Author Topic: Case Study for Newly Weds!  (Read 6938 times)

SheepDog

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Case Study for Newly Weds!
« on: February 08, 2017, 03:04:19 PM »
Hello!  My wife and I just got married last fall after being together for 7 years.  Prior to getting married, we each handled our finances separately and generally did our own thing.  We just finished combining our income and all accounts and have already realized some great benefits as well as realizations about each other's spending/savings habits we didn't fully appreciate before.  Looking for some outside perspective to help get on track!

Wife and I are both 26 with no kids.  Both have public sector jobs.

Lets get to the numbers!

My bi-weekly pay stub:
Gross pay = 1743.20
Pension contribution = 213.00
City tax = 35.00
Fed tax = 143.00
Medicare = 25.00
State tax = 37.00
Union dues = 25.00
Deferred comp (457b) = 50.00

Filing status is married with 2 Fed exemptions and 1 state exemption.

Net pay is roughly 1200.00 bi-weekly, give or take.

Wife's bi-weekly pay stub:
Gross pay = 1225.00
Pension contribution = 130.00
Fed tax = 70.00
State tax = 20.00
Medicare = 16.00
Vision = 18.00
Healthcare = 120.00
Union dues = 16.00
Deferred comp (457b) = 50.00

Filing status is 0 federal exemptions and 1 state exemption.

Net pay is roughly 850.00 bi-weekly, also give or take.

Both of our pay is base rate, we usually work a lot of overtime but we try to focus our budgeting on the base pay because the overtime is not guaranteed.

Wife's salary is locked in and has no upward potential at current employer.  She is actively looking for better paying job in career field.

My salary with max out at 58000 in 4 more years under the current contract.  I too will be looking for better career opportunities in the next few years.

I am on Wife's healthcare plan and both of us are exempt from SS payments due to the .Gov pension plans.

Wife also has some side business interests in photography and nutritional products.  Income can range from zero to several hundred a month, depending on how much time she has.

Monthly income total = 4000.00, approximately.

Now for the Expenses.

Mortgage = 700
Utilities (varies on seasonal use) = 270 (inc gas, electric, water, trash)
Car payment = 500
Car insurance = 120
Car fuel = 200
Cell phones = 90
Internet = 70
Groceries = 300
Student loans = 150
Gym membership = 60
Pet supplies = 120
Home supplies = 200
Dining out = 150 (historically; has cut down to about 50 recently)
Personal Allowances = 200 (100 for each of us)
Personal hygiene = 50
Health care stuff = 60
Clothes = 50 (should probably come out of the allowance of the person who bought it)

Total approximate expenses = 3290

Total money left over = 710

Those figures assume we don't have any splurges or unexpected spending.  The extra money has been going on the credit card steadily since we combined our money.

Now for Assets and Debts:

Assets:
Emergency Savings = 2100
Deferred comp = 0.  We just started the account so it should go up by 200 every month.  Plus or minus the capital gains/losses.
2007 Chevy Cobalt = paid off
1993 Dodge Dynasty = paid off
Wife also has some ATT stock which pays about $16 a year in dividends that her grandpa bought for her a long time ago.  Not sure of the actual share count or amount.

Debts:
Truck loan = 19500 @ 4.5%.  Have about 3 years left of payments.  Truck valued at 25000 currently.
Student loans = 8000 @ 5.5%
Credit card = 10800 @ 6.75%
Mortgage = 85000 @ 4.00%.  House appraised at 130000.  Does need about 15-20k in updates to realistically fetch that price.  Was advised a fair price for it now would be about 100k as it sits.

Basically that's all I can think of at the moment.  If you want any further details just ask and I'll provide.

I know the first things most of you will notice is the truck note and the credit card.  We use the truck weekly for house projects, yard work, etc.  It is also our main travel vehicle since it is the nicest and roomiest vehicle we have.  I plan on keeping it until it dies, hopefully a long time into the future.  I daily drive the Dodge back and forth to work.  But it is literally a beater and may blow up next week or next year.  It was basically free for us so I'm gonna use it while we can.

The credit card has a large balance because we merged both of our personal cards into one account.  We also financed a good deal of our wedding and honeymoon with it.  Also has a few college classes I took on it as well, since the interest was comparable to a new student loan.  We've knocked over 3000 off of it since last November and plan to keep at it.

Our goals are to knock down the credit card and student loans.  Then we want to update the house so we can sell it.  Finally, we want to boost our retirement income by investing more into the deferred comp and other investments.  Children are also on the horizon in the next 1-2 years.  We plan to retire at 52 (youngest age to retire and still get full pension) and work for ourselves.  We obviously need a kick in the butt to get there!

Well, have a look and let me know what you think we can improve on.  Thanks in advance!



« Last Edit: February 08, 2017, 03:14:21 PM by SheepDog »
Better to remain silent and be thought a fool than to speak and to remove all doubt.

The greatest pleasure in life is doing what people say you cannot do.

MDM

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Re: Case Study for Newly Weds!
« Reply #1 on: February 08, 2017, 03:35:17 PM »
Our goals are to knock down the credit card and student loans.  Then we want to update the house so we can sell it.  Finally, we want to boost our retirement income by investing more into the deferred comp and other investments.  Children are also on the horizon in the next 1-2 years.  We plan to retire at 52 (youngest age to retire and still get full pension) and work for ourselves.
It's close to a coin flip on whether you should invest or pay faster on the CC bill.  Numbers below looked at the maximum 457 contributions you might make, given your stated spending (and some guesswork).  You could download the case study spreadsheet and do your own "what if...?" calculations.  Good luck!

