Author Topic: The beatles Case Study  (Read 262729 times)

Malum Prohibitum

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Re: The beatles Case Study
« Reply #500 on: January 11, 2017, 10:56:31 AM »
Well, I disagree.  Maybe selling the rental is his next step.  Or maybe selling his current house and moving into the rental.  One step at a time.  Paying off the IRS is not going to make a long term difference if he and his wife do not get their excessive spending under control.

It has only been 4 days, Mmm_Donuts!
« Last Edit: January 11, 2017, 11:00:14 AM by Malum Prohibitum »

Malum Prohibitum

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Re: The beatles Case Study
« Reply #501 on: January 11, 2017, 10:59:14 AM »
In those four days, you have already cut out $600 monthly spending on lunches for other self employed people at work.

You have cut off the massages ($70 monthly?)

You are now looking into budgeting for groceries and meals out.

Even without the grocery and meals out - you have saved $670 monthly, or $8040 a year.  That's more than $80,000 over a decade.

Start calculating the value of your savings over ten years, and you will see that even little expenses (on a monthly basis) add up to large amounts.

MMM has a blog post.  He says to multiply monthly figures by 173.  http://www.mrmoneymustache.com/2011/04/15/getting-started-3-eliminate-short-termitis-the-bankruptcy-disease/

So $670 x 173 = $115,910

This represents a 7% rate of return on this money if invested (since you are not spending it each month).

Noodle

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Re: The beatles Case Study
« Reply #502 on: January 11, 2017, 11:02:35 AM »
One question I have not seen asked yet--how experienced at cooking are you and especially your wife? There's no point telling you to make your own bread and yogurt from scratch right now if you're at the "boil pasta, add sauce" level. There are still ways to cook and shop more efficiently, but I would give different advice depending on the experience level.

I'm embarrassed now because I'm at that stage!

Do I have to make the pasta and sauce myself from elemental ingredients or is it acceptable to buy the pasta and sauce and just toss it in the saucepan?

There's nothing embarrassing about pasta and sauce--I have it in my own cupboard! :) (Answer, make the sauce, buy the dried pasta. Sauce is easy and quick, and a lot cheaper than in the jar; pasta is a bit of a process, and there is less of a difference in price.)

I was really just trying to find out if all the convenience foods on the grocery receipts were because of a shortage of experience or a shortage of time. I think we have a tendency to fall into the "curse of knowledge" cognitive bias when it comes to cooking--we have so many good cooks on this forum we forget what it was like in the days of not knowing the difference between bake and broil, and trying to figure it out with two preschoolers underfoot is leveling up the difficulty! (Says the poster with multiple contributions to the "kitchen disasters" thread.)

Malum Prohibitum

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Re: The beatles Case Study
« Reply #503 on: January 11, 2017, 11:04:23 AM »
Guys, Beatles owes 40k to the IRS, plus multiple other high-cost debts. While it's great that he can save 80k over the next 10 years by eating out less, do you think the IRS will stop charging interest and penalties for 10 years while he figures this out?

Again, his next steps need to be sell the rental, as in, put it on the market TODAY, and sell the car. He has another car, selling this one will instantly free up 10k. It would take a LOT of eating out to make back that amount. Beatles is in SERIOUS shit here. IMO cutting out groceries is great but at this point, in his specific (dire!) situation, it is pissing in the wind.
  Let me back up and say that I am not so sure I "disagree," as I wrote, as I think these steps probably need to be taken, but, again, it has been only four days.  He is making improvements and I trust he will continue to make them.

This has probably all been a little overwhelming for him.

Once he and his wife see progress, they will buy into this whole MMM financial approach more and more.

IRS interest rate is 3 or 4% BTW.  In addition, a good accountant can often knock down a lot of it.

Mmm_Donuts

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Re: The beatles Case Study
« Reply #504 on: January 11, 2017, 11:13:14 AM »
Ok. Beatles doesn't have full information yet about the taxes he owes. It was mentioned way earlier in this thread, which I've been following with interest and learning from, btw.

If it's possible to set up a payment plan with them, and pay in instalments, then he should find that out ASAP. A quick Google search tells me that this is possible if you owe less than $50k, which at this point he does. If he does the instalment route, the penalties and interest will continue to compound until it's fully paid, but at least he will be making a dent in it. Also he has 72 months to pay it off, according to this site: https://smartasset.com/taxes/5-things-you-shouldnt-do-if-you-owe-the-irs-at-tax-time

(I'm not American so not fully familiar w the tax penalties there.)

40k divided by 72 months is ~$555/mo. Given the information he gains from talking with the IRS, or having his accountant or lawyer talk with them, he can devise a plan. This plan should rely on math. Will it be more worthwhile to cut back on eating out and grocery shopping so he can pay the IRS back at (let's say) $650 a month, if he can make such drastic cuts, or would it be more worthwhile to sell the rental and pay it back immediately?

