First, let me apologize. This post is really, really long. Once I started writing it, I sort of just unloaded everything, I suppose. Kinda hard to see this in black and white, but for anyone who wades through my mess and offers any suggestions, I offer my sincere thanks.
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I am an extreme late-comer to the idea of FIRE. In fact, I really should drop the RE because if I can get my finances in order and turn things around, by the time I can achieve FI there won’t be anything early about it. Still, it will be quite an achievement, given at my current rate I’ll simply have to work till I die (assuming I can live until 80), and that’s no good.
Quick background: I have five children, and for most of the years we were raising them, my annual income was between $25,000 and $35,000, and I was the sole breadwinner in the house, so it was a tough row to hoe at times. Not to sound like too much of a whinny pants, but there were periods when I was working a second job, and doing freelance writing on the side, just to pay the bills. The idea of saving money was simply not a serious option. For many of those years, we weren’t just living paycheck to paycheck, we were living today off of next week’s paycheck, or the one after that, getting further and further behind.
Now as an old geezer, as I look back over the years, I definitely see Bozo moves I made, times when I wished someone had punched me in the face and said WAKE THE HELL UP. My income has been higher these past ten years, and if I'd been wiser and used a little common sense I could have something set aside now. When I think of what I have wasted, I could kick myself in the patootie, if my hips swiveled that far and my knees were double-jointed. Guess I’ll just have to settle for self-face punching. But, the past is the past, and the only thing I can affect is the future, so I'm trying to make some changes
Having said all that, here’s where I’m at:
54, married, with three kids still at home – two of them are working part time and attending community college, the third is still in high school. My wife is 51.
Filing jointly, with three dependents, live in Virginia.
Gross salary Me: $54,900 (paid twice a month, on the 15th and 30th -- 4,582 per month gross) I've been on the job for 10 years, though we've gone through five CEOs and now three ownership changes, the latest one being last month.
Wife: $41,000 (She just started work in August as a teacher, so this is new for us. She’s paid once a month, on the 30th. Gross 3,150. Assuming her contract is renewed, next year – September – that will rise because she’s on a 13-month pay plan, then she’ll switch to a 12-month plan).
My Deductions (in addition to taxes): $150 a month for HSA (starts in January, no money in there at present)
$95 a month for health insurance
$15 a month for $50,000 in term life insurance
$6 a month for vision insurance
I haven't participated in our company's 401(k). There is no match, other than a "discretionary" match the company might make if it hits some undefined financial goals based on some mystery monetary performances for each of our locations. This company just bought us, so I have no history with it, but I know it has not done an end-of-year 401 (k) match for each of the past three years.
Net pay $3,600 a monthWife’s deductions (in addition to taxes)
$200 a month family insurance policy (her and the kids, not me)
$28 a month family dental policy (her and the kids, not me)
$15 a month family vision policy (her and the kids, not me)
$157 a month retirement (mandatory. Her employer puts in another $63 per month, or the equivalent of 2 percent of her salary. She could add another 4 percent of her salary, or $126, and they would match that on a 50-percent basis, or another $63)
At present, she does not put money in her HSA, her employer put $1,600 in it at the start of the school year.
Her total monthly net is 2,297OUR Total month net = 5,897I do have a side hustle of sorts – I'm a writer, and publish short stories, novellas and novels (I can't do freelance non-fiction because I'm a newspaper editor and, in our company, that's a no-no). I've been doing the side hustle off and on for a little over three years, and at one time I was making $4K to $5K a month. No more. The genre/field I wrote in has just about dried up, so I'm pulling in $200 a month now, mostly as passive income from my old work. I haven't done anything new in a while – just didn't see the point of working nights, weekends, only to see the money spent as fast as I could get it deposited in my bank account. If I were to give it a really hard go, I might get that back to $1,000 or so a month – maybe more if lightning strikes a second time.
Assets and debtsAssets: This will be easy, because there ain’t many.
At the end of the month, we’ll have about $400 in cash.
$1,700 worth of stock in a small utility that I’ve had for years. Dividends work out to a 2.95 percent yield at present, and I just let those buy more stock.
$2,000 from the side hustle due to me I should get about $1,200 of that toward the end of January, the rest at the end of February
That’s about it.