CategoryMonthly
Comments
Annual
Salary/Wages for earner #1$3,777$45,323
Salary/Wages for earner #2$2,654$31,850
Pretax Health Ins.$260$3,120
Pretax Vision/Dental Ins.$39$468
FICA base salary/wages$6,132$73,585
401(k) / 403(b) / TSP / etc.$743Room to increase?$8,918
457 plans   $1,363Room to increase?$16,357
Income subject to IRS tax$4,026$48,310
Federal Total Income$4,026$48,310
Federal tax$2292016 rates, MFJ, stand. ded., 2 exempt.$2,751
State/City tax$91Guess, using 2.75% * (AGI - Exempt'n)$1,094
Medicare$89$1,067
Total income taxes$409$4,913
Income before other expenses  $3,616$43,397
Monthly Average Expenses:
Mortgage$406$4,870
Property Tax$200$2,400
Home/Rent Insurance$94$1,128
Beauty Shop$50$600
Car Insurance$120$1,440
Clothing/Shoes$50$600
Dining (Lunch/Dinner/Etc.)$50$600
Electricity$270$3,240
Fuel/Public Transport$200$2,400
Groceries$300$3,600
Household; Maintenance$200$2,400
Internet$70$840
Medical (Doctor, Hospital, etc.)$60$720
Miscellaneous$200$2,400
Pets$120$1,440
Phone (cell)$90$1,080
Sports/Recreation$60$720
Work/Professional fees$89$1,066
Non-mortgage total$2,223$26,674
Loans:
Student Loan$153$1,834
Truck$503$6,032
CC$332$3,987
Total Expense$3,616$43,396
Total to invest$0$1
Summary:
"Gross" income$6,431$77,173
Income taxes$409$4,913
After-tax income$6,022$72,261
IRA+401k/403b/TSP/457 (Savers' credit)$2,106$25,275
Living expenses$2,928$35,132
Non-mortgage loans$988$11,853
After-tax investable$0$1


Filing Status21=S, 2=MFJ, 3=HOH
# Exemptions2
Adult #1Adult #2
Age2626
# of earners2
Total Income$48,310
Std. Deduct.$12,600
Act. Deduct.$12,600
Exemption$8,100
SL int. (approx.)$418
AGI$47,892
MAGI$48,310
Taxable$27,192
1040 Tax$3,151
AMT adder$0
Saver's credit$400
Tax after n-r credit$2,751
NIIT$0
EIC$0
Child Tax Cred.$0
Net Tax$2,751
Monthly$229
Mtg. Int. (approx.)$3,366
State tax$1,0942.75%
Prop tax$2,400
Item. Deduct.$6,860
VersionV8.13

Loans:Orig. Prin.Orig. LengthCurr. Prin.Yrs leftRate
Mortgage$85,00030$85,000304.000%
Student Loan$8,0005$8,00055.500%
Truck$19,5003.5$19,5003.54.500%
CC$10,8003$10,80036.750%

SheepDog

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Re: Case Study for Newly Weds!
« Reply #2 on: February 08, 2017, 03:44:39 PM »
Thanks for the Chart!

I kind of see what is going on there.  The wife however had glassy eyes looking at it. 

Not sure what all the tax stuff was at the bottom.
Better to remain silent and be thought a fool than to speak and to remove all doubt.

The greatest pleasure in life is doing what people say you cannot do.

MDM

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Re: Case Study for Newly Weds!
« Reply #3 on: February 08, 2017, 03:50:01 PM »
I kind of see what is going on there.  The wife however had glassy eyes looking at it.
Probably best looked at one line at a time to understand the details.  Most just reflect the spending posted in the OP.  Then see the graphs in the spreadsheet for some overviews.

Quote
Not sure what all the tax stuff was at the bottom.
See 2016 Form 1040 and/or google unfamiliar words or abbreviations.  If still unclear, just ask.

nereo

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Re: Case Study for Newly Weds!
« Reply #4 on: February 08, 2017, 03:53:48 PM »
Thank you for the detailed case study - nice to see one that is so well organized.
MDM did a great job with the chart summary; my comments will be more broad.

There's no surprise where your money is going - $820/mo towards your vehicles, plus quite a bit towards your student loans and cc bill. 
At 6.75% I'd prioritize nixing that cc bill ASAP.
You also own three cars, one of which is a fancy truck bought on credit. If you're really serious about your budget you'll consider selling off the truck.  There are lots of vehicles that will help with 'weekend home projects' - or better yet buy a light open trailer that can carry 4x8' sheets and towed behind either one of your existing cars (you might need to add a hitch, but those are $200 or so). You'll instantly have ~$6k from the sale of your truck to put towards that CC balance.  Your insurance will also go down.

Most everything else looks reaasonable, though some light trimming can always help the bottom line.
"Do not confuse complexity with superiority"

SheepDog

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Re: Case Study for Newly Weds!
« Reply #5 on: February 09, 2017, 09:02:03 AM »
Thanks for the advice everyone!

I played around with the excel sheet and it makes sense finally.  I can see what would happed to certain categories if others were adjusted, etc.

I knew the truck thing was going to come up as a red flag.  This is also going to sound like I'm attempting to justify it but we actually use the truck for truck things.  Hauling 4000lbs of dirt/gravel for the driveway and garden each spring.  Fence posts, feed, and a goose neck trailer with 10k lbs worth of hay bales for the parents farm, etc.  A little hitch on my wife's compact car isn't going to cut it lol. 

We are of the mindset that we keep a vehicle until it dies.  With it being a diesel and relatively low miles for its year, it should easily last 15-20 years.  It's paid off in 3 years or less.  A payment free truck for the next 15 years is better than 6000 less on my credit card now. 

Also if we sold it, I would still have to get a replacement vehicle.  I know we have 3 cars, but the Dodge is the definition of a beater.  Everyday that it starts and/or doesn't leave me stranded is a good day.  Its worth it's value in scrap metal and nothing more.
Better to remain silent and be thought a fool than to speak and to remove all doubt.

The greatest pleasure in life is doing what people say you cannot do.

nereo

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Re: Case Study for Newly Weds!
« Reply #6 on: February 09, 2017, 10:29:40 AM »
Fair enough regarding the truck - its rare that people actually use a truck these days for 'real truck purposes,' even beyond the small trailer option.  To be fair I have a 'residual truck' of my own from my former job where I had to tow boats on a near daily basis (business).  At 12 years old and 200k miles we've reached the point where we any ROI from selling it would take several years.

There are still options with the truck, though; you can find very good trucks that have been more beat up for <$10k, and/or the used van + trailer option.  Point is, I'd recommend thinking about what you need and then figure out what vehicle combination works best. A $25k truck with a $19.5k note probably isn't it when you have significant debt.