Weighing his options mathematically will allow him to make the smartest decision. So far he has been living without a care, financially. He is starting to care now, and he needs to learn how to think differently in order to stop repeating the same patterns of living like he is earning 5x what he actually earns.

Personally I would rip off the bandaid and sell the rental property. I'm not sure why this is such a big deal, even on day 4 - he knows he has to make drastic changes to his life. Selling the rental property is the LEAST drastic change, since it doesn't really affect his day to day life in any way. Other than having a huge weight lifted off his shoulders, with IRS debt gone.

Malum Prohibitum

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Re: The beatles Case Study
« Reply #505 on: January 11, 2017, 11:17:30 AM »
I'll just reiterate what somebody else warned him about already in the thread - GO SEE AN ACCOUNTANT BEFORE talking to the IRS. 

FrugalFan

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Re: The beatles Case Study
« Reply #506 on: January 11, 2017, 11:36:20 AM »
Beatles, this is my first post on this epic thread. I have to admit that my heart was racing when I read your salary, expenses, and liabilities. Am I correct that your monthly salary after deductions and taxes is 3875 per month excluding rental income (or 4470 including rental income)? On the other hand, your budget already lists 5472 in monthly expenses, and it is far from complete, correct? Where are hair cuts, clothes, kids activities, Christmas and birthday gifts (e.g., motorized jeeps), sporting goods, furniture and decor, car maintenance, house maintenance (all items mentioned in your post)? Even if these expenses only add up to an additional $200 per month, you are currently accumulating debt at about $1200 per month, or $14000 per year. And that is not counting the interest accumulating on that debt, or your other major liabilities. This is probably the worst hair on fire emergency I have seen on this site.

I'm with MMMDonuts on this one. It's not the time to be discussing small labor intensive changes like making your own bread. It's time to sell your rental and pay off a bunch of the debt. Today! I'm a real estate investor and I agree that these people won't care about the roof, they will care about the rental income, which seems good. Just give them a credit for a quoted amount on closing, or list accordingly with a mention of the roof needing repair in the listing. Also mention rental income in the listing. If you go through all the trouble of booking a roof repair for 5k, getting into more debt to accomplish this, do you think you will be able to recoup more than that amount? Not likely.

My suggestions, in order of benefit to effort ratio:

1. List rental with an agent specializing in income properties
2. Pay off HELOC, property taxes, and all high-interest debt to free up some cash flow
3. Contact a CPA and start making a plan for the IRS
3. Keep tracking in Mint and try to reduce your *largest* expenses with the most bang for your buck
4. Come up with a realistic budget that is less than you bring home every month.
5. Don't buy anything that is non-essential, no matter how good of a deal, unless you have saved for it first.

I think number 4 will be very difficult given your salary and expenses, but it is essential otherwise you will just keep moving backwards even if you make significant progress on the other items.



katscratch

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Re: The beatles Case Study
« Reply #507 on: January 11, 2017, 11:49:31 AM »
Hey, the beatles!

I am completely hooked on this thread and following it intently.  I just got caught up.

Let's recap. 

FIRST - this is only four days since the original post.  Right?

SECOND - You already have accomplishments.

........

Second, move on to groceries, comparison shop, buying whole food (not processed) and reduce or eliminate entirely eating out.

Third, calculate all of these savings on ten year terms to figure out what these things are really costing you.

Fourth, find the next issue and move on to it. 

One step at a time!


Yes, yes, yes! 
« Last Edit: January 11, 2017, 11:52:35 AM by katscratch »

economista

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Re: The beatles Case Study
« Reply #508 on: January 11, 2017, 11:56:54 AM »
Beatles - first off, you should be commended for sticking with this through all of the face punches. 

Here is my contribution toward your situation.  You need to set up a payment plan with the IRS.  My SO used to work for the IRS, in collections, so he knows a lot about how that all works.  The worst thing you can possibly do is simply ignore your IRS debt - it will just get worse and worse and they will pile on all kinds of fees and interest.  If you had contacted them immediately upon realizing you owed them money, and set up a payment plan at that point in time, you would be fine.  Their lowest payment option allows you to only pay $200 per month indefinitely until it is paid off.  My SO is visually impaired and in 2013 he went on disability due to his blindness and as a result his outstanding student loans were forgiven, but he had to pay taxes on them as if they were income.   He owed over $6,000 in taxes that year and he was only receiving $1200 per month in disability income.  He called them up immediately, asked for a payment plan, and he now pays $200 per month.  At this point you may need a lawyer to help you, but the IRS will work with you and help you set up payment plans.  Hiding from your problems never works; it just makes them bigger.

meandmyfamily

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Re: The beatles Case Study
« Reply #509 on: January 11, 2017, 12:01:19 PM »
Malum Prohibitum- do you have a link to your journal?  I would love to read it since we have 4 kids too.  I would love to get groceries to $600.  We are at $800-$950

BigRed

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Re: The beatles Case Study
« Reply #510 on: January 11, 2017, 12:03:04 PM »
It's Wednesday.  So far, your major gain has been to stop buying lunch for the office.  However, no actual lunch purchases have actually been avoided, since you did in fact buy lunch on Monday "one last time."