Total assets -- $4,100 (counting the money due to me, but not yet in my hands)
DebtsCredit Card 1 -- $5,000
Credit Card 2 -- $4.800
Credit Card 3 -- $480
Medical Bills for me – $4,400. Half of this is on a medical credit card charging 6 percent interest, the rest are spread among several providers. We have not yet entered into repayment agreements with the other providers, so no monthly expense yet to budget.
Medical Bills for my wife -- $5,000. We’re getting ready to put this on a medical credit card that’s interest free for 90 days, then 6 percent. As of this moment, we have not gotten the card and are not paying, so no monthly expense yet to budget, but I suspect it’s going to be around $150.
Dental Bill -- $1,000
Auto loan -- $7,800.
Wife’s student loan – this is about $20,000. Not an immediate concern, because she’s in a deferral program that allows her to pay $20 a month. That might be adjusted upward in the summer, however, since her new teaching job will make us ineligible for this lowest level of relief. However, because she teaches in a rural, low-income area, she will most likely be eligible for $17,500 in forgiveness, but only after 5 years of teaching.
Total debts: $45,980Monthly expenses: Some are fixed, some obviously vary month to month, I’ve used the recent average in those cases
Rent – 800
Electric bill – 240
Water bill 70
Internet 85
Car loan 290
Phone net cost – 225 (This will drop by $100 after March – my wife financed a phone for herself and my youngest child for two years as part of this plan. It’s a family plan, $40 per phone for unlimited everything, and we have 6 people on it – this is our share of the cost for myself, my wife, and my youngest. The other three pay their own portions. I will add, it’s Verizon, and it’s the only cell service we’ve found that actually works where we live.)
Car insurance—170 (Net cost. It’s actually higher, with 3 of my kids on the policy with their own vehicles, but they pay their portion)
Credit Card 1 -- $160
Credit Card 2 -- $130
Credit Card 3 – $30 (no interest charges on this card yet)
Medical credit card for me -- $64
Life insurance – $23
Dentist --$50
Student Loan -- $20
Daughter's trip -- $136 (this is a Costa Rica trip she's taking in the summer as part of a honors school thing. We've been paying this for 18 months and have another five months left. Too late to get out now)
Entertainment (Netflix, Amazon Prime, etc.) $30
Fitness -- $100
Heat -- $110, but only through the end of March. Afterward that disappears until next November.
Gasoline -- $400 (varies a bit, but that's the high end. It's so high because of our commutes – my wife drives 40 minutes North to work, I drive 25 minutes South. Like I said, we live in a RURAL area.)
Total 3,133Okay, I know those expense figures are outrageously high, but even with those, I should have a clear 2,800 in the clear, right? We should easily be able to do the grocery thing and still save some money, right?
Well, I got hooked up with YNAB a couple of months ago and used it primarily to track expenses for a couple of months, here's where most of the rest went
Groceries – $1,550 (ye gods, how do we eat that much?)
Eating out -- $300 (crazy)
Misc/throw-away -- $550 (nearly as bad as the $1,500 grocery bill)
For a grand monthly total of around $5,533. Throw in a few auto repairs, birthday presents, and we're spending more than we make.
I'll pause here to allow you all to line up and punch me in the face
Okay, done? Well, for now, anyway. There will be additional face-punching sessions in the lobby after the show.
Clearly, we need to cut a third of that grocery budget, maybe more. And quit with the eating out and most of the misc/throw-away money. To be honest, those last two are mostly my wife, and one challenge will be getting her to buy-in, to do the budgeting and pursue some goals. That is what it is. Let's assume for this exercise, any advice you can give, that she is on board and working right alongside me
Beyond cutting the groceries and the misc/throw-away money, what should I be doing? Aggressively attack debt? Saving for a home down payment (I really want a home)? Putting money into 401(k)? Should my wife raise her retirement deduction to the max (I really want to retire with some semblance of financial security, eventually, one day)? Wouldn't putting money away for retirement hurt out chance to save for a down payment? Should I be saving money in a regular, easily-accessible account first as an emergency stash? Should I just spend my extra money on lottery tickets and hope for the best? Play the ponies?
Any and ALL advice, ideas, most appreciated. I will do my best to answer any additional questions you may have.
Thank you in advance for the help and the face punches.