Need a reboot

[MrFrugalChicago]

So been married about 5 years. Started fairly frugal, but have been going less and less frugal as life got complicated.

"Oh work is now a higher profile job, time to start paying for fancier clothes"

"Oh we would be happier if we had a dog"

"Oh we would be happier if we had another dog"

"Oh we are getting old, time to have a baby"


Now overall - These changes are great. Would not trade the dogs or the kid for the world.  But, overall monthly expenses have gone up every month. Despite making double what I made when I was first married, savings rate is now lower (in absolute numbers, not even %). So clearly we have failed.

Past the point of incremental fixes, and DW agrees. So thinking of a flashfire reboot. Has anyone done something like this or have a plan? 


Complication - Unlike many people here I love my field, just not my job. So my goal is to be able to work for myself. I do not need to save 70% of my income and retire in 3 years or anything like most MMM crowd. But I do need to get spending under control so I can quit my dayjob and work fulltime for myself. Basically I feel my spending is making me unable to pursue my dreams.

Here is my current idea for a reboot:



* Pick an amount of monthly spending we are comfortable with. Maybe current spending * .6.  If spending were at that level, I would be much closer to being able to quit the day job.

* DW and I each make a list of our priorities in life, and their monthly cost. For example:  * My 2 dogs, $300. 

* We merge our lists together into one unified list of priorities.

* We start at the top and go down. When we reach our cost cap, that is it. If a house didn't make the cut, we are homeless. If clothes didn't make it, we are naked. Due to naked not being good,  I could see some items appearing multiple times.. i.e. *Basic Clothes - $10 a month* high on list, but *fancy designer clothes - $100 a month* far lower.


Will this work? Or is there a better template for a reboot?  Open to anything from selling house to car to bikes, need to get this under control.  Or do I give up and just wait a few more years till DW can work fulltime again?  Or I guess that needs to be an option too, we don't NEED DW to stay at home with the kid, we could do something else.

Don't hold any punches, face punches accepted!


Rough Current Budget
Income (me): $11, 600 per month (gross)

Expenses:
Fed/state/local Taxes: $2,946
Medical/Dental: $340
Mortgage P&I: $750
Property Tax: $200
Child Support (prev marriage) $600
Food: $800 (organic food is killing us, think we stop)
Eating out: $250 (dead, can go to 0)
Life Insurance (Term): $33
Homeowners Insurance: $42
Car Insurance: $66
Fancy Bicycles: $200 (very seasonal and swingy)
Entering running races and triathlons (main hobby): $40
2 Dogs - $300 (1 is has bad allergies, spend about $150 a month on food for them but looking for cheaper :(  Rest is vets, medicine, maybe board once or twice a year for a few days)
2 Fancy Pants Cellphones - $120
Gas - $100
Baby Classes - $120 (on chop block already)
Baby Supplies - $300
Clothes - $200
Random Stupid things we don't need - $500
Gifts - Birthdays, Holidays, weddings - $150
Household supplies - $120
House care (plants, mulch, whatever) - $70
Student Loan payments - $500 (owe 40k, min payment aprox $500, average APR ~ 5%)
Car Payments - $0
Furniture - $400
Internet + HBO - $90
Utilities - $200
Not adding up so whatever else I missed - $200

Savings:
401k - $450
Refilling Savings- $1500



Clearly we have fat dropping all over the place.  What is super annoying is we did all the big things RIGHT.

1) Live in low COLA area (no more Chicago)
2) No car payments
3) Very low mortgage
4) Relatively high income for 1 worker

My GOAL is to be able to add another 1200 a month to retirement accounts, and 500 extra per month to paying down student loans.

[projekt]

Perhaps if you posted it case-study style people could help you more. If there is a lot that can be trimmed and you can see it, then you should be able to make a budget that shows that. If not, then perhaps you need ideas for specific things. Did you go and buy a new mini-van for the kid? Are you paying for day care? What things have changed?

A comparison of your early spending and current spending might be informative too.