Beyond the vehicles your challenge is freeing up cashflow, either by increasing pay and/or knocking out that cc debt.
g'luck.
"Do not confuse complexity with superiority"

Canadian Ben

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Re: Case Study for Newly Weds!
« Reply #7 on: February 09, 2017, 10:33:37 AM »
Does it have to be a 25k Truck?

Why not sell it and find a more much beat up one, you're not using it to show it off, but to work it into the ground.

Raenia

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Re: Case Study for Newly Weds!
« Reply #8 on: February 11, 2017, 10:34:04 AM »
Even if you're determined to keep the truck (though I agree with those above you should seriously consider if an older truck would serve your needs just as well), there's a few smaller line items in your budget that you can work on.

Mortgage = 700
Utilities (varies on seasonal use) = 270 (inc gas, electric, water, trash)
Car payment = 500
Car insurance = 120
Car fuel = 200
Cell phones = 90 Cheaper phone plans may be available in your area, shop around.  Check how much data you're really using, and see if you can cut down to a lower data plan by using wireless instead.
Internet = 70
Groceries = 300
Student loans = 150
Gym membership = 60 Is this necessary?  A set of hand weights at home can replicate most of what a gym gives you.  Unless you regularly take classes, use a pool there, etc.
Pet supplies = 120
Home supplies = 200
Dining out = 150 (historically; has cut down to about 50 recently) Good work cutting this down, now focus on keeping it there.
Personal Allowances = 200 (100 for each of us) I'd take a look at what this is being spent on.  Possibly all of it is necessary for quality of life, but possibly not.  As an experiment, try cutting it down to 75/person and see how it feels for a few months.
Personal hygiene = 50
Health care stuff = 60
Clothes = 50 (should probably come out of the allowance of the person who bought it) Definitely move this to allowance section, you shouldn't need an extra 50/mo on clothes, especially buying at thrift stores

None of those will make as big a difference as the truck payment, but could free up a bit more toward that debt.  Good luck!

CU Tiger

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Re: Case Study for Newly Weds!
« Reply #9 on: February 13, 2017, 10:05:06 AM »
So, together here is your bi-weekly base pay:
Coupleís bi-weekly base pay:
Gross pay = $2968
Pension contributions = $343
Taxes = $330
Healthcare/Vision = $138
Union dues = $41
Deferred comp (457b) = $100

Net pay is roughly $2050 bi-weekly, also give or take.
To SIMPLIFY, I am going to assume you will get $4100 every month, even though youíll have 3 paycheck months every once in a while, plus overtime, plus whatever your wife brings home from her sidelines.

4100.00 = Monthly income total, approximately.

Now for the Expenses.

Mortgage = 700
Utilities (varies on seasonal use) = 270 (inc gas, electric, water, trash)
Car payment = 500 * how much do you still owe on the car? What kind of rate is your loan?
Car insurance = 120 * have you shopped for insurance recently to see if you could lower this?
Car fuel = 200
Cell phones = 90
Internet = 70
Groceries = 300 * Shop sales. Cook more meatless meals. Pack lunches. If you look at your grocery cart and it is full of convenience, prepared foods, ask yourself if that's really how you want to eat. It's expensive. Buy ingredients...raw food that you cook. It's better for you and cheaper.
Student loans = 150
Gym membership = 60
Pet supplies = 120 * I have beloved dogs, so I get spending on pets. Have you done what you can to keep this low?
Home supplies = 200
Dining out = 150 (historically; has cut down to about 50 recently) * Until you pay those CC off, Iíd cap this at $75 and put the extra $75 towards CC. A little sacrifice now will pay off big later. At a time in my life when I was making $18,000 a year and barely getting by in the big city, my HUGE treat of the week was going to Burger King and having a Whopper Meal, after my Saturday trip to the library. I would sit in BK, reading a good book, washing down my burger and delicious fries with a frosty Diet Coke, feeling like I was living the good life. That was over 20 years ago, and I can treat myself to nicer things now. I donít think I always enjoy them as much as that weekly trip to BK, because back then it was rare, special, and I savored it.
Personal Allowances = 200 (100 for each of us)
Personal hygiene = 50
Health care stuff = 60
Clothes = 50 (should probably come out of the allowance of the person who bought it) * Do you really need to buy new clothes every month?

Total approximate expenses = 3290

Total money left over = 710

Those figures assume we don't have any splurges or unexpected spending.  The extra money has been going on the credit card steadily since we combined our money.

Now for Assets and Debts:

Assets:
Emergency Savings = 2100
Deferred comp = 0.  We just started the account so it should go up by 200 every month.  Plus or minus the capital gains/losses.
2007 Chevy Cobalt = paid off * Wait, what? How do you have TWO paid off cars while you are paying a $500 per month car payment? What gives?
1993 Dodge Dynasty = paid off
Wife also has some ATT stock which pays about $16 a year in dividends that her grandpa bought for her a long time ago.  Not sure of the actual share count or amount.

Debts:
Truck loan = 19500 @ 4.5%.  Have about 3 years left of payments.  Truck valued at 25000 currently.
Student loans = 8000 @ 5.5%
Credit card = 10800 @ 6.75%
Mortgage = 85000 @ 4.00%.  House appraised at 130000.  Does need about 15-20k in updates to realistically fetch that price.  Was advised a fair price for it now would be about 100k as it sits.

Basically that's all I can think of at the moment.  If you want any further details just ask and I'll provide.

I know the first things most of you will notice is the truck note and the credit card.  We use the truck weekly for house projects, yard work, etc.  It is also our main travel vehicle since it is the nicest and roomiest vehicle we have.  I plan on keeping it until it dies, hopefully a long time into the future.  I daily drive the Dodge back and forth to work.  But it is literally a beater and may blow up next week or next year.  It was basically free for us so I'm gonna use it while we can. * Sigh. I am from the South and know how men can be about their trucks. Tell me truly, do you use this thing as a TRUCK/HAULER or do you have it because ďa man needs a truckĒ (quote from my father, a man with a truck)? If you are using it as a car (driving to work, driving to the grocery store) then you do not really need a truck, I donít care what my Dad says. You could sell it, pay off the loan, and use the balance to knock off some CC debt. Or sell it, sell your crummy car, and buy a 3-5 year old truck with cash.
I have this 8 year old Honda Fit, and you would not BELIEVE the amount of stuff I can get in it. Itís like the Tardis, bigger on the inside! Not that I think a Fit is perfect for everyone, but I do think owing almost $20,000 on a depreciating asset isÖnot good.