So, how did it go today?  Did you actually not buy lunch?

researcher1

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Re: The beatles Case Study
« Reply #511 on: January 11, 2017, 12:37:23 PM »
Even if these expenses only add up to an additional $200 per month, you are currently accumulating debt at about $1200 per month, or $14000 per year. And that is not counting the interest accumulating on that debt, or your other major liabilities. This is probably the worst hair on fire emergency I have seen on this site.

You are forgetting that he has a bottomless pile of money at his disposal...from mommy and daddy.

He said earlier that mom & dad have given him in excess of $50K in just the last few years!!!

He'll just tap them for another bundle of money to wipe out the most urgent debts that have accumulated, then go back to living a lifestyle he can't afford. 

Rinse and repeat.

begood

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Re: The beatles Case Study
« Reply #512 on: January 11, 2017, 12:46:20 PM »
Even if these expenses only add up to an additional $200 per month, you are currently accumulating debt at about $1200 per month, or $14000 per year. And that is not counting the interest accumulating on that debt, or your other major liabilities. This is probably the worst hair on fire emergency I have seen on this site.

You are forgetting that he has a bottomless pile of money at his disposal...from mommy and daddy.

He said earlier that mom & dad have given him in excess of $50K in just the last few years!!!

He'll just tap them for another bundle of money to wipe out the most urgent debts that have accumulated, then go back to living a lifestyle he can't afford. 

Rinse and repeat.

The fact that he hasn't already done that tells me that he is beginning to think differently. Give him a chance to breathe, think, and then act. He's just opened a door he didn't even know was there, and it's a LOT to process.

Jakejake

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Re: The beatles Case Study
« Reply #513 on: January 11, 2017, 12:59:38 PM »
In response to people talking about whether the first priority is to reduce the grocery bill or sell the rental - my vote is to do both now.

There are two adults in the house. Not buying soda and junk food doesn't take effort, so neither has to put energy into that or work their way up to it. They just have to not put it in a shopping cart.

The person who isn't putting effort into listing the rental property can focus on reductions in groceries. Doesn't have to be "make your own bread" - but putting regular bread instead of the gourmet stuff in the shopping cart, or grabbing a box of pasta and jar of sauce instead of a frozen pizza is not an excessive amount of effort. Nor is sprinkling chicken legs with salt and pepper and jamming that into the oven instead of buying frozen gourmet chicken at $10/lb.

If we were talking about normal grocery habits - where a reduction would be a savings of $50-100 a month, yeah, I would prioritize that as nice to get to someday.

But that's not the case - they are hemorrhaging as much money here as he would blow buying a remote car starter not just once, but every single week. It looks like they can save maybe as much as $1000 on food - without making their own bread or having mad cooking skills. Which means if they sell the car now and don't get around to seriously reducing the groceries til June (for example), or do the reverse, the comparison of cumulative savings is something like this:

Sell 2nd car in Jan, reduce foods in June:
Jan: Up $5k
Feb: Up $5k
Mar: Up $5k
Apr: Up $5k
May: Up $5k
June: Up $6k
Jul: Up $7k
Aug: Up $8k
Sep: Up $9k
Oct: Up $10k
Nov: Up $11k
Dec: Up $12k

Reduce food in Jan, sell car in June:
Jan: Up $1k
Feb: Up $2k
Mar: Up $3k
Apr: Up $4k
May: Up $5k
June: Up $11k
Jul: Up $12k
Aug: Up $13k
Sep: Up $14k
Oct: Up $15k
Nov: Up $16k
Dec: Up $17k

There's some extra math to calculate interest on credit cards they can save assuming the extra all goes to debt, but I'm too lazy to do it. :)

marty998

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Re: The beatles Case Study
« Reply #514 on: January 11, 2017, 01:23:34 PM »
Even if these expenses only add up to an additional $200 per month, you are currently accumulating debt at about $1200 per month, or $14000 per year. And that is not counting the interest accumulating on that debt, or your other major liabilities. This is probably the worst hair on fire emergency I have seen on this site.

You are forgetting that he has a bottomless pile of money at his disposal...from mommy and daddy.

He said earlier that mom & dad have given him in excess of $50K in just the last few years!!!

He'll just tap them for another bundle of money to wipe out the most urgent debts that have accumulated, then go back to living a lifestyle he can't afford. 

