knowledge: know what your money is buying when tithed. Know how much you're spending on it.

Hugerat

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Re: Reader Case Study--Where to cut
« Reply #5 on: June 20, 2014, 02:51:53 PM »
You should kill that car loan as soon as possible. 8.6% guaranteed return is better than any other investment opportunity.

The big problem I see is that you're not sure if your monthly savings is nearly $1,000 or $0!!! You need to find that out. If your husbad likes that sort of thing have him build a spreadsheet or start using Mint and track every single expense. You really can't make informed decisions if you don't know where you stand.

As others have said, you can save some on your phone, but this isn't huge. My wife and I switched from t-mobile no contract plans with basically no data to Ting. Our cost has gone from about combine $65 per month to $43, while we've gone from 60 MB of data to 500 MB to share. We even shelled out for some flashy phones and will still end up in the black before the year is out. So if you have Sprint coverage in your area that could be great.

Hugerat

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Re: Reader Case Study--Where to cut
« Reply #6 on: June 20, 2014, 03:02:08 PM »
And just one face punch: Ditch the emergency fund. Many people will hate me for this, but if you have control over your expenses and are able to cut back even further in the event of a true emergency, then emergency funds are pointless. You need to invest this money and all of your monthly surplus (which you can now nail down to the dollar thanks to your handy spreadsheet) should be plowed into investments too. I would not sleep well at all knowing that most of my savings was sitting in an account being slowly eroded away by inflation. Get it working for you and let your monthly cash surplus be your emergency fund.

Prairie Stash

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Re: Reader Case Study--Where to cut
« Reply #7 on: June 20, 2014, 03:11:43 PM »
Debt:

1 car loan, about 7,000 at 8.6ish% interest (ouch)

I'm ridiculously proud of having never taken out student loans. I tip my hat to those who had them and have managed to pay them off.

How much should we have in savings for an emergency? We have abut 3 months worth, which is the minimum for sleeping well at night. Should all extra money at this point should be thrown at that loan? Prepared for face punches.

Tough love, the car is terrible.  You avoided student loans to take on an even worse debt. Sell it tomorrow, get something without a loan.  If you refuse to sell, then pay off the loan ASAP! I wouldn't be able to sleep with that ugly monster of a loan.  Personally I'd use the savings to pay off that loan, I see your debt as an emergency.

StarryC

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Re: Reader Case Study--Where to cut
« Reply #8 on: June 20, 2014, 03:28:30 PM »
8.6% for a car loan must mean someone has bad credit, right?  I mean "new car" loans have been at 0-1% for a long time now, and used car loans are below 2% lately, right?  You need to know whether that is you, or your husband.  Is there debt you don't know about?   If it is just a terrible loan, and you keep the car, can you refinance it to the 2-3% that appears to be available?   

You also need to figure out where you are wrong- where is that extra $900 a month going? 

I completely disagree on dropping the emergency fund.  You have a kid.  This means there may be unexpected, and urgent expenses that you cannot put off.  You appear to be reliant on a car.  This means there may be unexpected and urgent expenses that you cannot put off.  I don't think your fund needs to be any higher, but don't get rid of it.  If hubs loses his job it might take 3 months for one of you to find a new job.  Even if it is unlikely, it is possible. 

$700 on groceries is unacceptable, obviously.  You need to meal plan, cook, and shop wisely.  Since you are able to stay home, this is something that falls under your job description.  1) Meatless Mondays.  2) Less beef (beef is way expensive these days).  3) More frozen vegetables. 

Probably some of that $700 is wasted on other goods as well.  You should try to downgrade to cheaper TP, cheaper diapers, cheaper shampoo, etc. 


gimp

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Re: Reader Case Study--Where to cut
« Reply #9 on: June 20, 2014, 03:44:56 PM »
Okay, now I'll fess up the real reason why laundry is near and dear to me heart...Please excuse the sales pitch: I make and sell laundry detergent and put 15% of proceeds to Child's Play Charity. I'm hoping to sell more and more to mustachians who are sick of paying out the nose for standard detergents. Typical prices for Tide or similar are around $0.20 per load. I sell a 64-100 load size for $8 which works out to $0.08-$0.125 per load. I usually charge $5 shipping, but if you were interested, I'd sent it your way for $8. If you dissolve the stuff in a cup of hot water first, you can run your was cold/cold, which would save you money, except you don't pay for hot water. Alright. Detergent rant over.
https://www.facebook.com/pages/Steves-Just-Laundry-Detergent/684639731576069
Also for dogecoin: http://shibemart.com/so/trick/homemade-laudry-detergent-for-your-clothes-not-your-doge/

I mean no offense to ask this: How is your product better/cheaper than $1 detergent I buy from the dollar store? I don't know shit about detergent and buy the cheapest I can.

