I'm going to start by asking whether you genuinely want FIRE? You say you do, but your actions speak otherwise.
Exactly right. That's why I'm here. My actions need to match my aspirations, and I need help with that.
Eating Out. I can't fathom spending this much eating out. My guess is that eating out becomes the "default" due to a lack of planning. Do you plan your menu for the week? Not just dinners at home, but breakfasts, lunches and snacks as well for the whole week. With your diary in front of you so that you know that "Tuesday night is the night we're going to be at...". Think about the alternatives to "eating out" and work them into your plan. Can you have your main meal at lunch and a light snack in the evening when you get home from being out? Can you pack snacks? Your kids are young enough that they won't mind. Mrs Gremlin and I do this and our grocery list reflects this. That doesn't mean never eating out, but it then becomes a conscious choice rather than a default.
Good point. We do meal plan, but it's mostly main meals, and we don't always account very well for when we'll be home or not (which can lead to food going off and being wasted). The problem is definitely us and not the kids, we pack for them fairly well. I will take this on board.
You have a soft spot for hot chocolate at work. Buy a tub of the powder and 3 L of milk and bring it in with you.
I don't care for it really, it's more social. I find it hard not to order when everyone goes for coffee. I can get tea, which is healthier but costs the same. Would I be correct that the solution is to eat some concrete and be prepared to say 'Oh no thanks but I'll come for the walk'?
Domestic Stuff ($7k). Wow. Not sure how this manages to add up to this, but you need to break it down further if you're going to destroy it. This is a massive black hole of spending.
Good point. I will think about how to get more detail on the category so I can destroy it.
How do I tell acceptable from not acceptable spending? For example, I recently bought a Google Home, as a way to play music in the house (and its many other functions). I'd been thinking about playing music at home for a while, and was pushed to action in fact by re-reading MMM's post on candlelit dinners. It was $109. Is that a valid purchase? Should I have bought a $30 speaker instead?
Or, I bought two toddler-appropriate board games for my kids the other day - about $60 together. I want to introduce them to board games and card games and other such family fun. Not sure how to do it without buying board games? These particular ones were not available second hand. Maybe I should have bought just one?
Car usage: $3,800 on petrol and $2,500 on parking and yet you are close enough to work to ride? This is 100% a lifestyle choice. You need to choose whether your lifestyle is this or a lifestyle that will help you reach FIRE. Most people don't FIRE, not because they're not attracted to the idea of FIRE, but because they're not willing to choose a lifestyle that gives them that.
We definitely want to cycle more and plan to. It's about 35min each way and both my wife and I have a trailer with children, so it's ok for to/from work only, but if we need to go somewhere else that day it gets trickier. But yes I accept this advice and it is good to have this validated as a worthwhile aspect of budget to attack :)
Gifts: This can very quickly add up with large families unless you are willing to do something about it. We've implemented a system where each niece and nephew gets one present from the entire extended family. We take turns to buy and have an agreed budget so it all evens out. Instead of lots of crap, they get one nice present each which tends to be valued more by the kids and our total gift amount has reduced considerably. Repeat for the grown ups.
Will do. Any pointers on convincing the in-laws (who are big gift givers) to adopt this? They have for adults (there's just Secret Santa, not everyone buying everyone else something), but they all seem to enjoy giving the kids mountains of presents :|
Phones: Your plans aren't going to break the bank, but why the need to upgrade your handsets? This is exactly the sort of lifestyle inflation that puts FIRE out of reach for so many people.
Fair. We have iPhone 6Ss. I recently had the battery replaced for $40. I expect to get another 12 months or so out of it. After that, software updates and such make them a bit slow and horrible? But we wouldn't replace with a new one, probably a second hand iPhone 7. Is this still undue lifestyle inflation?
Dry cleaning because you don't like ironing? Face punch. Your clothes budget should be able to come down too, but many other pieces of low hanging fruit if you want to reduce your budget.