[MrFrugalChicago]

Perhaps if you posted it case-study style people could help you more. If there is a lot that can be trimmed and you can see it, then you should be able to make a budget that shows that. If not, then perhaps you need ideas for specific things. Did you go and buy a new mini-van for the kid? Are you paying for day care? What things have changed?

A comparison of your early spending and current spending might be informative too.

Is case study the right format for a total reboot of life?  Not against case study, just trying to think of the right format to replan life now with kids and such in the picture. More important part is how to decide this with DW, vs what MMM readers think is best, as we obviously are the ones living our lives.

[tobitonic]

Cutting spending by 40% is a huge change. I'd definitely consult your wife first, or else you might get to work at home without the expense of a family (though with the expense of alimony).

[fattest_foot]

I don't know that doing a massive cut is the best idea, either.

If you were severely obese, I wouldn't recommend cutting your calories by 40% and also taking up bicycling, running, weightlifting, and yoga all at the same time. It's just too large of a lifestyle change for you to stick with it. It's definitely possible you can do it, but eventually you'll probably hit a breaking point and say "screw this."

[Rhoon]

MFC,

I feel the same way, the more I make the less I have in my checking account. Although I think I know the root causes of having less spending cash (It's going into savings and slashing debt as fast as possible) -- doesn't sound like this is your issue though.

Kids are pretty expensive. Diaper and wipes at my house (1 kid) alone are $100/mo and we try and buy in bulk at SAMS club. Are you paying any debt down (perhaps something you've picked up since expanding the family)? Was the house always the same before and after child birth? How about a new(er) / additional car? Medical expenses kicking up with all the Dr visits? Eating out more? Traveling more so the Grandparents can see the LO(s)? Basically, what has changed from pre-kids to post-kids?

I agree with the rest of the crowd, unless there's something really obvious going on in your budget, the ability to cut 40% off your monthly spending can be rough.

Along your train of thought however, if you sold your current house and moved, is there a lower COL area you can move to and still maintain your job / self-employment? How many vehicles do you have and can you being self-employed reduce those vehicles and still allow your DW to meet Dr appointments and the like with the children (not sure how old they are)?

One idea might be to just throw out your current budget (if you have one) and start fresh. What installment debt (house, car, student loans, etc...) needs to be paid each month being on top, including reducing any cc debt. Then utilities, food, etc.. down the bottom would be perhaps a small clothes budget (start out at $100/mo or reduce what you're currently spending by 50%) and go from there?

[opnfld]

It's difficult to propose anything specific without a look at a budget, but I don't understand why 2 dogs would cost $300 a month.  Total food budget for my family of 4 is ~$600.

If the budget cuts aren't obvious you may need a change in mindset, or you may need to wait for your wife to go back to work full-time.

[MrFrugalChicago]

Okay then, I can throw up a rough budget. Editing OP to include it.

DW is 100% on board, but a bit overwhelmed on how to do this.

A lot of it is subtle keeping up the lifestyle.

[MrFrugalChicago]

It's difficult to propose anything specific without a look at a budget, but I don't understand why 2 dogs would cost $300 a month.  Total food budget for my family of 4 is ~$600.

Food allergies on one of them, very hard to find food :(

[redbird]

That's what is called lifestyle inflation. Lifestyle inflation happens to pretty much everyone, but that's VERY fast.

I think something that would help, other than budgeting, is thinking harder about purchases and changes before making them. Don't let it be impulse. For example: WHY are you purchasing x? WHY do you want another dog? Do you really NEED it, or is it a WANT? Am I buying this because I think it is necessary for my life or would improve my life or make me happy? Or am I purchasing this just to try to look good to friends/family/neighbors/etc?

Wants are acceptable, but they should always be lower priority than needs and have to fit into whatever you decide your budget is. If you can't fit it in, then maybe you have to save up for it longer.

I feel like a lot of people don't really think hard enough about their purchase before making it, and if they do it too much, it can put them in debt and/or inflate their lifestyle way out of control.