The credit card has a large balance because we merged both of our personal cards into one account.  We also financed a good deal of our wedding and honeymoon with it.  Also has a few college classes I took on it as well, since the interest was comparable to a new student loan.  We've knocked over 3000 off of it since last November and plan to keep at it.
* I would hit that CC with everything I had. If you are paying anything extra on the mortgage, stop that, and add the cash to the CC. And stop using the CC until you pay it off! If you are carrying a balance, you canít use the card. Itís a rule.

Our goals are to knock down the credit card and student loans.
The first goal, paying off CC and Student Loans, great goal. Go for it. While you are doing that, I would NOT spend any money fixing/updating the house, unless you are doing something to stop the house from going down in value. So, a new roof to stop water damage would be okay. A new kitchen because the old one is ugly right now, not so much! Any cash money you spend on the house is money you are not using to retire debt.
THEN we want to boost our retirement income by investing more into the deferred comp and other investments.
 As soon as you are out of debt, you need to boost your savings and investing immediately. Then re-work the house with what you have left. Time is on your side with retirement and investment savings; do it now while you are young, and you donít have to save as much each month to wind up with the big bucks at retirement.
FINALLY - Then we want to update the house so we can sell it.
 Children are also on the horizon in the next 1-2 years.  We plan to retire at 52 (youngest age to retire and still get full pension) and work for ourselves.  We obviously need a kick in the butt to get there!

Well, have a look and let me know what you think we can improve on.  Thanks in advance!
There are two ways to get enough: one is to continue to accumulate more and more. The other is to desire less. - G.K. Chesterton

Debts_of_Despair

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Re: Case Study for Newly Weds!
« Reply #10 on: February 13, 2017, 10:36:08 AM »
I'll say it again: get rid of the truck!  If your parents need it for a farm operation, THEY can pay for it.  Everything else is easily taken care of by renting or borrowing a larger vehicle for the day.  Example: pay $30 to have topsoil delivered.

GrandioseMustachio

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Re: Case Study for Newly Weds!
« Reply #11 on: February 13, 2017, 11:16:55 AM »
I'll jump on the "get rid of the truck" bandwagon.

SheepDog, the OP, is probably loosing 5000$/year on that truck (2000$ depreciation, nearly 1000$ of interest, 1000$ of insurance, 1500$ of gas and 500$ on maintenance/repairs. 400$ a month. 69200$ over 10 years.

Now, the OP mentions that he uses "the truck weekly for house projects, yard work, etc." To justify keeping the truck, it has to provide well over 400$/month in savings related to these projects (in comparison to having the materials delivered, renting a truck, using a light trailer with the car, etc.). And these projects actually need to increase his net worth by more than 400$/month.

Something to think about.

Debts_of_Despair

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Re: Case Study for Newly Weds!
« Reply #12 on: March 02, 2017, 07:27:54 AM »
I don't think the OP liked our tough love, LOL!

MrsWolfeRN

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Re: Case Study for Newly Weds!
« Reply #13 on: March 03, 2017, 03:05:43 PM »
Agree on getting rid of the truck. You sound like you are fairly handy with auto repair. If you must do truck things, why not buy an older truck (70s or 80s)  that has already depreciated as much as it is going to. Mr. Wolfe purchased a 1976 Ford (not sure the model, but it is a full size pickup with 4 wheel drive) for $2000, and it can haul just as much as your truck. Also we don't have to worry about scratching it, and the license and insurance are dirt cheap. You will also be able to sell it for the same amount you paid for it.

MMM has some good articles on prepaid phone plans. We pay $12 each for Republic Wireless.

You seem to spend a lot on personal hygiene, pet supplies, and household supplies. Maybe rethink what brands you are buying or start using coupons. I like krazy coupon lady and hip2save for finding deals.

Can you suspend the gym membership, restaurants, and personal allowances until your hair is no longer on fire?


stevewisc

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Re: Case Study for Newly Weds!
« Reply #14 on: March 04, 2017, 09:13:55 AM »
Yeah - the truck will make more difference then anything else.  What you have there is a rolling mortgage.  Is the truck as valuable to you as your house? 

Maybe you two can spend 2-5 hours a week delivering mulch and dirt for other people?  (you get to spend time together and earn some cash - two Saturdays a month at 4hrs each with a little drive time and markup on the dirt and you can cover the cost - almost doubling you savings now)  Maybe a casual landscape business doing only things you are good at.  If you want to work for yourself why wait until you are 52?

SheepDog

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Re: Case Study for Newly Weds!
« Reply #15 on: April 21, 2017, 11:47:05 AM »
I don't think the OP liked our tough love, LOL!

No it wasn't that I didn't like the tough love lol.  We got busy with life the last few months and I haven't been online much!

Not much has really changed.  We did save up almost 10k in the bank and were getting ready to pay off the credit card but we got splurge-y and stupid.  Ended up with a new computer for the wife and I and ended up with ANOTHER car...   Now I'm trying to get rid of the nasty Dodge and cash flow that thing.  Warm weather is here so we are using the truck almost daily now.  I'm totally down to get rid of it but it just leads to big arguments with the wife about it (go ahead and call BS but its true lol.)

All said and done we've increased our wealth by only a few thousand since February. 
Better to remain silent and be thought a fool than to speak and to remove all doubt.

The greatest pleasure in life is doing what people say you cannot do.

Heroes821

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Re: Case Study for Newly Weds!
« Reply #16 on: April 21, 2017, 01:12:11 PM »
I don't think the OP liked our tough love, LOL!