Fair. I would love recommendations for iron-free business shirts that don't feel like you're wearing plastic. I truly detest ironing. Any other chore is fine. Cleaning the toilet, or getting kid vomit out of the carpet... All fine compared to ironing. Yes I know, I'm a complainypants and I should eat some concrete :(
Clothing budget is also a bit of a black hole, I need more detail. It doesn't feel like my wife or I buy clothes often, we don't go shopping for fun or anything. But yes point taken.
Insurance. I don't like looking for areas to increase spending, but you're practically living paycheck to paycheck, with x-coll'ed loans, needing both wages to survive yet you don't seem to be paying for life insurance. Also don't underestimate how much it would cost to replace contents if your house burned down, particularly if you're spending $2,500 on clothes and $7k on domestic stuff each year. I'd add both of these (even if your contents has a very high excess).
Oh we have life insurance, TPD and income protection insurance through Super. All set to appropriate levels (80% of income for two years, and enough Life/TPD to pay off the PPOR mortgage with more left for modifications such as wheelchair ramps or what have you)
On contents, the excess isn't the issue it's the annual premium nearly doubles in price. We're good at sourcing furniture second hand and similar. We think we wouldn't mind building up from scratch again on contents.
I think we have the typical problem that our spending matches our earning. Because we don't have any credit, we seem to go through boom/bust cycles - try really hard to not spend money, get lazy and resort to spendypants habits, start to run low, try really hard again, rinse repeat. Breaking out of the cycle and permanently reducing spending is what we struggle with.
Gas and Electricity. I don't know your climate, so can't comment on whether this is reasonable or not. But the most expensive things to run are those that change temperature. So heating and cooling in particular. You have a big house. How good is your insulation? Is ALL of your house insulated to the same level - including garages with internal access? Do you keep it all warm in winter? Do you run air con in summer? Can you set temps a degree or two higher/lower? Can you zone your house and only warm/cool what you need? Do you have multiple fridges?
No the house is not maximally insulated. We intend to do this as part of ongoing renovation efforts (e.g., we intend to renovate upstairs next, which will involve ripping all the gyprock off, and the ceiling, and stuffing it full of rock wool, etc.).
No we only use the gas heater when we're home, and only in lounge/dining. We do have oil heaters for bedrooms for overnight for the children (heating to about 16C).
We have a portable 5kw air con and a reverse cycle that's similar. We use them only when we're home and only for living areas we're using.
Generally heating the house to 18C in winter and cooling to 22C in summer
Can't zone, but we intend to put in a proper ducted heating/cooling system where we will be able to
We have a fridge/freezer and a stand alone freezer. The second freezer is to keep a stock of discounted meat, pre-made meals, etc.
Noting my wife is on maternity leave, so this winter was probably higher than usual due to someone being home all day in terms of heating/cooling
Should I be increasing the priority of insulating the house? Doing upstairs is six months away at the moment, while we finish outside
Cleaner. Is your cleaner genuinely $500 per year for 2 hours a fortnight? If so, that's well below minimum wage. What's going on here?
I looked into this. It's $500 for six months, not 12. We intend to stop the cleaner in January 2019. Shouldn't need one if everyone is out of the hose five days a week.
But as Freedomin5 said, your biggest luxury is your house. You have more house than you need. This is reflected in your mortgage, your utilities, your insurances and probably your domestic stuff. This is a choice. You can choose this. But if you also want FIRE, you need to be far more ruthless elsewhere.
Fair.
What would Mustachians consider an appropriate amount of house for two adults and three children (including when the children are teenagers)? Would you make children share bedrooms? Would you cut the guest bedroom? What's a Mustachian amount of yard?
Mortgage v investing. In Australia, with no deductibility on PPOR and (generally) higher interest rates than many parts of the world, the mathematical trade-off between paying down a mortgage or paying into offset (particularly on PPOR) and investing is less clear cut than in many other places. It may work for you but it may not. Do your own calcs on this before you decide a path. But unless you get your spending under control, this is a theoretical consideration for you at the moment.
I think we would go with paying down mortgage, due to wife's risk averse-ness. Noted it is theoretical. Hopefully not for long...
Thank you