[Classical_Liberal]

Random Stupid things we don't need - $500

hahahaha!  Masterful

[Rhoon]

Expenses:
Eating out: $250 (dead, can go to 0)
   - Being a parent, you need to go out at least once a month minimum, without the kid(s)! Cut this down drastically sure, but I wouldn't go to Zero. You have to have a life outside of the house.

Fancy Bicycles: $200 (very seasonal and swingy)
   - $200/mo or just $200 one time? If it's just a 1 time thing, then I would put a line item for "One time purchases" in the budget and buy things like this out of that budget.
Baby Classes - $120 (on chop block already) -- depends what they are; swimming and other classes can be very beneficial.
Clothes - $200 -- Cut 50%
Random Stupid things we don't need - $500 - No need to say more
Furniture - $400 -- Again, monthly or one-time purchases? If you're upgrading items or expanding the furniture count, cut this budget by more than half and stick it under General house hold items, to include gardening and cleaning supplies. Upgrade 1 thing at a time.

Not adding up so whatever else I missed - $454 -- I feel you there.

I feel your pain on this one and have been considering the same as you. I picked up the "One spreadsheet to rule them all" to help find the missing money (Because it's not in my checking account!!)

[MrFrugalChicago]

That's what is called lifestyle inflation. Lifestyle inflation happens to pretty much everyone, but that's VERY fast.

So heres the problem. I am working all day. Wife is bored and goes to store. Comes home with $100 in crap I don't want. I did nothing wrong, but I jut lost $100 to crap.

[MrFrugalChicago]

Expenses:
Eating out: $250 (dead, can go to 0)
   - Being a parent, you need to go out at least once a month minimum, without the kid(s)! Cut this down drastically sure, but I wouldn't go to Zero. You have to have a life outside of the house.

Fancy Bicycles: $200 (very seasonal and swingy)
   - $200/mo or just $200 one time? If it's just a 1 time thing, then I would put a line item for "One time purchases" in the budget and buy things like this out of that budget.
Baby Classes - $120 (on chop block already) -- depends what they are; swimming and other classes can be very beneficial.
Clothes - $200 -- Cut 50%
Random Stupid things we don't need - $500 - No need to say more
Furniture - $400 -- Again, monthly or one-time purchases? If you're upgrading items or expanding the furniture count, cut this budget by more than half and stick it under General house hold items, to include gardening and cleaning supplies. Upgrade 1 thing at a time.

Not adding up so whatever else I missed - $454 -- I feel you there.

I feel your pain on this one and have been considering the same as you. I picked up the "One spreadsheet to rule them all" to help find the missing money (Because it's not in my checking account!!)

hah good points!

For bikes:  Averaging out over the last few years. Bikes can get kind of out of control, especially when you are trying to race and not commute in them. They would make most MMM people very sad ;(  My bikes are worth more than my cars. Big bike expenses in the last few years were:

DWs race bike ($1800)
My road bike ($1800)
My tri bike ($3400)
Refitting wifes road bike ($400)
Kickr ($1000)

So $200 is just a long term average guess at monthly cost. 0 plans to spend more in next 2-3 years outside of repair. Could honestly be rid of bikes and still be happy, they arent crucial to my happiness.



For furniture - Just averaging out because we had a few big items. Again I expect it to calm down, but never know..

[MrFrugalChicago]

Okay after 6 months off YNAB, we agreed the no budget plan is not so good for us. Back to YNAB...

[matchewed]

You may have done the big things right but plenty of people do that right, or there'd be no one living there. You need to slap the shit out of your concept of quality of living. You're looking to save thousands a month if you can start not spewing money at every single little thing.