Exflyboy

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Re: Reader Case Study--Where to cut
« Reply #10 on: June 20, 2014, 03:46:26 PM »
Speaking of cars.. The car I drive now cost me $350... I rebuilt the engine and manual transmission for another $1200 and drove it 30,000miles last year during my brutal commute.

The rebuild really was optional though.. that car as it was had plenty of life left in it.

I've never had a car loan.. Imagine what I have saved in interest over 30 years or so!!!

Frank

Victoria

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Re: Reader Case Study--Where to cut
« Reply #11 on: June 20, 2014, 04:06:24 PM »
Morjax: You are exactly right about some of that misc fund. I look around and wonder where the money went. THIS is probably 50% of what needs fixing. I'm in the process of rewinding my habits back to how they were during the "starving student" days. I realize now that some of that goes for christmas and birthday gifts.

You also mention the easiest way to save money is by lowing rent costs. I hear you. We used to pay 925...for a 650 sqft 2 bedroom. Staying there would have been more frugal, but it was poorly designed and I was going insane. Retrospectively we could have waited a few more months before moving into a 3 bedroom. We honestly don't pay much for housing for living in Southern California area that we do. I'd be happy to liver further out in the boondocks, but that creates a daily commute that isn't worth the time or money. If we could move out of state to a cheaper area, we would in a heartbeat. But that would mean giving up custody, and so here we are. The only other option is downsizing, which could save us $200 a month, but that would require going back to a 2 bedroom. Due to the age difference I would like to explore other avenues before sticking the kids in the same room. I'm also enjoying living next door to my best friend, who has a girl about my daughter's age. We can provide last-minute childcare for one another, borrow a cup of sugar, and other hard-to-quantify benefits. I've thought hard about this, believe me. It's not off the table, it's just not my first target.

About the Tithe: We tithe 10% of our gross income, and add $20 on top of that for fast offering (money saved from the two meals we fast once a month, donated to aid those in the congregation who need help making ends meet). We're LDS and every member is required to tithe 10% of what they make. Our clergy is all voluntary so it goes for church buildings, temples, humanitarian aid, etc. It's a big chunk, but cutting this out would be like not attending church on Sunday. For us, it's a sacrifice it's worth it to make.


I'm extremely doubtful that I can get the husband to agree to ditch the savings, even if I wanted to. He remembers unemployment too well. The recession hit his profession hard. I do think that it's big enough and we don't need to add to it though.

The republic wireless sounds good, except (complainy pants moment) I really enjoy not having a smart phone. No fragile, battery-draining touch screen, no option to check the internet to look up whatever not-actually-as-important-as-I-think question on google, no kids begging to play games on my phone, one less available time-suck to distract me from what's important. But a pre-payed or some other kind of plan is definitely on my to-do list.

Groceries: We eat vegetarian at least two days a week. We seldom buy cereal. I've stopped buying beef. I often meal plan (well...only about 50% of the time). This is why the amount shocked my socks off. But we buy lots of fresh fruit and vegetables. I buy fish once or twice a month. I'm wondering if I should just withdraw $500 in cash in the beginning of the month and only pay groceries in cash....and if I run out, I run out. Then the next month I can make it $475, etc. Had anyone had success with this kind of method?

Car interest: I think we could refinance for cheaper. My husband has great credit. When we got the car I had about zero credit history (in the United States), so that may have been taken into account. So looking into that will be on the to-do list as well.

Thanks for the help so far.

gimp

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Re: Reader Case Study--Where to cut
« Reply #12 on: June 20, 2014, 04:30:29 PM »
My recommended method for groceries is this:

Save your receipts, and enter every single thing you bought for the month into a spreadsheet.

Since you're not blind, you'll immediate go "wtf why did we buy that" and "wtf why is this $40 it should be $5" and so on. Rinse and repeat. You will figure out very quickly where the money is going. Honestly though, if you're not buying a lot of fish and meat, you're either spending an insane amount on fruit/veggies that are out of season and ridiculously expensive, or you're buying a lot of shit in small convenience packaging and a very high price per weight, or both.

ch12

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Re: Reader Case Study--Where to cut
« Reply #13 on: June 20, 2014, 05:01:32 PM »
I'm also enjoying living next door to my best friend, who has a girl about my daughter's age. We can provide last-minute childcare for one another, borrow a cup of sugar, and other hard-to-quantify benefits. I've thought hard about this, believe me. It's not off the table, it's just not my first target.

About the Tithe: We tithe 10% of our gross income, and add $20 on top of that for fast offering (money saved from the two meals we fast once a month, donated to aid those in the congregation who need help making ends meet). We're LDS and every member is required to tithe 10% of what they make.

Groceries: We eat vegetarian at least two days a week. We seldom buy cereal. I've stopped buying beef. I often meal plan (well...only about 50% of the time). This is why the amount shocked my socks off. But we buy lots of fresh fruit and vegetables. I buy fish once or twice a month. I'm wondering if I should just withdraw $500 in cash in the beginning of the month and only pay groceries in cash....and if I run out, I run out. Then the next month I can make it $475, etc. Had anyone had success with this kind of method?

