Author Topic: seeking advice and motivation!  (Read 2216 times)

littleweedontheprairie

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seeking advice and motivation!
« on: July 10, 2017, 09:46:35 PM »
Hi there!

After reading messages on the forum for a while, I'm now ready to post. I've been shy about sharing our situation as I'm a little nervous about getting face-punched :) . Time to be brave! Plus, I've found you guys to be super supportive and full of helpful advice.

So we're not really looking to retire early, more to retire securely at a reasonable age (like not above 70). We have some debt and a recent mortgage that seems unsurmountable to me. I'd like your input on how we spend our money and whether we could/should do things differently.
I'm 28, husband is 30. I stay home with two young kids (1 and 3). After taxes, insurances, retirement contribution, etc, husband takes home 5,200 monthly.

Our debts:

- Student Loan - remaining balance of $5,010 ($25,000 originally), interest rate 6.8%.
- Car Loan - for our Subaru that we bought brand new (I know, I know) after our 15 year old car definitely quit on us. We tried to buy used and found the prices were essentially the same as new for anything that had less than 100k miles on it (we are in a fairly rural area). Anyhow. 19k left on it, 1.9% interest rate.
- Mortgage. We owe about 212k. 4.99% interest rate.

Assets:

- I have about 10k in a retirement account from my previous job.
- Husband has about 15k (he's been in the workforce for only 18 months, was a graduate student earning a pittance before that)
- Car #1: 2016 Subaru Forester, worth about $20k per KBB- still owe $19k on it though.
- Car #2: old 80's pickup truck, worth about $1500. Not super reliable, mostly kept around for odd jobs and errands.
- Car #3: the husband's commuter car, bought to replace the increasingly unreliable pickup. '88 Volvo, probably worth around $2k?
- we have about $30k of equity in the house according to latest appraisal.



Here's our budget breakdown:

- Mortgage PITI: $1,500 (we throw in around 80 dollars extra towards the principal, just to have a round number).
- House repair fund: we set aside $250 each month in prevision of things breaking down, etc.
- Electricity: $100
- Heat: We budget $150 each month. It's more than enough to fill the propane tank once a year (500 gallons a year) and buying wood (4 to 5 cords).
- Trash: $25
- Internet: $60
- Phone: $120. We are on Verizon (not on contract) because that is unfortunately the only network with any sort of coverage around here. We often rack up extra data usage due to my husband's job. If you have any ideas about how to cut that...
- Gas: $200. 30 mile commute for my husband, a "trip to town" is 12 miles.
- Tithing: $400.
- Student loan: $750. I think the minimum payment is something like $200.
- Car payment: $360.
- Car fund: $250 every month to cover insurance, registrations, oil and parts, and save for the next beater :)
- Savings: $250. We'd like to build up a beefy emergency fund, because of the nature of my husband's job and also because all of my family is overseas (and I might have to rush there one day). Once we get there we will likely funnel that to extra retirement savings or kids college.
- Groceries, household, etc: $750. That's the money I "manage" every month. Between diapers, co-pays, food, and cat litter I can't seem to be able to save any of it. I try to not go over $300 for food, but I really struggle (and I bake my own bread, shop sales, eat very little meat and grow a garden...). So any suggestions there would be very appreciated!

Any suggestions on how to do this better? I don't see where to trim, but you might!
I've been trying to bring in a few extra dollars working from home but without real success. My husband can't really pick up a side gig as his job pretty much takes all the time he can give to it.
I realize -as I'm typing this post- that there is nothing dire about our situation, yet it feels like there's not much extra room and like we are not paying debt down fast enough. Any ideas?

Laura33

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Re: seeking advice and motivation!
« Reply #1 on: July 11, 2017, 11:01:26 AM »
Honestly:  patience!  You have one reasonable-but-not-massive income, two young kids, student loans, car loans, and a mortgage -- and you are prepaying two of those.  But at your current rate, your student loans will be paid off in a little more than 6 months.  That will free up $750/month -- that's $9K/year!  And once the Subaru is paid off, that will be over $1100/month extra, which is over 20% of your take-home!  In short, you have been in the slog of negative compounding, but there is a light at the end of the tunnel, and the tunnel isn't even that long any more. 