Rinse and repeat.

That sort of negativity is uncalled for, and is not in keeping with the spirit of this forum.

Bee21

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Re: The beatles Case Study
« Reply #515 on: January 11, 2017, 01:31:58 PM »
Wow, i missed about 5 pages worth of drama!

I agree with Marty, this thread is an MMM forum classic, and deserve a sticky. If it doesn't, we definitely should compile the grocery advice mentioned here and post it separately (with a sticky).

Be gentle with op, he has been through a lot in the past few days and accomplished a lot. Facing his situation must have been hard. Making these difficult decisions is hard. Plus i imagine there is also a domestic storm going on with the wife in the background. Whatever you do, whoever racked up the debt, move on. Come up with a plan you are both comfortable with and as we told you, you can dig out of this hole by the end of the year.

We have been carrying on about the outrageous grocery spending, the parents and the IRS debt too long. There is enough information about them. Let them rest.

Let's move on to the other problem areas. OP, as others pointed out, there are several items missing from your budget and we suspect they go straight to your credit cards (@ 23%). Do you want to discuss these? Can we help you with these?

Missing budget items in my view. Kids toys (motorized vehicle? Wtf). Clothes. Haircuts. If you had a massage line in your budget, i suspect there are expensive haircuts, manicures and facials as well. Gym? Healthcare? Kids activities( wife is away all day doing activities. What sort ). Babysitting. Holidays. Christmas and birthdays. Gifts. These have to be planned and budgeted for or else you will find yourself in an even deeper hole. It is better to know that you can spend 100 dollars on the kids clothes than going crazy at the clearance racks. People will jump in about thrift stores, and about kids needing only empty boxes to play with, ignore them if you wish, but you need to understand how much you can realistically spend.

I know several people like Beatles.They are very real. I wish i could help them personally, but of course you don't preach to your friends about money. I almost fainted last year, when a friend told me that they finally managed to refinance their loans to save 7k a month in interest. They looked very successful, waterfront house, the investment properties, the suv, the convertible, the boat, the sahm, and it turns out they are living large on borrowed money and having health problems due to all the associated stress.she picked up a daily cleaning job to help them stay afloat, it was that bad. Imagine her rocking up in a 70k car payment to scrub someone's toilet for 5o dollars. 😢

Malum Prohibitum

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Re: The beatles Case Study
« Reply #516 on: January 11, 2017, 01:37:56 PM »
Malum Prohibitum- do you have a link to your journal?  I would love to read it since we have 4 kids too.  I would love to get groceries to $600.  We are at $800-$950
  Here you go.  It needs more face punches, that's for sure!  http://forum.mrmoneymustache.com/journals/i-wasted-all-my-money!/

Groceries were $520 in November, and we hosted more than a dozen people over two days for Thanksgiving (my wife found great sales on turkey and ham!!!!)
« Last Edit: January 11, 2017, 01:42:43 PM by Malum Prohibitum »

RetiredAt63

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Re: The beatles Case Study
« Reply #517 on: January 11, 2017, 01:41:40 PM »
Possibly researcher1 is reacting to the beatles other posts on what is in the fridge and the cost of raising a child?  Let's face it, if you know your parents will rescue you*, it is psychologically harder to do the turn-around, because what he and his wife have to do is major, and work.  We still have very little idea of how much his wife is buying in to all our suggestions.  And Bee21 is right, there are most likely other expenses he hasn't thought about yet, just like the furniture loan was under the radar for awhile.  Until people start tracking spending to the penny, most money just flows out without being noticed or accounted for.  And bank charges - I remember on "Til debt do us part" how often people were racking up $20-$30 or more each month just on ATM charges.

It is Wednesday afternoon, so I am also curious to hear how lunch at beatles' workplace went today.  Did he stand firm?  Did he take his lunch?  Did someone else in the office step up for communal lunches?

Also so far the only firm change I can think of is the work lunches.  Am I missing some?  I am so hoping to hear he has an appointment with a CA re the IRS.  I am hoping he has an appointment to meet with a real estate agent who specialized in investment properties**. 


*Which is why I have made it very clear to my DD that there is no gravy train.  Of course I am there for her if necessary, but no gravy train.