Car interest: I think we could refinance for cheaper. My husband has great credit. When we got the car I had about zero credit history (in the United States), so that may have been taken into account. So looking into that will be on the to-do list as well.
Living near your best friend is a very good move, and it keeps you happy on top of any other benefits. http://www.preventdisease.com/news/11/101311_Happy-Friend-Living-Within-a-Half-Mile%20Makes-You-42-Percent-More-Likely-To-Be-Happy.shtml

Whether or not to tithe before FI is a common debate. It depends on what matters to you; if giving to the church matters, then keep it. The $944 floating around that you think goes into gifts definitely should be found. Mint.com is your friend, and I'm sure that you'll find the holes within a month or so.

Definitely get a lower interest rate on your car and get Ting or Republic Wireless for your cell phones. http://www.mrmoneymustache.com/2014/05/13/moto-x-vs-moto-g/

You might have fun reading SethBahookey's thread on grocery spending http://forum.mrmoneymustache.com/share-your-badassity/grocery-expenses-for-the-month!!/

RootofGood also did a huge post on a month's worth of groceries. He buys a lot more processed carbs than we do, but I also eat 2 meals a day at work.

http://rootofgood.com/one-month-of-groceries/

RootofGood

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Re: Reader Case Study--Where to cut
« Reply #14 on: June 20, 2014, 05:55:05 PM »
RootofGood also did a huge post on a month's worth of groceries. He buys a lot more processed carbs than we do, but I also eat 2 meals a day at work.

http://rootofgood.com/one-month-of-groceries/

Thanks for sharing the link!  I went back and looked at my summary and I added up over 100 lbs of fresh produce we bought in that month, and spent under $100 for that amount. 

Victoria, check out Aldi if you have one nearby.  Great place to get fresh produce. If there isn't an Aldi's, I've heard good things about Sprouts and Winco but not sure about the latter for fresh produce (just heard they are similar to Aldi).  Some say Aldi is like shopping in the slums, but it's a great way to save a ton of cash, especially if you buy a lot of fresh produce.

I have a question about the tithing - you say it's non-negotiable and "cutting this out would be like not attending church on Sunday".  I've heard you get excommunicated (maybe that's not the right word) from LDS if you don't pay up.  Any truth to that? Do they audit what you make and require 10% of gross income?  Could you cut back to 10% of net or 8% of gross for example?  Seems exorbitant. 
« Last Edit: June 20, 2014, 06:00:37 PM by RootofGood »

kimmarg

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Re: Reader Case Study--Where to cut
« Reply #15 on: June 20, 2014, 07:45:28 PM »
For food check out Everydaygoodstotage.net it has great recipes for using what you have in food storage (which I'm assuming you might have as most of the websites about it are LDS. Cannery also has great food deals!)

Also check for the 'bountiful baskets' food coop in your area. They have amazing deals and cover much of the west.

morjax

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Re: Reader Case Study--Where to cut
« Reply #16 on: June 20, 2014, 11:36:30 PM »
Okay, now I'll fess up the real reason why laundry is near and dear to me heart...Please excuse the sales pitch: I make and sell laundry detergent and put 15% of proceeds to Child's Play Charity. I'm hoping to sell more and more to mustachians who are sick of paying out the nose for standard detergents. Typical prices for Tide or similar are around $0.20 per load. I sell a 64-100 load size for $8 which works out to $0.08-$0.125 per load. I usually charge $5 shipping, but if you were interested, I'd sent it your way for $8. If you dissolve the stuff in a cup of hot water first, you can run your was cold/cold, which would save you money, except you don't pay for hot water. Alright. Detergent rant over.
https://www.facebook.com/pages/Steves-Just-Laundry-Detergent/684639731576069
Also for dogecoin: http://shibemart.com/so/trick/homemade-laudry-detergent-for-your-clothes-not-your-doge/

I mean no offense to ask this: How is your product better/cheaper than $1 detergent I buy from the dollar store? I don't know shit about detergent and buy the cheapest I can.


No offense taken whatever. I'm a chemist, so I've bent my knowledge to make a potent detergent for an optimized price. I'm not saying that I can make a better product than Proctor and Gamble, but large companies have large overhead and are in search or large profits. My intent is to make a solid detergent without frills, a mustachian detergent, if you will.

With regards to the dollar store detergent, the main difference is the concentration/potency. I looked up a dollar store detergent, and this one advertises "classic 1 cup formula!" http://www.dollartree.com/Sun-Clean-Fresh-Laundry-Detergent-19-oz-Boxes/p328003/index.pro

These detergents almost always have high levels of fillers in them . Theirs needs 1 cup, mine needs one tablespoon. I think that it comes down to goals; My goal is to make a kick ass detergent that is potent and that I would preferentially use over commercial detergents for myself, and sell it to those interested. Dollar store brand are looking to provide the least expensive material that will still clean and can be sold at $1 per unit.Tide or similar want to either offer you a premium product with an associated premium price.