My one specific suggestion goes to the vehicles.  First, three vehicles to keep titled/inspected/insured is always more expensive than two.  I'd dump the truck, period, unless you really truly use it like weekly.  Second, your DH has the great idea to have a cheap beater for commuting, but he has the wrong cheap beater -- if he is driving 30 miles for his commute, he needs to get something like a Corolla or a Prius that will maximize his gas mileage. 
Laugh while you can, monkey-boy

GizmoTX

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Re: seeking advice and motivation!
« Reply #2 on: July 11, 2017, 11:17:17 AM »
You need 6 months to a year of your mandatory expenses saved in an emergency fund. Instead of throwing extra at the mortgage, direct it to your emergency fund. Whatever else you can cut or have left over, direct to your emergency fund. Perhaps part of your house repair fund could be considered part of your emergency fund. Put it in a high yield online savings account (not a CD).

Fund your retirement before any college saving. You need the time for compounding. College may or may not happen, & costs can be trimmed by AP courses, community college for the first 1-2 years (choosing courses that will transfer), in-state university, scholarships.

Lady SA

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Re: seeking advice and motivation!
« Reply #3 on: July 11, 2017, 02:30:36 PM »
I know the student loan will be paid off in a few months, but in that time, any thoughts to refinancing it? You could get a lower rate a save a bit on interest for the next few months.
sofi or earnest are good ones people recommend around here. Shameless plug, I've got a referral for earnest in my sig. 6.8% is kind of high and I wonder if you could trim that a bit, but on the other hand, interest savings would be relatively negligible since its only over the course of a few months instead of years. Up to you!

Other than that, I agree with Laura. Patience and freeing up cashflow once debts are paid off will accelerate you just fine. Get rid of some of the extra load you're carrying re: cars, but you're by no means hair on fire, you have a reasonable income, and no outrageous spending. No big facepunches for you!
« Last Edit: July 11, 2017, 02:33:10 PM by Lady Smartass »
https://www.earnest.com/invite/lillian2 --> Use this referral to refinance your student loans with Earnest and get a $200 bonus!

Lady SA

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Re: seeking advice and motivation!
« Reply #4 on: July 11, 2017, 02:35:50 PM »
can you post a more detailed breakdown of the $750 for "household"? We can offer better, more specific advice if you do.
https://www.earnest.com/invite/lillian2 --> Use this referral to refinance your student loans with Earnest and get a $200 bonus!

Feivel2000

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Re: seeking advice and motivation!
« Reply #5 on: July 11, 2017, 02:52:12 PM »


I know the student loan will be paid off in a few months, but in that time, any thoughts to refinancing it? You could get a lower rate a save a bit on interest for the next few months.

If they can refinance and only pay 0.0% interest, they could save $200. So it's probably not worth the hassle.

Why do you have the Subaru if all the driving is done by a beater? Three cars are at least 1 to many. Could you sell the Subaru and the truck and get a reliable and fuel efficient commuter car?


MDM

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Re: seeking advice and motivation!
« Reply #6 on: July 21, 2017, 06:48:36 PM »
See also Investment Order and perhaps try the spreadsheet in How To: Write a "Case Study" Topic.  Those might help you answer some questions yourself - and/or generate new ones. ;)

Lepetitange3

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Re: seeking advice and motivation!
« Reply #7 on: July 21, 2017, 07:41:46 PM »
I could be wrong here but 4.99% seems really high for a mortgage?  Mine is a lot lower. Can you refinance?

littleweedontheprairie

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Re: seeking advice and motivation!
« Reply #8 on: July 22, 2017, 11:59:25 AM »
Thank you all for your answers and advice! You definitely gave me some food for thought.

Laura33, you might just have hit it when you mentioned patience... We do throw a lot money towards our debt and have been for a while (on the student loans anyway) so it will likely feel very different in a few months.

My husband's beater is a Volvo 240L that gets decent gas mileage. Not as extraordinary as a Corolla or Prius, but good enough and it is fairly reliable and well taken-care of (he bought it from a car-nerd friend).

The truck now sits idle most days, and you do have a point that it could be sold. It wouldn't bring much though, and when it is needed, it is NEEDED (think hauling heavy stuff around the property, getting cars unstuck from mud/snow- we live far from a paved road).