** I had a beautiful 1 acre wooded house lot that I hoped to build on in the distant future, or pass on to DD, who loved it.  In the midst of my expensive divorce, I sold it.  So BTDT.

kms

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Re: The beatles Case Study
« Reply #518 on: January 11, 2017, 01:44:39 PM »
Be gentle with op, he has been through a lot in the past few days and accomplished a lot. Facing his situation must have been hard. Making these difficult decisions is hard. Plus i imagine there is also a domestic storm going on with the wife in the background. Whatever you do, whoever racked up the debt, move on. Come up with a plan you are both comfortable with and as we told you, you can dig out of this hole by the end of the year.
While I was one of the first to advise beatles on baby steps and I stand by that I have to disagree here. It's not hard. Infact it's the exact diametrical oppositve of hard. Raising one or several children as a single parent is hard. Fighting cancer is hard. Losing a limb in an accident is hard. Helplessly watching your children, parents, siblings, or other loved ones die is hard. Not spending money on useless crap, however, is not hard. Infact, it's so easy they had to skip step 2) and 3) of the three step "Not Purchasing Crap" program because they realized that after "1) Stop purchasing crap" they were done.

Yes, it requires some thinking and general usage of that weird greyish squishy mass located between ones right and left ear (which, as it turns out in a shocking turn of events, is exactly what it is for!). Yes, it requires adjustement of ones expectations and habits.

But it's definitely not hard.

Allie

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Re: The beatles Case Study
« Reply #519 on: January 11, 2017, 01:49:00 PM »
I'm going to second that this isn't a choice between selling everything and paying off debt or reducing daily spending.  It has to be both.  It's pretty clear that just getting a large infusion of cash from selling the rental isn't going to keep them from spiraling back into debt as they received a large infusion of cash from the parents just a couple years ago and it didn't make a difference.  Before that, they were racking up debt and living off a loan from Uncle Sam in the form of unpaid taxes.  Before that, it was probably support from mom and dad while they were getting launched.  I would be surprised if they had lived solely on what they earned, ever. 

If you guys don't seriously readjust your spending, eventually there will be no one left to prop up your lifestyle and it will fall apart.

Every single little thing they do will be a positive gain and every single big thing they do will be a positive gain.  To even be solvent in the future, let alone save for retirement and the kids, they need to do it all. 

Every thing you set eyes on in your house should be evaluated for how much it will net you if you sell it.  Who cares if you get a tantrum and $50 for a motorized jeep if you paid $200?  You need $50 way more than you need a kids toy right now.  Then consider that in reality, you probably paid $300 for the $200 dollar jeep because that money wasn't being spent on high interest debts!  Just like those $7000 couches, everything you buy, even if you get a great deal is being financed and an insane interest rate.

I enjoy cooking and at some point, back in my youth, I took a home ec class in middle school.  Everything you could possibly want to learn about cooking, homemaking, ironing, cleaning, and saving money can be learned on the Internet.  YouTube chefs have taught me how to do everything from knead a ball of dough to roll up a kick ass spring roll.  For everything in your life start asking what the function of the item is

...if a recipe calls for mango it's to add a tangy, sweet, fruity flavor...use an in season sweet/tart fruit like a Granny Smith apple...

...if your coffee maker dies don't get a kuerig figure out a way to immerse ground beans in boiling water and strain (I'm not being weird, pour over coffee is a thing now just figure out how to do it without a fancy stand and such)...

...if you kid wants a motorized jeep to get him quickly from one place to another, introduce him to a bicycle or better yet his legs...

Pretty soon you will be disgusted at how much stuff you were buying that is completely unnecessary.

Also, plan to get everything used.  I guarantee that every couch you have sat on, probably even the one at your house, has had someone engage in "adult behavior" on it, as well as being puked on, boogered on, peed on, and pooped on if there are kids or pets around.  :-)


Bee21

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Re: The beatles Case Study
« Reply #520 on: January 11, 2017, 02:12:28 PM »
It is hard to break bad habits and to do a hard reset. I am currently reducing my eating and changing bad eating patterns and it is haaaaard.

I am even reading Willpower for dummies, it is that hard. So yeah, i feel for op and his wife, they have a  much bigger mountain to climb.

RetiredAt63

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Re: The beatles Case Study
« Reply #521 on: January 11, 2017, 02:45:05 PM »
Getting themselves out of this hole will not actually be that hard, they have assets and good income.  What is going to be hard for them is the psychological change, and acceptance that their lives have to change - forever.  And actually doing it.

But they can do it - they are young, healthy and educated.  No external forces pushing against them.

kms

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Re: The beatles Case Study
« Reply #522 on: January 11, 2017, 03:21:40 PM »
See, that's where I disagree. It's going to be inconvenient for sure. It's going to require adjustment and change, and we're creatures of habit. So yes, it's going to be inconvenient, but not hard.

In my book hardship would apply if he was a single parent without income. In that case it'd be somewhere between hard and impossible. But given his situation and income it will be anything but hard. Long, inconvenient, challenging, and maybe even ugly at times? Yes, definitely. Hard? No.

But again, that's my definition. YMMV.
« Last Edit: January 11, 2017, 03:33:34 PM by kms »

The beatles

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Re: The beatles Case Study
« Reply #523 on: January 11, 2017, 04:14:33 PM »
I made a blog.