In terms of powdered vs liquid, powdered detergents are generally more potent to begin with, so I would expect the liquid products at the dollar store to be watered down further still, just enough to get a passable clean using them. I'm clearly biased, but will say that for some people, the dollar store detergent serves the purpose. More power to them, if it works it works.

hopefully it's now clear as mud for you ;) If you have any other questions, by all means, fire away: I'm more revved up about the topic of laundry detergent than I have any right to be ^_^

morjax

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Re: Reader Case Study--Where to cut
« Reply #17 on: June 20, 2014, 11:59:07 PM »
You also mention the easiest way to save money is by lowing rent costs.

Even though I parrot ways to cut costs on this front, I am guilty myself. My wife an I life in a nice 4 bdrm on a cul de sac in a nice school district. All in all, I'm rather fond of the place and don't plan to move. I think the important part is to know what it's costing you, and know that it is an option, a decision. 


About the Tithe: We tithe 10% of our gross income, and add $20 on top of that for fast offering (money saved from the two meals we fast once a month, donated to aid those in the congregation who need help making ends meet). We're LDS and every member is required to tithe 10% of what they make. Our clergy is all voluntary so it goes for church buildings, temples, humanitarian aid, etc. It's a big chunk, but cutting this out would be like not attending church on Sunday. For us, it's a sacrifice it's worth it to make.

Again, my goal is not to put you on the ropes on this. Your choices in religious contributions, charitable giving, etc are altogether yours to make, and I'm in no place to say you shouldn't make them. I guess the main point I hope to impress is that you should make the choice consciously, and with an understanding and knowing what you're getting into. You should make your choices so that when you look back on them you think "That's what I wanted to and chose to spend on." and not "!!!! How did I spend so much on that?"


I'm extremely doubtful that I can get the husband to agree to ditch the savings, even if I wanted to. He remembers unemployment too well. The recession hit his profession hard. I do think that it's big enough and we don't need to add to it though.

That can be OK, again, as long as you know that by not putting that money towards your car loan, you're paying a premium of 8.6% interest to have that money at your immediate disposal for the life of the loan. Ultimately, everyone has a different history, tolerance for risk, etc and you have to do what you to let you sleep well at night.


The republic wireless sounds good, except (complainy pants moment) I really enjoy not having a smart phone. No fragile, battery-draining touch screen, no option to check the internet to look up whatever not-actually-as-important-as-I-think question on google, no kids begging to play games on my phone, one less available time-suck to distract me from what's important. But a pre-payed or some other kind of plan is definitely on my to-do list.

For Me, My wife and my folks, Republic was a no brainer. I get the hesitancy regarding smart phones. One comment is that with the $10/month plan, you do not get 3G, so unless you have WIFI available, you won't be able to, as you put so well, "look up whatever not-actually-as-important-as-I-think question on google". I'm the same way, and rather like the not-3G. I suppose you could have a hard rule with your kids that the phone is not for games and just not put apps on there? One final option is you may be able to grab someone's old Defy XT used, though I've not looked into the details on going about it.

Ultimately, if you opt against Republic, no skin off my back. I've heard good things about other MVNOs as well (Ting, Straight Talk, ect). Research and google are your friends, and a cursory seach of these forums should provide a bounty on information as well.

I'm wondering if I should just withdraw $500 in cash in the beginning of the month and only pay groceries in cash....and if I run out, I run out. Then the next month I can make it $475, etc.

My parents did this kind on thing. I'd say go for it. Worst case scenario, you just come up with another plan at the end of the month if it doesn't work. I think it's good to have a discrete wad of cash to spend, because it forces you to make comparisons in a visual way. "I have X amount left, so I can buy one of these, or three of these."


Car interest: I think we could refinance for cheaper. My husband has great credit. When we got the car I had about zero credit history (in the United States), so that may have been taken into account. So looking into that will be on the to-do list as well.

Again, I'm ashamed to admit that I too have not sold the car which we still owe ~$7000 at 4.5% to buy one in cash. If you're not willing to sell, at least refinance, or try to pay it down quickly with the fiery wrath of the mustachian debt-destroyer.


Best of luck to you! You're asking the right questions to get started. Keep trimming the fat, keep tracking as close as you can stand. The better your focus and endurance in tracking, the better results you're like to have.

~M

P.S. No comments on the detergent?? ;)

morjax

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Re: Reader Case Study--Where to cut
« Reply #18 on: June 21, 2014, 12:01:44 AM »
My recommended method for groceries is this:

Save your receipts, and enter every single thing you bought for the month into a spreadsheet.

Since you're not blind, you'll immediate go "wtf why did we buy that" and "wtf why is this $40 it should be $5" and so on. Rinse and repeat.