No it wasn't that I didn't like the tough love lol.  We got busy with life the last few months and I haven't been online much!

Not much has really changed.  We did save up almost 10k in the bank and were getting ready to pay off the credit card but we got splurge-y and stupid.  Ended up with a new computer for the wife and I and ended up with ANOTHER car...   Now I'm trying to get rid of the nasty Dodge and cash flow that thing.  Warm weather is here so we are using the truck almost daily now.  I'm totally down to get rid of it but it just leads to big arguments with the wife about it (go ahead and call BS but its true lol.)

All said and done we've increased our wealth by only a few thousand since February.

Holy crap, if that is the result of not being online for a few months you need to make it a daily thing to read 1 mmm article per night before bed.  Don't backslide from your plan. Don't fall off the money train.  Get Debt Free by lowing your expenses. Once debt free pretend that your investments and savings accounts are your new debt and stay frugal until you have at least a small stache.

Buying a computer and a new car when you were making such good progress on your debt was DUMB and deserves a giant FACE PUNCH! 
Build the habit of saving now before you add kids or you'll have a hard time with it down the road.

CU Tiger

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Re: Case Study for Newly Weds!
« Reply #17 on: April 21, 2017, 09:15:32 PM »
Dang y'all, instead of buying freedom (from debt) you bought toys. I mean, it is typical behavior for people with low net worth, so if that is where you want to be...you are headed in the right direction.
There are two ways to get enough: one is to continue to accumulate more and more. The other is to desire less. - G.K. Chesterton

Playing with Fire UK

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Re: Case Study for Newly Weds!
« Reply #18 on: April 22, 2017, 12:13:30 AM »
ended up with ANOTHER car...   

Do you really think that this happened to you? Or did you choose for this to happen? Did you trip and land in a dealership?

Unless you own your choices and TELL your money where to go this will happen over and over.

Use this as a lesson. You are not the kind of people at the moment that can save up and have cash in bank with a plan for debt repayment. Pay of the credit card with every pay cheque.

And no more cars FFS.

SheepDog

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Re: Case Study for Newly Weds!
« Reply #19 on: April 23, 2017, 01:18:59 PM »
I didn't pay anything for the other car, it was gifted to replace the dying Dodge Dynasty.  I probably should have mentioned that!

The wife and I did have a serious talk over the last two days and I think we are going to sell the truck, use the little equity in it to get a smaller, older truck, and then cash flow the 500/month or so into our debt.  Not having a truck is out of the question but we also don't need the payments on this one either (took awhile to come around to the idea but I finally saw the light lol.)  It was harder than expected to convince my wife we don't need to pay 500 a month for three more years for a truck that is bigger and more powerful than we really need.  We probably spent 2-3 hours in a heated argument on a vehicle that I bought before we were married and she doesn't even drive.  You'd think it was her truck and most precious possession they way she defended it!  (Driving a diesel sure is fun though!)

Plan on posting it for sale this week.  Any tips on selling a vehicle private party when I currently have a note on it?

We also have plans to hopefully cut the gym membership out (she has been offered a part time job teaching dance cardio classes at the gym which would also give us free membership) and we are dialing back on our other expenses as we find chances as well.
« Last Edit: April 23, 2017, 01:23:08 PM by SheepDog »
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mountainfamily

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Re: Case Study for Newly Weds!
« Reply #20 on: April 23, 2017, 10:57:49 PM »
Nice work, sounds like you're making some good changes! I'd encourage you to stick with it. The small side hustles like teaching classes at the gym, using your new-to-you-beater truck to do occasional hauling, etc., sound fun, too.

Check out Republic Wireless if Verizon and Sprint towers work in your area.

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Re: Case Study for Newly Weds!
« Reply #21 on: April 24, 2017, 05:53:03 AM »
I didn't pay anything for the other car, it was gifted to replace the dying Dodge Dynasty.  I probably should have mentioned that!
...
amazing how a lack of information causes a rush to judgement ;-)

just chiming in to say I'm glad you are still focused on your debt-reduction. 
Cars/trucks are funny things - we get emotionally attached to them when ultimately they're just large expensive tools designed to get us from point A to B.  The greatest marketing success ever.
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researcher1

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Re: Case Study for Newly Weds!
« Reply #22 on: April 24, 2017, 07:16:56 AM »
It was harder than expected to convince my wife we don't need to pay 500 a month for three more years for a truck that is bigger and more powerful than we really need.  We probably spent 2-3 hours in a heated argument on a vehicle that I bought before we were married and she doesn't even drive.  You'd think it was her truck and most precious possession they way she defended it!  (Driving a diesel sure is fun though!)

Why does your wife want to keep the truck so badly?  What is her rationale?

It sounds like she sees is at a status symbol.

SheepDog

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Re: Case Study for Newly Weds!
« Reply #23 on: April 24, 2017, 07:57:59 AM »
Why does your wife want to keep the truck so badly?  What is her rationale?

It sounds like she sees is at a status symbol.

I think deep down we both did see it like that.  My big thing is I've always liked and wanted a diesel since I was 16.  They are "cool" to have and drive because they are loud, big, and blow black smoke! (only semi-serious there).
  She likes it because it is big, roomy, and the most comfortable vehicle we have for commuting.

But her main argument, which I was dumb founded over, was she insisted we needed our current truck and nothing else was because it has four doors and could easily fit a child seat in it in the future.  0.o
She failed to understand how a child seat was going to fit in the new Cobalt we were just gifted (same car as the one she currently drives btw and has fit many other people's carseats in...).

I think a fine vehicle situation would be:

2007 Cobalt 4dr - 33mpgs
2007 Cobalt 2dr - 33mpgs
some older beater truck for wahtever.

We already have the two cobalts and they are completely paid off.  Other than some upcomming maintenance on them, they are pretty much good to go.
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researcher1

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Re: Case Study for Newly Weds!
« Reply #24 on: April 24, 2017, 08:21:00 AM »
It sounds like she sees is at a status symbol.

I think deep down we both did see it like that.  My big thing is I've always liked and wanted a diesel since I was 16.  They are "cool" to have and drive because they are loud, big, and blow black smoke! (only semi-serious there).