Thanks to a few posters who messaged me and said I should do so. They were right.

It's certainly helped me hash over my thoughts.

I'm still going to reply to this thread every day, but sometimes I need to step away and just write to myself.

I made a little progress bar where I can track how much debt I've knocked down and how much money i've saved.

I'm really hoping this will keep me motivated.

Here is the link in case anyone feels like reading it. http://stackingpennies.org/im-just-really-bad-with-money
« Last Edit: January 11, 2017, 04:18:07 PM by The beatles »

The beatles

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Re: The beatles Case Study
« Reply #524 on: January 11, 2017, 04:16:02 PM »
Getting themselves out of this hole will not actually be that hard, they have assets and good income.  What is going to be hard for them is the psychological change, and acceptance that their lives have to change - forever.  And actually doing it.

But they can do it - they are young, healthy and educated.  No external forces pushing against them.

I think the psychological change is coming along.

I've stopped myself several times already this week from purchasing something that I usually would have.

So far this week we have eaten all our meals at home.

French Onion Soup, Potato Pancakes, and Mac N Cheese.


The beatles

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Re: The beatles Case Study
« Reply #525 on: January 11, 2017, 04:20:00 PM »
In response to people talking about whether the first priority is to reduce the grocery bill or sell the rental - my vote is to do both now.

There are two adults in the house. Not buying soda and junk food doesn't take effort, so neither has to put energy into that or work their way up to it. They just have to not put it in a shopping cart.

The person who isn't putting effort into listing the rental property can focus on reductions in groceries. Doesn't have to be "make your own bread" - but putting regular bread instead of the gourmet stuff in the shopping cart, or grabbing a box of pasta and jar of sauce instead of a frozen pizza is not an excessive amount of effort. Nor is sprinkling chicken legs with salt and pepper and jamming that into the oven instead of buying frozen gourmet chicken at $10/lb.

If we were talking about normal grocery habits - where a reduction would be a savings of $50-100 a month, yeah, I would prioritize that as nice to get to someday.

But that's not the case - they are hemorrhaging as much money here as he would blow buying a remote car starter not just once, but every single week. It looks like they can save maybe as much as $1000 on food - without making their own bread or having mad cooking skills. Which means if they sell the car now and don't get around to seriously reducing the groceries til June (for example), or do the reverse, the comparison of cumulative savings is something like this:

Sell 2nd car in Jan, reduce foods in June:
Jan: Up $5k
Feb: Up $5k
Mar: Up $5k
Apr: Up $5k
May: Up $5k
June: Up $6k
Jul: Up $7k
Aug: Up $8k
Sep: Up $9k
Oct: Up $10k
Nov: Up $11k
Dec: Up $12k

Reduce food in Jan, sell car in June:
Jan: Up $1k
Feb: Up $2k
Mar: Up $3k
Apr: Up $4k
May: Up $5k
June: Up $11k
Jul: Up $12k
Aug: Up $13k
Sep: Up $14k
Oct: Up $15k
Nov: Up $16k
Dec: Up $17k

There's some extra math to calculate interest on credit cards they can save assuming the extra all goes to debt, but I'm too lazy to do it. :)

I don't know how we could make it work without a 2nd car.

I agree that in a perfect world getting rid of the 2nd car would be ideal.

But we don't live in a city that has dense population and businesses and bus lines.

The beatles

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Re: The beatles Case Study
« Reply #526 on: January 11, 2017, 04:20:53 PM »
Beatles - first off, you should be commended for sticking with this through all of the face punches. 

Here is my contribution toward your situation.  You need to set up a payment plan with the IRS.  My SO used to work for the IRS, in collections, so he knows a lot about how that all works.  The worst thing you can possibly do is simply ignore your IRS debt - it will just get worse and worse and they will pile on all kinds of fees and interest.  If you had contacted them immediately upon realizing you owed them money, and set up a payment plan at that point in time, you would be fine.  Their lowest payment option allows you to only pay $200 per month indefinitely until it is paid off.  My SO is visually impaired and in 2013 he went on disability due to his blindness and as a result his outstanding student loans were forgiven, but he had to pay taxes on them as if they were income.   He owed over $6,000 in taxes that year and he was only receiving $1200 per month in disability income.  He called them up immediately, asked for a payment plan, and he now pays $200 per month.  At this point you may need a lawyer to help you, but the IRS will work with you and help you set up payment plans.  Hiding from your problems never works; it just makes them bigger.

I think we may have a fix for the IRS.

I called a CPA today and he suggested an alternative I never thought of and I am actively thinking about it.

The beatles

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Re: The beatles Case Study
« Reply #527 on: January 11, 2017, 04:21:47 PM »
Even if these expenses only add up to an additional $200 per month, you are currently accumulating debt at about $1200 per month, or $14000 per year. And that is not counting the interest accumulating on that debt, or your other major liabilities. This is probably the worst hair on fire emergency I have seen on this site.

