Case Study: 37 Married, 2 kids, High Income, High Expenses, What can we cut?

[Roadrunner53]

Joe189man, "I am not worried about losing our jobs in mid 50s for two reasons, 1) likely wherever we are working, we will be part owners by then, responsible for a book of business and 2) per my retirement calculations, I have us retiring around then anyway."

Never say never when it comes to losing your job. Life changes drastically when you least expect it. Especially when it comes to illness, accidents. It could be you, your wife or your kids. Sometimes one partner gets sick and the other partner has to quit to take care of the sick person. Life has twists and turns that we cannot plan for but we can do our best along the way...just in case. Not trying to be a Debbie downer but things happen we can't do anything about. Think about all the millionaires on the Titanic. One minute they were on top of the world, the next minute disaster hit and nothing they could do.

[doingfine]

Writing the case study, I realized that we spend too much for subscriptions, phones, swim lessons, and maybe insurance. With our savings we have options to further reduce monthly expenses at the cost of lost emergency savings, cost/benefits to be weighed. I am concerned with not saving enough and that also contributed to writing the case study.

If that's the bulk of what you've taken from this critique, I gotta say, you've missed the point entirely. Small costs are important, but from an outsider's perspective, clearly the biggest issue you have going, financially, is your willingness to finance things you want rather than saving to pay cash for them.

[Roadrunner53]

I know you don't want to hear about the car but I just wanted to point out that you are paying $7872 per year car payments and your wife drives it 3 miles a day to and from work and you say day care is on the way so no extra miles there. In a years time, for work alone, mileage is approx. 750 miles. I know you go shopping and do other errands with the car but how much mileage do you put on that car a year with no vacations? I assume you paid around $40,000+ for it. Once it is paid off it will be of little value. You can rent a brand new car any size you want for vacations or weekend getaways.

Trust me, I know the lure of new cars, I have had many. Right now I have a 10 year old Honda CRV and our other vehicle is a 13 year old pick up truck. We don't put much mileage on the cars but I have had a terrible urge to buy a new car lately. We keep the vehicles maintained regularly and they both run good. The bad thing is that even though the car has extremely low mileage, the rust will get it sooner or later. Sigh...If I do bite the bullet sometime in the future, I will probably buy used, low mileage.

[newloginuser]

Just to echo what others have said, you need to work on your expenses. Without going back to look at your original post, you can save approx. $4,000 if you were to cut out your student loans, car payment, and the educational expense. That's a lot of money to save if you didn't have those monthly expenses.

On a lower scale, the phone and subscriptions are too rich to keep them all at the going rate. If you and your wife live in the Midwest, and I am guessing in an area that doesn't have harsh winters, one if not both of you should think about the biking to work with living so close. With driving 3 miles to work, not only do you not need a van, but you should be using the cheapest possible vehicle with good mileage for work. Or since you work 5 miles away (assuming same direction) get rid of the van and drop off the kids and wife everyday.

Your budget is also a bit vague on food/restaurant. I can't tell do you eat out a lot? Do you buy fancy food and have a monthly grocery bill over $1,000? You may not be saving anything additional without knowing your food/restaurant budget.

[SimpleCycle]

There was a case study a while back that reminds me of this one, but it went pretty differently.  High income, high expenses, and some seriously crazy spending.  But OP got on board with tracking and has made great progress.

https://forum.mrmoneymustache.com/case-studies/case-study-75950/

[joe189man]

Maybe i should have started the case study by saying the following

We have some silly things in our budget and are working to address them (Van, groceries, eating out, cellphones, subscriptions) ... but we also have at least between $1,000-2,000+ dollars extra a month that needs to be put to work.

What would you do? pay off debt? increase emergency savings? start a taxable investment account at Vanguard? Start a side business to further increase income? Use emergency funds to pay off a small debt and debt snowball? other?

Instead i posted this case study about a month early, included some things that are not relevant and got raked over the coals for it. That's on me and is my fault, now please, please let that go.

if you feel the need to post again please answer the question above and not the original as that went FUBAR and isn't really the question to ask.

[Sanitary Stache]

I'd pay off the car and student loans ASAP. Your debt is an emergency.

[reeshau]

Yes, get out of debt and stay out.  Buy your next car with cash, even if you "can" get financing.  Feel the pain of writing the check, and seeing the account balance drop.  That will be a good test of just how important the car is to you.