This is both good advice for awareness, and also (for my lazy ass *self-face-punch*) somewhat laborious. I think that it's a good way to bring your grocery spending into focus, but maybe not quite as good as an indefinite tracking method... Thoughts?

Scottishsteph

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Re: Reader Case Study--Where to cut
« Reply #19 on: June 21, 2014, 07:08:15 AM »
Apologies if I'm being really thick here but you don't seem to have added your rent onto your monthly expenses. So, instead of $900 being missing, you are actually overspending by $300 every month.

Catbert

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Re: Reader Case Study--Where to cut
« Reply #20 on: June 21, 2014, 08:22:59 AM »
Sprouts is a great southern California option for reasonable fresh food.  Shop their sales.  This week their big loss leader is apricots for $0.48 a pound.  I bought 20 lbs for eating fresh, freezing for smoothies and canning apricot butter.   

Also look to see what ethnic food stores are in your area.  An Asian grocery would a great cheap source of rice.  Fresh fruit and veg can be very cheap but often not the best quality.  Plan to use quickly.   

avongil

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Re: Reader Case Study--Where to cut
« Reply #21 on: June 21, 2014, 09:16:14 AM »
Tithing and fast offering: 561 (non-negotiable)
Health insurance: 437 (for myself and 1 kid; husband's work pays his)
Health insurance : 27 (for 1 kid: costs are split with step-daughter's mom, who gets cheap insurance through job)
College savings for kids: 80 (10 a week direct deposited for each of them)


You are spending more money on tithing than yourself or your kids.  I would re-negotiate that.  Think about how much faster you will reach FI and then you should donate to whatever cause you want.




SingleMomDebt

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Re: Reader Case Study--Where to cut
« Reply #22 on: June 21, 2014, 09:41:24 AM »
Agree with you that ditching the auto loan 1st is good priority.

When I was a fam of 4 and I finally tracked our food expenditures, I discovered we were spending $400/month alone on eating out. ouch! We definitely dumped that and got back on track. but i was amazed at how easy it was for that money was to go through our fingers. while your 700 is on groceries alone, I recommend tracking it daily via a spreadsheet or mint.com to see why its so high.

Eating out $50. Not too shabby. I've actually added restaurant into my budget. A bunch of my friends and the kids all get together for taco tuesday. the time we spend together is meaningful. its my conscious spending. and worth it. but unconscious eating out spending is null for me.

Tithing, I completely understand where you are on this one. I used to tithe regularly too. And often considered whether I should continue tithing while paying off consumer debt or put it on hold. After reading Dave Ramsey's website and methods, I actually decided to put tithing on hold until I get better footing on my finances. Because as I see it, I will be able to make a much better contribution when I am debt free. Tithing your time instead of finances is also a possibility. Just my thoughts. I respect your decision.

Well, as I see it, you've taken the first step by listing everything and taking the conscious effort for your family to control money matters. yay!

Cpa Cat

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Re: Reader Case Study--Where to cut
« Reply #23 on: June 21, 2014, 10:02:20 AM »
Regarding tithing: What I recommend is that you set a yearly budget for "gifts." This budget should include gifts to yourself, your kids, other people, charity and church. Then it becomes a trade-off. Do we put an extra gift under the tree, or do we ask the kids to help pick what toy to give away at the Xmas drive? Do we spend $50 on a gift for Cousin Sally's wedding, or do we spend $25 and give an extra $25  to Church this month?

Instead of saying that tithing is non-negotiable, make every gift negotiable.

For food budgets: Make a meal plan, using some of the many cheapo-meal blogs out there. If you put a budget on every meal, you'll find you'll bring the core of your grocery budget under control pretty quickly. After that, go through your receipts and highlight all of the things you bought that weren't necessary. Chips and soda are obvious, but also highlight things like the grapes you bought on a whim that ended up costing $5/lb. Spreadsheet optional - if you still find that your grocery budget is blowing up, then do a spreadsheet. But just sitting down and acknowledging the waste helps a lot.

When my husband and I did this, we sat down with the receipts together. Previously, he would say, "Why are you spending so much on groceries?!" When he looked at the receipts with me, it turned into, "Oh my god, my breakfast/snacks/lunch cost what?! Stop buying that!"

Cassie

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Re: Reader Case Study--Where to cut
« Reply #24 on: June 21, 2014, 02:21:03 PM »
When there were 5 of us I made casseroles to save $ since you don't need as much meat.  another way is to make breakfast for dinner one nite a week. It can be quick, easy and my kids loved it.  You could make eggs & bacon, pancakes & bacon, etc.  Some nites we might have something like soup & sandwiches.  Every meal does not have to be a traditional dinner.  WE love Winco-it has saved us a ton of $.  Produce is usually fine but if not just get that somewhere else. 