Fed/state/local Taxes: $2,946
Medical/Dental: $340
Mortgage P&I: $750
Property Tax: $200
Child Support (prev marriage) $600
Food: $800 (organic food is killing us, think we stop) wtf? why? it's no healthier and for a family of 3?
Eating out: $250 (dead, can go to 0) kill it
Life Insurance (Term): $33
Homeowners Insurance: $42
Car Insurance: $66
Fancy Bicycles: $200 (very seasonal and swingy) What does this even mean? you buy $24,000 worth of  bikes a year?
Entering running races and triathlons (main hobby): $40 Main hobby which is less than your bicycles? maybe just join a running club
2 Dogs - $300 (1 is has bad allergies, spend about $150 a month on food for them but looking for cheaper :(  Rest is vets, medicine, maybe board once or twice a year for a few days)
2 Fancy Pants Cellphones - $120 GAAAAAAAAAh no
Gas - $100
Baby Classes - $120 (on chop block already) To learn to do what exactly?
Baby Supplies - $300 ??
Clothes - $200 Can drop to 20 a month (that's extravagant)
Random Stupid things we don't need - $500 Break this down and understand it because it's tied to your last one and is a waste.
Gifts - Birthdays, Holidays, weddings - $150
Household supplies - $120
House care (plants, mulch, whatever) - $70
Student Loan payments - $500 (owe 40k, min payment aprox $500, average APR ~ 5%)
Car Payments - $0
Furniture - $400 how do you continuously spend on furniture? are you buying a new table every month?
Internet + HBO - $90 why?
Utilities - $200 do the usual shit that can fix this sort of thing, run AC, less heat less, shut shit off...etc.
Not adding up so whatever else I missed - $200

[MrFrugalChicago]

re matchewed:

Family of 3.5 I guess morelike.

Ya Bicycle average has been rough. Need to work on that ;) But it is part of main hobby (Triathlons). Pricey hobby..

Hopefully Furniture is dying down. New house has just been a bit expensive lately...

Need internet because WFH.  HBO can die though.

[MVal]

Kill the cell phones. I use a "dumb" slider phone and only pay $20/mo on Airvoice for it. I see other people with their smartphones that own them and realize how much better off I am living a simpler life with my simple phone that still makes all the calls, texts and photos I want. When I think back 10 years ago when I didn't even have a cell phone and was just as happy, I know a smartphone is not something I "need."

[bacchi]

Decrease the "gifts" category too.

[RosieTR]

I think our couch was like $200 at BigLots, 7 years ago. Still cups our butts! With dogs/kids you should not have pricey furniture! Check cheap places (for soft furniture) or thrift stores/estate sales for hard furniture (like tables). Work out a budget and parameters for the item, then ask your wife to find it since she has more time.
Wife needs some sort of hobby that's cheaper than the $500/mo of "crap" unless it's not actual crap. Maybe a set amount she can just spend so it preserves marital harmony?
Why do baby supplies cost $300/mo? Except disposable diapers, everything for baby can be bought used or asked for during holidays/bdays. It's fine if baby does not understand that new things can be purchased until baby is 4-6 yo.

Holy crap I thought I was excessive with 6 bikes for two people! Set a limit for the number of tri entrances per year, and train better for fewer of them. Replace only running shoes, bike tires/chains/etc and goggles/swimsuit. When they clearly are falling apart or causing injury (I can wear running shoes way longer than recommended but DH less so. YMMV). If you're doing long (read $$) races, consider shorter or more local ones. Explore options to work a race in a series for a discount on next year's entrance or the like.

Some expenses are just going to be high, like the student loans and child support. Others you can shave down. Like already suggested, don't just cut everything immediately because it'll be a shock. We recently went through and just shaved a bit off our expedable stuff: cut alcohol spending like 10-15%, for example. Did not cut trash. Skipping a glass of wine or beer a few days a week is not as impactful as planning a trip to the dump every few weeks, for us, right now. Think more about impact of each thing to find some stuff you'll notice less or not at all, or which will improve your life. Baby classes might be very worthwhile, or maybe they are just another added hassle that doesn't seem to create any extra bonding or skills, for example.

[matchewed]

Or you can give me a whole case of excusitis.

[MrFrugalChicago]

Kill the cell phones. I use a "dumb" slider phone and only pay $20/mo on Airvoice for it. I see other people with their smartphones that own them and realize how much better off I am living a simpler life with my simple phone that still makes all the calls, texts and photos I want. When I think back 10 years ago when I didn't even have a cell phone and was just as happy, I know a smartphone is not something I "need."