[Roadrunner53]

This is what I would do.

The extra money you have per month +/- $1,500 should be added to the $300 and the $325 you are now paying on your student loans.
That would then be $2,125 per month towards the student loans.
The $1,500 per month would add up to $18,000 (extra money per year) and the amount you are currently paying ($7,500 per year). A total of $25,500 per year.
In approx. 21 months both loans ($44,000) would be paid off. You could have them paid off by February 2021 or earlier if you put a bit more towards it per month.

The other scenario might be you split the $1,500 in half and put $750 extra to the student loans per month and it would take approx. 32 months to pay off the two student loans.
Plus, take the other $750 per month and pay down the car loan.
I think I like this scenario better. It would take a little longer but both would be paid off pretty quickly.

[cloudsail]

I would pay off the first student loan, at 4.75%. That one is only 13k and should be gone pretty quickly. Then car or other student loan is up to you.

Though I'm not really getting where the extra 1000 to 2000 is coming from? Currently you have that money earmarked for food and household items. Those aren't really optional spending.

[Villanelle]

It sounds like you've evaluated your expenses and chose then ones you are willing to consider cutting, and the ones you consider non-negotiable.  I'd take whatever extra you are willing to find and pay off debts, starting with the highest interest rate. 

Since you don't want to talk about anything else, that's probably the best route forward and there's not much else anyone can tell you.   

[joe189man]

Though I'm not really getting where the extra 1000 to 2000 is coming from? Currently you have that money earmarked for food and household items. Those aren't really optional spending.

~$1200 from the education service
~$150 from swim Class
~$50 subscriptions
~$60 from cell phones in a month or two then another $70 by around Christmas
~$40 optimize auto insurance

That's ~$1500 a month extra

It sounds like you've evaluated your expenses and chose then ones you are willing to consider cutting, and the ones you consider non-negotiable.  I'd take whatever extra you are willing to find and pay off debts, starting with the highest interest rate. 

Since you don't want to talk about anything else, that's probably the best route forward and there's not much else anyone can tell you.   

Agreed for the time being and our current circumstances, please consider this post resolved

[seemsright]

Yeah, your kid isn't difficult because they're gifted, they're difficult and gifted, which can be a challenge to manage.

I've worked with many gifted kids and many are tremendously well behaved, and don't end up getting tested early because they naturally generate their own enrichment.

It really doesn't take a lot to foster the learning needs of a typical gifted child, but it can be a nightmare managing the behavioural problems of a child with behavioural issues who is also gifted because despite their need for intellectual stimulation, they're more difficult to teach. It's especially challenging when they are both extremely gifted AND have a severe learning disability AND a bevahioural problem.

I don't share personal information, but my family has intimate experience with raising extremely gifted children and going through painstaking energy and effort to ensure that one of them didn't end up a super villain/terrorist.

You know your kid, so do what you think is best, but know that if you are actually dealing with the kind of challenges that require that level of intervention at that young an age, then you might be in for a few decades of intense support, not a few months.

Also, welcome to the MMM forums where threads very easily go off the rails and where intense personal criticism of your very personal life choices is the norm, ESPECIALLY if you try and say that they're off limits.

Don't take anything here personally and don't bother getting defensive about anything. Just take what's useful to you and keep moving forward.

This.

I have a very gifted kid. Thank goodness her IQ is not in the profound gifted...that is a whole different ball of wax. (I have a friend who has a DD that is having major issues and you would never guess she is only 9 when talking to her...she sounds like a college professor)

At age 4 I was drinking Bourbon multiple times a week due to multiple 3 hour meltdowns a day. It was very VERY hard. I could have not handled her if I was trying to work a full time job when she was that age (I FIRED when she was born) What helped was stickers...give your kid a space where he can stick stickers. under the end of the cabinet in the kitchen is a great spot. Let him take the stickers from the sticker sheet and put on the cabinet (they are easy to remove when he is done with this stage) This will help with his finger, and arm strength, and will translate to him reading due to learning how to track where he wants to have the sticker on the cabinet.

Another idea is to get him a large white board and put it on the wall and allow him to use the dry erase markers on it to work out ideas, to draw, etc.