I see this mentality in my area all of the time and it is completely ridiculous...
- Finance a huge diesel truck, at $400-$800/month, just to look cool. 
- Hang your Truck Nutz on the hitch.
- Drive around the city and roll coal. 
Meanwhile, you are in the poor house because of the mortgage-sized truck payments and 10 MPG fuel bills.

I'm glad you are finally seeing the light, and not following in the steps of all the other dipshits you see in the Walmart parking lot.

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Re: Case Study for Newly Weds!
« Reply #25 on: April 24, 2017, 08:23:54 AM »
Oh my...

Ok - here's a logical counterargument for both of you.
Diesel (and used vehicles in general) aren't going anywhere, certainly not in the next 5-10 years.  If/when you get to the baby stage in 1-2 years you can (if you still want) sell the Cobalt and buy another used car makes it easier to put multiple car-seats in.

This reminds me of a common tactic used car salsemen employ; "we might not have another car like this again!". 
Cars are easy to find.  Get what you need for TODAY, worry about "1-2 years from now" in 1-2 years.

fwiw I've got two friends with infants.  One has twins and a Prius, the other has a 2 door Gulf with a 1yr and 3yr old.  Both seem to manage just fine. YMMV.
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geo_kale

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Re: Case Study for Newly Weds!
« Reply #26 on: May 04, 2017, 10:23:22 AM »
The wife and I did have a serious talk over the last two days and I think we are going to sell the truck, use the little equity in it to get a smaller, older truck, and then cash flow the 500/month or so into our debt.  Not having a truck is out of the question but we also don't need the payments on this one either (took awhile to come around to the idea but I finally saw the light lol.)  It was harder than expected to convince my wife we don't need to pay 500 a month for three more years for a truck that is bigger and more powerful than we really need.  We probably spent 2-3 hours in a heated argument on a vehicle that I bought before we were married and she doesn't even drive.  You'd think it was her truck and most precious possession they way she defended it!  (Driving a diesel sure is fun though!)

Hey, I totally relate to this. My boyfriend (30) and I (25) both sold our trucks this year. It took a lot of discussing, and I had to confront my weird emotional attachment to these vehicles. We inherited a 1998 Camry and that's what led me to sell my truck first. We just sold his last week and we're thrilled! The reason I was holding on to his was because it was 4 wheel drive, but a few MMM articles really helped strengthen my resolve. If you're serious about FI/RE, you need to make decisions based on numbers and not emotions. Easier said than done I know...we're down to just the Camry now and bought a hitch for it so we can have a cargo rack when we need to haul things around.

When you say "Not having a truck is out of the question" why is that? What part of the country do you live in?

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Re: Case Study for Newly Weds!
« Reply #27 on: May 04, 2017, 01:18:51 PM »
I can't help you with the emotional aspect of getting rid of the truck because I can't even begin to fathom what people see in them. Personally they are the embodiment of everything opposite of what I enjoy about driving a vehicle. But that is neither here nor there; we all have our personal enjoyments and foibles that we have to assess and decide whether they are worth the financial burden. That is your homework to figure out on your own.

From a purely numbers aspect though, I'm doing some quick calculations here. Once you get rid of the CC debt you will presumably have around $700/month to put to savings. That would put you at a 11% gross savings rate. If you were to get rid of the truck, thereby getting rid of the payment and reducing your gas and insurance costs (let's guesstimate freeing up another $600/month), that would boost your potential savings rate up to 20% of gross. That is an ENORMOUS deal in your overall long-term picture. Check out the table in this column http://www.mrmoneymustache.com/2012/01/13/the-shockingly-simple-math-behind-early-retirement/ and have a look at how many extra years you have to work at a 10% savings rate versus a 20% savings rate. Granted, this isn't perfect because I was too lazy to calculate your savings rate of your net income instead of gross, but the general trend holds true. Is this truck status symbol worth working an extra 14 years of your life? I realize the payments only extend for another 3 years and that theoretically you could bump up your savings once that is paid off, but I suspect that if you don't have your priorities aligned right now to get to the higher savings rate that you will find it very difficult if not impossible to do so in 3 years from now. Maybe it will be kids/daycare/another vehicle/house upgrades/whatever. Practice strengthening your frugality muscle now and it will serve you well in the future.
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SheepDog

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Re: Case Study for Newly Weds!
« Reply #28 on: May 11, 2017, 05:06:05 PM »
Update:  (maybe I need to start a log in the diary section before this gets out of hand.)

Sold the Dynasty today, got $350 for it.  Also have had the truck listed for about a week now with only minimal interest.  The payoff amount is about $2000 less than the book value but it needs a new bed for $1000.  Even having someone "assume the loan" gets me off the hook and they are getting a good deal, but no takers....

Wife is on board mostly; still struggling with some of her old spending habits but we are still way ahead of where we were 3 months ago! 

I've also started riding my bike around town.  I haven't used my car for in-town trips for almost 2 weeks.  Wife is skeptical about biking but she did ask me to go pick up her sister's bike so she can ride it so there's a start!

I told her that if we can sell the truck and knock off the CC bill, she will be able to go part-time at work when she has our children.  Not only would that save on childcare costs but she would be able to spend more time with the child.  That was the magic ticket that I think got her on board.  Now just have to stick to it and then make it more of a life goal then just a rather short term goal.
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ysette9

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Re: Case Study for Newly Weds!
« Reply #29 on: May 11, 2017, 07:42:04 PM »
Quote
That was the magic ticket that I think got her on board.

Congratulations on the progress! I hope that truck sells quickly. Even if you sell it at a bit of a loss, worst case scenario, you still come out ahead financially as your cash flow situation will be much improved and you won't be paying for a depreciating asset.

I love that you were able to frame the changes in a way that resonated with your wife. It is all about reframing it in terms of priorities and keeping front and center what your big, motivating goals are. It is much easier to make the right trade offs in the moment if you can visualize part-time work, more time with future kids, more time doing fun hobbies, or whatever else you want down the road.
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Bimmy

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Re: Case Study for Newly Weds!
« Reply #30 on: May 12, 2017, 10:03:40 AM »
I told her that if we can sell the truck and knock off the CC bill, she will be able to go part-time at work when she has our children.  Not only would that save on childcare costs but she would be able to spend more time with the child.  That was the magic ticket that I think got her on board.  Now just have to stick to it and then make it more of a life goal then just a rather short term goal.