So that leaves the Subaru. The truck has a single cab and can't fit all of us. The Volvo is good most days unless roads are too muddy or covered in snow. The Subaru is the one "good" car, that can get my husband to work if the roads are bad and the truck is down, that can fit all of us for a visit to family 2 hours away, etc. I probably use it 3 times a week with the kids for groceries/errands, recycling trips, church stuff, etc. It is worth considering getting rid of it though and just make do with the two others. My husband likes having one car that doesn't need monthly repairs though. That gives us a bit more time to breathe when something needs to be fixed on one of the two others. 

So we could rethink the 3 car situation. It seemed an inevitable side effect of rural life, but definitely worth reconsidering.

We could take the trash to the dump... Would need to find a raccoon, coyote proof way to store it between trips (we have no garage, and the outbuildings are not critter-proof). We are happy to be our 25 bucks a month for that service.

Need to look at refinancing mortgage too!

We do have Verizon pre-paid. We own our phones outright and are charged 95 dollars for our 2 lines, sharing the min. amount of data (2 GB).  There seems to be junk fees added to that every month. I used to have a flip phone and the bill was the same. Switched to a "smart" phone when the flip one died and a replacement turned out to be pricier than a smartphone! (I blame hipsters, lol). I will look at dropping the internet...

Ok, now for the detail on those 750 dollars that I handle every month. Would love some of your input on that.
It goes to:
- food. I try to keep it under 300 dollars and I really struggle. We have no Aldi or Costco in the vicinity. The closest Sams Club is an hour and a half away. Walmart is 30 minutes away. Close by (15 min) we have a couple of small-town grocery stores that charge a pretty penny.
- booze: $50. Okay, shame on us for that one. We found that was the one way to curb our random alcohol expenses. I buy a 24 pack of beer and a couple of bottles of wine at the start of the month and then we are done. I'm not sure we are disciplined enough to give that up. But we could.
- household supplies: $100. That's high, isn't it? But somehow it's always spent. Or redirected to food. 
- pets (cat food, litter, chicken feed): $50.
- babies: $100 (that should now dramatically decrease as the oldest is finally getting potty trained, the youngest is in cloth diapers, and we don't need formula anymore...until the next baby anyway :) )
- random stuff that seems to always happen... Basically the rest. Doctor bills, a broken section of gutter, a baby shower gift, etc. Last month it was a speeding ticket  (shame on me... my first one ever). I rarely finish the month with more than 20 bucks.

I'm going to go take a look at other sections of the forum for ideas on how to curb this down.

Thank you for all your help!!!


With This Herring

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Re: seeking advice and motivation!
« Reply #9 on: July 22, 2017, 04:13:47 PM »
How specifically are you tracking expenses?  Many posters here find that using a program such as GnuCash (my preference!), Quicken, YNAB, Mint, or Personal Capital to get a complete picture of the details of their spending helps a lot.

You should log onto the Verizon site and look up your last few months usage of voice, texts, and data, then head over to our own I.P. Daley's tech discussion thread for advice on which Verizon-network MVNO might work well for you at a better price.

For heat - You have a truck to haul wood.  In my area, at least, there are often posts on Craigslist throughout the year offering free firewood, usually still standing wood or a large dead tree that has been cut down recently or fell in a storm.  If you keep your eyes open, this may cut your heating bill some.

Food
  • If you are already baking your own bread, would it be worth a trip to that Sam's Club once every few months to stock up on massive sacks of flour, dried beans, etc?  (And I would hope you are already buying at least a one-pound sack of yeast at a time, instead of those tiny packets or jars.  It keeps forever in the freezer.)
  • Could you talk to your local grocer and see if you can get a discount for buying, say, a case of crushed tomatoes at a time?  You could say "the next time you order crushed tomatoes, buy a case for me, and you won't need to pay someone to stock it on the shelves."
  • When your husband is on his way home on that 30-minute commute, can he swing by a bulk store or larger grocer and pick up a few big items for you?
  • Would his work be okay with him receiving shipments of bulk food there?  The Webstaurant Store offers discounts on shipping if you ship to a business address.  I would guess that other online bulk retailers have a similar system.  You can get dried beans, baking supplies, and all sort of things.  You would have to do your own calculations to see if this is economical for you.
  • Would food prices on Amazon make a Prime subscription make sense?
Because your toaster got hacked because you tried to watch porn on your blender.

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