These are the two big ideas that helped my Dd. Once she started school she was all ready reading at a 2nd grade level, and I fought the school district HARD and did not take NO for a answer when I asked them to grade skip her. She turns 9 at the end of the month and is finishing 4th. Her behavior is still a challenge but with ample books, workbooks, and other things (current obsession is folding paper, either in paper airplanes, or origami) she is much better than she was at 4. 4 was so bad you could not pay me all of the money in the world to relive that age.



 

[Sultan58]

wow....just wow.....all this talk about "gifted" kids...please

if your kids are reasonably smart...that very probably means they are normal -- not gifted.....and if someone is telling you that your 3-4 year old has an IQ of 130....I have some property I'd like to sell you.

My kids all got full scholarships.....but my wife and I did not consider them gifted....they grew into normal adults.

How about we dial back the "oh my kids are gifted too....my entire family is gifted.....we have 27 gifted kids in my family......"

The main pre-requisite for  identifying "gifted" children in this thread seems to be that are reasonably smart but they have issues behaving.

[StarBright]

I wasn't going to come back to this thread because the OP seems like they've gotten what they needed. For what it is worth - I've also posted a similar case study ie "what should I do with my extra 1500 a month" and gotten similar responses. I went back and re-evaluated and realized the responses weren't totally wrong, but I wasn't totally wrong either. Just makes clear how hard it is to get things accurately across on the internet. But there is always good food for thought on MMM.

Anyways - the last response re: gifted children irked me so, that I felt the need to add another response.  And I'm going off on a gifted tangent.

Gifted children are actually not neurotypical.

Gifted brains are as different from the typical population as brains with intellectual disability.Their brains actually work differently than average children and there has been some solid research in this area in the last 10-15 years. One of the biggest differences is that the pre-frontal cortex (regulates emotion and helps with executive function) develops much slower (weird right?!) in the gifted population.

An average child reaches peak cortex thickness around the age of 8, a gifted child around the age of 12. Average brains spend the next several years pruning synapses, but gifted brains prune faster. Additionally, gifted brains actually have more grey matter than average brains. Some research suggests that gifted brains actually have more neural pathways.

It is absolutely not crazy to look into educating these children differently than the average population because their brains work differently than the average population.  I'd venture that if pediatricians and psychologists are recommending IQ testing/full neuro-pediatric eval then they also know that there is something atypical with a child. OP does not sound like a person who just went out looking to have their child diagnosed as gifted, but as someone who was looking for help with other issues, and was told their child is gifted (which can be a huge piece in the puzzle to coming up with solutions).

@joe189man - I will be happy to delete this post if you'd like me to! As I've had to become an advocate for my child, I have just become incredibly passionate about defending gifted kids (and especially their parents :)) over the last year. Just let me know and I'll delete this ASAP.

[MrThatsDifferent]

Ok, I read through this to see what the drama was about. Got it.

I think you’re doing mostly ok. Yeah, you’ve gone a little lifestyle inflation, but not insane. Oddly, I’d keep those swim lessons until both kids can keep themselves afloat if they fall into a pool (particularly if you have a pool). I’d get rid of the school loans as quickly as possible. You’re not getting rid of the van, so just let that one ride. No need to spend up the mortgage. If you’ve maxed your retirement accounts then I’d out the extra money in 529s, HSA (if available) and then Vanguard. Typical investment order stuff.

Mostly, I’d sit with the wife and work out a plan. We’re here and we want to get there, what will we need to do? You’re not dumb or bad people and the money you’ve paid for the child education wasn’t a mistake. Hopefully you all have the info you need to make better decisions about your kid’s education.

Don’t beat yourself up, just make well-thought out, considered decisions, with the singular goal of avoiding all debt, except mortgage, and giving saving and investing as much as you can, while having the happiest, best home and family life possible. Simple ;-)

[Freedomin5]

Maybe i should have started the case study by saying the following

We have some silly things in our budget and are working to address them (Van, groceries, eating out, cellphones, subscriptions) ... but we also have at least between $1,000-2,000+ dollars extra a month that needs to be put to work.

What would you do? pay off debt? increase emergency savings? start a taxable investment account at Vanguard? Start a side business to further increase income? Use emergency funds to pay off a small debt and debt snowball? other?

If this is your question, then the answer is easy: Investment Order - https://forum.mrmoneymustache.com/investor-alley/investment-order/