My wife is the same way- her dream is to have children and be a mom. Living frugally lets her do that. Great job.

Bimmy. Close relative to Billy and Jimmy Lee of the Double Dragon Series.

MrsWolfeRN

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Re: Case Study for Newly Weds!
« Reply #31 on: May 12, 2017, 04:06:56 PM »
Great job!! Thanks for updating.

SheepDog

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Re: Case Study for Newly Weds!
« Reply #32 on: June 21, 2017, 11:31:08 AM »
Truck is gone!!!!

Sold it yesterday.  I sold it for 16500.  I owed 17700 on it so we took a little loss but we'll make it back in no time with the extra savings we'll have.  I figure we'll be ahead about 700-800 a month now due to no loan payment, cheaper car insurance, and driving more fuel efficient vehicles.

In other news, the wife and I are both in the hiring process for new jobs.  Hers has the potential to double her salary and mine could yield a 50% increase.

And finally, I have rolled over my old inactive pensions into my current 457b plan.  Almost 30K that I can invest and let it grow.  And due to a recent raise, I have upped my deferred comp contributions from $50 to $150 a pay check.  And I'm still bringing home about $50 more a check.

Thanks all for the motivation to get it done!  We've added almost 50k to our NW so far this year and are finally positive!
« Last Edit: June 21, 2017, 11:37:24 AM by SheepDog »
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Re: Case Study for Newly Weds!
« Reply #33 on: June 21, 2017, 11:43:25 AM »
awesome news!
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Re: Case Study for Newly Weds!
« Reply #34 on: June 21, 2017, 12:50:49 PM »
Wow, that is great progress, especially the truck.

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Re: Case Study for Newly Weds!
« Reply #35 on: June 21, 2017, 08:49:47 PM »
Awesome to see the progress on here! Especially with the truck and jobs =)

How's it going keeping the cost of eating out down? Have you been putting all your extra cash toward the CC debt?
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Re: Case Study for Newly Weds!
« Reply #36 on: June 21, 2017, 11:24:55 PM »
Awesome job getting the truck sold!

Do you receive any match on the deferred comp contributions? If so I would invest the exact amount it takes to get the maximum match. If not, I wouldn't contribute anything until the credit cards are paid in full.

Feivel2000

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Re: Case Study for Newly Weds!
« Reply #37 on: June 22, 2017, 04:29:06 AM »
Just a quick question: you said you saved ~10k to knock down the cc but then decided to buy a new PC.

There should be plenty of cash left, unless your wife is into 4k video editing... Have you thrown it at the cc yet? And if you are at risk getting distracted, wouldn't it be better to pay the cc directly instead of saving in another place to later pay down the debt?

Btw: Great work!


SheepDog

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Re: Case Study for Newly Weds!
« Reply #38 on: June 22, 2017, 01:09:39 PM »
Awesome to see the progress on here! Especially with the truck and jobs =)

How's it going keeping the cost of eating out down? Have you been putting all your extra cash toward the CC debt?

Eating out is consistently down to about $50 a month.  And we've been chipping away at the CC bill.  Since I used some of our emergency stash to cover the loss on the sale of the truck, we are gonna prioritize saving that balance back up.  About a month or 2 then its all hands on deck throwing the money saved on the truck onto the CC bill.
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SheepDog

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Re: Case Study for Newly Weds!
« Reply #39 on: June 22, 2017, 01:14:09 PM »
Just a quick question: you said you saved ~10k to knock down the cc but then decided to buy a new PC.

There should be plenty of cash left, unless your wife is into 4k video editing... Have you thrown it at the cc yet? And if you are at risk getting distracted, wouldn't it be better to pay the cc directly instead of saving in another place to later pay down the debt?

Btw: Great work!

That money was long gone back in April lol.  Between the computer, a new (used) car, a college class I took, bulking up the savings account, and prepaying a month of expenses in advance, it went by fast.

Good news is the car purchase set us up to be able to sell the truck and with one more wedding shoot (which is already booked), she'll have just about broken even on the cost of the computer.  Also since we are effectively a month ahead in all of our expenses, we aren't living pay check to pay check.  What a huge mental relief that is.
Better to remain silent and be thought a fool than to speak and to remove all doubt.

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SheepDog

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Re: Case Study for Newly Weds!
« Reply #40 on: June 22, 2017, 01:17:25 PM »
Awesome job getting the truck sold!

Do you receive any match on the deferred comp contributions? If so I would invest the exact amount it takes to get the maximum match. If not, I wouldn't contribute anything until the credit cards are paid in full.

No match on the DC, just the tax deductions on money saved.  I know it's not the smartest money decision, but we know that if we don't start investing now and saving something, we will be much less likely to develop those habits and stick to it in the future.  Out of sight, out of mind type deal.
Better to remain silent and be thought a fool than to speak and to remove all doubt.

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ysette9

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Re: Case Study for Newly Weds!
« Reply #41 on: June 22, 2017, 01:22:47 PM »
Congrats on the progress you are making so far. Keep up the good work!
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Feivel2000

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Re: Case Study for Newly Weds!
« Reply #42 on: June 22, 2017, 01:24:49 PM »
What is the logic behind saving the money and not paying down the cc? Throw your emergency fund at the cc debt. If an emergency comes up, you still can use the, now almost cleared, cc.

I know that using a cc as emergency fund is not a good idea in the long run, but in the short term I think it is a worse idea to pay interest.

Every $1,000 on the credit card cost you $5 per _month_.


Bracken_Joy

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Re: Case Study for Newly Weds!
« Reply #43 on: June 22, 2017, 02:00:32 PM »
Just a quick question: you said you saved ~10k to knock down the cc but then decided to buy a new PC.

There should be plenty of cash left, unless your wife is into 4k video editing... Have you thrown it at the cc yet? And if you are at risk getting distracted, wouldn't it be better to pay the cc directly instead of saving in another place to later pay down the debt?