You are forgetting that he has a bottomless pile of money at his disposal...from mommy and daddy.

He said earlier that mom & dad have given him in excess of $50K in just the last few years!!!

He'll just tap them for another bundle of money to wipe out the most urgent debts that have accumulated, then go back to living a lifestyle he can't afford. 

Rinse and repeat.

That's what we are trying to avoid.

katscratch

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Re: The beatles Case Study
« Reply #528 on: January 11, 2017, 04:22:05 PM »
Wow.  You made more progress in four days than I did in four years.  And WITH your partner!


The hardest part is shifting your awareness -- the rest of it gets easier by the day.

kms

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Re: The beatles Case Study
« Reply #529 on: January 11, 2017, 04:22:58 PM »
Congrats beatles!

Bracken_Joy

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Re: The beatles Case Study
« Reply #530 on: January 11, 2017, 04:24:21 PM »
Beatles, huge congrats. Changing how you view the world is one of the most fundamental changes you can make. This is big stuff, and I'm seriously impressed you've held on through this whole case study! Wishing you the best headed forward.

swick

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Re: The beatles Case Study
« Reply #531 on: January 11, 2017, 04:28:17 PM »
Wonderful progress, Beatles. I *might* forgive you for calling us minion money hippies. Although it is a rather catchy moniker. I do appreciate a good alliteration.

IRS STUFF: When you have processed the info, please consider sharing the solution your CPA advised. We might all learn something and there are lots of accountants on here who might be able to help you clarify the options.

Good job on sticking it out and starting to make changes. Once you get started there will be no stopping you and the Mrs. If you are in it together, you will be able to achieve amazing things really quickly!


Cowardly Toaster

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Re: The beatles Case Study
« Reply #532 on: January 11, 2017, 04:28:51 PM »
I made a blog.



Kudos Mr. Beatles! I'm glad you're taking this so seriously. And I can promise you you'll be happy you started the journey. I'd wager you might be a little happier already in the sense of being relieved.

oneyearfromnow

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Re: The beatles Case Study
« Reply #533 on: January 11, 2017, 04:52:23 PM »
The beatles,

I'm going to de-lurk to tell you, and your missus, that you are on the right path.

It is (without a doubt) a challenge to change directions, and habits and become more financially responsible.  But you have made the first step, and you both should be commended for taking it.  In as much as a marriage is about love and respect, it is also essentially a business relationship.  You should be working towards a common goal that you both think is do-able, and achieveable.

You are fortunate that your kids are young, and they won't remember much of your belt-tightening years.  You are also fortunate that you realized there was a problem, and you decided to do something about it.  Your kids will learn this kind of positive, take charge, attitude, and *they will* respect you both for it. <<maybe not during the teen years though  😳 >>

That first paycheque you get where you don't have *any* debt to pay will be amazing.  The transition from putting it on the debt - to putting in a savings account will make you both absolutly giddy.

When the debt is gone, and you start seeing milestones passing, I am certain that we will see you (and perhaps your missus) posting on other newbies help requests with vigor, knowledge, and passion. 

Take care, you can do it!  Above all, you should know, that deep down, *we all* want you and your family to succeed.

RetiredAt63

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Re: The beatles Case Study
« Reply #534 on: January 11, 2017, 04:56:52 PM »
Great news!

Eating at home - a win!  Remember your veggies  ;-)  And protein.   French onion soup, yummy.  And veggies (the onions) and proteins (the cheese and the beef broth).  Tip from a good restaurant, a not too sweet sherry is as good as port in it, but you need a bit of one or the other to give depth of flavour.  Don't worry about the kids, the alcohol cooks out.  Too bad for us grown-ups.

There is a whole subforum on taxes (http://forum.mrmoneymustache.com/taxes/).  If you post your IRS problem and suggested solution on there a lot of tax-smart people can give you feedback.

I am sure I am not the only one who wants to know how your office colleagues are coping with the loss of their thrice-weekly lunches.  Poor things (not).

Not buying things you would have never stopped to think about before - really good.  Can you play a mind game with yourself?  You are in marketing.  Every time you hear/see an ad that really gets you thinking about "needing" something (yes you now know it is a want not a need), analyze the ad. What got your attention?  How did it keep your attention?  How did it suck you in to wanting the item?  Stopping to analyze it will kill the magic lure.

Zoot

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Re: The beatles Case Study
« Reply #535 on: January 11, 2017, 05:05:38 PM »
Dude, I just read your blog, and it's AMAZING.

Keep writing, keep writing, keep writing!  I can't wait to hear the stories of your journey.  :)

The beatles

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Re: The beatles Case Study
« Reply #536 on: January 11, 2017, 05:11:37 PM »
Wonderful progress, Beatles. I *might* forgive you for calling us minion money hippies. Although it is a rather catchy moniker. I do appreciate a good alliteration.