Chrissy

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Re: Reader Case Study--Where to cut
« Reply #25 on: June 22, 2014, 09:31:17 PM »
Of course, refinancing the car loan deserves some research.  In addition, were it I, I would put the kids' college contributions toward destroying the car loan, too.  I'm surprised no one else has mentioned this.  The over 8% interest rate on the loan is eating up the 7% average gain from stocks.  If you get the loan refinanced to anything >5%, destroy it a.s.a.p.!

Once the loan is done, you can take the $280/mo and make it up to the college funds.

I just negotiated my internet down from $43 to $28, so you might try that.  Since you're in an apartment building, maybe you can share with a neighbor or your best friend?  I've done this before with very successful results:  paying $15/mo for internet!

I look forward to hearing an update...
« Last Edit: June 22, 2014, 09:57:14 PM by Chrissy »

PilotsWife

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Re: Reader Case Study--Where to cut
« Reply #26 on: June 22, 2014, 09:48:46 PM »
Geez. When a lady says non-negotiable, she means non-negotiable!

For Mormons, paying your tithe is part of being a member in good standing. You have a yearly interview with your Bishop in which he asks, among other things, if you're paying your tithing. If you want a temple recommend, which is important, you must pay your tithing. It's part & parcel of being Mormon.

When Victoria says non-negotiable, she means it. Seriously, stop harping on it, folks.


RootofGood

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Re: Reader Case Study--Where to cut
« Reply #27 on: June 23, 2014, 01:50:09 PM »
Geez. When a lady says non-negotiable, she means non-negotiable!

For Mormons, paying your tithe is part of being a member in good standing. You have a yearly interview with your Bishop in which he asks, among other things, if you're paying your tithing. If you want a temple recommend, which is important, you must pay your tithing. It's part & parcel of being Mormon.

When Victoria says non-negotiable, she means it. Seriously, stop harping on it, folks.

Why so defensive?  It's always good to closely examine where you are directing your limited resources to make sure you have optimized your spending. 

One might, for example, decide to devote 10% of one's income toward actual charity instead of tithing to build even more and larger churches and temples.  Or not.  The choice should be a conscious one.

Cpa Cat

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Re: Reader Case Study--Where to cut
« Reply #28 on: June 23, 2014, 02:27:48 PM »
When Victoria says non-negotiable, she means it. Seriously, stop harping on it, folks.

In the long-term, everything is negotiable. Especially in a budget.

I could say that my cats are non-negotiable. But they're not. I -could- give them up, I simply choose not to. That's my choice to own. I then have to decide what is the best way to care for them, what trade-offs I'm willing to make for them, etc.

By calling something non-negotiable, it exempts you from thinking about it. It is absolutely her choice to tithe 10% and if she chooses to make it a priority, then good for her. But it's a choice. And thinking of it as a choice reminds you that every choice has a trade off.

I'm choosing to give 10% to the Church, because it is important to me, therefore, we will have fewer gifts at Christmas, because it's not as important to me spiritually. I'm choosing to give 10% to the Church, because it is important to me, so the kids won't be participating in the summer camp they want to go to, because the Church holds many community events and activities.

Saying, instead, "I have to give 10% to the Church and it's non negotiable so stop talking about it!" is counter productive to a budgeting process. Look - for many people their mortgage is "non-negotiable" or private school is "non-negotiable" - and it's simply not true. Everything in a budget is a negotiation.

PilotsWife

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Re: Reader Case Study--Where to cut
« Reply #29 on: June 23, 2014, 04:54:37 PM »
CPA Cat: And so Victoria said "For us, it's a sacrifice it's worth it to make." It sounds like she's made the conscious decision to follow the dictates set up by her Church & values that more than she values 10% of her income. Tithing isn't a "gift" & it's not negotiable, at least not to LDS.

Root of Good: I'm not going to go into a lengthy explanation of how Mormonism works, but it's not generally a pick-and-choose, "take what you like & leave the rest" kind of religion. Tithing is a big deal & suggesting that someone needs to cut it out of their budget to "optimize their spending" is dickish, IMO. Victoria makes the decision to be Mormon every hour of every day, so I'm going to go out on a limb & give her the benefit of the doubt that she's made a conscious decision wrt tithing.
« Last Edit: June 23, 2014, 05:00:12 PM by PilotsWife »

avongil

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Re: Reader Case Study--Where to cut
« Reply #30 on: June 23, 2014, 06:55:58 PM »
PilotsWife,

It's really just shockingly simple math. When you look at a longer time interval, your contributions to whatever cause are maximized by reducing waste (interest) first, then contributing to whatever cause or organization you wish.  If you think otherwise, then this is mathematically false and you should reconsider whatever it is your are taught or forced into.

People on this financial forum are from different walks of life and different religions, or even lack of religion.  Some free thinking is not a bad thing. 

You could always be like everyone else, not negotiate anything or have any different ideas and retire at 65 or just work until you are good and dead.