Btw: Great work!

That money was long gone back in April lol.  Between the computer, a new (used) car, a college class I took, bulking up the savings account, and prepaying a month of expenses in advance, it went by fast.

Good news is the car purchase set us up to be able to sell the truck and with one more wedding shoot (which is already booked), she'll have just about broken even on the cost of the computer.  Also since we are effectively a month ahead in all of our expenses, we aren't living pay check to pay check.  What a huge mental relief that is.

I thought you had said the car was a gift?

I'll also say, from a psychology perspective: look hard at your language. It is still VERY external locus of control driven. Ie, stuff "just happens" to your money. "It went" not "we spent it on". There's a distance there, and a lack of personal accountability. Does that make sense? It's a small thing, but it has major implications for how our brain is working. And it goes both ways- language like that is both a SYMPTOM of a thought process that isn't working for you, and it also REINFORCES that thought process. It makes you at the mercy of your money, instead of you being in charge, the way you should be.
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SheepDog

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Re: Case Study for Newly Weds!
« Reply #44 on: June 22, 2017, 05:10:39 PM »
What is the logic behind saving the money and not paying down the cc? Throw your emergency fund at the cc debt. If an emergency comes up, you still can use the, now almost cleared, cc.

I know that using a cc as emergency fund is not a good idea in the long run, but in the short term I think it is a worse idea to pay interest.

Every $1,000 on the credit card cost you $5 per _month_.

My wife and I agreed to having XXX dollars in our savings account at all times for ER fund.  That was part of our agreement when it came time to combine finances.  And I feel safer with cash in hand for an emergency rather than relying on a CC as the first line of defense.

And, our CC interest rate is low enough that we are not suffering by saving an extra few $100 or so compared to dumping it back onto the CC bill right away.  Now, if we had a more traditional high rate card, like 18-25%, no doubt that would be the time when every last dollar went to it.

Like I said earlier, its not ideal from a pure maximizing our earning/savings potential standpoint, but its working right now.  We are leaps and bounds better than where we were just a few years ago.
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geo_kale

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Re: Case Study for Newly Weds!
« Reply #45 on: June 26, 2017, 10:17:09 AM »
Congrats!! It's starting to snowball now...that's the real magic :)

jezebel

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Re: Case Study for Newly Weds!
« Reply #46 on: June 26, 2017, 11:24:55 AM »
Just a quick question: you said you saved ~10k to knock down the cc but then decided to buy a new PC.

There should be plenty of cash left, unless your wife is into 4k video editing... Have you thrown it at the cc yet? And if you are at risk getting distracted, wouldn't it be better to pay the cc directly instead of saving in another place to later pay down the debt?

Btw: Great work!

That money was long gone back in April lol.  Between the computer, a new (used) car, a college class I took, bulking up the savings account, and prepaying a month of expenses in advance, it went by fast.

Good news is the car purchase set us up to be able to sell the truck and with one more wedding shoot (which is already booked), she'll have just about broken even on the cost of the computer.  Also since we are effectively a month ahead in all of our expenses, we aren't living pay check to pay check.  What a huge mental relief that is.

I thought you had said the car was a gift?

I'll also say, from a psychology perspective: look hard at your language. It is still VERY external locus of control driven. Ie, stuff "just happens" to your money. "It went" not "we spent it on". There's a distance there, and a lack of personal accountability. Does that make sense? It's a small thing, but it has major implications for how our brain is working. And it goes both ways- language like that is both a SYMPTOM of a thought process that isn't working for you, and it also REINFORCES that thought process. It makes you at the mercy of your money, instead of you being in charge, the way you should be.

Congrats on your progress!  But I am also concerned about the 10K.  Saving up that amount of money for a specific goal just to let go sounds very concerning to me.

bouldertechwarrior

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Re: Case Study for Newly Weds!
« Reply #47 on: June 27, 2017, 01:36:50 PM »
Fellow newly-wed, 20's here:

1. THREE CARS?!?

My husband and I get by with two (soon to be ONE!) paid off, compact cars (Go, Honda Civic!) - and you wouldn't believe what those "little" cars can do - weeklong camping trips, serious loads from Home Depot (we just bought a house) - lots of friends with inner tubes, cases of beer, etc.

2. Avoid "20's Lifestyle Creep" - (not going to mention avocado toast here; feel free to continue reading):

- Live simply, before you get caught up in the reckless materialism of our parents' lives - it worries me that you want to "upgrade" your house for sale, presumably to buy something bigger. Are you out of space? Can you re-arrange?

3. Newley-wed-ness:

- Maybe wait on kids, for a bit? Cheap dates - get good at these!

WHOA - looks like you did a TON - congrats on the truck, and enjoy the superb gas savings of just about any other car!

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Re: Case Study for Newly Weds!
« Reply #48 on: June 27, 2017, 01:39:56 PM »
ALSO: Please, PLEASE stay FAR FAR FAR FAR away from any "nutritional/fitness" "business opportunities" - you mentioned those - that happen to be "network marketing", "multi-level marketing" or whatever the newest term for PYRAMID SCHEME is these days. Please. This is the single worst decision I've seen my peers make is to get suckered into these scams and pay ~$5k UP FRONT, harass and lose friends, eventually sell out at a loss.

Read up on these. Stay far, far away.

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Re: Case Study for Newly Weds!
« Reply #49 on: June 28, 2017, 01:19:13 AM »
Man just read all the recent comments lol.  Why are we getting killed on the computer purchase?  We spent $3000 on it 3 months ago, and have already made $2000 with it through my wife's photography business.  She has a wedding booked next month which will put us in the positive.  The old computer was getting painfully slow and unreliable.  It was a 7 year old MacBook so its not like we could upgrade its parts.  Considering the new computer is top of the line and the MacBook was barely a mid-range model when we bought it, the new one should last at least as long.  Its paid for itself in 4 months and the next 6.5 years will be profit!



Better to remain silent and be thought a fool than to speak and to remove all doubt.

The greatest pleasure in life is doing what people say you cannot do.