Hello, first time posting, not new to MMM's philosophy, but despite that my hair is on fire. I've tried to implement some changes, but I have a terrible time sticking to them. It's like my spouse and I understand the philosophy but are weaklings in certain areas.
I think the goal for us is moderately early retirement. Spouse 1 is not very interested in FIRE, and spouse 2 (me) is more interested but not sure it’s feasible. My primary motivation in posting a case study is to get our spending under control, because I feel bad about how much we are overspending and it’s a huge lost opportunity.
Life situation: Spouse 1, 39, and Spouse 2, 37, MFJ, two children 2 and 6 months, live in a MCOL city (although plenty of people say it's HCOL)
Gross Salary/Wages: Spouse 1: $155,000 + 12% bonus (new job, so he hasn't gotten the bonus yet and it is not included below)
Spouse 2: $74,714
Net Salary per paycheck (biweekly pay):
Spouse 1:
Gross Salary - $5,961.54
Taxes - $1,515.23
401k - $834.62 (Spouse 1 was unemployed the first two months of the year, so this amount equals $18,000 split by the remaining pay periods, employer matches first 7.5%)
ESPP - $889.73
Health and Dependent Care FSAs - $95.24
Medical/Vision - $18.03 (Covers Spouse 1 only)
Transit - $30
Net Pay - $2,578.69
Spouse 2:
Gross Salary: $2,873.60
Taxes - $359.91
403b - $689.66 (Employer matches first 3%)
Health and Dependent Care FSAs - $314.58
Medical/Dental/Vision/LTD - $187.43 (Covers Spouse 2 and the children)
Net Pay - $1,322.02
Total Monthly Income:
Wages: $8,451.54 (paychecks x 26 / 12)
ESPP sales: $2,104 (we sell immediately to bank the gains from the 15% discount, and use it as general income)
Daycare FSA reimbursement: $417
Total income: $10,972.54
Expenses:
Housing
Mortgage + HOA - $1,510 ($934 principal and interest, $576 taxes, insurance, and HOA)
Storage Unit - $70
House Cleaner - $220
House maintenance - $214
Utilities
Cell Phone - $57 (One Verizon 2 gb plan, spouse 1 has phone through work)
Internet - $50 (Lowest available non-contract price)
Natural Gas - $65
Electricity - $63
Transportation
Gas - $35
Car Insurance - $24
Bike share - $17
Auto maintenance/replacement fund - $150
Kid Expenses
Daycare - $3,033 (one infant and one toddler, this is insane, but is actually below market rates for our area)
Babysitter - $100
College savings - $200
Health/Insurance
OOP Medical - $180 (actual spending above Health FSA from last year, may be lower this year)
Umbrella Insurance - $13
Life Insurance - $163
Debt Service
Student Loan #1 - $483
Student Loan #2 - $143
Discretionary Spending (average last 6 months, unless otherwise indicated)
Groceries - $598
Restaurants and food away from home - $783 (This is about 1 sit down meal out a week, plus way too many lunches out)
Alcohol - $83
Amazon/Target - $748 (this includes some groceries and alcohol not tracked separately, household supplies, baby formula, kids clothes, and all “other”. I know I need to break it out better)
Spending money - $600 (budgeted, covers adult clothing, hair, hobbies, anything else not in the budget, actuals are lower because I don’t spend my whole allowance)
Travel - $625 (budgeted, three trips east to visit family for holidays, one big vacation every other year, small local trips, actual was right on last year)
Vet - $83 (budgeted, actual has been lower but we have two ancient cats and expect it won’t be low forever)
Christmas - $115 (per month, based on actual spending last year, including tips/gifts to service providers)
Technology Replacement - $29
Charitable Giving - $300
Entertainment - $30
Total Expenses - $10,784
Assets:
Condo - 2 br, worth about $360k, outstanding mortgage of $185k, so about $175k in home equity
Roth IRAs - $75k
Tax advantaged retirement accounts (401k/403b) - $183k
Taxable investment account - $77k
Spouse 2's random investment account - $1,904
Cash savings - $26,851
Checking - $5,689
Car - $1000 (2003 Toyota Corolla, in fair condition)
Liabilities:
Mortgage - previously mentioned, balance of $185,080, interest rate 4.125%, 28 years left, minimum payment $934
Student Loan #1 - $29,790, interest rate 4.0%, 6 years left, minimum payment $483
Student Loan #2 - $9,050, interest rate 3.0%, 6 years left, minimum payment $143
Other relevant information:
Our income has increased dramatically over the past two years, so have only been saving at this level for about 1.5 years. I think our spending has been this out of control for longer than that.
I have several chronic health conditions (hence the high OOP medical spending).
Two highly specialized careers keep us tied to major U.S. cities.
We previously have been maxing two backdoor Roths, but our daycare costs have increased substantially this year. I imagine we will fund it out of the bonus this year.
My spouse is not necessarily "on board", but I control a lot of the discretionary spending, so it is primarily my problem to fix.
Questions: My primary question is how people find motivation to cut spending when it’s not an “emergency”? I literally feel like I don’t understand where all the money is going, and this level of spending is so out of line with my values. Just putting together this case study has been enlightening to say the least.
For a variety of reasons, I want to keep my job right now, but I realize the math doesn’t look great. Has anyone opted for a stay at home parent for financial reasons?
How do you set financial goals? I think not having goals might be part of why it is so hard to stick to the plan.
There’s a ton of low hanging fruit here, and plenty of room for face punches. This might be a case where putting together the case study illuminates the path forward. Stories from recovering spendypants appreciated.