Jennifer in Ottawa

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Re: Reader Case Study--Where to cut
« Reply #31 on: June 23, 2014, 07:24:27 PM »
There are exactly two things we cannot choose.  We cannot choose not to die.  We cannot choose the colour of our skin.  Everything else is optional.  If you make a choice, own it, accept responsibility for it, and carry on.

Don't say "I have no choice.", because it simply isn't true.

And if there is something in your budget that you absolutely, positively refuse to budge on, then simply don't include it.  Deduct the cost of it from your expenses and income, and then you are guaranteed never to hear about it.

PilotsWife

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Re: Reader Case Study--Where to cut
« Reply #32 on: June 23, 2014, 07:33:16 PM »
PilotsWife,

It's really just shockingly simple math. When you look at a longer time interval, your contributions to whatever cause are maximized by reducing waste (interest) first, then contributing to whatever cause or organization you wish.  If you think otherwise, then this is mathematically false and you should reconsider whatever it is your are taught or forced into.

People on this financial forum are from different walks of life and different religions, or even lack of religion.  Some free thinking is not a bad thing. 

You could always be like everyone else, not negotiate anything or have any different ideas and retire at 65 or just work until you are good and dead.

This comment comes across as really condescending, FYI.

I didn't try to argue that tithing is the most fiscally responsible way of contributing to charity, or that free thinking is bad, or that Mormonism is the only way to go. I am not Mormon, I do not tithe, & I don't plan on working until I'm 65 (which is why I'm on this forum in the first place). I am simply trying to explain the importance of tithing to Mormons & stick up for someone who probably didn't want to hear so many people telling her to cut out something that she considers non-negotiable. Perhaps she should have kept it from her budget, but she didn't so....let's move forward & look at the things Victoria is willing to cut back on.

 

Janie

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Re: Reader Case Study--Where to cut
« Reply #33 on: June 23, 2014, 08:12:10 PM »
Apologies if I'm being really thick here but you don't seem to have added your rent onto your monthly expenses. So, instead of $900 being missing, you are actually overspending by $300 every month.

!!! It looks like Scottishsteph is right and that expenses are $300 more each month than take home--an emergency situation.

hexdexorex

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Re: Reader Case Study--Where to cut
« Reply #34 on: June 23, 2014, 08:37:07 PM »
There is nothing big in your budget that has a ton of wiggle room so you are not really going to achieve big changes.

For food I would order non-perishables on amazon. You should be able to keep this under 350 a month (even with a kids).

The biggest thing coming down the line seems to be the husband getting a job after coming out of school. After that happens the best thing you can do it stick to your 1 income budget.

RootofGood

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Re: Reader Case Study--Where to cut
« Reply #35 on: June 23, 2014, 09:01:08 PM »
Root of Good: I'm not going to go into a lengthy explanation of how Mormonism works, but it's not generally a pick-and-choose, "take what you like & leave the rest" kind of religion. Tithing is a big deal & suggesting that someone needs to cut it out of their budget to "optimize their spending" is dickish, IMO. Victoria makes the decision to be Mormon every hour of every day, so I'm going to go out on a limb & give her the benefit of the doubt that she's made a conscious decision wrt tithing.

I didn't suggest she should cut tithing from her budget, but rather to merely examine the expenditure critically. 

Quote
One might, for example, decide to devote 10% of one's income toward actual charity instead of tithing to build even more and larger churches and temples.  Or not.  The choice should be a conscious one.

It's her choice, after all.  I would point out that billions of people around the world live virtuous fulfilling lives every day without tithing the Mormon Church.  Some donate to other organized religion, some donate to charity.

From what I understand of Mormonism, Victoria could pray on the issue of tithing, and if God reveals to her that it is no longer mandatory (for her particularly, or as a general rule) then she is no longer required to tithe.  Doctrine by revelation is what it's all about!  Sure, she would then join the hundreds of other splinter Mormon sects out there, but you got to do what's revealed to you right?

PilotsWife

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Re: Reader Case Study--Where to cut
« Reply #36 on: June 24, 2014, 02:09:08 AM »

From what I understand of Mormonism, Victoria could pray on the issue of tithing, and if God reveals to her that it is no longer mandatory (for her particularly, or as a general rule) then she is no longer required to tithe.  Doctrine by revelation is what it's all about!  Sure, she would then join the hundreds of other splinter Mormon sects out there, but you got to do what's revealed to you right?

I think that's pushing the idea of personal revelation a little too far. Once multiple prophets weigh in on a topic with instructions directly from God, I don't think the still, small voice would hold up in court. Plus, there's always this as incentive to pay tithing:

"Tithing is a pivotal commandment, one on which other larger issues turn. Only those Church members who pay a full tithing can receive temple ordinances. And the Lord tells us that those who pay tithing will not be burned at His Second Coming (see D&C 64:23)." From LDS.org




hyenas

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Re: Reader Case Study--Where to cut
« Reply #37 on: June 24, 2014, 09:32:00 AM »
Have you considered purchasing an apartment washer? They don't need plumbing hookups and can connect to a faucet. I have
one in my bathroom and I adore it. It'll pay for itself in about a year if you're spending $5 a week on laundry.