Totally dumb phone is not an option. Run a business on the side and for my future career path and need 24/7 availability right now.

I think the internet + talk portion of my cell phone bill for 2 phones is 45 or 50? Have it fairly gamed down all things considered (Me + DW + 3 friends all share a tmobile family plan, which gets the per line cost down to 20-25 while having much much more data than the lower tier resellers).. The rest is payments for devices I already own (and 75% paid down at this point). So best case if I transferred to a republic wireless type place I could save $10 or $20?  Open to researching more, but honestly not a huge phone elephant to kill.


So good news on the dog food front, DW went hunting and found a food that I (think) big dog won't be allergic to, will only be $80 a month for the two dogs (vs $130 before), so potentially grabbed an easy $50.

DW also scoured the house, and we found something like $400 in overpriced crap lay around we hadn't even opened! So we made a 10pm target run and took it all back. Rebought baby wipes, but not the rest. Think we got 1600 baby wipes for < $15 with a $5 gift card bonus, which will likely be enough to last until potty trained (previously organic baby wipes were 3-4x as much even in bulk). I want to price Diapers, need to figure out what Kirklands cost... Also got non-organic half n half for the first time in a few years.


Cranked Roth up from 450 -> 900 a month (1 roth for me,  1 for DW)
Cranked up my 401k from 0 to 900 a month
Added an automatic pay-$500-extra to my worst student loan.

So from lastnight to today went from like $450 a month in "saving" to $2300.  "Saving" in quotes because I am not sure the 500 extra towards student loans is really savings, but in the longrun it is...


Feeling a lot less like I am going to explode today.

On the fence is do I sell all my bikes and make 30-50% of the value back, or just keep them 10+ years so I get my moneys worth out of them. Will ponder this one for a while, I do enjoy my super bikes at times...

[MrFrugalChicago]

Decrease the "gifts" category too.

So I give generally $100 in gifts a year, or something stingy.

DW has a broke family. She has trouble seeing us making all this money and buy all this stupid stuff, and not give her family nice gifts (wedding, graduations, etc).

Working on it, but will be a hard fight. Think DW would argue to cut elsewhere first...

[SimplyMarvie]

Two minor comments

1. Consider throttling down the baby spending. Cloth diapers, making your own baby food, hippie stuff like that sounds like it takes much more work than it actually does, and saves serious bucks.  And to be honest, if your wife is home all day it will give her things to do that don't involve going to the store.

2. I know everyone is telling you not to cut everything all at once, but it seems like you need a drastic mental shift. When we were in the same position, we actually DID cut everything all at once, telling ourselves that it was our very own Greek Austerity program. The mental shift worked wonders... we were easily able to see what spending that we actually missed versus what spending we did not actually care about once it was gone (and these categories were NOT what they thought they would be at the outset.) We've probably dialed down to 75% of where we once were -- at least, since I'm typing this from a weekend vacation rental so we could go hiking in the mountains, let the facepunching commence -- but we'll periodically declare full austerity again when we have unexpected expenses or want to flex that muscle.

[meandmyfamily]

Wow you are making great changes!  Definitely cut out all baby supplies (beside diapers-necessities) and baby classes even though they are so fun!  Stay out of Target!!!  Look for Mommy and Me meetups in town.  They are free and serve the same purpose to get out and meet others with little ones.  Also Craigslist is a great place to find barely used baby stuff for a fraction of the cost!

[MrFrugalChicago]

Two minor comments

1. Consider throttling down the baby spending. Cloth diapers, making your own baby food, hippie stuff like that sounds like it takes much more work than it actually does, and saves serious bucks.  And to be honest, if your wife is home all day it will give her things to do that don't involve going to the store.

So cloth diapers are a bit of a sore spot. Spent like $300 on some "used from craigslist" G diaper system. Turned out that neither of us liked it. Resold the parts for $100-$200?  Fairly big loss of money.

I think we found a disposable to switch though, from $0.30 for current envionmentally friendly diaper to $0.11 each.  F the environment....