IRS STUFF: When you have processed the info, please consider sharing the solution your CPA advised. We might all learn something and there are lots of accountants on here who might be able to help you clarify the options.

Good job on sticking it out and starting to make changes. Once you get started there will be no stopping you and the Mrs. If you are in it together, you will be able to achieve amazing things really quickly!

Swick!

Your PM the other day really helped a lot.

I appreciate you.

The beatles

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Re: The beatles Case Study
« Reply #537 on: January 11, 2017, 05:14:22 PM »
Dude, I just read your blog, and it's AMAZING.

Keep writing, keep writing, keep writing!  I can't wait to hear the stories of your journey.  :)

Haha thank you.

That makes me feel good.

pbkmaine

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Re: The beatles Case Study
« Reply #538 on: January 11, 2017, 05:19:27 PM »
Good writing, beatles!

Zoot

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Re: The beatles Case Study
« Reply #539 on: January 11, 2017, 05:24:19 PM »
Dude, I just read your blog, and it's AMAZING.

Keep writing, keep writing, keep writing!  I can't wait to hear the stories of your journey.  :)

Haha thank you.

That makes me feel good.

And by the way:  I am SO going to steal the phrase "money hippie."  I love it.  :)

Zoot
Money Hippie to the Stars 

Footsore Rambler

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Re: The beatles Case Study
« Reply #540 on: January 11, 2017, 05:28:19 PM »
I've really been enjoying this thread, and I'm delurking to say your blog post was great and I love that you describe this group as 'money hippies'.  You are making great progress, and I hope you keep it up!

LadyMuMu

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Re: The beatles Case Study
« Reply #541 on: January 11, 2017, 05:33:22 PM »
I want a t-shirt that says Minion Money Hippy. Nailed it!

Jakejake

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Re: The beatles Case Study
« Reply #542 on: January 11, 2017, 05:34:08 PM »
I like the blog! Any chance you can edit the link into the first post in this thread to make it easier for us to find in the future?

CheapScholar

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Re: The beatles Case Study
« Reply #543 on: January 11, 2017, 05:47:08 PM »
Beatles, you're going to move those thermometers on your blog faster than you can imagine.  Hell, you could still retire at 50 (decades before most Americans) if you stick to this, and be dishing out advice on this board someday. Beatles!

With This Herring

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Re: The beatles Case Study
« Reply #544 on: January 11, 2017, 05:59:46 PM »
This thread has gotten huge!  Wow!  Beatles, you've gotten a lot of good advice.  I'm glad to see the new blog.  Count me in as a curious CPA wondering about your CPA's tax suggestion.

I don't know how we could make it work without a 2nd car.
I agree that in a perfect world getting rid of the 2nd car would be ideal.
But we don't live in a city that has dense population and businesses and bus lines.

Due to major car issues that necessitated keeping a non-functioning car for six months (loooong story), DBF and I shared one car for that half-year, while each working 20+ minutes from home in opposite directions.  If A was going to use the car for the day, A would drop off B early enough that both A and B would be at work on time.  At the end of the day, A would get out of work, drive to B's work, then pick up B.  It wasn't a fun time, and there was a lot of getting to work early and leaving late, but it was doable.

What you and your wife could do is decide that she would drop you off at and pick you up from work on Tuesdays and Thursdays, giving her use of the car on those days.  I'm not sure this would be ideal long-term, but it is a possibility for the short term.  It's just a thought.  Alternatively, you might be able to carpool with others who make the daily commute into and out of the city.

Neustache

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Re: The beatles Case Study
« Reply #545 on: January 11, 2017, 06:16:49 PM »
We had 1 car for many years...some while we both worked and then for 3.5 years as a SAHM.  It's totally doable, but your wife needs to learn that play dates at YOUR house are ways for her to interact socially and the kids get to play as well.  I would pick one day a week to drive my husband and pick him up (sometimes zero days per week) and I'd do any errands necessary on that day. 




The beatles

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Re: The beatles Case Study
« Reply #546 on: January 11, 2017, 06:40:33 PM »
Wife did weekly shopping today.

$13!

We only needed "essentials" as we've been eating all the stuff that has been accumulating in our pantry and freezer.

Jakejake

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Re: The beatles Case Study
« Reply #547 on: January 11, 2017, 06:42:07 PM »
I'm over here applauding!

birdie55

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Re: The beatles Case Study
« Reply #548 on: January 11, 2017, 06:42:16 PM »
That is HUGE. 

Congratulations and please tell her she did good.  Good start.

pbkmaine

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Re: The beatles Case Study
« Reply #549 on: January 11, 2017, 06:47:30 PM »
Nice!