This is the one I have...

http://www.walmart.com/ip/Magic-Chef-1.6-cu.-ft.-Top-Load-Portable-Washer/20656386?action=product_interest&action_type=title&placement_id=irs_top&strategy=PWVUB&visitor_id=80043059695&category=0%3A4044%3A90548%3A132964&client_guid=e9849213-f46b-4262-8511-02ad8906e6e0&config_id=2&parent_item_id=20656384&guid=1c9b86a2-7638-4a72-8e64-1755479e974b&bucket_id=irsbucketdefault&findingMethod=p13n

They also come bigger, smaller, and cheaper.

In regards to bulk food. I should think that your church could advise you. I'm not LDS but I do abide by their food storage principles. Often the church will have a cannery or their own bulk food distribution. If there's not a large population where you live then you should check out Azure Standard (www.azurestandard.com) Which is a wholesale food distributor that sells directly to the public. There are no membership costs, you just have to make your order and go to the drop off point to pick it up.

Oldguy

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Re: Reader Case Study--Where to cut
« Reply #38 on: June 24, 2014, 10:39:56 AM »
You mentioned a part time job "in your field".
You have decided to be a SAHM for 5 to 8 years. In your situation additional income can also make a big difference. You are obviously educated, intelligent and capable. I humbly suggest you redefine your field to be - "an enterprising person determined to succeed; go-getter" and I'll point you to this:

http://forum.mrmoneymustache.com/ask-a-mustachian/who-has-a-side-gigjob-that-brings-in-extra-cash-share-with-us!/

backyardfeast

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Re: Reader Case Study--Where to cut
« Reply #39 on: June 24, 2014, 11:12:18 AM »
Re: the car loan, which is clearly what needs to go asap.  In our experience, the easiest way to deal with debts like this is with a 0% or other similar credit card offer.  You don't have any cc debt, but your husband has great credit and you need to build some.  Do either of you have a credit card or get random offers in the mail?  It can be incredibly easy to get a very low-to-no interest short-term loan/cash advance that enables you to pay off the 8% loan in one payment, and then repay the credit card in the fastest way that makes sense to you.

On the tithing question, I agree that conscious decision making is important, but I think it's also worth saying that most of us go through a conscious recognition that there are expenses that are totally anti-mustachian and ridiculous on paper, but that we are keeping them.  While it's true that you are in a minor emergency situation and that in theory tithing is taking up a lot of your monthly income, it's also true that you have an equal amount of mystery spending that will make a big difference quickly if you can get it under control.  You are also in a phase of life that will not last forever; if you can build good habits now, the time will come where income will increase, your husband will finish school, you will go back to work, etc.  Concentrate on building a lean, streamlined, conscious budget on which you feel your family lives a satisfying and meaningful life, and trust that over time this will hold you in good stead.  Do not move.

That said, if you are $300 in the hole each month, you may also want to put those college contributions on hold...the kids are very young, and there will be time to help them in a variety of ways as they get closer to university age.  There are threads about different approaches to this issue you may want to take a look at.  Good luck!

PloddingInsight

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Re: Reader Case Study--Where to cut
« Reply #40 on: June 24, 2014, 01:13:02 PM »
Quote
...instead of tithing to build even more and larger churches and temples...

Quote
I would point out that billions of people around the world live virtuous fulfilling lives every day without tithing the Mormon Church.

I'm popping in to say, this thread makes me cringe.  Seriously, people.  "Non-negotiable" is a polite way to say, I don't wish to entertain comments about this item in my budget.  It's not an invitation for you to not-so-subtly vent your anti-Mormonism and/or anti-Christian and/or anti-religious viewpoints.


Gin1984

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Re: Reader Case Study--Where to cut
« Reply #41 on: June 24, 2014, 02:42:29 PM »
Debt:

1 car loan, about 7,000 at 8.6ish% interest (ouch)

I'm ridiculously proud of having never taken out student loans. I tip my hat to those who had them and have managed to pay them off.

How much should we have in savings for an emergency? We have abut 3 months worth, which is the minimum for sleeping well at night. Should all extra money at this point should be thrown at that loan? Prepared for face punches.

Tough love, the car is terrible.  You avoided student loans to take on an even worse debt. Sell it tomorrow, get something without a loan.  If you refuse to sell, then pay off the loan ASAP! I wouldn't be able to sleep with that ugly monster of a loan.  Personally I'd use the savings to pay off that loan, I see your debt as an emergency.
You are better off getting a student loan and paying that car loan off.  Btw, you should not be "many months ahead", that means they are not applying your additional payments to the principal.